Brookfield Global Listed Infrastructure Income Fund Inc., et al.; Notice of Application, 54353-54357 [2015-22602]
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Federal Register / Vol. 80, No. 174 / Wednesday, September 9, 2015 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
In the Matter of Advanced Lighting
Solutions, Inc.; Order of Suspension of
Trading
September 4, 2015.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Advanced
Lighting Solutions, Inc. because of
questions regarding the accuracy and
completeness of assertions by the
company in materials posted on the
Web site operated by OTC Markets
Group, Inc. and in press releases. This
includes questions about the accuracy of
a May 14, 2015 Form ATS and a May
26, 2015 press release with respect to
the company’s business plans and
activities. Advanced Lighting Solutions,
Inc. is a Wyoming corporation with its
principal place of business located in
Conroe, Texas. Its stock is quoted on
OTC Link, operated by OTC Markets
Group Inc., under the ticker: AVLS.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company.
Therefore, it is ordered, pursuant to
Section 12(k) of the Securities Exchange
Act of 1934, that trading in the
securities of the above-listed company is
suspended for the period from 9:30 a.m.
EDT on September 4, 2015, through
11:59 p.m. EDT on September 18, 2015.
By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2015–22780 Filed 9–4–15; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31802; File No. 812–14456]
Brookfield Global Listed Infrastructure
Income Fund Inc., et al.; Notice of
Application
September 1, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 19(b) of the Act and rule
19b–1 under the Act.
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AGENCY:
Applicants: Brookfield Global Listed
Infrastructure Income Fund Inc.
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(‘‘INF’’), Brookfield High Income Fund
Inc. (‘‘HHY’’), Brookfield Mortgage
Opportunity Income Fund Inc. (‘‘BOI’’),
Brookfield Total Return Fund Inc.
(‘‘HTR,’’ together with INF, HHY, and
BOI, the ‘‘Funds’’), and Brookfield
Investment Management Inc. (‘‘BIM’’).
SUMMARY: Applicants request an order to
permit certain registered closed-end
investment companies to make periodic
distributions of long-term capital gains
with respect to their outstanding
common shares as frequently as
monthly in any one taxable year, and as
frequently as distributions are specified
by or in accordance with the terms of
any outstanding preferred shares that
such investment companies may issue.
DATES: Filing Dates: The application was
filed on June 6, 2015 and amended on
August 13, 2015.
Hearing or Notification of Hearing: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on September 28, 2015 and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090;
Applicants, Brookfield Place, 250 Vesey
Street, New York, NY 10281–1023.
FOR FURTHER INFORMATION CONTACT: Jaea
F. Hahn, Senior Counsel, at (202) 551–
6870, or Mary Kay Frech, Branch Chief,
at (202) 551–6821 (Division of
Investment Management, Chief
Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm, or by
calling (202) 551–8090.
Applicants’ Representations
1. INF, HHY, BOI and HRT are
Maryland corporations registered as
closed-end management investment
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54353
companies.1 INF’s investment objective
is to provide a high total return, with an
emphasis on income, which it seeks to
achieve by investing in publicly traded
equity securities of infrastructure
companies listed on a domestic or
foreign exchange. HHY’s primary
investment objective is to seek high
current income by investing in high
yield bonds, debentures, notes,
corporate loans, convertible debentures
and other debt instruments. BOI’s
primary investment objective is to seek
high total investment return by
investing primarily in mortgage-related
debt securities and other mortgagerelated instruments. HTR’s primary
investment objective is to provide a high
total return, including short and longterm capital gains and a high level of
current income by investing primarily
in U.S. Treasury, mortgage-backed,
asset-backed and high-yield corporate
securities. The common shares of each
of the Funds are listed and traded on the
New York Stock Exchange. Although
none of the Funds currently intend to
issue preferred shares, the board of
directors (‘‘Board’’) of each Fund may
authorize the issuance of preferred
shares in the future.
2. BIM, a Delaware corporation, is
registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers
Act’’) as an investment adviser. BIM
serves as investment adviser to INF,
HHY, BOI and HTR. Each Adviser to a
Fund will be registered under the
Advisers Act.
3. Applicants believe that investors in
closed-end funds may prefer an
investment vehicle that provides regular
current income through fixed
distribution policies that would be
available through a distribution policy
(‘‘Distribution Policy’’). Applicants state
that prior to a Fund’s implementing a
Distribution Policy in reliance on the
order, the Board of each Fund,
including a majority of the directors
who are not ‘‘interested persons’’ of the
Fund, as defined in section 2(a)(19) of
1 All existing registered closed-end investment
companies that currently intend to rely on the order
have been named as applicants. Applicants request
that the order also apply to each other registered
closed-end investment company advised or to be
advised in the future by BIM or by an entity
controlling, controlled by, or under common
control (within the meaning of section 2(a)(9) of the
Act) with BIM (including any successor in interest)
(each such entity, including BIM, the ‘‘Adviser’’)
that in the future seeks to rely on the order (such
investment companies, together with INF, HHY,
BOI and HTR, are collectively, the ‘‘Funds’’ and
individually, a ‘‘Fund’’). Any Fund that may rely
on the order in the future will comply with the
terms and conditions of the application. A
successor in interest is limited to entities that result
from a reorganization into another jurisdiction or a
change in the type of business organization.
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the Act (the ‘‘Independent Directors’’),
will request, and the Adviser will
provide, such information as is
reasonably necessary to make an
informed determination of whether the
Board should adopt a proposed
Distribution Policy. In particular, the
Board and the Independent Directors
will review information regarding the
purpose and terms of the Distribution
Policy; the likely effects of the policy on
the Fund’s long-term total return (in
relation to market price and its net asset
value per common share (‘‘NAV’’)); the
expected relationship between the
Fund’s distribution rate on its common
shares under the policy and the Fund’s
total return (in relation to NAV);
whether the rate of distribution is
anticipated to exceed such Fund’s
expected total return in relation to its
NAV; and any foreseeable material
effects of the policy on the Fund’s longterm total return (in relation to market
price and NAV). The Independent
Directors will also consider what
conflicts of interest the Adviser and the
affiliated persons of the Adviser and the
Fund might have with respect to the
adoption or implementation of the
Distribution Policy. Applicants state
that, only after considering such
information will the Board, including
the Independent Directors, of each Fund
approve a Distribution Policy and in
connection with such approval will
determine that the Distribution Policy is
consistent with a Fund’s investment
objective(s) and in the best interests of
the Fund’s common shareholders.
4. Applicants state that the purpose of
a Distribution Policy, generally, would
be to permit a Fund to distribute over
the course of each year, through
periodic distributions in relatively equal
amounts (plus any required special
distributions) that are comprised of
payments received from portfolio
holdings, supplemental amounts
generally representing capital gains or,
possibly, returns of capital that may
represent unrealized capital gains. The
Fund seeks to establish a distribution
rate that approximates that Fund’s
projected total return that can
reasonably be expected to be generated
by the Fund over an extended period of
time, although the distribution rate will
not be solely dependent on the amount
of income earned or capital gains
realized by the Fund. Under the
Distribution Policy of a Fund, such
Fund would distribute to its respective
common shareholders a fixed
percentage of the market price of such
Fund’s common shares at a particular
point in time or a fixed percentage of
NAV at a particular time or a fixed
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amount per common share, any of
which may be adjusted from time to
time. It is anticipated that under a
Distribution Policy, the minimum
annual distribution rate with respect to
a Fund’s common shares would be
independent of the Fund’s performance
during any particular period but would
be expected to correlate with the Fund’s
performance over time. Except for
extraordinary distributions and
potential increases or decreases in the
amount of the distributions in the final
dividend period in light of a Fund’s
projected performance for the entire
calendar year and to enable the Fund to
comply with the distribution
requirements of Subchapter M of the
Internal Revenue Code (‘‘Code’’) for the
calendar year, each distribution on the
Fund’s common shares would be at the
stated rate then in effect.
5. Applicants state that prior to the
implementation of a Distribution Policy
for any Fund in reliance on the order,
the Board of such Fund will have
adopted policies and procedures under
rule 38a–1 under the Act that: (i) Are
reasonably designed to ensure that all
notices required to be sent to the Fund’s
shareholders pursuant to section 19(a)
of the Act, rule 19a–1 thereunder and
condition 4 below (each a ‘‘19(a)
Notice’’) include the disclosure required
by rule 19a–1 under the Act and by
condition 2(a) below, and that all other
written communications by the Fund or
its agents regarding distributions under
the Distribution Policy include the
disclosure required by condition 3(a)
below; and (ii) require the Fund to keep
records that demonstrate its compliance
with all of the conditions of the order
and that are necessary for such Fund to
form the basis for, or demonstrate the
calculation of, the amounts disclosed in
its 19(a) Notices.
Applicants’ Legal Analysis
1. Section 19(b) of the Act generally
makes it unlawful for any registered
investment company to make long-term
capital gains distributions more than
once every twelve months. Rule 19b–1
limits the number of capital gains
dividends, as defined in section
852(b)(3)(C) of the Code
(‘‘distributions’’), that a fund may make
with respect to any one taxable year to
one, plus a supplemental distribution
made pursuant to section 855 of the
Code not exceeding 10% of the total
amount distributed for the year, plus
one additional capital gain dividend
made in whole or in part to avoid the
excise tax under section 4982 of the
Code.
2. Section 6(c) of the Act provides, in
relevant part, that the Commission may
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exempt any person or transaction from
any provision of the Act to the extent
that such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act.
3. Applicants state that one of the
concerns leading to the enactment of
section 19(b) and adoption of rule
19b–1 was that shareholders might be
unable to distinguish between frequent
distributions of capital gains and
dividends from investment income.
Applicants state, however, that rule
19a–1 effectively addresses this concern
by requiring that distributions (or the
confirmation of the reinvestment
thereof) estimated to be sourced in part
from capital gains or capital be
accompanied by a separate statement
showing the sources of the distribution
(e.g., estimated net income, net shortterm capital gains, net long-term capital
gains and/or return of capital).
Applicants state that similar
information is included in the Funds’
annual reports to shareholders and on
the Internal Revenue Service Form 1099
DIV, which is sent to each common and
preferred shareholder who received
distributions during a particular year.
4. Applicants further state that each
Fund will make the additional
disclosures required by the conditions
set forth below, and each Fund will
adopt compliance policies and
procedures in accordance with rule
38a–1 under the Act to ensure that all
required 19(a) Notices and disclosures
are sent to shareholders. Applicants
state that the information required by
section 19(a), rule 19a–1, the
Distribution Policy, the policies and
procedures under rule 38a–1 noted
above, and the conditions listed below
will help ensure that each Fund’s
shareholders are provided sufficient
information to understand that their
periodic distributions are not tied to a
Fund’s net investment income (which
for this purpose is the Fund’s taxable
income other than from capital gains)
and realized capital gains to date, and
may not represent yield or investment
return. Accordingly, applicants assert
that continuing to subject the Funds to
section 19(b) and rule 19b–1 would
afford shareholders no extra protection.
5. Applicants note that section 19(b)
and rule 19b–1 also were intended to
prevent certain improper sales practices,
including, in particular, the practice of
urging an investor to purchase shares of
a fund on the basis of an upcoming
capital gains dividend (‘‘selling the
dividend’’), where the dividend would
result in an immediate corresponding
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reduction in NAV and would be in
effect a taxable return of the investor’s
capital. Applicants submit that the
‘‘selling the dividend’’ concern should
not apply to closed-end investment
companies, such as the Funds.2
According to applicants, if the
underlying concern extends to
secondary market purchases of shares of
closed-end funds that are subject to a
large upcoming capital gains dividend,
adoption of a periodic distribution plan
actually helps minimize the concern by
avoiding, through periodic
distributions, any buildup of large endof-the-year distributions.
6. Applicants also note that the
common stock of closed-end funds often
trades in the marketplace at a discount
to its NAV. Applicants believe that this
discount may be reduced if the Funds
are permitted to pay relatively frequent
dividends on their common shares at a
consistent rate, whether or not those
dividends contain an element of longterm capital gains.
7. Applicants assert that the
application of rule 19b–1 to a
Distribution Policy actually could have
an inappropriate influence on portfolio
management decisions. Applicants state
that, in the absence of an exemption
from rule 19b–1, the adoption of a
periodic distribution plan imposes
pressure on management (i) not to
realize any net long-term capital gains
until the point in the year that the fund
can pay all of its remaining distributions
in accordance with rule 19b–1, and (ii)
not to realize any long-term capital
gains during any particular year in
excess of the amount of the aggregate
pay-out for the year (since as a practical
matter excess gains must be distributed
and accordingly would not be available
to satisfy pay-out requirements in
following years), notwithstanding that
purely investment considerations might
favor realization of long-term gains at
different times or in different amounts.
Applicants assert that by limiting the
number of long-term capital gain
dividends that a Fund may make with
respect to any one year, rule 19b–1 may
prevent the normal and efficient
operation of a periodic distribution plan
whenever that Fund’s realized net longterm capital gains in any year exceed
2 Applicants note that none Funds currently
advised by BIM, including INF, HHY, BOI, or HTR,
offer or intend to offer their shares by means of a
shelf registration statement. However, to the extent
that any Fund may do so in the future, shares will
be offered in this manner only when they are
trading at a premium to NAV, and not on the basis
of an upcoming capital gains dividend, thus
minimizing the likelihood of improper fund share
sales practices. Any such offering of shares of a
Fund will be made in compliance with condition
6 below.
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the total of the periodic distributions
that may include such capital gains
under the rule.
8. Applicants also assert that rule
19b–1 may force fixed regular periodic
distributions under a periodic
distribution plan to be funded with
returns of capital 3 (to the extent net
investment income and realized shortterm capital gains are insufficient to
fund the distribution), even though
realized net long-term capital gains
otherwise would be available. To
distribute all of a Fund’s long-term
capital gains within the limits in rule
19b–1, a Fund may be required to make
total distributions in excess of the
annual amount called for by its periodic
distribution plan, or to retain and pay
taxes on the excess amount. Applicants
assert that the requested order would
minimize these anomalous effects of
rule 19b–1 by enabling the Funds to
realize long-term capital gains as often
as investment considerations dictate
without fear of violating rule 19b–1.
9. Applicants state that Revenue
Ruling 89–81 under the Code requires
that a fund that seeks to qualify as a
regulated investment company under
the Code and that has both common
stock and preferred shares outstanding
designate the types of income, e.g.,
investment income and capital gains, in
the same proportion as the total
distributions distributed to each class
for the tax year. To satisfy the
proportionate designation requirements
of Revenue Ruling 89–81, whenever a
fund has realized a long-term capital
gain with respect to a given tax year, the
fund must designate the required
proportionate share of such capital gain
to be included in common and preferred
share dividends. Applicants state that
although rule 19b–1 allows a fund some
flexibility with respect to the frequency
of capital gains distributions, a fund
might use all of the exceptions available
under the rule for a tax year and still
need to distribute additional capital
gains allocated to the preferred shares to
comply with Revenue Ruling 89–81.
10. Applicants assert that the
potential abuses addressed by section
19(b) and rule 19b–1 do not arise with
respect to preferred shares issued by a
closed-end fund. Applicants assert that
such distributions generally are either
fixed or determined in periodic auctions
by reference to short-term interest rates
rather than by reference to performance
of the issuer, and Revenue Ruling 89–
81 determines the proportion of such
3 Returns of capital as used in the application
means return of capital for financial accounting
purposes and not for tax accounting purposes.
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54355
distributions that are comprised of longterm capital gains.
11. Applicants also submit that the
‘‘selling the dividend’’ concern is not
applicable to preferred shares, which
entitles a holder to no more than a
specified periodic dividend at a fixed
rate or the rate determined by the
market, and, like a debt security, is
priced based upon its liquidation
preference, dividend rate, credit quality,
and frequency of payment. Applicants
state that investors buy preferred shares
for the purpose of receiving payments at
the frequency bargained for, and any
application of rule 19b–1 to preferred
shares would be contrary to the
expectation of investors.
12. Applicants request an order under
section 6(c) of the Act granting an
exemption from the provisions of
section 19(b) of the Act and rule 19b–
1 thereunder to permit each Fund to
distribute periodic capital gain
dividends (as defined in section
852(b)(3)(C) of the Code) as frequently
as monthly in any one taxable year in
respect of its common shares and as
often as specified by, or determined in
accordance with the terms of, any
preferred shares issued by the Fund.
Applicants’ Conditions
Applicants agree that, with respect to
each Fund seeking to rely on the order,
the order will be subject to the following
conditions:
1. Compliance Review and Reporting.
The Fund’s chief compliance officer
will: (a) Report to the Fund’s Board, no
less frequently than once every three
months or at the next regularly
scheduled quarterly Board meeting,
whether (i) the Fund and its Adviser
have complied with the conditions of
the order, and (ii) a material compliance
matter (as defined in rule 38a–1(e)(2)
under the Act) has occurred with
respect to such conditions; and (b)
review the adequacy of the policies and
procedures adopted by the Board no less
frequently than annually.
2. Disclosures to Fund Shareholders.
(a) Each 19(a) Notice disseminated to
the holders of the Fund’s common
shares, in addition to the information
required by section19(a) and rule
19a–1:
(i) Will provide, in a tabular or
graphical format:
(1) The amount of the distribution, on
a per common share basis, together with
the amounts of such distribution
amount, on a per common share basis
and as a percentage of such distribution
amount, from estimated: (A) Net
investment income; (B) net realized
short-term capital gains; (C) net realized
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long-term capital gains; and (D) return
of capital or other capital source;
(2) the fiscal year-to-date cumulative
amount of distributions, on a per
common share basis, together with the
amounts of such cumulative amount, on
a per common share basis and as a
percentage of such cumulative amount
of distributions, from estimated: (A) Net
investment income; (B) net realized
short-term capital gains; (C) net realized
long-term capital gains; and (D) return
of capital or other capital source;
(3) the average annual total return in
relation to the change in NAV for the 5year period (or, if the Fund’s history of
operations is less than five years, the
time period commencing immediately
following the Fund’s first public
offering) ending on the last day of the
month ended immediately prior to the
most recent distribution record date
compared to the current fiscal period’s
annualized distribution rate expressed
as a percentage of NAV as of the last day
of the month prior to the most recent
distribution record date; and (4) the
cumulative total return in relation to the
change in NAV from the last completed
fiscal year to the last day of the month
prior to the most recent distribution
record date compared to the fiscal yearto-date cumulative distribution rate
expressed as a percentage of NAV as of
the last day of the month prior to the
most recent distribution record date.
Such disclosure shall be made in a
type size at least as large and as
prominent as the estimate of the sources
of the current distribution; and
(ii) Will include the following
disclosure:
(1) ‘‘You should not draw any
conclusions about the Fund’s
investment performance from the
amount of this distribution or from the
terms of the Fund’s Distribution
Policy’’;
(2) ‘‘The Fund estimates that it has
distributed more than its income and
net realized capital gains; therefore, a
portion of your distribution may be a
return of capital. A return of capital may
occur, for example, when some or all of
the money that you invested in the
Fund is paid back to you. A return of
capital distribution does not necessarily
reflect the Fund’s investment
performance and should not be
confused with ‘yield’ or ‘income’ ’’; 4
and
(3) ‘‘The amounts and sources of
distributions reported in this 19(a)
Notice are only estimates and are not
4 The disclosure in condition 2(a)(ii)(2) will be
included only if the current distribution or the
fiscal year-to-date cumulative distributions are
estimated to include a return of capital.
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being provided for tax reporting
purposes. The actual amounts and
sources of the amounts for tax reporting
purposes will depend upon the Fund’s
investment experience during the
remainder of its fiscal year and may be
subject to changes based on tax
regulations. The Fund will send you a
Form 1099–DIV for the calendar year
that will tell you how to report these
distributions for federal income tax
purposes.’’
Such disclosure shall be made in a
type size at least as large as and as
prominent as any other information in
the 19(a) Notice and placed on the same
page in close proximity to the amount
and the sources of the distribution.
(b) On the inside front cover of each
report to shareholders under rule 30e–
1 under the Act, the Fund will:
(i) Describe the terms of the
Distribution Policy (including the fixed
amount or fixed percentage of the
distributions and the frequency of the
distributions);
(ii) include the disclosure required by
condition 2(a)(ii)(1) above;
(iii) state, if applicable, that the
Distribution Policy provides that the
Board of the Fund may amend or
terminate the Distribution Policy at any
time without prior notice to Fund
shareholders; and
(iv) describe any reasonably
foreseeable circumstances that might
cause the Fund to terminate the
Distribution Policy and any reasonably
foreseeable consequences of such
termination.
(c) Each report provided to
shareholders of a Fund under rule 30e–
1 under the Act and each prospectus
filed with the Commission on Form N–
2 under the Act, will provide the Fund’s
total return in relation to changes in
NAV in the financial highlights table
and in any discussion about the Fund’s
total return.
3. Disclosure to Shareholders,
Prospective Shareholders and Third
Parties.
(a) The Fund will include the
information contained in the relevant
19(a) Notice, including the disclosure
required by condition 2(a)(ii) above, in
any written communication (other than
a communication on Form 1099) about
the Distribution Policy or distributions
under the Distribution Policy by the
Fund, or agents that the Fund has
authorized to make such
communication on the Fund’s behalf, to
any Fund common shareholder,
prospective common shareholder or
third-party information provider;
(b) The Fund will issue,
contemporaneously with the issuance of
any 19(a) Notice, a press release
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containing the information in the 19(a)
Notice and will file with the
Commission the information contained
in such 19(a) Notice, including the
disclosure required by condition 2(a)(ii)
above, as an exhibit to its next filed
Form N–CSR; and
(c) The Fund will post prominently a
statement on its (or the Adviser’s) Web
site containing the information in each
19(a) Notice, including the disclosure
required by condition 2(a)(ii) above, and
will maintain such information on such
Web site for at least 24 months.
4. Delivery of 19(a) Notices to
Beneficial Owners. If a broker, dealer,
bank or other person (‘‘financial
intermediary’’) holds common shares
issued by the Fund in nominee name, or
otherwise, on behalf of a beneficial
owner, the Fund: (a) Will request that
the financial intermediary, or its agent,
forward the 19(a) Notice to all beneficial
owners of the Fund’s shares held
through such financial intermediary; (b)
will provide, in a timely manner, to the
financial intermediary, or its agent,
enough copies of the 19(a) Notice
assembled in the form and at the place
that the financial intermediary, or its
agent, reasonably requests to facilitate
the financial intermediary’s sending of
the 19(a) Notice to each beneficial
owner of the Fund’s shares; and (c)
upon the request of any financial
intermediary, or its agent, that receives
copies of the 19(a) Notice, will pay the
financial intermediary, or its agent, the
reasonable expenses of sending the 19(a)
Notice to such beneficial owners.
5. Additional Board Determinations
for Funds Whose Common Shares
Trades at a Premium.
If:
(a) The Fund’s common shares have
traded on the stock exchange that they
primarily trade on at the time in
question at an average premium to NAV
equal to or greater than 10%, as
determined on the basis of the average
of the discount or premium to NAV of
the Fund’s common shares as of the
close of each trading day over a 12-week
rolling period (each such 12-week
rolling period ending on the last trading
day of each week); and
(b) The Fund’s annualized
distribution rate for such 12-week
rolling period, expressed as a percentage
of NAV as of the ending date of such 12week rolling period, is greater than the
Fund’s average annual total return in
relation to the change in NAV over the
2-year period ending on the last day of
such 12-week rolling period; then:
(i) At the earlier of the next regularly
scheduled meeting or within four
months of the last day of such 12-week
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rolling period, the Board, including a
majority of the Independent Directors:
(1) Will request and evaluate, and the
Adviser will furnish, such information
as may be reasonably necessary to make
an informed determination of whether
the Distribution Policy should be
continued or continued after
amendment;
(2) will determine whether
continuation, or continuation after
amendment, of the Distribution Policy is
consistent with the Fund’s investment
objective(s) and policies and is in the
best interests of the Fund and its
shareholders, after considering the
information in condition 5(b)(i)(1)
above; including, without limitation:
(A) Whether the Distribution Policy is
accomplishing its purpose(s);
(B) the reasonably foreseeable
material effects of the Distribution
Policy on the Fund’s long-term total
return in relation to the market price
and NAV of the Fund’s common shares;
and
(C) the Fund’s current distribution
rate, as described in condition 5(b)
above, compared with the Fund’s
average annual taxable income or total
return over the two-year period, as
described in condition 5(b), or such
longer period as the Board deems
appropriate; and
(3) based upon that determination,
will approve or disapprove the
continuation, or continuation after
amendment, of the Distribution Policy;
and
(ii) The Board will record the
information considered by it, including
its consideration of the factors listed in
condition 5(b)(i)(2) above, and the basis
for its approval or disapproval of the
continuation, or continuation after
amendment, of the Distribution Policy
in its meeting minutes, which must be
made and preserved for a period of not
less than six years from the date of such
meeting, the first two years in an easily
accessible place.
6. Public Offerings. The Fund will not
make a public offering of its common
shares other than:
(a) A rights offering below NAV to
holders of the Fund’s common shares;
(b) an offering in connection with a
dividend reinvestment plan, merger,
consolidation, acquisition, spin-off or
reorganization of the Fund; or
(c) an offering other than an offering
described in conditions 6(a) and 6(b)
above, provided that, with respect to
such other offering:
(i) The Fund’s annualized distribution
rate for the six months ending on the
last day of the month ended
immediately prior to the most recent
VerDate Sep<11>2014
14:19 Sep 08, 2015
Jkt 235001
distribution record date,5 expressed as a
percentage of NAV as of such date, is no
more than 1 percentage point greater
than the Fund’s average annual total
return for the 5-year period ending on
such date; 6 and
(ii) the transmittal letter
accompanying any registration
statement filed with the Commission in
connection with such offering discloses
that the Fund has received an order
under section 19(b) to permit it to make
periodic distributions of long-term
capital gains with respect to its common
shares as frequently as twelve times
each year, and as frequently as
distributions are specified by or
determined in accordance with the
terms of any outstanding preferred
shares as such Fund may issue.
7. Amendments to Rule 19b–1.
The requested order will expire on the
effective date of any amendment to rule
19b–1 that provides relief permitting
certain closed-end investment
companies to make periodic
distributions of long-term capital gains
with respect to their outstanding
common shares as frequently as twelve
times each year.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–22602 Filed 9–8–15; 8:45 am]
54357
Rule 19b–4 thereunder,2 a proposed rule
change to amend NYSE Arca Equities
Rule 5.2(j)(3), Commentary .02 relating
to the listing of Investment Company
Units based on municipal bond indexes.
The proposed rule change was
published for comment in the Federal
Register on February 4, 2015.3 On
March 19, 2015, pursuant to section
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to disapprove the proposed
rule change.5 On May 4, 2015, the
Commission published an order
instituting proceedings under section
19(b)(2)(B) of the Act 6 to determine
whether to approve or disapprove the
proposed rule change.7 On July 30,
2015, the Commission issued a notice of
designation of a longer period for
Commission action on proceedings to
determine whether to approve or
disapprove the proposed rule change.8
The Commission has received no
comment letters on the proposed rule
change.
Pursuant to section 19(b)(1) 9 of the
Act 10 and Rule 19b–4 thereunder,11
notice is hereby given that, on August
28, 2015, the Exchange filed with the
Commission Amendment No. 1 to the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange.12 The
BILLING CODE 8011–01–P
2 17
CFR 240.19b–4.
Securities Exchange Act Release No. 74175
(Jan. 29, 2015), 80 FR 6150 (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 74534,
80 FR 15834 (Mar. 25, 2015). The Commission
designated a longer period within which to take
action on the proposed rule change and designated
May 5, 2015, as the date by which it should
approve, disapprove, or institute proceedings to
determine whether to disapprove the proposed rule
change.
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 74863
(May 4, 2015), 80 FR 26591 (May 8, 2015) (‘‘Order
Instituting Proceedings’’). Specifically, the
Commission instituted proceedings to allow for
additional analysis of the proposed rule change’s
consistency with Section 6(b)(5) of the Act, which
requires, among other things, that the rules of a
national securities exchange be ‘‘designed to
prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles
of trade,’’ and ‘‘to protect investors and the public
interest.’’ See id.
8 See Securities Exchange Act Release No. 75569,
80 FR 46627 (Aug. 5, 2015). The Commission
designated a longer period within which to take
action on the proposed rule change and designated
October 2, 2015 as the date by which it should
approve or disapprove the proposed rule change.
9 15 U.S.C. 78s(b)(1).
10 15 U.S.C. 78a.
11 17 CFR 240.19b–4.
12 Amendment No. 1 replaces SR–NYSEArca–
2015–01 as originally filed and supersedes such
3 See
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75811; File No. SR–
NYSEArca–2015–01]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of
Amendment No. 1 to Proposed Rule
Change To Amend NYSE Arca Equities
Rule 5.2(j)(3), Commentary .02 Relating
to Listing of Investment Company
Units Based on Municipal Bond
Indexes
September 2, 2015.
On January 16, 2015, NYSE Arca, Inc.
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and
5 If the Fund has been in operation fewer than six
months, the measured period will begin
immediately following the Fund’s first public
offering.
6 If the Fund has been in operation fewer than five
years, the measured period will begin immediately
following the Fund’s first public offering.
1 15 U.S.C. 78s(b)(1).
PO 00000
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Sfmt 4703
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09SEN1
]]>Agencies
[Federal Register Volume 80, Number 174 (Wednesday, September 9, 2015)]
[Notices]
[Pages 54353-54357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-22602]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31802; File No. 812-14456]
Brookfield Global Listed Infrastructure Income Fund Inc., et al.;
Notice of Application
September 1, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 19(b) of
the Act and rule 19b-1 under the Act.
-----------------------------------------------------------------------
Applicants: Brookfield Global Listed Infrastructure Income Fund
Inc. (``INF''), Brookfield High Income Fund Inc. (``HHY''), Brookfield
Mortgage Opportunity Income Fund Inc. (``BOI''), Brookfield Total
Return Fund Inc. (``HTR,'' together with INF, HHY, and BOI, the
``Funds''), and Brookfield Investment Management Inc. (``BIM'').
SUMMARY: Applicants request an order to permit certain registered
closed-end investment companies to make periodic distributions of long-
term capital gains with respect to their outstanding common shares as
frequently as monthly in any one taxable year, and as frequently as
distributions are specified by or in accordance with the terms of any
outstanding preferred shares that such investment companies may issue.
DATES: Filing Dates: The application was filed on June 6, 2015 and
amended on August 13, 2015.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on September 28, 2015 and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090; Applicants, Brookfield Place,
250 Vesey Street, New York, NY 10281-1023.
FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202)
551-6870, or Mary Kay Frech, Branch Chief, at (202) 551-6821 (Division
of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. INF, HHY, BOI and HRT are Maryland corporations registered as
closed-end management investment companies.\1\ INF's investment
objective is to provide a high total return, with an emphasis on
income, which it seeks to achieve by investing in publicly traded
equity securities of infrastructure companies listed on a domestic or
foreign exchange. HHY's primary investment objective is to seek high
current income by investing in high yield bonds, debentures, notes,
corporate loans, convertible debentures and other debt instruments.
BOI's primary investment objective is to seek high total investment
return by investing primarily in mortgage-related debt securities and
other mortgage-related instruments. HTR's primary investment objective
is to provide a high total return, including short and long-term
capital gains and a high level of current income by investing primarily
in U.S. Treasury, mortgage-backed, asset-backed and high-yield
corporate securities. The common shares of each of the Funds are listed
and traded on the New York Stock Exchange. Although none of the Funds
currently intend to issue preferred shares, the board of directors
(``Board'') of each Fund may authorize the issuance of preferred shares
in the future.
---------------------------------------------------------------------------
\1\ All existing registered closed-end investment companies that
currently intend to rely on the order have been named as applicants.
Applicants request that the order also apply to each other
registered closed-end investment company advised or to be advised in
the future by BIM or by an entity controlling, controlled by, or
under common control (within the meaning of section 2(a)(9) of the
Act) with BIM (including any successor in interest) (each such
entity, including BIM, the ``Adviser'') that in the future seeks to
rely on the order (such investment companies, together with INF,
HHY, BOI and HTR, are collectively, the ``Funds'' and individually,
a ``Fund''). Any Fund that may rely on the order in the future will
comply with the terms and conditions of the application. A successor
in interest is limited to entities that result from a reorganization
into another jurisdiction or a change in the type of business
organization.
---------------------------------------------------------------------------
2. BIM, a Delaware corporation, is registered under the Investment
Advisers Act of 1940 (the ``Advisers Act'') as an investment adviser.
BIM serves as investment adviser to INF, HHY, BOI and HTR. Each Adviser
to a Fund will be registered under the Advisers Act.
3. Applicants believe that investors in closed-end funds may prefer
an investment vehicle that provides regular current income through
fixed distribution policies that would be available through a
distribution policy (``Distribution Policy''). Applicants state that
prior to a Fund's implementing a Distribution Policy in reliance on the
order, the Board of each Fund, including a majority of the directors
who are not ``interested persons'' of the Fund, as defined in section
2(a)(19) of
[[Page 54354]]
the Act (the ``Independent Directors''), will request, and the Adviser
will provide, such information as is reasonably necessary to make an
informed determination of whether the Board should adopt a proposed
Distribution Policy. In particular, the Board and the Independent
Directors will review information regarding the purpose and terms of
the Distribution Policy; the likely effects of the policy on the Fund's
long-term total return (in relation to market price and its net asset
value per common share (``NAV'')); the expected relationship between
the Fund's distribution rate on its common shares under the policy and
the Fund's total return (in relation to NAV); whether the rate of
distribution is anticipated to exceed such Fund's expected total return
in relation to its NAV; and any foreseeable material effects of the
policy on the Fund's long-term total return (in relation to market
price and NAV). The Independent Directors will also consider what
conflicts of interest the Adviser and the affiliated persons of the
Adviser and the Fund might have with respect to the adoption or
implementation of the Distribution Policy. Applicants state that, only
after considering such information will the Board, including the
Independent Directors, of each Fund approve a Distribution Policy and
in connection with such approval will determine that the Distribution
Policy is consistent with a Fund's investment objective(s) and in the
best interests of the Fund's common shareholders.
4. Applicants state that the purpose of a Distribution Policy,
generally, would be to permit a Fund to distribute over the course of
each year, through periodic distributions in relatively equal amounts
(plus any required special distributions) that are comprised of
payments received from portfolio holdings, supplemental amounts
generally representing capital gains or, possibly, returns of capital
that may represent unrealized capital gains. The Fund seeks to
establish a distribution rate that approximates that Fund's projected
total return that can reasonably be expected to be generated by the
Fund over an extended period of time, although the distribution rate
will not be solely dependent on the amount of income earned or capital
gains realized by the Fund. Under the Distribution Policy of a Fund,
such Fund would distribute to its respective common shareholders a
fixed percentage of the market price of such Fund's common shares at a
particular point in time or a fixed percentage of NAV at a particular
time or a fixed amount per common share, any of which may be adjusted
from time to time. It is anticipated that under a Distribution Policy,
the minimum annual distribution rate with respect to a Fund's common
shares would be independent of the Fund's performance during any
particular period but would be expected to correlate with the Fund's
performance over time. Except for extraordinary distributions and
potential increases or decreases in the amount of the distributions in
the final dividend period in light of a Fund's projected performance
for the entire calendar year and to enable the Fund to comply with the
distribution requirements of Subchapter M of the Internal Revenue Code
(``Code'') for the calendar year, each distribution on the Fund's
common shares would be at the stated rate then in effect.
5. Applicants state that prior to the implementation of a
Distribution Policy for any Fund in reliance on the order, the Board of
such Fund will have adopted policies and procedures under rule 38a-1
under the Act that: (i) Are reasonably designed to ensure that all
notices required to be sent to the Fund's shareholders pursuant to
section 19(a) of the Act, rule 19a-1 thereunder and condition 4 below
(each a ``19(a) Notice'') include the disclosure required by rule 19a-1
under the Act and by condition 2(a) below, and that all other written
communications by the Fund or its agents regarding distributions under
the Distribution Policy include the disclosure required by condition
3(a) below; and (ii) require the Fund to keep records that demonstrate
its compliance with all of the conditions of the order and that are
necessary for such Fund to form the basis for, or demonstrate the
calculation of, the amounts disclosed in its 19(a) Notices.
Applicants' Legal Analysis
1. Section 19(b) of the Act generally makes it unlawful for any
registered investment company to make long-term capital gains
distributions more than once every twelve months. Rule 19b-1 limits the
number of capital gains dividends, as defined in section 852(b)(3)(C)
of the Code (``distributions''), that a fund may make with respect to
any one taxable year to one, plus a supplemental distribution made
pursuant to section 855 of the Code not exceeding 10% of the total
amount distributed for the year, plus one additional capital gain
dividend made in whole or in part to avoid the excise tax under section
4982 of the Code.
2. Section 6(c) of the Act provides, in relevant part, that the
Commission may exempt any person or transaction from any provision of
the Act to the extent that such exemption is necessary or appropriate
in the public interest and consistent with the protection of investors
and the purposes fairly intended by the policy and provisions of the
Act.
3. Applicants state that one of the concerns leading to the
enactment of section 19(b) and adoption of rule 19b-1 was that
shareholders might be unable to distinguish between frequent
distributions of capital gains and dividends from investment income.
Applicants state, however, that rule 19a-1 effectively addresses this
concern by requiring that distributions (or the confirmation of the
reinvestment thereof) estimated to be sourced in part from capital
gains or capital be accompanied by a separate statement showing the
sources of the distribution (e.g., estimated net income, net short-term
capital gains, net long-term capital gains and/or return of capital).
Applicants state that similar information is included in the Funds'
annual reports to shareholders and on the Internal Revenue Service Form
1099 DIV, which is sent to each common and preferred shareholder who
received distributions during a particular year.
4. Applicants further state that each Fund will make the additional
disclosures required by the conditions set forth below, and each Fund
will adopt compliance policies and procedures in accordance with rule
38a-1 under the Act to ensure that all required 19(a) Notices and
disclosures are sent to shareholders. Applicants state that the
information required by section 19(a), rule 19a-1, the Distribution
Policy, the policies and procedures under rule 38a-1 noted above, and
the conditions listed below will help ensure that each Fund's
shareholders are provided sufficient information to understand that
their periodic distributions are not tied to a Fund's net investment
income (which for this purpose is the Fund's taxable income other than
from capital gains) and realized capital gains to date, and may not
represent yield or investment return. Accordingly, applicants assert
that continuing to subject the Funds to section 19(b) and rule 19b-1
would afford shareholders no extra protection.
5. Applicants note that section 19(b) and rule 19b-1 also were
intended to prevent certain improper sales practices, including, in
particular, the practice of urging an investor to purchase shares of a
fund on the basis of an upcoming capital gains dividend (``selling the
dividend''), where the dividend would result in an immediate
corresponding
[[Page 54355]]
reduction in NAV and would be in effect a taxable return of the
investor's capital. Applicants submit that the ``selling the dividend''
concern should not apply to closed-end investment companies, such as
the Funds.\2\ According to applicants, if the underlying concern
extends to secondary market purchases of shares of closed-end funds
that are subject to a large upcoming capital gains dividend, adoption
of a periodic distribution plan actually helps minimize the concern by
avoiding, through periodic distributions, any buildup of large end-of-
the-year distributions.
---------------------------------------------------------------------------
\2\ Applicants note that none Funds currently advised by BIM,
including INF, HHY, BOI, or HTR, offer or intend to offer their
shares by means of a shelf registration statement. However, to the
extent that any Fund may do so in the future, shares will be offered
in this manner only when they are trading at a premium to NAV, and
not on the basis of an upcoming capital gains dividend, thus
minimizing the likelihood of improper fund share sales practices.
Any such offering of shares of a Fund will be made in compliance
with condition 6 below.
---------------------------------------------------------------------------
6. Applicants also note that the common stock of closed-end funds
often trades in the marketplace at a discount to its NAV. Applicants
believe that this discount may be reduced if the Funds are permitted to
pay relatively frequent dividends on their common shares at a
consistent rate, whether or not those dividends contain an element of
long-term capital gains.
7. Applicants assert that the application of rule 19b-1 to a
Distribution Policy actually could have an inappropriate influence on
portfolio management decisions. Applicants state that, in the absence
of an exemption from rule 19b-1, the adoption of a periodic
distribution plan imposes pressure on management (i) not to realize any
net long-term capital gains until the point in the year that the fund
can pay all of its remaining distributions in accordance with rule 19b-
1, and (ii) not to realize any long-term capital gains during any
particular year in excess of the amount of the aggregate pay-out for
the year (since as a practical matter excess gains must be distributed
and accordingly would not be available to satisfy pay-out requirements
in following years), notwithstanding that purely investment
considerations might favor realization of long-term gains at different
times or in different amounts. Applicants assert that by limiting the
number of long-term capital gain dividends that a Fund may make with
respect to any one year, rule 19b-1 may prevent the normal and
efficient operation of a periodic distribution plan whenever that
Fund's realized net long-term capital gains in any year exceed the
total of the periodic distributions that may include such capital gains
under the rule.
8. Applicants also assert that rule 19b-1 may force fixed regular
periodic distributions under a periodic distribution plan to be funded
with returns of capital \3\ (to the extent net investment income and
realized short-term capital gains are insufficient to fund the
distribution), even though realized net long-term capital gains
otherwise would be available. To distribute all of a Fund's long-term
capital gains within the limits in rule 19b-1, a Fund may be required
to make total distributions in excess of the annual amount called for
by its periodic distribution plan, or to retain and pay taxes on the
excess amount. Applicants assert that the requested order would
minimize these anomalous effects of rule 19b-1 by enabling the Funds to
realize long-term capital gains as often as investment considerations
dictate without fear of violating rule 19b-1.
---------------------------------------------------------------------------
\3\ Returns of capital as used in the application means return
of capital for financial accounting purposes and not for tax
accounting purposes.
---------------------------------------------------------------------------
9. Applicants state that Revenue Ruling 89-81 under the Code
requires that a fund that seeks to qualify as a regulated investment
company under the Code and that has both common stock and preferred
shares outstanding designate the types of income, e.g., investment
income and capital gains, in the same proportion as the total
distributions distributed to each class for the tax year. To satisfy
the proportionate designation requirements of Revenue Ruling 89-81,
whenever a fund has realized a long-term capital gain with respect to a
given tax year, the fund must designate the required proportionate
share of such capital gain to be included in common and preferred share
dividends. Applicants state that although rule 19b-1 allows a fund some
flexibility with respect to the frequency of capital gains
distributions, a fund might use all of the exceptions available under
the rule for a tax year and still need to distribute additional capital
gains allocated to the preferred shares to comply with Revenue Ruling
89-81.
10. Applicants assert that the potential abuses addressed by
section 19(b) and rule 19b-1 do not arise with respect to preferred
shares issued by a closed-end fund. Applicants assert that such
distributions generally are either fixed or determined in periodic
auctions by reference to short-term interest rates rather than by
reference to performance of the issuer, and Revenue Ruling 89-81
determines the proportion of such distributions that are comprised of
long-term capital gains.
11. Applicants also submit that the ``selling the dividend''
concern is not applicable to preferred shares, which entitles a holder
to no more than a specified periodic dividend at a fixed rate or the
rate determined by the market, and, like a debt security, is priced
based upon its liquidation preference, dividend rate, credit quality,
and frequency of payment. Applicants state that investors buy preferred
shares for the purpose of receiving payments at the frequency bargained
for, and any application of rule 19b-1 to preferred shares would be
contrary to the expectation of investors.
12. Applicants request an order under section 6(c) of the Act
granting an exemption from the provisions of section 19(b) of the Act
and rule 19b-1 thereunder to permit each Fund to distribute periodic
capital gain dividends (as defined in section 852(b)(3)(C) of the Code)
as frequently as monthly in any one taxable year in respect of its
common shares and as often as specified by, or determined in accordance
with the terms of, any preferred shares issued by the Fund.
Applicants' Conditions
Applicants agree that, with respect to each Fund seeking to rely on
the order, the order will be subject to the following conditions:
1. Compliance Review and Reporting. The Fund's chief compliance
officer will: (a) Report to the Fund's Board, no less frequently than
once every three months or at the next regularly scheduled quarterly
Board meeting, whether (i) the Fund and its Adviser have complied with
the conditions of the order, and (ii) a material compliance matter (as
defined in rule 38a-1(e)(2) under the Act) has occurred with respect to
such conditions; and (b) review the adequacy of the policies and
procedures adopted by the Board no less frequently than annually.
2. Disclosures to Fund Shareholders.
(a) Each 19(a) Notice disseminated to the holders of the Fund's
common shares, in addition to the information required by section19(a)
and rule 19a-1:
(i) Will provide, in a tabular or graphical format:
(1) The amount of the distribution, on a per common share basis,
together with the amounts of such distribution amount, on a per common
share basis and as a percentage of such distribution amount, from
estimated: (A) Net investment income; (B) net realized short-term
capital gains; (C) net realized
[[Page 54356]]
long-term capital gains; and (D) return of capital or other capital
source;
(2) the fiscal year-to-date cumulative amount of distributions, on
a per common share basis, together with the amounts of such cumulative
amount, on a per common share basis and as a percentage of such
cumulative amount of distributions, from estimated: (A) Net investment
income; (B) net realized short-term capital gains; (C) net realized
long-term capital gains; and (D) return of capital or other capital
source;
(3) the average annual total return in relation to the change in
NAV for the 5-year period (or, if the Fund's history of operations is
less than five years, the time period commencing immediately following
the Fund's first public offering) ending on the last day of the month
ended immediately prior to the most recent distribution record date
compared to the current fiscal period's annualized distribution rate
expressed as a percentage of NAV as of the last day of the month prior
to the most recent distribution record date; and (4) the cumulative
total return in relation to the change in NAV from the last completed
fiscal year to the last day of the month prior to the most recent
distribution record date compared to the fiscal year-to-date cumulative
distribution rate expressed as a percentage of NAV as of the last day
of the month prior to the most recent distribution record date.
Such disclosure shall be made in a type size at least as large and
as prominent as the estimate of the sources of the current
distribution; and
(ii) Will include the following disclosure:
(1) ``You should not draw any conclusions about the Fund's
investment performance from the amount of this distribution or from the
terms of the Fund's Distribution Policy'';
(2) ``The Fund estimates that it has distributed more than its
income and net realized capital gains; therefore, a portion of your
distribution may be a return of capital. A return of capital may occur,
for example, when some or all of the money that you invested in the
Fund is paid back to you. A return of capital distribution does not
necessarily reflect the Fund's investment performance and should not be
confused with `yield' or `income' ''; \4\ and
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\4\ The disclosure in condition 2(a)(ii)(2) will be included
only if the current distribution or the fiscal year-to-date
cumulative distributions are estimated to include a return of
capital.
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(3) ``The amounts and sources of distributions reported in this
19(a) Notice are only estimates and are not being provided for tax
reporting purposes. The actual amounts and sources of the amounts for
tax reporting purposes will depend upon the Fund's investment
experience during the remainder of its fiscal year and may be subject
to changes based on tax regulations. The Fund will send you a Form
1099-DIV for the calendar year that will tell you how to report these
distributions for federal income tax purposes.''
Such disclosure shall be made in a type size at least as large as
and as prominent as any other information in the 19(a) Notice and
placed on the same page in close proximity to the amount and the
sources of the distribution.
(b) On the inside front cover of each report to shareholders under
rule 30e-1 under the Act, the Fund will:
(i) Describe the terms of the Distribution Policy (including the
fixed amount or fixed percentage of the distributions and the frequency
of the distributions);
(ii) include the disclosure required by condition 2(a)(ii)(1)
above;
(iii) state, if applicable, that the Distribution Policy provides
that the Board of the Fund may amend or terminate the Distribution
Policy at any time without prior notice to Fund shareholders; and
(iv) describe any reasonably foreseeable circumstances that might
cause the Fund to terminate the Distribution Policy and any reasonably
foreseeable consequences of such termination.
(c) Each report provided to shareholders of a Fund under rule 30e-1
under the Act and each prospectus filed with the Commission on Form N-2
under the Act, will provide the Fund's total return in relation to
changes in NAV in the financial highlights table and in any discussion
about the Fund's total return.
3. Disclosure to Shareholders, Prospective Shareholders and Third
Parties.
(a) The Fund will include the information contained in the relevant
19(a) Notice, including the disclosure required by condition 2(a)(ii)
above, in any written communication (other than a communication on Form
1099) about the Distribution Policy or distributions under the
Distribution Policy by the Fund, or agents that the Fund has authorized
to make such communication on the Fund's behalf, to any Fund common
shareholder, prospective common shareholder or third-party information
provider;
(b) The Fund will issue, contemporaneously with the issuance of any
19(a) Notice, a press release containing the information in the 19(a)
Notice and will file with the Commission the information contained in
such 19(a) Notice, including the disclosure required by condition
2(a)(ii) above, as an exhibit to its next filed Form N-CSR; and
(c) The Fund will post prominently a statement on its (or the
Adviser's) Web site containing the information in each 19(a) Notice,
including the disclosure required by condition 2(a)(ii) above, and will
maintain such information on such Web site for at least 24 months.
4. Delivery of 19(a) Notices to Beneficial Owners. If a broker,
dealer, bank or other person (``financial intermediary'') holds common
shares issued by the Fund in nominee name, or otherwise, on behalf of a
beneficial owner, the Fund: (a) Will request that the financial
intermediary, or its agent, forward the 19(a) Notice to all beneficial
owners of the Fund's shares held through such financial intermediary;
(b) will provide, in a timely manner, to the financial intermediary, or
its agent, enough copies of the 19(a) Notice assembled in the form and
at the place that the financial intermediary, or its agent, reasonably
requests to facilitate the financial intermediary's sending of the
19(a) Notice to each beneficial owner of the Fund's shares; and (c)
upon the request of any financial intermediary, or its agent, that
receives copies of the 19(a) Notice, will pay the financial
intermediary, or its agent, the reasonable expenses of sending the
19(a) Notice to such beneficial owners.
5. Additional Board Determinations for Funds Whose Common Shares
Trades at a Premium.
If:
(a) The Fund's common shares have traded on the stock exchange that
they primarily trade on at the time in question at an average premium
to NAV equal to or greater than 10%, as determined on the basis of the
average of the discount or premium to NAV of the Fund's common shares
as of the close of each trading day over a 12-week rolling period (each
such 12-week rolling period ending on the last trading day of each
week); and
(b) The Fund's annualized distribution rate for such 12-week
rolling period, expressed as a percentage of NAV as of the ending date
of such 12-week rolling period, is greater than the Fund's average
annual total return in relation to the change in NAV over the 2-year
period ending on the last day of such 12-week rolling period; then:
(i) At the earlier of the next regularly scheduled meeting or
within four months of the last day of such 12-week
[[Page 54357]]
rolling period, the Board, including a majority of the Independent
Directors:
(1) Will request and evaluate, and the Adviser will furnish, such
information as may be reasonably necessary to make an informed
determination of whether the Distribution Policy should be continued or
continued after amendment;
(2) will determine whether continuation, or continuation after
amendment, of the Distribution Policy is consistent with the Fund's
investment objective(s) and policies and is in the best interests of
the Fund and its shareholders, after considering the information in
condition 5(b)(i)(1) above; including, without limitation:
(A) Whether the Distribution Policy is accomplishing its
purpose(s);
(B) the reasonably foreseeable material effects of the Distribution
Policy on the Fund's long-term total return in relation to the market
price and NAV of the Fund's common shares; and
(C) the Fund's current distribution rate, as described in condition
5(b) above, compared with the Fund's average annual taxable income or
total return over the two-year period, as described in condition 5(b),
or such longer period as the Board deems appropriate; and
(3) based upon that determination, will approve or disapprove the
continuation, or continuation after amendment, of the Distribution
Policy; and
(ii) The Board will record the information considered by it,
including its consideration of the factors listed in condition
5(b)(i)(2) above, and the basis for its approval or disapproval of the
continuation, or continuation after amendment, of the Distribution
Policy in its meeting minutes, which must be made and preserved for a
period of not less than six years from the date of such meeting, the
first two years in an easily accessible place.
6. Public Offerings. The Fund will not make a public offering of
its common shares other than:
(a) A rights offering below NAV to holders of the Fund's common
shares;
(b) an offering in connection with a dividend reinvestment plan,
merger, consolidation, acquisition, spin-off or reorganization of the
Fund; or
(c) an offering other than an offering described in conditions 6(a)
and 6(b) above, provided that, with respect to such other offering:
(i) The Fund's annualized distribution rate for the six months
ending on the last day of the month ended immediately prior to the most
recent distribution record date,\5\ expressed as a percentage of NAV as
of such date, is no more than 1 percentage point greater than the
Fund's average annual total return for the 5-year period ending on such
date; \6\ and
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\5\ If the Fund has been in operation fewer than six months, the
measured period will begin immediately following the Fund's first
public offering.
\6\ If the Fund has been in operation fewer than five years, the
measured period will begin immediately following the Fund's first
public offering.
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(ii) the transmittal letter accompanying any registration statement
filed with the Commission in connection with such offering discloses
that the Fund has received an order under section 19(b) to permit it to
make periodic distributions of long-term capital gains with respect to
its common shares as frequently as twelve times each year, and as
frequently as distributions are specified by or determined in
accordance with the terms of any outstanding preferred shares as such
Fund may issue.
7. Amendments to Rule 19b-1.
The requested order will expire on the effective date of any
amendment to rule 19b-1 that provides relief permitting certain closed-
end investment companies to make periodic distributions of long-term
capital gains with respect to their outstanding common shares as
frequently as twelve times each year.
For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-22602 Filed 9-8-15; 8:45 am]
BILLING CODE 8011-01-P
