[Federal Register Volume 80, Number 70 (Monday, April 13, 2015)]
[Notices]
[Pages 19709-19713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08338]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31548; File No. 812-14437]


Sprott Focus Trust, Inc. and Sprott Asset Management LP; Notice 
of Application

April 7, 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: Sprott Focus Trust, Inc. (the ``Existing Fund'') and 
Sprott Asset Management LP (``Sprott Asset'').
    Summary of Application: 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 stock 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 stock that such 
investment companies may issue.
    Filing Date: The application was filed on March 27, 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 May 1, 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, Bibb L. Strench, 
Esq., Seward & Kissel LLP, 901 K Street NW., Washington, DC 20001.

FOR FURTHER INFORMATION CONTACT: Mark N. Zaruba, Senior Counsel, at 
(202) 551-6878, 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 http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicants' Representations

    1. The Existing Fund is a Maryland corporation registered under the 
Act as a closed-end management investment company.\1\ The Existing 
Fund's investment goal is long-term capital growth, which it seeks to 
achieve by investing in equity securities and non-convertible fixed 
income securities. Shares of the common stock of the Existing Fund are 
listed and traded on the NASDAQ Global Select Market. The Existing Fund 
had issued preferred stock all of which was redeemed on November 15, 
2012. 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 (as defined below).
---------------------------------------------------------------------------

    \1\ The only existing registered closed-end investment company 
that currently intends to rely on the order has been named as an 
applicant. Applicants request that the order also apply to each 
other registered closed-end investment company advised or to be 
advised in the future by Sprott Asset or by an entity controlling, 
controlled by, or under common control (within the meaning of 
section 2(a)(9) of the Act) with Sprott Asset (including any 
successor in interest) (each such entity, including Sprott Asset, 
the ``Adviser'') that in the future seeks to rely on the order (such 
investment companies, together with the Existing Fund, 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. Sprott Asset, a limited partnership organized under the laws of 
Canada, is registered under the Investment Advisers Act of 1940 (the 
``Advisers Act'') as an investment adviser. Sprott Asset provides 
investment advisory services to the Existing Fund. Each Adviser to a 
Fund will be registered as an investment adviser under the Advisers 
Act. Sprott Asset has engaged Sprott Asset Management USA Inc., which 
is registered as an investment adviser under the Advisers Act, as sub-
adviser for the Existing Fund.
    3. Pursuant to a prior order,\2\ the Existing Fund has established 
a periodic payout policy of paying quarterly distributions on its 
common stock.\3\ To maintain certainty for the distribution policy of 
the Existing Fund and the distribution policies that other Funds may 
adopt in the future (each, a ``Distribution Policy''), applicants 
request an order to permit each Fund to make periodic distributions 
that include long-term capital gains as frequently as 12 times in any 
one taxable year in respect of its common stock and as often as 
specified by, or determined in accordance with the terms of, any 
preferred stock issued.
---------------------------------------------------------------------------

    \2\ Royce Focus Trust, Inc., et al., Investment Company Act 
Release Nos. 30447 (April 4, 2013) (notice) and 30499 (April 30, 
2013) (order). The Existing Fund is seeking the requested order 
because it may no longer rely on this prior order as a result of the 
change of its investment adviser from Royce & Associates, LLC to 
Sprott Asset.
    \3\ The Existing Fund currently has no outstanding preferred 
stock.
---------------------------------------------------------------------------

    4. Applicants state that prior to a Fund's implementing a 
Distribution Policy in reliance on the requested order, the board of 
directors (the ``Board'') of such Fund, including a

[[Page 19710]]

majority of the directors who are not ``interested persons'' of the 
Fund, as defined in section 2(a)(19) of 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 the case of the Existing Fund, the Board approved a 
Distribution Policy substantially similar to the distribution policy 
that had been in place prior to the date of the application. 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 share of 
common stock (``NAV'')); the expected relationship between the Fund's 
distribution rate on its common stock under the policy and the Fund's 
total return (in relation to NAV); whether the rate of distribution 
would 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 also will 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 objectives and in the best interests of the holders of the 
Fund's common stock.
    5. 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), an amount closely 
approximating the total taxable income of such Fund during such year 
and, if so determined by its Board, all or a portion of returns of 
capital paid by portfolio companies to such Fund during the year. Under 
the Distribution Policy of a Fund, such Fund would distribute to its 
respective common stockholders a fixed percentage of the market price 
of such Fund's common stock at a particular point in time or a fixed 
percentage of NAV at a particular time or a fixed amount per share of 
common stock, 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 such Fund's common stock 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 final dividend periods in light of a Fund's 
performance for an 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 stock would be at the stated rate 
then in effect.
    6. 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 stockholders 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 the one of the concerns leading to the 
enactment of section 19(b) and adoption of rule 19b-1 was that 
stockholders 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 stockholders and on the Internal Revenue Service Form 
1099-DIV, which is sent to each common and preferred stockholder 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 stockholders. 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 
stockholders 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 stockholders no extra protection.
    5. Applicants note that section 19(b) and rule 19b-1 also were 
intended to prevent certain improper fund share 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

[[Page 19711]]

corresponding 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, which do not continuously distribute shares. 
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.
    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 stock 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 \4\ (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.
---------------------------------------------------------------------------

    \4\ 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 
stock 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 stock 
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 stock 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 
stock issued by a closed-end fund. Applicants assert that such 
distributions are either fixed or determined in periodic auctions or 
remarketings or are periodically reset 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 stock, 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 
stock for the purpose of receiving payments at the frequency bargained 
for, and any application of rule 19b-1 to preferred stock 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 stock and as often as specified by, or determined in accordance 
with the terms of, any preferred stock issued by the Fund.

Applicants' Conditions

    Applicants agree that, with respect to each Fund seeking to rely on 
the requested 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 Stockholders

    (a) Each 19(a) Notice disseminated to the holders of the Fund's 
common stock, 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 share of common stock 
basis, together with the amounts of such distribution amount, on a per 
share of common stock 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 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 share of common stock basis, together with

[[Page 19712]]

the amounts of such cumulative amount, on a per share of common stock 
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''' \5\; and
---------------------------------------------------------------------------

    \5\ 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.
---------------------------------------------------------------------------

    (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 stockholders 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 may amend or terminate the Distribution Policy at any 
time without prior notice to Fund stockholders; 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 stockholders 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 Stockholders, Prospective Stockholders 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 
stockholder, prospective stockholder 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 stock 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 stock 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 stock; 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 Stock Trades 
at a Premium

    If:
    (a) The Fund's common stock has 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 shares of 
common stock 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 rolling period, the 
Board, including a majority of the Independent Directors:

[[Page 19713]]

    (1) Will request and evaluate, and the Fund's 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 stockholders, 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 stock; 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 2-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 the Fund's common stock 
other than:
    (a) A rights offering below NAV to holders of the Fund's common 
stock;
    (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,\6\ 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; \7\ and
---------------------------------------------------------------------------

    \6\ If the Fund has been in operation fewer than six months, the 
measured period will begin immediately following the Fund's first 
public offering.
    \7\ If the Fund has been in operation fewer than five years, the 
measured period will begin immediately following the Fund's first 
public offering.
---------------------------------------------------------------------------

    (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 shares of common stock 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 shares of preferred stock 
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 stock as 
frequently as twelve times each year.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-08338 Filed 4-10-15; 8:45 am]
 BILLING CODE 8011-01-P