[Federal Register Volume 80, Number 114 (Monday, June 15, 2015)]
[Notices]
[Pages 34178-34182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14483]



[[Page 34178]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31665; File No. 812-14272]


Ares Dynamic Credit Allocation Fund, Inc., Ares Multi-Strategy 
Credit Fund, Inc., and Ares Capital Management II LLC; Notice of 
Application

June 9, 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.

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APPLICANTS: Ares Dynamic Credit Allocation Fund, Inc. (``ARDC''), Ares 
Multi-Strategy Credit Fund, Inc. (``ARMF''), and Ares Capital 
Management II LLC (``ACM'') (together, the ``Applicants'').

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 twelve times 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.

DATES: Filing Dates: The application was filed on January 31, 2014 and 
amended on September 16, 2014 and January 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 July 6, 2015 and should be accompanied by proof of service on 
applicants, in the form of an affidavit or, for lawyers, a certificate 
of service. Hearing requests should state the nature of the writer's 
interest, 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: Robert W. Errett, Deputy Secretary, U.S. Securities and 
Exchange Commission, 100 F Street NE., Washington, DC 20549-1090; 
Applicants, Daniel J. Hall, Esq., Ares Dynamic Credit Allocation Fund, 
Inc., Ares Capital Management II LLC, 2000 Avenue of the Stars, 12th 
Floor, Los Angeles, CA 90067.

FOR FURTHER INFORMATION CONTACT: Stephan N. Packs, Senior Counsel, at 
(202) 551-6853, or James M. Curtis, Branch Chief, at (202) 551-6712 
(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. ARDC and ARMF each is registered as a non-diversified, closed-
end management investment company organized as a Maryland 
corporation.\1\ The investment objective of each of ARDC and ARMF is to 
provide total return, primarily through current income and, 
secondarily, through capital appreciation. ARDC and ARMF each intends 
to pursue this objective by investing primarily in a broad portfolio of 
(i) secured loans made primarily to companies whose debt is rated below 
investment grade; (ii) corporate bonds that are expected to be 
primarily high yield issues rated below investment grade; and (iii) 
other fixed-income instruments of a similar nature that may be 
represented by derivatives; and (iv) securities issued by 
collateralized loan obligations. Shares of the common stock of each of 
ARDC and ARMF are listed and traded on the New York Stock Exchange. 
Each of ARDC and ARMF currently has no outstanding preferred stock and 
does not intend to issue any, but may do so in the future. 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).
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    \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 ACM or by an entity controlling, controlled by, or 
under common control (within the meaning of section 2(a)(9) of the 
Act) with ACM (including any successor in interest) (each such 
entity, including ACM, the ``Adviser'') that in the future seeks to 
rely on the order (such investment companies, together with ARDC and 
ARMF, 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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    2. ACM, a Delaware limited liability company, is registered under 
the Investment Advisers Act of 1940 (the ``Advisers Act'') as an 
investment adviser. ACM is the investment adviser to the Funds. Any 
sub-adviser to a Fund will be registered as an investment adviser under 
the Advisers Act or not subject to registration.
    3. Applicants state that prior to a Fund's implementing a 
distribution policy (``Distribution Policy'') in reliance on the order, 
the board of directors (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 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: (i) The purpose and terms of the 
Distribution Policy; (ii) 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'')); (iii) 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); (iv) 
whether the rate of distribution would exceed such Fund's expected 
total return in relation to its NAV; and (v) 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.
    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) an amount closely 
approximating the total taxable income of the Fund during the year and, 
if

[[Page 34179]]

determined by the 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 period in light of a Fund's 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 stock 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 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 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 the same information will be included in the 
Funds' annual reports to stockholders and on the Internal Revenue 
Service Form 1099 DIV, which will be 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 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 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 a closed-end investment company, 
such as each Fund, 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 a closed-end fund 
often trades in the marketplace at a discount to its NAV. Applicants 
believe that this discount may be reduced if a Fund is permitted to pay 
relatively frequent dividends on its 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-

[[Page 34180]]

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 \2\ (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.
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    \2\ 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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    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 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 twelve 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 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 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 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' \3\ ''; and
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    \3\ 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 
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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:
    (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)

[[Page 34182]]

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,\4\ 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; \5\ and
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    \4\ If the Fund has been in operation fewer than six months, the 
measured period will begin immediately following the Fund's first 
public offering.
    \5\ 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 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.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-14483 Filed 6-12-15; 8:45 am]
 BILLING CODE 8011-01-P