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[Federal Register Volume 75, Number 45 (Tuesday, March 9, 2010)]
[Notices]
[Pages 10846-10850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-4908]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29167; File No. 812-13676]

The Chile Fund, Inc., et al.; Notice of Application

March 2, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of 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: The Chile Fund, Inc. (``Chile Fund''), Aberdeen Australia 
Equity Fund (``Australia Fund,'' together with the Chile Fund, the 
``Current Funds''), Aberdeen Asset Management Asia Limited (``Aberdeen 
Asia'') and Aberdeen Asset Management Investment Services Limited 
(``Aberdeen'').
SUMMARY: 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. The requested order would supersede a 
prior order issued to the Australia Fund.

DATES: Filing Dates: The application was filed on July 27, 2009, and 
amended on December 3, 2009, January 6, 2010, and February 25, 2010.

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 March 29, 2010 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: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090; Applicants, c/o Aberdeen Asset 
Management Inc., 1735 Market Street, 32nd Floor, Philadelphia, PA 
19103.

FOR FURTHER INFORMATION CONTACT: Lewis B. Reich, Senior Counsel, at 
(202) 551-6919, or Jennifer L. Sawin, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

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 Current Funds are both Maryland corporations registered 
under the Act as closed-end management investment companies.\1\ The 
common

[[Page 10847]]

stock of each Current Fund is listed on the NYSE Amex. Applicants 
believe that the shareholders of each Fund that would rely on the 
requested order are generally conservative, dividend-sensitive 
investors who desire current income periodically. Although the Current 
Funds have not issued preferred stock, their boards of directors (the 
``Chile Fund Board'' and the ``Australia Fund Board'') or the board of 
directors or trustees of another Fund \2\ may authorize such issuances 
in the future.
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    \1\ The Current Funds are the only registered closed-end 
investment companies that currently intend to rely on the requested 
order. Applicants request that the order also apply to each 
registered closed-end investment company that: (a) Is advised by 
either Aberdeen or Aberdeen Asia (including any successor in 
interest) or by any entity controlling, controlled by, or under 
common control (within the meaning of section 2(a)(9) of the Act) 
with Aberdeen or Aberdeen Asia (collectively with Aberdeen and 
Aberdeen Asia, ``Advisers''), and (b) decides in the future to rely 
on the order and complies with the terms and conditions of the 
application (collectively with the Current Funds, ``Funds'' and 
each, a ``Fund''). 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\ The board of directors or trustees of any Fund, including 
the Current Funds, as used herein, a ``Board.''
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    2. Aberdeen and Aberdeen Asia are direct wholly-owned subsidiaries 
of Aberdeen Asset Management PLC, and are investment advisers 
registered under the Investment Advisers Act of 1940 (``Advisers 
Act''). Aberdeen serves as investment adviser to and is responsible for 
the overall management of the Chile Fund, and Aberdeen Asia serves as 
investment adviser to and is responsible for the overall management of 
the Australia Fund. Any other Adviser will also be registered with the 
Commission under the Advisers Act.
    3. Applicants state that on June 24-25, 2009, the Chile Fund Board, 
including a majority of the members who are not ``interested persons'' 
as defined in section 2(a)(19) of the Act (the ``Independent 
Directors'') reviewed information regarding the purpose of the proposed 
distribution policy (a ``Plan'', and for the Chile Fund, the ``Chile 
Fund Plan''), the reasonably foreseeable effects of the Plan on the 
Fund's long-term total return (in relation to market price and net 
asset value per share (``NAV'')), whether the rate of distribution 
under the Chile Fund Plan will exceed the Chile Fund's expected total 
return (in relation to NAV). Applicants state that the Chile Fund 
Board, including a majority of the Independent Directors, also 
considered any conflicts of interest that Aberdeen, its affiliated 
persons, and affiliated persons of the Chile Fund might have with 
respect to the adoption or implementation of the Chile Fund Plan. 
Applicants further state that, after considering such information, the 
Chile Fund Board, including its Independent Directors, determined that 
the Chile Fund Plan was consistent with the Fund's investment 
objectives and in the best interests of its stockholders, and adopted 
the Chile Fund Plan in respect of the Chile Fund's outstanding common 
stock.
    4. Applicants state that, under the Chile Fund Plan, the Chile Fund 
would make level quarterly distributions based upon a fixed percentage 
of the rolling average of the Fund's prior four quarter-end net asset 
values. Applicants state that the purpose of the Chile Fund Plan is to 
allow the Chile Fund to make fixed periodic distributions to provide a 
steady return to the Chile Fund's common stockholders. Applicants state 
that the annual distribution rate with respect to the Chile Fund's 
common shares will be independent of the Chile Fund's performance in 
any particular period but would be expected not to exceed the Chile 
Fund's total return over time. Applicants explain that, except for 
extraordinary distributions and potential increases or decreases in the 
final dividend periods in light of the 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 
of 1986 (``Code'') for the calendar year, each distribution on the 
common shares would be at the stated rate then in effect.
    5. Applicants state that prior to implementing the Chile Fund Plan, 
the Chile Fund Board will adopt policies and procedures under rule 38a-
1 under the Act (a) that are reasonably designed to ensure that all 
notices required to be sent to the Chile Fund's stockholders pursuant 
to section 19(a) of the Act, rule 19a-1 thereunder and condition D 
below (each a ``19(a) Notice'') include the disclosure required by rule 
19a-1 and by condition B.1 below, and that all other written 
communications by the Chile Fund or its agents regarding distributions 
under the Plan include the disclosure required by condition C below, 
and (b) that require the Chile Fund to keep records that demonstrate 
compliance with all of the conditions of the order and that are 
necessary for the Chile Fund to form the basis for, or demonstrate the 
calculation of, the amounts disclosed in its 19(a) Notices.
    6. Applicants state that on December 12, 1997, the Australia Fund, 
relying on a prior order (``Prior Order''),\3\ instituted a Plan with 
respect to the Australia Fund's common stock (the ``Australia Fund 
Plan'') that was discontinued on March 14, 2002 and subsequently re-
instituted on February 17, 2004. In instituting and re-instituting the 
Australia Fund Plan, the Australia Fund Board, including a majority of 
its Independent Directors, found that the Australia Fund Plan was in 
the best interests of the Australia Fund's common stockholders. 
Applicants state that the purpose of the Australia Fund Plan is to 
allow the Australia Fund to make fixed periodic distributions to 
provide a steady return to the Australia Fund's common stockholders. 
Applicants state that the annual distribution rate with respect to the 
Australia Fund's common shares will be independent of the Australia 
Fund's performance in any particular period but would be expected not 
to exceed the Australia Fund's total return over time. Applicants 
explain that, except for extraordinary distributions and potential 
increases or decreases in the final dividend periods in light of the 
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 of 1986 (``Code'') for the calendar year, each 
distribution on the common shares is at the stated rate then in effect. 
The Australia Fund Plan currently pays quarterly distributions at an 
annual rate, set once a year, that is a percentage of the rolling 
average of the Fund's prior four quarter-end net asset values. Prior to 
relying on the requested order in connection with the Australia Fund 
Plan, the Australia Fund Board will have taken the actions described 
in, and the Australia Fund will have satisfied the representations set 
forth in, the application. When the requested order is issued, it will 
supersede the Prior Order.
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    \3\ The First Australia Fund, Inc., Release Nos. IC-23363 (July 
28, 1998) (notice of application) and IC-23397 (August 24, 1998) 
(order). The Australia Fund was formerly named The First Australia 
Fund, Inc.
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Applicants' Legal Analysis

    1. Section 19(b) generally makes it unlawful for any registered 
investment company to make long-term capital gains distributions more 
than once each year. 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 ``clean up'' distribution made 
pursuant to section 855 of the Code not exceeding 10% of the aggregate 
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.

[[Page 10848]]

    2. Section 6(c) 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 a separate statement showing the sources of a 
distribution (e.g., estimated net income, net short-term capital gains, 
net long-term capital gains and/or return of capital) accompany any 
distributions (or the confirmation of the reinvestment of 
distributions) estimated to be sourced in part from capital gains or 
capital. Applicants state that the same information is included in each 
Fund's annual report to stockholders. Further, IRS Form 1099-DIV is 
sent to each common and preferred stockholder who received 
distributions during a particular year (including shareholders who have 
sold shares during the year).
    4. Applicants further state that each Fund will make the additional 
disclosures required by the conditions set forth below, and each of 
them will have adopted compliance policies and procedures in accordance 
with rule 38a-1 under the Act to ensure that all required notices and 
disclosures are sent to shareholders. Applicants argue that rule 19a-l, 
the Plans, the Funds' compliance policies and the conditions listed 
below ensure that each Fund's shareholders would be provided sufficient 
information to understand that their periodic distributions are not 
tied to the 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. Applicants also state that compliance with the Funds' 
compliance procedures and condition C below will ensure that 
prospective shareholders and third parties are provided with the same 
information. Accordingly, applicants assert that continuing to subject 
the Funds to section 19(b) and rule 19b-1 would afford stockholders no 
additional protection.
    5. Applicants note that section 19(b) and rule 19b-1 also were 
intended to prevent 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 
corresponding reduction in NAV and would be in effect a taxable return 
of the investor's capital. Applicants assert 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 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 the Fund is permitted to 
pay more frequent dividends with respect to its common stock at a 
consistent rate.
    7. Applicants assert that the application of rule 19b-1 to the 
Plans actually could have 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 thus assert that the limitation on the number of 
capital gain dividends that a Fund may make with respect to any one 
year 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 the fixed 
regular periodic distributions 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 thus 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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    \4\ 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 has both common shares 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 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 
shares issued by a closed-end fund. Applicants assert that such 
distributions are either fixed or are 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 the 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 periodic dividend at a fixed rate or the rate 
determined by the market, and, like

[[Page 10849]]

a debt security, is priced based upon its liquidation value, 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.
    12. Applicants request an order pursuant to section 6(c) of the Act 
granting an exemption from section 19(b) of the Act and rule 19b-1 
thereunder to permit each Fund to make periodic capital gain dividends 
(as defined in section 852(b)(3)(C) of the Code) as often 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 thereof in 
respect of the Fund's preferred stock (if any).\5\
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    \5\ In order to rely on the order, a future Fund must satisfy 
each of the foregoing representations except that such 
representations will be made in respect of actions by the Board of 
such future Fund and will be made at a future time.
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Applicants' Conditions

    Applicants agree that any order of the Commission granting the 
requested relief will be subject to the following conditions:

A. Compliance Review and Reporting

    Each Fund's chief compliance officer will:
    1. Report to the Fund's Board, no less frequently than once every 
three months or at the next regularly scheduled quarterly Board 
meeting, whether:
    (a) The Fund and its Adviser have complied with the conditions of 
the order and
    (b) A material compliance matter (as defined in Rule 38a-1(e)(2) 
under the Act) has occurred with respect to such conditions; and
    2. Review the adequacy of the policies and procedures adopted by 
the Board no less frequently than annually.

B. Disclosures To Fund Stockholders

    1. Each 19(a) Notice disseminated to the holders of the Fund's 
common stock, in addition to the information required by Section 19(a) 
and Rule 19a-1:
    (a) 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 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
    (b) 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 Plan'';
    (2) ``The Fund estimates that it has distributed more than its 
income and 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' ''; \6\ and
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    \6\ The disclosure in this condition B.1.(b)(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;
    2. On the inside front cover of each report to stockholders under 
Rule 30e-1 under the Act, the Fund will:
    (a) Describe the terms of the Plan (including the fixed amount or 
fixed percentage of the distributions and the frequency of the 
distributions);
    (b) Include the disclosure required by condition B.1.(b)(1) above;
    (c) State, if applicable, that the Plan provides that the Board may 
amend or terminate the Plan at any time without prior notice to Fund 
stockholders; and
    (d) Describe any reasonably foreseeable circumstances that might 
cause the Fund to terminate the Plan and any reasonably foreseeable 
consequences of such termination; and
    3. 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.

C. Disclosure to Stockholders, Prospective Stockholders and Third 
Parties

    1. Each Fund will include the information contained in the relevant 
19(a) Notice, including the disclosure required by condition B.1.(b) 
above, in any written communication (other than a communication on Form 
1099) about the Plan or distributions under the Plan by the Fund, or 
agents that the Fund has authorized to make such communication on the 
Fund's behalf, to any Fund common stockholder, prospective common 
stockholder or third-party information provider;
    2. 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 file with the Commission the information contained in such 
19(a) Notice, including the disclosure required by condition B.1.(b) 
above, as an exhibit to its next filed Form N-CSR; and

[[Page 10850]]

    3. The Fund will post prominently a statement on its (or its 
Adviser's) Web site containing the information in each 19(a) Notice, 
including the disclosure required by condition B.1.(b) above, and 
maintain such information on such Web site for at least 24 months.

D. Delivery of 19(a) Notices to Beneficial Owners

    If a broker, dealer, bank or other person (``Financial 
Intermediary'') holds common stock issued by a Fund in nominee name, or 
otherwise, on behalf of a beneficial owner, the Fund:
    1. 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;
    2. 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
    3. 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.

E. Additional Board Determinations for Funds Whose Common Stock Trades 
at a Premium

    If:
    1. A Fund's common stock has traded on the stock exchange on which 
it primarily trades 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 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
    2. 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:
    (a) 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 Plan should be continued or continued 
after amendment;
    (2) Will determine whether continuation, or continuation after 
amendment, of the Plan 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 
E.2.(a)(1) above; including, without limitation: (A) Whether the Plan 
is accomplishing its purpose(s); (B) the reasonably foreseeable 
material effects of the Plan 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 E.2 
above, compared with the Fund's average annual taxable income or total 
return over the 2-year period, as described in condition E.2, 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 Plan; and
    (b) The Board will record the information it considers, including 
its consideration of the factors listed in condition E.2.(a)(2) above, 
and the basis for its approval or disapproval of the continuation, or 
continuation after amendment, of the Plan 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.

F. Public Offerings

    A Fund will not make a public offering of the Fund's common stock 
other than:
    1. A rights offering below NAV to holders of the Fund's common 
stock;
    2. An offering in connection with a dividend reinvestment plan, 
merger, consolidation, acquisition, spin-off or reorganization of the 
Fund; or
    3. An offering other than an offering described in conditions F.1 
and F.2 above, provided that, with respect to such other offering:
    (a) 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,\7\ 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; \8\ and
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    \7\ If a Fund has been in operation fewer than six months, the 
measured period will begin immediately following the Fund's first 
public offering.
    \8\ If a 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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    (b) 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 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 preferred stock as such 
Fund may issue.

G. Amendments to Rule 19b-1

    The requested order will expire on the effective date of any 
amendments to Rule 19b-1 that provide 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.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-4908 Filed 3-8-10; 8:45 am]
BILLING CODE 8011-01-P
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