Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Notices 46223 

1A successor in interest is limited to an entity 

that results from a reorganization into another 

jurisdiction or a change in the type of business 

organization. 

2Any Fund relying on this relief in the future will 

do so in a manner consistent with the terms and 

conditions of the application. Applicants represent 

that each entity presently intending to rely on the 

requested relief is listed as an applicant. 

3Applicants submit that rule 23c–3 and 

Regulation M under the Exchange Act permit an 

interval fund to make repurchase offers to 

repurchase its shares while engaging in a 

continuous offering of its shares pursuant to Rule 

415 under the Securities Act of 1933, as amended. 

SECURITIES AND EXCHANGE 

COMMISSION 

Investment Company Act Release No. 

33220; 812–14928 Broadstone Real 

Estate Access Fund and Broadstone 

Asset Management, LLC 

September 7, 2018. 

Notice of an application under section 

6(c) of the Investment Company Act of 

1940 (the ‘‘Act’’) for an exemption from 

sections 18(a)(2), 18(c) and 18(i) of the 

Act, under sections 6(c) and 23(c)(3) of 

the Act for an exemption from rule 

23c–3 under the Act, and for an order 

pursuant to section 17(d) of the Act and 

rule 17d–1 under the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order to permit certain 

registered closed-end management 

investment companies to issue multiple 

classes of shares and to impose assetbased distribution and/or service fees, 

early withdrawal charges (‘‘Early 

Withdrawal Charges’’), and early 

repurchase fees. 

APPLICANTS: Broadstone Real Estate 

Access Fund (the ‘‘Initial Fund’’), and 

Broadstone Asset Management, LLC (the 

‘‘Adviser’’). 

FILING DATES: The application was filed 

on July 11, 2018. Applicants have 

agreed to file an amendment during the 

notice period, the substance of which is 

reflected in this notice. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on September 27, 2018, 

and should be accompanied by proof of 

service on the 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: Broadstone Asset 

Management, Inc., 800 Clinton Square, 

Rochester, NY 14604. 

FOR FURTHER INFORMATION CONTACT: 

Stephan N. Packs, Senior Counsel, at 

(202) 551–6853, or David J. Marcinkus, 

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 

website 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 Initial Fund is a newly-formed 

Delaware statutory trust that is 

registered under the Act as a 

continuously offered, non-diversified, 

closed-end management investment 

company. 

2. The Adviser, a New York limited 

liability company, is registered as an 

investment adviser under the 

Investment Advisers Act of 1940. The 

Adviser serves as investment adviser to 

the Initial Fund. 

3. The applicants seek an order to 

permit the Funds (as defined below) to 

issue multiple classes of shares, each 

having its own fee and expense 

structure and to impose Early 

Withdrawal Charges, asset-based 

distribution and/or service fees with 

respect to certain classes. 

4. Applicants request that the order 

also apply to any continuously-offered 

registered closed-end management 

investment company, existing now or in 

the future, for which the Adviser, or any 

entity controlling, controlled by, or 

under common control with the 

Adviser, or any successor in interest to 

any such entity,1 acts as investment 

adviser and which operates as an 

interval fund pursuant to rule 23c–3 

under the Act or provides periodic 

liquidity with respect to its shares 

pursuant to rule 13e–4 under the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) (each, a ‘‘Future 

Fund’’ and together with the Initial 

Fund, the ‘‘Funds’’).2

5. The Initial Fund intends to make a 

continuous public offering of its shares 

upon a declaration of effectiveness of its 

registration statement. Applicants state 

that additional offerings by any Fund 

relying on the order may be on a private 

placement or public offering basis. 

Shares of the Funds are not expected to 

be listed on any securities exchange nor 

quoted on any quotation medium and 

the Funds do not expect there to be a 

secondary trading market for their 

shares. 

6. If the requested relief is granted, the 

Initial Fund intends to continuously 

offer Class W Shares and Class I Shares, 

with each class having its own fee and 

expense structure. Because of the 

different distribution fees, services, and 

any other class expenses that may be 

attributable to the Class W and Class I 

Shares, the net income attributable to, 

and the dividends payable on, each 

class of shares may differ from each 

other. 

7. Applicants state that, from time to 

time, the Initial Fund may create 

additional classes of shares, the terms of 

which may differ from Class W and 

Class I Shares in the following respects: 

(i) The amount of fees permitted by 

different distribution plans or different 

service fee arrangements; (ii) voting 

rights with respect to a distribution plan 

of a class; (iii) different class 

designations; (iv) the impact of any class 

expenses directly attributable to a 

particular class of shares allocated on a 

class basis as described in the 

application; (v) any differences in 

dividends and net asset value resulting 

from differences in fees under a 

distribution plan or in class expenses; 

(vi) any Early Withdrawal Charge or 

other sales load structure; and (vii) 

exchange or conversion privileges of the 

classes as permitted under the Act. 

8. Applicants state that the Initial 

Fund has adopted a fundamental policy 

to repurchase a specified percentage of 

its shares (no less than 5% and no more 

than 25%) at net asset value on a 

quarterly basis. Such repurchase offers 

will be conducted pursuant to rule 

23c–3 under the Act. Each of the other 

Funds will likewise adopt fundamental 

investment policies in compliance with 

rule 23c–3 and make quarterly 

repurchase offers to its shareholders, or 

provide periodic liquidity with respect 

to its shares pursuant to rule 13e–4 

under the Exchange Act.3 Any 

repurchase offers made by the Funds 

will be made to all holders of shares of 

each such Fund. 

9. Applicants represent that any assetbased service and/or distribution fees 

for each class of shares of the Funds will 

comply with the provisions of FINRA 

Rule 2341 (‘‘FINRA Sales Charge 


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46224 Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Notices 

4Any reference in the application to the FINRA 

Sales Charge Rule includes any successor or 

replacement to the FINRA Sales Charge Rule. 

5 In all respects other than class by class 

disclosure, each Fund will comply with the 

requirements of Form N–2. 

6See Shareholder Reports and Quarterly Portfolio 

Disclosure of Registered Management Investment 

Companies, Investment Company Act Release No. 

26372 (Feb. 27, 2004) (adopting release) (requiring 

open-end investment companies to disclose fund 

expenses in shareholder reports); and Disclosure of 

Breakpoint Discounts by Mutual Funds, Investment 

Company Act Release No. 26464 (June 7, 2004) 

(adopting release) (requiring open-end investment 

companies to provide prospectus disclosure of 

certain sales load information). 

7Fund of Funds Investments, Investment 

Company Act Rel. Nos. 26198 (Oct. 1, 2003) 

(proposing release) and 27399 (Jun. 20, 2006) 

(adopting release). See also Rules 12d1–1, et seq. of 

the Act. 

Rule’’).4 Applicants also represent that 

each Fund will disclose in its 

prospectus the fees, expenses and other 

characteristics of each class of shares 

offered for sale by the prospectus, as is 

required for open-end multiple class 

funds under Form N–1A.5 As is 

required for open-end funds, each Fund 

will disclose its expenses in shareholder 

reports, and describe any arrangements 

that result in breakpoints in or 

elimination of sales loads in its 

prospectus.6 In addition, applicants will 

comply with applicable enhanced fee 

disclosure requirements for fund of 

funds, including registered funds of 

hedge funds.7

10. Each of the Funds will comply 

with any requirements that the 

Commission or FINRA may adopt 

regarding disclosure at the point of sale 

and in transaction confirmations about 

the costs and conflicts of interest arising 

out of the distribution of open-end 

investment company shares, and 

regarding prospectus disclosure of sales 

loads and revenue sharing 

arrangements, as if those requirements 

applied to the Fund. In addition, each 

Fund will contractually require that any 

distributor of the Fund’s shares comply 

with such requirements in connection 

with the distribution of such Fund’s 

shares. 

11. Each Fund will allocate all 

expenses incurred by it among the 

various classes of shares based on the 

net assets of the Fund attributable to 

each class, except that the net asset 

value and expenses of each class will 

reflect the expenses associated with the 

distribution plan of that class, service 

fees, and any other incremental 

expenses of that class. Expenses of a 

Fund allocated to a particular class of 

shares will be borne on a pro rata basis 

by each outstanding share of that class. 

Applicants state that each Fund will 

comply with the provisions of rule 

18f–3 under the Act as if it were an 

open-end investment company. 

12. Applicants state that each Fund 

may impose an Early Withdrawal 

Charge on shares submitted for 

repurchase that have been held less than 

a specified period and may waive the 

Early Withdrawal Charge for certain 

categories of shareholders or 

transactions to be established from time 

to time. Applicants state that each Fund 

will apply the Early Withdrawal Charge 

(and any waivers or scheduled 

variations of the Early Withdrawal 

Charge) uniformly to all shareholders in 

a given class and consistently with the 

requirements of rule 22d–1 under the 

Act as if the Funds were open-end 

investment companies. 

13. Applicants state that shares of a 

Fund may be subject to an early 

repurchase fee (‘‘Early Repurchase Fee’’) 

at a rate of no greater than 2% of the 

aggregate net asset value of a 

shareholder’s shares repurchased by the 

Fund if the interval between the date of 

purchase of the shares and the valuation 

date with respect to the repurchase of 

those shares is less than 90 days. Any 

Early Repurchase Fees will apply 

equally to all classes of shares of a 

Fund, consistent with section 18 of the 

Act and rule 18f–3 thereunder. To the 

extent a Fund determines to waive, 

impose scheduled variations of, or 

eliminate any Early Repurchase Fee, it 

will do so consistently with the 

requirements of rule 22d–1 under the 

Act as if the Early Repurchase Fee were 

a contingent deferred sales load (defined 

below) and as if the Fund were an openend investment company and the 

Fund’s waiver of, scheduled variation 

in, or elimination of, any such Early 

Repurchase Fee will apply uniformly to 

all shareholders of the Fund regardless 

of class. Applicants state that the Initial 

Funds do not intend to impose an Early 

Repurchase Fee. 

14. Each Fund operating as an interval 

fund pursuant to rule 23c–3 under the 

Act may offer its shareholders an 

exchange feature under which the 

shareholders of the Fund may, in 

connection with the Fund’s periodic 

repurchase offers, exchange their shares 

of the Fund for shares of the same class 

of (i) registered open-end investment 

companies or (ii) other registered 

closed-end investment companies that 

comply with rule 23c–3 under the Act 

and continuously offer their shares at 

net asset value, that are in the Fund’s 

group of investment companies 

(collectively, ‘‘Other Funds’’). Shares of 

a Fund operating pursuant to rule 23c– 

3 that are exchanged for shares of Other 

Funds will be included as part of the 

amount of the repurchase offer amount 

for such Fund as specified in rule 23c– 

3 under the Act. Any exchange option 

will comply with rule 11a–3 under the 

Act, as if the Fund were an open-end 

investment company subject to rule 

11a–3. In complying with rule 11a–3, 

each Fund will treat an Early 

Withdrawal Charge as if it were a 

contingent deferred sales load. 

Applicants’ Legal Analysis: 

Multiple Classes of Shares 

1. Section 18(a)(2) of the Act provides 

that a closed-end investment company 

may not issue or sell a senior security 

that is a stock unless certain 

requirements are met. Applicants state 

that the creation of multiple classes of 

shares of the Funds may violate section 

18(a)(2) because the Funds may not 

meet such requirements with respect to 

a class of shares that may be a senior 

security. 

2. Section 18(c) of the Act provides, 

in relevant part, that a closed-end 

investment company may not issue or 

sell any senior security if, immediately 

thereafter, the company has outstanding 

more than one class of senior security. 

Applicants state that the creation of 

multiple classes of shares of the Funds 

may be prohibited by section 18(c), as 

a class may have priority over another 

class as to payment of dividends 

because shareholders of different classes 

would pay different fees and expenses. 

3. Section 18(i) of the Act provides 

that each share of stock issued by a 

registered management investment 

company will be a voting stock and 

have equal voting rights with every 

other outstanding voting stock. 

Applicants state that multiple classes of 

shares of the Funds may violate section 

18(i) of the Act because each class 

would be entitled to exclusive voting 

rights with respect to matters solely 

related to that class. 

4. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security or transaction or any 

class or classes of persons, securities or 

transactions from any provision of the 

Act, or from any rule or regulation 

under the Act, if and to the extent 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. Applicants 

request an exemption under section 6(c) 

from sections 18(a)(2), 18(c) and 18(i) to 

permit the Funds to issue multiple 

classes of shares. 

5. Applicants submit that the 

proposed allocation of expenses relating 

to distribution and/or services and 

voting rights among multiple classes is 

equitable and will not discriminate 


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Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Notices 46225 

against any group or class of 

shareholders. Applicants submit that 

the proposed arrangements would 

permit a Fund to facilitate the 

distribution of its shares and provide 

investors with a broader choice of 

shareholder services. Applicants assert 

that the proposed closed-end 

investment company multiple class 

structure does not raise the concerns 

underlying section 18 of the Act to any 

greater degree than open-end 

investment companies’ multiple class 

structures that are permitted by rule 

18f–3 under the Act. Applicants state 

that each Fund will comply with the 

provisions of rule 18f–3 as if it were an 

open-end investment company. 

Early Withdrawal Charges 

1. Section 23(c) of the Act provides, 

in relevant part, that no registered 

closed-end investment company shall 

purchase securities of which it is the 

issuer, except: (a) On a securities 

exchange or other open market; (b) 

pursuant to tenders, after reasonable 

opportunity to submit tenders given to 

all holders of securities of the class to 

be purchased; or (c) under other 

circumstances as the Commission may 

permit by rules and regulations or 

orders for the protection of investors. 

2. Rule 23c–3 under the Act permits 

a registered closed-end investment 

company (an ‘‘interval fund’’) to make 

repurchase offers of between five and 

twenty-five percent of its outstanding 

shares at net asset value at periodic 

intervals pursuant to a fundamental 

policy of the interval fund. Rule 23c– 

3(b)(1) under the Act permits an interval 

fund to deduct from repurchase 

proceeds only a repurchase fee, not to 

exceed two percent of the proceeds, that 

is paid to the interval fund and is 

reasonably intended to compensate the 

fund for expenses directly related to the 

repurchase. A Fund will not impose a 

repurchase fee on investors who 

purchase and tender their shares. 

3. Section 23(c)(3) provides that the 

Commission may issue an order that 

would permit a closed-end investment 

company to repurchase its shares in 

circumstances in which the repurchase 

is made in a manner or on a basis that 

does not unfairly discriminate against 

any holders of the class or classes of 

securities to be purchased. 

4. Applicants request relief under 

section 6(c), discussed above, and 

section 23(c)(3) from rule 23c–3 to the 

extent necessary for the Funds to 

impose Early Withdrawal Charge on 

shares of the Funds submitted for 

repurchase that have been held for less 

than a specified period. 

5. Applicants state that the Early 

Withdrawal Charges they intend to 

impose are functionally similar to 

contingent deferred sales loads imposed 

by open-end investment companies 

under rule 6c–10 under the Act. Rule 

6c–10 permits open-end investment 

companies to impose contingent 

deferred sales loads, subject to certain 

conditions. Applicants note that rule 

6c–10 is grounded in policy 

considerations supporting the 

employment of contingent deferred 

sales loads where there are adequate 

safeguards for the investor and state that 

the same policy considerations support 

imposition of Early Withdrawal Charges 

in the interval fund context. In addition, 

applicants state that Early Withdrawal 

Charges may be necessary for the 

distributor to recover distribution costs. 

Applicants represent that any Early 

Withdrawal Charge imposed by the 

Funds will comply with rule 6c–10 

under the Act as if the rule were 

applicable to closed-end investment 

companies. The Funds will disclose 

Early Withdrawal Charges in accordance 

with the requirements of Form N–1A 

concerning contingent deferred sales 

loads. 

Asset-Based Distribution and/or Service 

Fees 

1. Section 17(d) of the Act and rule 

17d–1 under the Act prohibit an 

affiliated person of a registered 

investment company, or an affiliated 

person of such person, acting as 

principal, from participating in or 

effecting any transaction in connection 

with any joint enterprise or joint 

arrangement in which the investment 

company participates unless the 

Commission issues an order permitting 

the transaction. In reviewing 

applications submitted under section 

17(d) and rule 17d–1, the Commission 

considers whether the participation of 

the investment company in a joint 

enterprise or joint arrangement is 

consistent with the provisions, policies 

and purposes of the Act, and the extent 

to which the participation is on a basis 

different from or less advantageous than 

that of other participants. 

2. Rule 17d–3 under the Act provides 

an exemption from section 17(d) and 

rule 17d–1 to permit open-end 

investment companies to enter into 

distribution arrangements pursuant to 

rule 12b–1 under the Act. Applicants 

request an order under section 17(d) and 

rule 17d–1 under the Act to the extent 

necessary to permit the Fund to impose 

asset-based distribution and/or service 

fees. Applicants have agreed to comply 

with rules 12b–1 and 17d–3 as if those 

rules applied to closed-end investment 

companies, which they believe will 

resolve any concerns that might arise in 

connection with a Fund financing the 

distribution of its shares through assetbased distribution and/or service fees. 

For the reasons stated above, 

applicants submit that the exemptions 

requested under section 6(c) are 

necessary and appropriate in the public 

interest and are consistent with the 

protection of investors and the purposes 

fairly intended by the policy and 

provisions of the Act. Applicants further 

submit that the relief requested 

pursuant to section 23(c)(3) will be 

consistent with the protection of 

investors and will insure that applicants 

do not unfairly discriminate against any 

holders of the class of securities to be 

purchased. Finally, applicants state that 

the Funds’ imposition of asset-based 

distribution and/or service fees is 

consistent with the provisions, policies 

and purposes of the Act and does not 

involve participation on a basis different 

from or less advantageous than that of 

other participants. 

Applicants’ Condition: 

Applicants agree that any order 

granting the requested relief will be 

subject to the following condition: 

Each Fund relying on the order will 

comply with the provisions of rules 

6c–10, 12b–1, 17d–3, 18f–3, 22d–1, and, 

where applicable, 11a–3 under the Act, 

as amended from time to time, as if 

those rules applied to closed-end 

management investment companies, 

and will comply with the FINRA Sales 

Charge Rule, as amended from time to 

time, as if that rule applied to all closedend management investment 

companies. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–19837 Filed 9–11–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

33219; 812–14767] 

PIMCO Flexible Credit Income Fund, et 

al. 

September 6, 2018. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application under section 

6(c) of the Investment Company Act of 

1940 (the ‘‘Act’’) for an exemption from 


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