Document ID: SEC-2014-1784-0001
Agency: sec
Document Type: Notice
Title: Applications: Principal Real Estate Income Fund and ALPS Advisors, Inc.
Posted Date: 2014-10-22T04:00Z

[Federal Register Volume 79, Number 204 (Wednesday, October 22, 2014)]
[Notices]
[Pages 63179-63183]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-25082]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31290; File No. 812-14295]

Principal Real Estate Income Fund and ALPS Advisors, Inc.; Notice 
of Application

October 16, 2014.
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: Principal Real Estate Income Fund (``PGZ'') and Alps 
Advisors, Inc. (``ALPS'').

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 shares 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 shares that the investment companies may 
issue.

Dates: Filing Dates: The application was filed on April 2, 2014, and 
amended on August 14, 2014.

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 November 10, 2014 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, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090; Applicants: ALPS Fund Services, 
Inc., 1290 Broadway, Suite 1100, Denver, CO 80203.

FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, 
at (202) 551-6812, or David P. Bartels, 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. PGZ is registered as a closed-end management investment company 
organized as a Delaware statutory trust.\1\ The common shares of PGZ 
are listed and traded on the New York Stock Exchange. The investment 
objective of PGZ is high current income, with a secondary objective of 
capital appreciation. Applicants represent that, under normal market 
conditions, PGZ invests at least 80% of its total assets in commercial 
real estate securities, primarily consisting of commercial mortgage 
backed securities and other U.S. and non-U.S. real estate-related 
securities (primarily real estate investment trusts (``REITs'')). 
Although PGZ does not currently intend to issue preferred shares, 
applicants state that the board of trustees (``Board'') of PGZ may 
authorize the issuance of preferred shares in the future.
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    \1\ The only 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 ALPS or by an entity controlling, 
controlled by, or under common control (within the meaning of 
section 2(a)(9) of the Act) with ALPS (including any successor in 
interest) (each such entity, including ALPS, the ``Adviser'') that 
in the future seeks to rely on the order (such investment companies, 
together with PGZ, are collectively, the ``Funds'' and individually, 
a ``Fund''). Any Fund that relies 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. The Adviser, a corporation organized under the laws of the State 
of Colorado, is registered as an investment adviser under the 
Investment Advisers Act of 1940 (the ``Advisers Act'').\2\ Principal 
Real Estate Investors, LLC, a limited liability company organized under 
the laws of the State of Delaware, is registered as an investment 
adviser under the Advisers Act and is the sub-adviser to PGZ. Any sub-
adviser to a Fund will be registered as an investment adviser under the 
Advisers Act or not subject to registration.
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    \2\ Any investment adviser to a Fund will be registered under 
the Advisers Act.
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    3. Applicants state that prior to the Fund's implementing a 
distribution policy (``Distribution Policy'') in reliance on the order, 
the Board, including a majority of the trustees who are not 
``interested persons'' of the Fund, as defined in section 2(a)(19) of 
the Act (the ``Independent Trustees''), will request, and the Adviser 
will provide, the 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 
Trustees will review information regarding the purpose and terms of the 
Distribution Policy; the likely effects of the policy on the Fund's 
long-term total return (in relation to market price and its net asset 
value per common share (``NAV'')); the expected relationship between 
the Fund's distribution rate on its common shares under the policy and 
the Fund's total return (in relation to NAV); whether the rate of 
distribution would exceed the Fund's expected total return in relation 
to its NAV; and any reasonably foreseeable material effects of the 
policy on the Fund's long-term total return (in relation to market 
price and NAV). The Independent Trustees 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 the information will the Board, including the 
Independent Trustees, approve a Distribution Policy and, in connection 
with the approval, will determine that the Distribution Policy is 
consistent with the Fund's investment objectives and in the best 
interests of the Fund's common shareholders.
    1. Applicants state that the purpose of a Distribution Policy, 
generally, would be to permit a Fund to distribute over the course of 
each year, through periodic distributions in relatively equal amounts 
(plus any required special distributions) that are composed of payments 
received from portfolio holdings, supplemental amounts generally 
representing capital gains or, possibly, returns of capital that may 
represent unrealized capital gains. The Fund seeks to establish a 
distribution rate that approximates the Fund's projected total return 
that can reasonably be expected to be generated by the Fund over an 
extended period of

[[Page 63180]]

time, although the distribution rate will not be solely dependent on 
the amount of income earned or capital gains realized by the Fund. 
Under the Distribution Policy, the Fund would distribute periodically 
(as frequently as 12 times in any taxable year) to its respective 
common shareholders a fixed percentage of the market price of the 
Fund's common shares at a particular point in time or a fixed 
percentage of NAV at a particular time or a fixed amount per share of 
common shares, 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 the Fund's common shares would be 
independent of the Fund's performance during any particular period but 
would be expected to correlate with the Fund's performance over time. 
Except for extraordinary distributions and potential increases or 
decreases in the amount of the distributions in the final dividend 
period in light of a Fund's projected performance for the entire 
calendar year and to enable the Fund to comply with the distribution 
requirements of Subchapter M of the Internal Revenue Code (``Code'') 
for the calendar year, each distribution on the Fund's common shares 
would be at the stated rate then in effect.
    2. Applicants state that prior to the implementation of a 
Distribution Policy for the Fund, the Board will have adopted policies 
and procedures under rule 38a-1 under the Act that: (i) Are reasonably 
designed to ensure that all notices required to be sent to the Fund's 
shareholders pursuant to section 19(a) of the Act, rule 19a-1 
thereunder and condition 4 below (each a ``19(a) Notice'') include the 
disclosure required by rule 19a-1 under the Act and by condition 2(a) 
below, and that all other written communications by the Fund or its 
agents regarding distributions under the Distribution Policy include 
the disclosure required by condition 3(a) below; and (ii) require the 
Fund to keep records that demonstrate its compliance with all of the 
conditions of the order and are necessary for the 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 the exemption is necessary or appropriate in 
the public interest and consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the Act.
    3. Applicants state that one of the concerns leading to the 
enactment of section 19(b) and adoption of rule 19b-1 was that 
shareholders might be unable to distinguish between frequent 
distributions of capital gains and dividends from investment income. 
Applicants state, however, that rule 19a-1 effectively addresses this 
concern by requiring that distributions (or the confirmation of the 
reinvestment thereof) estimated to be sourced in part from capital 
gains or capital be accompanied by a separate statement showing the 
sources of the distribution (e.g., estimated net income, net short-term 
capital gains, net long-term capital gains and/or return of capital). 
Applicants state that similar information is included in the Fund's 
annual report to shareholders and on the Internal Revenue Service Form 
1099 DIV, which is sent to each common and preferred shareholder who 
received distributions during a particular year.
    4. Applicants further state that the Fund will make the additional 
disclosures required by the conditions set forth below and will adopt 
compliance policies and procedures in accordance with rule 38a-1 under 
the Act to ensure that all required 19(a) Notices and disclosures are 
sent to shareholders. Applicants state that the information required by 
section 19(a), rule 19a-1, the Distribution Policy, the policies and 
procedures under rule 38a-1 noted above, and the conditions listed 
below will help ensure that the Fund's shareholders are provided 
sufficient information to understand that their periodic distributions 
are not tied to a Fund's net investment income (which for this purpose 
is the Fund's taxable income other than from capital gains) and 
realized capital gains to date, and may not represent yield or 
investment return. Accordingly, applicants assert that continuing to 
subject the Fund to section 19(b) and rule 19b-1 would afford 
shareholders no extra protection.
    5. Applicants note that section 19(b) and rule 19b-1 also were 
intended to prevent certain improper sales practices, including, in 
particular, the practice of urging an investor to purchase shares of a 
fund on the basis of an upcoming capital gains dividend (``selling the 
dividend''), where the dividend would result in an immediate 
corresponding 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 Fund. 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 shares of closed-end funds 
often trade in the marketplace at a discount to their NAV. Applicants 
believe that this discount may be reduced if the Funds are permitted to 
pay relatively frequent dividends on their common shares at a 
consistent rate, whether or not those dividends contain an element of 
long-term capital gains.
    7. Applicants assert that the application of rule 19b-1 to a 
Distribution Policy actually could have an inappropriate influence on 
portfolio management decisions. Applicants state that, in the absence 
of an exemption from rule 19b-1, the adoption of a periodic 
distribution plan imposes pressure on management (i) not to realize any 
net long-term capital gains until the point in the year that the fund 
can pay all of its remaining distributions in accordance with rule 19b-
1, and (ii) not to realize any long-term capital gains during any 
particular year in excess of the amount of the aggregate pay-out for 
the year (since as a practical matter excess gains must be distributed 
and accordingly would not be available to satisfy pay-out requirements 
in following years), notwithstanding that purely investment 
considerations might favor realization of long-term gains at different 
times or in different amounts. Applicants assert that by limiting the 
number of long-term capital gain dividends that the 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 the Fund's 
realized net long-term capital gains in any year exceed

[[Page 63181]]

the total of the periodic distributions that may include the capital 
gains under the rule.
    8. Applicants also assert that rule 19b-1 may force fixed regular 
periodic distributions under a periodic distribution plan to be funded 
with returns of capital \3\ (to the extent net investment income and 
realized short-term capital gains are insufficient to fund the 
distribution), even though realized net long-term capital gains 
otherwise would be available. To distribute all of a Fund's long-term 
capital gains within the limits in rule 19b-1, a Fund may be required 
to make total distributions in excess of the annual amount called for 
by its periodic distribution plan, or to retain and pay taxes on the 
excess amount. Applicants assert that the requested order would 
minimize these anomalous effects of rule 19b-1 by enabling the Fund to 
realize long-term capital gains as often as investment considerations 
dictate without fear of violating rule 19b-1.
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    \3\ Returns of capital as used in the application means return 
of capital for financial accounting purposes and not for tax 
accounting purposes.
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    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 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 the capital gain to be included in common and preferred share 
dividends. Applicants state that although rule 19b-1 allows a fund some 
flexibility with respect to the frequency of capital gains 
distributions, a fund might use all of the exceptions available under 
the rule for a tax year and still need to distribute additional capital 
gains allocated to the preferred shares to comply with Revenue Ruling 
89-81.
    10. Applicants assert that the potential abuses addressed by 
section 19(b) and rule 19b-1 do not arise with respect to preferred 
shares issued by a closed-end fund. Applicants assert that the 
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 the distributions that are comprised of long-term capital 
gains.
    11. Applicants also submit that the ``selling the dividend'' 
concern is not applicable to preferred shares, which entitle 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, are priced 
based upon their liquidation preference, dividend rate, credit quality, 
and frequency of payment. Applicants state that investors buy preferred 
shares for the purpose of receiving payments at the frequency bargained 
for, and any application of rule 19b-1 to preferred shares would be 
contrary to the expectation of investors.
    12. Applicants request an order under section 6(c) of the Act 
granting an exemption from the provisions of section 19(b) of the Act 
and rule 19b-1 thereunder to permit the 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 shares and as often as specified by, or determined in accordance 
with the terms of, any preferred shares issued by the Fund.

Applicants' Conditions

    Applicants agree that, with respect to each Fund seeking to rely on 
the order, the order will be subject to the following conditions:

1. Compliance Review and Reporting

    The Fund's chief compliance officer will: (a) Report to the Fund's 
Board, no less frequently than once every three months or at the next 
regularly scheduled quarterly Board meeting, whether (i) the Fund and 
the 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 the conditions; and (b) review the 
adequacy of the policies and procedures adopted by the Board no less 
frequently than annually.

2. Disclosures to Fund Shareholders

    (a) Each 19(a) Notice disseminated to the holders of the Fund's 
common shares, in addition to the information required by section 19(a) 
and rule 19a-1:
    (i) Will provide, in a tabular or graphical format:
    (1) The amount of the distribution, on a per common share basis, 
together with the amounts of the distribution amount, on a per common 
share basis and as a percentage of the 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 the cumulative 
amount, on a per common share basis and as a percentage of the 
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 Applicants' Distribution Policy'';
    (2) ``The Fund estimates that it has distributed more than its 
income and net realized capital gains; therefore, a portion of your 
distribution may be a return of capital. A return of capital may occur, 
for example, when some or all of the money that you invested in the 
Fund is paid back to you. A return of capital distribution does not 
necessarily reflect the Fund's investment performance and should not be 
confused with `yield' or `income' \4\''; and
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    \4\ The disclosure in condition 2(a)(ii)(2) will be included 
only if the current distribution or the fiscal year-to-date 
cumulative distributions are estimated to include a return of 
capital.
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    (3) ``The amounts and sources of distributions reported in this 
19(a)

[[Page 63182]]

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 
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for federal income tax purposes.''

    The disclosure shall be made in a type size at least as large as 
and as prominent as any other information in the 19(a) Notice and 
placed on the same page in close proximity to the amount and the 
sources of the distribution.
    (b) On the inside front cover of each report to shareholders under 
rule 30e-1 under the Act, the Fund will:
    (i) Describe the terms of the Distribution Policy (including the 
fixed amount or fixed percentage of the distributions and the frequency 
of the distributions);
    (ii) include the disclosure required by condition 2(a)(ii)(1) 
above;
    (iii) state, if applicable, that the Distribution Policy provides 
that the Board may amend or terminate the Distribution Policy at any 
time without prior notice to Fund shareholders; and
    (iv) describe any reasonably foreseeable circumstances that might 
cause the Fund to terminate the Distribution Policy and any reasonably 
foreseeable consequences of the termination.
    (c) Each report provided to shareholders of the Fund under rule 
30e-1 under the Act and each prospectus filed with the Commission on 
Form N-2 under the Act, will provide the Fund's total return in 
relation to changes in NAV in the financial highlights table and in any 
discussion about the Fund's total return.

3. Disclosure to Shareholders, Prospective Shareholders and Third 
Parties

    (a) The Fund will include the information contained in the relevant 
19(a) Notice, including the disclosure required by condition 2(a)(ii) 
above, in any written communication (other than a communication on Form 
1099) about the Distribution Policy or distributions under the 
Distribution Policy by the Fund, or agents that the Fund has authorized 
to make the communication on the Fund's behalf, to any Fund 
shareholder, prospective shareholder or third-party information 
provider;
    (b) The Fund will issue, contemporaneously with the issuance of any 
19(a) Notice, a press release containing the information in the 19(a) 
Notice and will file with the Commission the information contained in 
the 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 the information on the Web site for at least 24 months.

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

    If a broker, dealer, bank or other person (``financial 
intermediary'') holds common shares issued by the Fund in nominee name, 
or otherwise, on behalf of a beneficial owner, the Fund: (a) Will 
request that the financial intermediary, or its agent, forward the 
19(a) Notice to all beneficial owners of the Fund's shares held through 
the financial intermediary; (b) will provide, in a timely manner, to 
the financial intermediary, or its agent, enough copies of the 19(a) 
Notice assembled in the form and at the place that the financial 
intermediary, or its agent, reasonably requests to facilitate the 
financial intermediary's sending of the 19(a) Notice to each beneficial 
owner of the Fund's shares; and (c) upon the request of any financial 
intermediary, or its agent, that receives copies of the 19(a) Notice, 
will pay the financial intermediary, or its agent, the reasonable 
expenses of sending the 19(a) Notice to the beneficial owners.

5. Additional Board Determinations for Funds Whose Common Shares Trade 
at a Premium

If:
    (a) The Fund's common shares have traded on the stock exchange that 
they primarily trade on at the time in question at an average premium 
to NAV equal to or greater than 10%, as determined on the basis of the 
average of the discount or premium to NAV of the Fund's common shares 
as of the close of each trading day over a 12-week rolling period (each 
the 12-week rolling period ending on the last trading day of each 
week); and
    (b) The Fund's annualized distribution rate for the 12-week rolling 
period, expressed as a percentage of NAV as of the ending date of the 
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 the 12-week rolling period; then:
    (i) At the earlier of the next regularly scheduled meeting or 
within four months of the last day of the 12-week rolling period, the 
Board, including a majority of the Independent Trustees:
    (1) Will request and evaluate, and the Fund's Adviser will furnish, 
the information as may be reasonably necessary to make an informed 
determination of whether the Distribution Policy should be continued or 
continued after amendment;
    (2) will determine whether continuation, or continuation after 
amendment, of the Distribution Policy is consistent with the Fund's 
investment objective(s) and policies and is in the best interests of 
the Fund and its shareholders, after considering the information in 
condition 5(b)(i)(1) above; including, without limitation:
    (A) Whether the Distribution Policy is accomplishing its 
purpose(s);
    (B) the reasonably foreseeable material effects of the Distribution 
Policy on the Fund's long-term total return in relation to the market 
price and NAV of the Fund's common shares; and
    (C) the Fund's current distribution rate, as described in condition 
5(b) above, compared with the Fund's average annual taxable income or 
total return over the 2-year period, as described in condition 5(b), or 
the 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 the 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 
shares other than:
    (a) A rights offering below NAV to holders of the Fund's common 
shares;
    (b) an offering in connection with a dividend reinvestment plan, 
merger, consolidation, acquisition, spin-off or reorganization of the 
Fund; or
    (c) an offering other than an offering described in conditions 6(a) 
and 6(b) above, provided that, with respect to the other offering:

[[Page 63183]]

    (i) The Fund's annualized distribution rate for the six months 
ending on the last day of the month ended immediately prior to the most 
recent distribution record date,\5\ expressed as a percentage of NAV as 
of the date, is no more than 1 percentage point greater than the Fund's 
average annual total return for the 5-year period ending on the date; 
\6\ and
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    \5\ If the Fund has been in operation fewer than six months, the 
measured period will begin immediately following the Fund's first 
public offering.
    \6\ If the Fund has been in operation fewer than five years, the 
measured period will begin immediately following the Fund's first 
public offering.
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    (ii) the transmittal letter accompanying any registration statement 
filed with the Commission in connection with the offering discloses 
that the Fund has received an order under section 19(b) to permit it to 
make periodic distributions of long-term capital gains with respect to 
its common shares as frequently as twelve times each year, and as 
frequently as distributions are specified by or determined in 
accordance with the terms of any outstanding preferred shares as the 
Fund may issue.

7. Amendments to Rule 19b-1

    The requested order will expire on the effective date of any 
amendment to rule 19b-1 that provides relief permitting certain closed-
end investment companies to make periodic distributions of long-term 
capital gains with respect to their outstanding common shares as 
frequently as twelve times each year.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
 Deputy Secretary.
[FR Doc. 2014-25082 Filed 10-21-14; 8:45 am]
BILLING CODE 8011-01-P