83 FR 46225 - PIMCO Flexible Credit Income Fund, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 177 (September 12, 2018)

Page Range		46225-46228
FR Document		2018-19765
Federal Register, Volume 83 Issue 177 (Wednesday, September 12, 2018)
[Federal Register Volume 83, Number 177 (Wednesday, September 12, 2018)]
[Notices]
[Pages 46225-46228]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-19765]


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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.

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    Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from

[[Page 46226]]

sections 18(a)(2), 18(c) and 18(i) of the Act, under sections 6(c) and 
23(c) 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 asset-based distribution and/or service 
fees and early withdrawal charges (``EWCs'').

Applicants: PIMCO Flexible Credit Income Fund (the ``Credit Fund'') and 
PIMCO Flexible Municipal Income Fund (the ``Municipal Fund'') (the 
Credit Fund and the Municipal Fund together the ``Initial Funds''), 
Pacific Investment Management Company LLC (the ``Investment Manager'') 
and PIMCO Investments LLC (the ``Distributor'').

Filing Dates: The application was filed on April 25, 2017 and amended 
on December 4, 2017 and August 20, 2018.

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 October 1, 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: PIMCO Flexible Credit 
Income Fund, PIMCO Flexible Municipal Income Fund, Pacific Investment 
Management Company LLC and PIMCO Investments LLC, c/o David C. 
Sullivan, Esq., Ropes & Gray LLP, 800 Boylston St., Boston, MA 02199 .

FOR FURTHER INFORMATION CONTACT: Rachel Loko, Senior Counsel or Aaron 
Gilbride, Branch Chief, at (202) 551-6825 (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 or by calling (202) 551-8090.

Applicants' Representations

    1. The Credit Fund is a Massachusetts business trust that is 
registered under the Act as a non-diversified, closed-end management 
investment company. The Credit Fund seeks to provide attractive risk-
adjusted returns and current income. The Credit Fund seeks to achieve 
its investment objectives by investing, under normal circumstances, at 
least 80% of its net assets (plus any borrowings for investment 
purposes) in a portfolio of debt instruments of varying maturities. The 
Municipal Fund is a Massachusetts business trust registered under the 
Act as a non-diversified, closed-end management investment company. The 
Municipal Fund seeks to provide high current income exempt from federal 
income tax. Capital appreciation is a secondary objective. The 
Municipal Fund seeks to achieve these objectives by investing at least 
80% of its net assets (plus any borrowings for investment purposes) in 
a portfolio of municipal bonds and other municipal securities, the 
interest from which, in the opinion of bond counsel for the issuer at 
the time of issuance (or on the basis of other authority believed by 
PIMCO to be reliable), is exempt from federal income tax. To a lesser 
extent, the Municipal Fund also expects to invest in a full range of 
preferred securities, with an emphasis on preferred securities that, at 
the time of issuance, are eligible to pay dividends that qualify for 
certain favorable federal income tax treatment.
    2. The Investment Manager is registered as an investment adviser 
under the Investment Advisers Act of 1940, as amended. The Investment 
Manager serves as investment adviser to the Initial Funds.
    3. The applicants seek an order to permit the Initial Funds to 
issue multiple classes of shares and to impose asset-based distribution 
and/or service fees and EWCs.
    4. Applicants request that the order also apply to any continuously 
offered registered closed-end management investment company that has 
been previously organized or that may be organized in the future for 
which the Investment Manager or Distributor, or any entity controlling, 
controlled by, or under common control with the Investment Manager or 
Distributor, or any successor in interest to any such entity,\1\ acts 
as investment manager, adviser or principal underwriter 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 Funds, the 
``Funds'').\2\
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    \1\ A 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.
    \2\ Any 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.
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    5. The Credit Fund continuously offers, and the Municipal Fund will 
continuously offer, common shares to the public. 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 will 
not be listed on any securities exchange nor quoted on any quotation 
medium. The Funds do not expect there to be a secondary trading market 
for their shares.
    6. If the requested relief is granted, the Credit Fund intends to 
commence a continuous offering of one or more additional classes of 
shares. If the relief requested herein is granted, it is currently 
expected that the Municipal Fund will initially offer two share 
classes. It is currently expected that one share class will not be 
subject to a front-end sales load, a distribution fee or a service fee. 
The other share class may be subject to a front-end sales load, a 
distribution fee and/or a service fee. The Funds may in the future 
offer additional classes of shares and/or another sales charges 
structure. Because of the different distribution fees, services and any 
other class expenses that may be attributable to the each class of 
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 Funds may create 
additional classes of shares, the terms of which may differ from the 
initial class 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) any differences in 
dividends and net asset value resulting from differences in fees under 
a distribution or service fee arrangement or in class expenses; (v) any 
EWC or other sales load structure; and (vi) exchange or conversion 
privileges of the classes as permitted under the Act.

[[Page 46227]]

    8. Applicants state that the Initial Funds have each adopted a 
fundamental policy to repurchase a specified percentage of its shares 
(no less than 5%) 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 and make periodic repurchase offers to its shareholders in 
compliance with rule 23c-3 or will 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.
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    \3\ Applicants 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.
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    9. Applicants represent that any asset-based service and/or 
distribution fees for each class of shares of the Funds will comply 
with the provisions of FINRA Rule 2341(d) (``FINRA Sales Charge 
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. 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.\5\ In addition, 
applicants will comply with applicable enhanced fee disclosure 
requirements for fund of funds, including registered funds of hedge 
funds.\6\
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    \4\ Any reference to the FINRA Sales Charge Rule includes any 
successor or replacement to the FINRA Sales Charge Rule.
    \5\ See 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).
    \6\ Fund 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.
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    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 that 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 attributable to that 
class (if any), including transfer agency 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 EWC on shares 
submitted for repurchase that have been held less than a specified 
period and may waive the EWC for certain categories of shareholders or 
transactions to be established from time to time. Applicants state that 
each Fund will apply the EWC (and any waivers or scheduled variations, 
or elimination of the EWC) 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. 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 such 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 or Rule 13e-4 under the Exchange 
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 EWC as if it were a contingent deferred sales load (``CDSL'').

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 voting rights among multiple classes is 
equitable and will not discriminate against any group or class of 
shareholders. Applicants submit that the proposed arrangements would 
permit a Fund to facilitate the distribution of its securities and 
provide

[[Page 46228]]

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 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.
    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 EWCs on shares of the Funds submitted for repurchase 
that have been held for less than a specified period.
    5. Applicants state that the EWCs they intend to impose are 
functionally similar to CDSLs imposed by open-end investment companies 
under rule 6c-10 under the Act. Rule 6c-10 permits open-end investment 
companies to impose CDSLs, subject to certain conditions. Applicants 
note that rule 6c-10 is grounded in policy considerations supporting 
the employment of CDSLs where there are adequate safeguards for the 
investor and state that the same policy considerations support 
imposition of EWCs in the interval fund context. In addition, 
applicants state that EWCs may be necessary for the distributor to 
recover distribution costs. Applicants represent that any EWC 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 EWCs in accordance with the requirements of Form N-1A 
concerning CDSLs.

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 asset-based distribution fees.
    3. 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 closed-end management investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-19765 Filed 9-11-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Notices 46225

against any group or class of 5. Applicants state that the Early companies, which they believe will
shareholders. Applicants submit that Withdrawal Charges they intend to resolve any concerns that might arise in
the proposed arrangements would impose are functionally similar to connection with a Fund financing the
permit a Fund to facilitate the contingent deferred sales loads imposed distribution of its shares through asset-
distribution of its shares and provide by open-end investment companies based distribution and/or service fees.
investors with a broader choice of under rule 6c–10 under the Act. Rule For the reasons stated above,
shareholder services. Applicants assert 6c–10 permits open-end investment applicants submit that the exemptions
that the proposed closed-end companies to impose contingent requested under section 6(c) are
investment company multiple class deferred sales loads, subject to certain necessary and appropriate in the public
structure does not raise the concerns conditions. Applicants note that rule interest and are consistent with the
underlying section 18 of the Act to any 6c–10 is grounded in policy protection of investors and the purposes
greater degree than open-end considerations supporting the fairly intended by the policy and
investment companies’ multiple class employment of contingent deferred provisions of the Act. Applicants further
structures that are permitted by rule sales loads where there are adequate submit that the relief requested
18f–3 under the Act. Applicants state safeguards for the investor and state that pursuant to section 23(c)(3) will be
that each Fund will comply with the the same policy considerations support consistent with the protection of
provisions of rule 18f–3 as if it were an imposition of Early Withdrawal Charges investors and will insure that applicants
open-end investment company. in the interval fund context. In addition, do not unfairly discriminate against any
applicants state that Early Withdrawal holders of the class of securities to be
Early Withdrawal Charges Charges may be necessary for the purchased. Finally, applicants state that
1. Section 23(c) of the Act provides, distributor to recover distribution costs. the Funds’ imposition of asset-based
in relevant part, that no registered Applicants represent that any Early distribution and/or service fees is
closed-end investment company shall Withdrawal Charge imposed by the consistent with the provisions, policies
purchase securities of which it is the Funds will comply with rule 6c–10 and purposes of the Act and does not
issuer, except: (a) On a securities under the Act as if the rule were involve participation on a basis different
exchange or other open market; (b) applicable to closed-end investment from or less advantageous than that of
pursuant to tenders, after reasonable companies. The Funds will disclose other participants.
opportunity to submit tenders given to Early Withdrawal Charges in accordance Applicants’ Condition:
all holders of securities of the class to with the requirements of Form N–1A Applicants agree that any order
be purchased; or (c) under other concerning contingent deferred sales granting the requested relief will be
circumstances as the Commission may loads. subject to the following condition:
permit by rules and regulations or Asset-Based Distribution and/or Service Each Fund relying on the order will
orders for the protection of investors. Fees comply with the provisions of rules
2. Rule 23c–3 under the Act permits 6c–10, 12b–1, 17d–3, 18f–3, 22d–1, and,
1. Section 17(d) of the Act and rule
a registered closed-end investment where applicable, 11a–3 under the Act,
17d–1 under the Act prohibit an
company (an ‘‘interval fund’’) to make as amended from time to time, as if
affiliated person of a registered
repurchase offers of between five and those rules applied to closed-end
investment company, or an affiliated
twenty-five percent of its outstanding management investment companies,
person of such person, acting as
shares at net asset value at periodic principal, from participating in or and will comply with the FINRA Sales
intervals pursuant to a fundamental effecting any transaction in connection Charge Rule, as amended from time to
policy of the interval fund. Rule 23c– with any joint enterprise or joint time, as if that rule applied to all closed-
3(b)(1) under the Act permits an interval arrangement in which the investment end management investment
fund to deduct from repurchase company participates unless the companies.
proceeds only a repurchase fee, not to Commission issues an order permitting For the Commission, by the Division of
exceed two percent of the proceeds, that the transaction. In reviewing Investment Management, under delegated
is paid to the interval fund and is applications submitted under section authority.
reasonably intended to compensate the 17(d) and rule 17d–1, the Commission Eduardo A. Aleman,
fund for expenses directly related to the considers whether the participation of Assistant Secretary.
repurchase. A Fund will not impose a the investment company in a joint [FR Doc. 2018–19837 Filed 9–11–18; 8:45 am]
repurchase fee on investors who enterprise or joint arrangement is BILLING CODE 8011–01–P
purchase and tender their shares. consistent with the provisions, policies
3. Section 23(c)(3) provides that the and purposes of the Act, and the extent
Commission may issue an order that to which the participation is on a basis SECURITIES AND EXCHANGE
would permit a closed-end investment different from or less advantageous than COMMISSION
company to repurchase its shares in that of other participants.
circumstances in which the repurchase 2. Rule 17d–3 under the Act provides [Investment Company Act Release No.
is made in a manner or on a basis that 33219; 812–14767]
an exemption from section 17(d) and
does not unfairly discriminate against rule 17d–1 to permit open-end PIMCO Flexible Credit Income Fund, et
any holders of the class or classes of investment companies to enter into al.
securities to be purchased. distribution arrangements pursuant to
4. Applicants request relief under rule 12b–1 under the Act. Applicants September 6, 2018.
daltland on DSKBBV9HB2PROD with NOTICES

section 6(c), discussed above, and request an order under section 17(d) and AGENCY: Securities and Exchange
section 23(c)(3) from rule 23c–3 to the rule 17d–1 under the Act to the extent Commission (‘‘Commission’’).
extent necessary for the Funds to necessary to permit the Fund to impose ACTION: Notice.
impose Early Withdrawal Charge on asset-based distribution and/or service
shares of the Funds submitted for fees. Applicants have agreed to comply Notice of an application under section
repurchase that have been held for less with rules 12b–1 and 17d–3 as if those 6(c) of the Investment Company Act of
than a specified period. rules applied to closed-end investment 1940 (the ‘‘Act’’) for an exemption from

VerDate Sep<11>2014 18:41 Sep 11, 2018 Jkt 244001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\12SEN1.SGM 12SEN1
46228 Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Notices

investors with a broader choice of where there are adequate safeguards for investors and will insure that applicants
shareholder services. Applicants assert the investor and state that the same do not unfairly discriminate against any
that the proposed closed-end policy considerations support holders of the class of securities to be
investment company multiple class imposition of EWCs in the interval fund purchased. Finally, applicants state that
structure does not raise the concerns context. In addition, applicants state the Funds’ imposition of asset-based
underlying section 18 of the Act to any that EWCs may be necessary for the distribution and/or service fees is
greater degree than open-end distributor to recover distribution costs. consistent with the provisions, policies
investment companies’ multiple class Applicants represent that any EWC and purposes of the Act and does not
structures that are permitted by rule imposed by the Funds will comply with involve participation on a basis different
18f–3 under the Act. Applicants state rule 6c–10 under the Act as if the rule from or less advantageous than that of
that each Fund will comply with the were applicable to closed-end other participants.
provisions of rule 18f–3 as if it were an investment companies. The Funds will
open-end investment company. disclose EWCs in accordance with the Applicants’ Condition
requirements of Form N–1A concerning Applicants agree that any order
Early Withdrawal Charges granting the requested relief will be
CDSLs.
1. Section 23(c) of the Act provides, subject to the following condition:
in relevant part, that no registered Asset-Based Distribution and/or Service Each Fund relying on the order will
closed-end investment company shall Fees comply with the provisions of rules 6c–
purchase securities of which it is the 1. Section 17(d) of the Act and rule 10, 12b–1, 17d–3, 18f–3, 22d–1, and,
issuer, except: (a) On a securities 17d–1 under the Act prohibit an where applicable, 11a–3 under the Act,
exchange or other open market; (b) affiliated person of a registered as amended from time to time, as if
pursuant to tenders, after reasonable investment company, or an affiliated those rules applied to closed-end
opportunity to submit tenders given to person of such person, acting as management investment companies,
all holders of securities of the class to principal, from participating in or and will comply with the FINRA Sales
be purchased; or (c) under other effecting any transaction in connection Charge Rule, as amended from time to
circumstances as the Commission may with any joint enterprise or joint time, as if that rule applied to all closed-
permit by rules and regulations or arrangement in which the investment end management investment
orders for the protection of investors. company participates unless the companies.
2. Rule 23c–3 under the Act permits Commission issues an order permitting For the Commission, by the Division of
an ‘‘interval fund’’ to make repurchase the transaction. In reviewing Investment Management, under delegated
offers of between five and twenty-five applications submitted under section authority.
percent of its outstanding shares at net 17(d) and rule 17d–1, the Commission Eduardo A. Aleman,
asset value at periodic intervals considers whether the participation of Assistant Secretary.
pursuant to a fundamental policy of the the investment company in a joint
[FR Doc. 2018–19765 Filed 9–11–18; 8:45 am]
interval fund. Rule 23c–3(b)(1) under enterprise or joint arrangement is
BILLING CODE 8011–01–P
the Act permits an interval fund to consistent with the provisions, policies
deduct from repurchase proceeds only a and purposes of the Act, and the extent
repurchase fee, not to exceed two to which the participation is on a basis SECURITIES AND EXCHANGE
percent of the proceeds, that is paid to different from or less advantageous than COMMISSION
the interval fund and is reasonably that of other participants.
intended to compensate the fund for 2. Rule 17d–3 under the Act provides [Release No. 34–84049; File No. SR–
expenses directly related to the an exemption from section 17(d) and NYSEArca–2018–38]
repurchase. rule 17d–1 to permit open-end
3. Section 23(c)(3) provides that the investment companies to enter into Self-Regulatory Organizations; NYSE
Commission may issue an order that distribution arrangements pursuant to Arca, Inc.; Notice of Filing of
would permit a closed-end investment rule 12b–1 under the Act. Applicants Amendment No. 1 and Order
company to repurchase its shares in request an order under section 17(d) and Approving on an Accelerated Basis a
circumstances in which the repurchase rule 17d–1 under the Act to the extent Proposed Rule Change, as Modified by
is made in a manner or on a basis that necessary to permit the Fund to impose Amendment No. 1, Relating to the
does not unfairly discriminate against asset-based distribution and/or service Continued Listing Criteria Applicable
any holders of the class or classes of fees. Applicants have agreed to comply to the Shares of the iShares California
securities to be purchased. with rules 12b–1 and 17d–3 as if those AMT Free Muni Bond ETF and iShares
4. Applicants request relief under rules applied to closed-end investment New York AMT-Free Muni Bond ETF
section 6(c), discussed above, and companies, which they believe will September 6, 2018.
section 23(c)(3) from rule 23c–3 to the resolve any concerns that might arise in
extent necessary for the Funds to connection with a Fund financing the I. Introduction
impose EWCs on shares of the Funds distribution of its shares through asset- On May 21, 2018, NYSE Arca, Inc.
submitted for repurchase that have been based distribution fees. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
held for less than a specified period. 3. For the reasons stated above, with the Securities and Exchange
5. Applicants state that the EWCs they applicants submit that the exemptions Commission (‘‘Commission’’), pursuant
intend to impose are functionally requested under section 6(c) are to Section 19(b)(1) of the Securities
similar to CDSLs imposed by open-end necessary and appropriate in the public Exchange Act of 1934 (‘‘Act’’) 1 and Rule
daltland on DSKBBV9HB2PROD with NOTICES

investment companies under rule 6c–10 interest and are consistent with the 19b–4 thereunder,2 a proposed rule
under the Act. Rule 6c–10 permits open- protection of investors and the purposes change to modify the continued listing
end investment companies to impose fairly intended by the policy and criteria applicable to the shares
CDSLs, subject to certain conditions. provisions of the Act. Applicants further (‘‘Shares’’) of the iShares California
Applicants note that rule 6c–10 is submit that the relief requested
grounded in policy considerations pursuant to section 23(c)(3) will be 1 15 U.S.C. 78s(b)(1).
supporting the employment of CDSLs consistent with the protection of 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 18:41 Sep 11, 2018 Jkt 244001 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 E:\FR\FM\12SEN1.SGM 12SEN1
Document Created: 2018-09-12 02:06:57
Document Modified: 2018-09-12 02:06:57
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice.
Dates		The application was filed on April 25, 2017 and amended on December 4, 2017 and August 20, 2018.
Contact		Rachel Loko, Senior Counsel or Aaron Gilbride, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 46225