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Federal Register / Vol. 86, No. 126 / Tuesday, July 6, 2021 / Notices
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expenses borne by shareholders during the reporting period in shareholder reports 4 and describe in its prospectus any arrangements that result in breakpoints in, or elimination of, sales loads.5 In addition, applicants will comply with applicable enhanced fee disclosure requirements for fund of funds, including registered funds of hedge and private equity funds.6
10. Each Fund and its distributor the Distributor will also comply with any requirements that may be adopted by the Commission or FINRA 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 apply to the Fund and the Distributor. Each Fund or the Distributor will contractually require that any other distributor of the Funds Shares comply with such requirements in connection with the distribution of Shares of the Fund.
11. All expenses incurred by a Fund will be allocated among its 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 and service plan of that class if any, shareholder services fees attributable to a particular class including transfer agency fees, if any, and any other incremental expenses of that class. Expenses of a Fund allocated to a particular class of the Funds 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 1940 Act as if it were an open-end management investment company.
12. Applicants state that the Initial Fund does not intend to offer any exchange privilege or conversion feature, but any such privilege or feature introduced in the future by a Fund will comply with rule 11a1, rule 11a3, and rule 18f3 as if the Fund were an openend management investment company.
4 Shareholder Reports and Quarterly Portfolio Disclosure of Registered Management Investment Companies, Investment Company Act Release No.
26372 Feb. 27, 2004 adopting release.
5 Disclosure of Breakpoint Discounts by Mutual Funds, Investment Company Act Release No. 26464
June 7, 2004 adopting release.
6 Fund of Funds Investments, Investment Company Act Release Nos. 26198 Oct. 1, 2003
proposing release and 27399 June 20, 2006
adopting release. See also rules 12d11, et seq.
under the 1940 Act.

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13. Applicants seek relief to the extent necessary for each Fund to impose an early withdrawal charge on shares submitted for repurchase that have been held less than a specified period.
Applicants state that each Fund may grant waivers of the early withdrawal charges on repurchases for certain categories of shareholders or transactions 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 22d1 under the 1940 Act as if the Fund were an openend management investment company.
14. Applicants state that a Fund operating as an interval fund pursuant to rule 23c3 under the 1940 Act may offer its shareholders an exchange feature under which the shareholders of the Fund may, in connection with the Funds periodic repurchase offers, exchange their Shares of the Fund for shares of the same class of i registered open-end management investment companies or ii other registered closed-end investment companies that comply with rule 23c3 under the 1940
Act and continuously offer their shares at net asset value, that are in the Funds group of investment companies collectively, the Other Funds.
Shares of a Fund operating pursuant to rule 23c3 that are exchanged for shares of Other Funds will be included as part of the repurchase offer amount for such Fund as specified in rule 23c3 under the 1940 Act. Any exchange option will comply with rule 11a3 under the 1940
Act, as if the Fund were an open-end management investment company subject to rule 11a3. In complying with rule 11a3 under the 1940 Act, each Fund will treat an early withdrawal charge as if it were a contingent deferred sales load a CDSL.7
15. Applicants state that the Initial Fund does not currently, nor does it currently intend to, impose a repurchase fee, but may do so in the future. If a Fund charges a repurchase fee, Shares of the Fund will be subject to a repurchase fee at a rate of no greater than two percent of the shareholders repurchase proceeds 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 7 A CDSL, assessed by an open-end fund pursuant to Rule 6c10 under the 1940 Act, is a distributionrelated charge payable to the distributor. Pursuant to the requested order, the early withdrawal charge will likewise be a distribution-related charge payable to the distributor. which is payable to a Fund
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one year.8 Repurchase fees, if charged, will equally apply to all classes of Shares of the Fund, consistent with section 18 of the 1940 Act and rule 18f 3 thereunder. To the extent a Fund determines to waive, impose scheduled variations of, or eliminate a repurchase fee, it will do so consistently with the requirements of rule 22d1 under the 1940 Act as if the repurchase fee were a CDSL and as if the Fund were a registered open-end management investment company. In addition, the Funds waiver of, scheduled variation in, or elimination of the repurchase fee will apply uniformly to all shareholders of the Fund regardless of class.
Applicants Legal Analysis Multiple Classes of Shares 1. Section 18a2A and B makes it unlawful for a registered closed-end management investment company to issue a senior security that is a stock unless a immediately after such issuance it will have an asset coverage of at least 200% and b provision is made to prohibit the declaration of any distribution upon its common stock, or the purchase of any such common stock, unless in every such case such senior security has at the time of the declaration of any such distribution, or at the time of any such purchase, an asset coverage of at least 200% after deducting the amount of such distribution or purchase price, as the case may be. Applicants state that the creation of multiple classes of Shares of the Funds may violate section 18a2
because the Funds may not meet section 18a2s requirements with respect to a class of Shares that may be a senior security.
2. Section 18c of the 1940 Act provides, in relevant part, that a registered closed-end management investment company may not issue or sell any senior security which is a stock if immediately thereafter the company will have outstanding more than one class of senior security that is a stock.
Applicants state that the creation of multiple classes of Shares of a Fund may be prohibited by section 18c, 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 18i of the 1940 Act generally provides that each share of stock issued by a registered management 8 Unlike a distribution-related charge, the repurchase fee is payable to the Fund to compensate long-term shareholders for the expenses related to shorter-term investors, in light of the Funds generally longer-term investment horizons and investment operations.

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