As filed with the U.S. Securities and Exchange Commission on November 21, 2023
File No. 812-[ ]
UNITED STATES OF AMERICA
BEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Application Pursuant to Sections 6(c) and 23(c)(3) of the Investment Company Act of 1940
(the Act) for an Order Granting Certain Exemptions from the Provisions of Rule 23c-3
thereunder
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
In the Matter of the Application of:
Nuveen Enhanced Floating Rate Income Fund
333 West Wacker Drive
Chicago, Illinois 60606
and
Nuveen Fund Advisors, LLC
333 West Wacker Drive
Chicago, Illinois 60606
and
Nuveen Asset Management, LLC
333 West Wacker Drive
Chicago, Illinois 60606
and
Nuveen Securities, LLC
333 West Wacker Drive
Chicago, Illinois 60606
Please send all communications, notices and orders regarding this Application to:
Mark L. Winget
Vice President and Secretary
333 West Wacker Drive
Chicago, Illinois 60606
With copies to:
Joel D. Corriero, Esq.
Stradley Ronon Stevens & Young, LLP
2005 Market Street
Suite 2600
Philadelphia, Pennsylvania 19103
Page 1 of 58 sequentially numbered pages (including exhibits)
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I. |
THE PROPOSAL | 3 | ||||||||
II. |
STATEMENT OF FACTS | 3 | ||||||||
A. | Nuveen Enhanced Floating Rate Income Fund | 3 | ||||||||
B. | Nuveen Fund Advisors, LLC | 5 | ||||||||
C. | Nuveen Asset Management, LLC | 5 | ||||||||
D. | Nuveen Securities, LLC | 5 | ||||||||
E. | Other Requirements for a Rule 23c-3 Fund | 6 | ||||||||
III. |
EXEMPTIONS REQUESTED | 7 | ||||||||
IV. |
COMMISSION AUTHORITY | 8 | ||||||||
V. |
DISCUSSION | 8 | ||||||||
A. | Background | 8 | ||||||||
B. | Monthly Repurchases | 10 | ||||||||
VI. |
APPLICANTS CONDITIONS | 12 | ||||||||
VII. |
CONCLUSION | 12 | ||||||||
|
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File No. 812-[ ]
Nuveen Enhanced Floating Rate Income Fund (the Fund) is a newly organized Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the Act), as a diversified, closed-end management investment company that will be operated as an interval fund. The Fund is advised by Nuveen Fund Advisors, LLC (Nuveen Fund Advisors) and sub-advised by Nuveen Asset Management, LLC (Nuveen Asset Management and together with Nuveen Fund Advisors, the Adviser). Nuveen Securities, LLC (the Distributor) is the principal underwriter and distributor of the Funds shares. The Fund, the Adviser and the Distributor are referred to herein as the Applicants.
The Applicants hereby seek an order (the Order) from the U.S. Securities and Exchange Commission (the Commission or the SEC) pursuant to Sections 6(c) and 23(c)(3) of the Act for an exemption from certain provisions of Rule 23c-3 under the Act to permit the Fund to make repurchase offers to its common shareholders every month and to provide notification to its common shareholders of an upcoming repurchase offer no less than seven and no more than fourteen calendar days in advance of the repurchase request deadline.
Applicants request that the Order also apply to any registered closed-end management investment company that has been previously organized or that may be organized 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 an investment adviser, and which operates as an interval fund pursuant to Rule 23c-3 under the Act (each a Future Fund and, together with the Fund, the Funds). Any of the Funds relying on this relief in the future will do so in compliance with the terms and conditions of this application (the Application). Applicants represent that each entity presently intending to rely on the requested relief is listed as an Applicant. Unless otherwise provided relief, the Fund will comply with all other provisions of Rule 23c-3. Terms as used in this Application that are defined in Rule 23c-3 have the same meaning as they are given in Rule 23c-3.
A. | Nuveen Enhanced Floating Rate Income Fund |
The Fund is a newly organized Massachusetts business trust registered under the Act as a diversified, closed-end management investment company that will be operated as an interval fund pursuant to Rule 23c-3 under the Act. The Funds principal investment objective is to seek a high level of current income and the secondary investment objective of the Fund is to seek capital appreciation. Common shares of the Fund are offered on a continuous basis at net asset value per share plus the applicable sales load, if any, and are not offered or traded in the secondary market and are not listed on any exchange or quoted on any quotation medium.
The Fund will be operated as an interval fund pursuant to Rule 23c-3 under the Act and 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 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 Funds group of investment companies (collectively, the Other Funds). Shares of any of the Funds
1 A successor in interest is limited to an entity that results from reorganization into another jurisdiction or a change in the type of business organization.
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operating pursuant to Rule 23c-3 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 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 under the Act, the Fund will treat an early withdrawal charge as if it were a contingent deferred sales load (CDSL).2
As further discussed below, the Fund seeks an Order to make offers to repurchase a portion of its common shares at one-month intervals, rather than the periodic intervals (three, six or twelve months) specified by Rule 23c-3, and to notify common shareholders seven to fourteen calendar days in advance of the repurchase request deadlines, rather than the no less than twenty-one and no more than forty-two days before each repurchase request deadline specified by Rule 23c-3. In connection with making monthly repurchases with modified notice provisions, the Fund will be subject to conditions (as described herein) such that the aggregate percentage of common shares subject to repurchase in any three-month period will not exceed 25% of the Funds outstanding common shares and payment for such common shares will occur at least five business days before notification of the next repurchase offer.
The Funds Board of Trustees has adopted a fundamental policy of making quarterly repurchase offers. To the extent the Fund receives the requested Order, the Funds Board of Trustees may, in the future, determine to adopt a fundamental policy of making monthly repurchase offers. Prior to relying on the requested Order, the Fund will obtain the approval of a majority of the Funds outstanding voting securities to adopt a fundamental policy to permit monthly repurchase offers.3 If the Fund relies on the requested Order, the Fund will disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1), and the imposition of early withdrawal charges as permitted pursuant to the Multi-Class Order (as defined below). The Funds fundamental policies with respect to repurchase offers, including the periodic repurchase offer interval, will be changeable by majority vote of the holders of the Funds outstanding voting securities. Monthly repurchase offers shall be for an amount not less than 5% nor more than 25% of the common shares outstanding during any three month period in accordance with any exemptive relief granted by the Commission.4 The Funds fundamental policies will also specify the means to determine the dates of the repurchase request deadlines and the maximum number of days between each repurchase request deadline and the repurchase pricing date as required by Rule 23c-3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5).5 The Funds repurchase pricing date normally will be the same
2 A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 of the Act, is a distribution related 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 as distinguished from a repurchase fee which is payable to a Fund to reimburse a Fund for costs incurred in liquidating securities in the Funds portfolio.
3 In the case of a Future Fund that has not yet offered its shares to the public, the Future Fund will obtain the approval of its sole initial shareholder to adopt a fundamental policy to permit monthly repurchase offers. In the case of a Future Fund that seeks to adopt a fundamental policy of making monthly repurchase offers after selling shares to the public, the Future Fund will obtain the approval of a majority of the Funds outstanding voting securities to the adoption of such policy.
4 Applicants agree that, as a condition to the relief requested in this Application, the repurchase offer amount for the then-current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). The Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
5 A Future Fund that relies on the exemptive relief requested hereby will have fundamental investment policies in compliance with Rule 23c-3(b)(2)(i), as modified by the requested Order, which will include the date of repurchase request deadlines or the means of determining the repurchase request deadlines and the maximum number of days between each repurchase request deadline and the next repurchase pricing date (as required by Rule 23c-3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5)). A Future Funds repurchase pricing date normally will be the same date as the repurchase request deadline and pricing will be determined after close of business on that date. A Future Fund will disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1). A Future Funds fundamental policies with respect to repurchase offers,
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date as the repurchase request deadline and pricing will be determined after the close of business on that date.
The Fund intends to offer one class of common shares upon commencement of operations: Class I common shares (Class I Shares). The Fund is relying on an exemptive order (Multi-Class Order) from the SEC that permits the Fund to issue multiple classes of shares and to impose asset-based distribution fees and early-withdrawal fees.6 From time to time the Fund may create additional classes of shares, the terms of which may differ from the Funds Class I Shares in the following respects: (i) the amount of fees permitted by a distribution and service plan as to such class; (ii) voting rights with respect to a distribution and service plan as to such 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 Multi-Class Order; (v) differences in any dividends and net asset values per share resulting from differences in fees under a distribution and service plan or in class expenses; (vi) any early withdrawal charge or other sales load structure; (vii) all shares will be offered to the public at net asset value plus any applicable sales charge; and (viii) any exchange or conversion features, in each case, as permitted under the Act.
B. | Nuveen Fund Advisors, LLC |
Nuveen Fund Advisors is a limited liability company organized under the laws of the state of Delaware. Nuveen Fund Advisors serves as investment adviser to the Fund. Nuveen Fund Advisors is registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act).
Nuveen Fund Advisors will provide services to the Fund pursuant to an investment management agreement between the Fund and Nuveen Fund Advisors. Nuveen Fund Advisors will have overall responsibility for the management of the Fund. Nuveen Fund Advisors will oversee all investment advisory and portfolio management services and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance and related services.
C. | Nuveen Asset Management, LLC |
Nuveen Asset Management is a limited liability company organized under the laws of the state of Delaware. Nuveen Asset Management serves as sub-adviser to the Fund and is a subsidiary of Nuveen Fund Advisors. Nuveen Asset Management is registered with the Commission as an investment adviser under the Advisers Act.
Nuveen Asset Management will provide services to the Fund pursuant to a sub-advisory agreement between Nuveen Fund Advisors and Nuveen Asset Management. Under the sub-advisory agreement, subject to the supervision and direction of the Funds Board of Trustees, Nuveen Asset Management will manage the Funds portfolio in accordance with the Funds investment objective and policies, make investment decisions for the Fund, place orders to purchase and sell securities, and employ professional portfolio managers and securities analysts who provide research services to the Fund.
D. | Nuveen Securities, LLC |
including the periodic offer interval, will be changeable only by majority vote of the holders of such Future Funds outstanding voting securities. Under a Future Funds fundamental policy, the repurchase offer amount will be determined by such Future Funds Board of Trustees prior to each repurchase offer and will not be less than 5% of its outstanding common shares on the repurchase request deadline. Applicants agree that, as a condition to the relief requested in this application, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then-current monthly period, will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). A Future Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
6 In the Matter of Nuveen Floating Rate Fund, et al., Rel. No. IC-24066 (October 8, 1999) (notice), Rel. No. IC-24114 (October 27, 1999) (order).
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The Distributor is a Delaware limited liability company and affiliate of the Adviser. The Distributor is a broker-dealer registered with the Commission and a member of FINRA.
The Distributor will act as the distributor of Shares for the Fund on a best efforts basis, subject to various conditions, pursuant to the terms of the distribution agreement with the Fund. The Distributor is not obligated to sell any specific amount of Shares of the Fund.
Shares will also be offered through other brokers or dealers that will have entered into selling agreements with the Distributor. The Distributor may reallocate the full amount of the sales load to the brokers or dealers that offer shares of the Fund. The actual front- end sales load paid by investors may vary among and within selling agents.
E. | Other Requirements for a Rule 23c-3 Fund |
Rule 23c-3(b)(4) requires that common shareholders be provided with notification of each quarterly repurchase offer no less than twenty-one and no more than forty-two days before each repurchase request deadline. If the relief requested herein is obtained, however, the Fund, upon commencing monthly repurchase offers, will provide (and any Future Fund will provide) common shareholders with notification of each monthly repurchase offer no less than seven and no more than fourteen days before each repurchase request deadline. The Funds notification will include (and any Future Funds notification will include), all information required by Rule 23c-3(b)(4)(i). Applicants agree that, as a condition of the relief requested in this application, the Fund, upon commencing monthly repurchase offers, will make (and any Future Fund will make) payment for common shares repurchased in the previous months repurchase offer at least five business days before sending notification of the next repurchase offer. The Fund, upon commencing monthly repurchase offers, will file (and any Future Fund will file), copies of the notification with the Commission, together with Form N-23c-3, within three business days after sending the notification to common shareholders as required by Rule 23c-3(b)(4)(ii).
Pursuant to Rule 23c-3(b)(1), the Fund, upon commencing monthly repurchase offers, will repurchase (and any Future Fund will repurchase), common shares for cash at the net asset value determined on the repurchase pricing date and will pay the holders on or before the repurchase payment deadline,7 which will be no later than seven calendar days after the repurchase pricing date, unless the offer is suspended or postponed as provided in Rule 23c-3(b)(3). Upon commencing monthly repurchase offers, the Fund intends to make payment by the fifth business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date. The Fund and a Future Fund may deduct a repurchase fee in an amount not to exceed 2% from the repurchase proceeds payable to tendering common shareholders, in compliance with Rule 23c-3(b)(1), and then only to the extent such repurchase fee is reasonably intended to compensate the Fund (and any Future Fund) for expenses directly related to the repurchase. Such a fee would be in addition to the early withdrawal charges the Fund (or any Future Fund relying on the Multi-Class Order or similar relief) may charge pursuant to the Multi-Class Order or similar relief. The Fund, upon commencing monthly repurchase offers, will not condition (and any Future Fund will not condition), a repurchase offer upon tender of any minimum amount of common shares. The Fund, upon commencing monthly repurchase offers, will comply (and any Future Fund will comply), with the pro ration and other allocation requirements applicable if common shareholders tender more than the repurchase offer amount in accordance with Rule 23c-3(b)(5). The Fund, upon commencing monthly repurchase offers, will permit (and any Future Fund will permit), tenders to be withdrawn or modified at any time until the repurchase request deadline, but will not permit tenders to be withdrawn or modified thereafter in accordance with Rule 23c-3(b)(6). The Fund, upon commencing monthly repurchase offers, will compute (and any Future Fund will compute), the net asset value for its common shares in accordance with Rule 23c-3(b)(7). The Fund (and any Future Fund) will not
7 Rule 23c-3(a)(4).
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suspend or postpone a repurchase offer except pursuant to the vote of a majority of its trustees, including a majority of its Disinterested Trustees (as defined below), and only under the limited circumstances specified by Rule 23c-3(b)(3)(i). At least a majority of the trustees of the Fund will be (and at least a majority of trustees of any Future Fund will be) persons who are not interested persons of the Fund (or a Future Fund, as applicable) within the meaning of Section 2(a)(19) of the Act (Disinterested Trustees), and the selection or nomination of those trustees is, in the case of the Fund, or will be, in the case of any Future Fund, committed to the discretion of the Disinterested Trustees in accordance with Rule 23c-3(b)(8)(i). The Fund (and any Future Fund) will comply with Rule 23c-3(b)(8)s requirements with respect to its Disinterested Trustees and their legal counsel. Any senior security issued by the Fund (and any Future Fund) or other indebtedness of the Fund (and any Future Fund) will either mature by the next repurchase pricing date or provide for the Funds (or Future Funds, as applicable) ability to call, repay of redeem such senior security or other indebtedness by the repurchase pricing date, either in whole or in part without penalty or premium, as necessary to permit the Fund (or Future Fund, as applicable) to complete the repurchase offer in such amounts, as the trustees have determined, in compliance with the asset coverage requirements of Section 18 of the Act and in accordance with Rule 23c-3(b)(9).
In accordance with Rule 23c-3(b)(10), from the time the Fund (or any Future Fund) sends its notification to common shareholders of the repurchase offer, which shall be sent in compliance with the requirements of Rule 23c-3(b)(4) as modified by the requested Order, until the repurchase pricing date, a percentage of such funds assets equal to at least 100% of the repurchase offer amount will consist of: (1) assets that can be sold or disposed of in the ordinary course of business at approximately the price at which such fund has valued such investment, within a period equal to the period between the repurchase request deadline and the repurchase payment deadline, or (2) assets that mature by the next repurchase payment deadline; and in the event the Funds (or any Future Funds) assets fail to comply with this requirement, the Board of Trustees of such fund will cause such fund to take such action as it deems appropriate to ensure compliance. The Funds Board of Trustees will adopt (and any Future Funds Board of Trustees will adopt) written procedures reasonably designed, taking into account current market conditions and such funds investment objectives, to ensure that such funds portfolio assets are sufficiently liquid so that the Fund (and any Future Fund, as applicable) can comply with its fundamental policy on repurchases and with the liquidity requirements described above. The Funds Board of Trustees (and any Future Funds Board of Trustees) will review the overall composition of the portfolio and make and approve such changes to the procedures as it deems necessary. Applicants believe the Funds portfolio can be (and any Future Funds portfolio will be) managed to provide ample liquidity for its proposed monthly repurchase offers in accordance with the requirements of Rule 23c-3(b)(10).
The Fund and the Distributor will (and any Future Fund and any respective underwriter for such fund will) comply as if the Fund (and any Future Fund, as applicable) was an open-end investment company, with the provisions of Section 24(b) of the Act and the rules thereunder with respect to any advertisement, pamphlet, circular, form letter, or other sales literature addressed to, of intended for distribution to, prospective investors in accordance with Rule 23c-3(b)(11).
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase any securities of any class 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 such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors in order to insure that such purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class or classes of securities to be purchased. Repurchase offers made pursuant to the exception which permits closed-end funds to make repurchases pursuant to tender offers are considered issuer tender offers and thus, absent further relief, must comply with the requirements of the tender offer rules under the Securities Exchange
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Act of 1934, as amended (the Exchange Act), including Rules 13e-4 and 14e-1.
The Commission also may exempt closed-end issuer repurchases from the prohibitions in Section 23(c) pursuant to Section 23(c) (3). Rule 23c-3 provides such an exemption as it permits a registered closed-end investment company to make repurchase offers for its common stock at net asset value at periodic intervals pursuant to a fundamental policy of the investment company. Periodic interval is defined in Rule 23c-3(a)(1) as an interval of three, six or twelve months. Rule 23c-3(b)(4) requires that notification of each repurchase offer be sent to common shareholders no less than 21 calendar days and no more than 42 calendar days before the repurchase request deadline. Rule 23c-3(a)(3) provides that a repurchase offer amount may be between 5% and 25% of the common stock outstanding on the repurchase request deadline. At the time the Commission adopted Rule 23c-3, corresponding amendments to Rules 10b-68 and 13e-4 of the Exchange Act and Regulation 14E of the Exchange Act were also adopted, exempting repurchase offers pursuant to Rule 23c-3 from most of the provisions of those rules.9
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from the definition of periodic interval under Rule 23c-3(a)(1) that would permit the Fund (and any Future Fund) to rely on the relief provided by Rule 23c-3 while making repurchase offers on a monthly basis. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven but no more than fourteen calendar days in advance of the repurchase request deadline.10
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and 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.
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 such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
Section 23(c)(3) of the Act 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.
A. | Background |
In its 1992 study entitled Protecting Investors: A Half Century of Investment Company Regulation (Protecting Investors), the Commissions Division of Investment Management (the Division) recognized
8 Rule 102(b)(2) of Regulation M continues this exception.
9 Subsequently, the Commission also added paragraph (a)(1)(xi) to Rule 415 under the Securities Act of 1933, as amended (the Securities Act), in order to permit closed-end funds relying on Rule 23c-3 to make continuous or delayed offerings.
10 Based on the requested relief the Fund (or any Future Fund) will be able to rely on the exemptions provided under Exchange Act and Securities Act rules for repurchase offers made in accordance with Rule 23c-3.
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that the Act imposes a rigid classification system that dictates many important regulatory consequences.11 For example, the characterization of a management company as open-end or closed-end has historically been crucial to the determination of the degree of liquidity a funds shareholders will have, and thus the liquidity required of a funds investments.
Furthermore, except as noted below, there has been no middle ground between the two extremes. Open-end funds have offered complete liquidity to their shareholders and thus required virtually complete liquidity of the underlying investments, while closed-end funds have been subject to requirements that in fact restrict the liquidity they are permitted to offer their investors. Under this dual system of regulation, neither form has provided the best vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors, the Division determined that, given the changes in the securities market since 1940in particular the emergence of semi-liquid investment opportunitiesit was appropriate to re-examine the classification system and its regulatory requirements.12
The one exception to the liquid/illiquid dichotomy has been the so called prime-rate funds. These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting Investors recognized that the rigidity of the Acts classification system had become a limitation on sponsors ability to offer innovative products that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The report also noted the pioneering efforts of the prime rate funds and the market success they had experienced.13 The report thus concluded that it would be appropriate to provide the opportunity for investment companies to chart new territory between the two extremes of the open-end and closed-end forms, consistent with the goals of investor protection.14 The Division thus recommended giving the industry the ability to employ new redemption and repurchasing procedures, subject to Commission rulemaking and oversight.
In accordance with this recommendation, and shortly after Protecting Investors was published, the Commission proposed for comment a new rule designed to assist the industry in this endeavor.15 The Commission proposed Rule 23c-3, which began from the closed-end, illiquid perspective under Section 23(c), and provided flexibility to increase shareholder liquidity through periodic repurchase offers under simplified procedures. Rule 23c-3 was adopted in April 1993.16
The prime rate funds were cited in both Protecting Investors and the Proposing Release as the prototype for the interval concept.17 Nonetheless, while the prime rate funds broke the path for innovation in this area, developments since the origin of these funds make further innovation appropriate. Precedent exists for the granting of exemptive relief to permit funds other than prime rate interval funds to engage in repurchases on a monthly basis.18
11 SEC Staff Report, Protecting Investors: A Half Century of Investment Company Regulation (May 1992) at 421.
12 Id. at 424.
13 Id. at 439-40.
14 Id. at 424.
15 Investment Co. Act Rel. No. 18869 (July 28, 1992) (the Proposing Release).
16 Investment Co. Act Rel. No. 19399 (April 7, 1993) (the Adopting Release). The Commission also had proposed Rule 22e-3, which began from the open-end, complete liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The Commission neither adopted nor withdrew proposed Rule 22e-3. To Applicants knowledge, the Commission has taken no further action with respect to Rule 22e-3.
17 Protecting Investors at 439-40; Proposing Release at 27.
18 In the Matter of Arca U.S. Treasury Fund and Arca Capital Management, LLC, Rel. No. IC-34935 (June 2, 2023) (notice) and Rel. No. IC-34952 (June 28, 2023) (order) (Arca). In the Matter of Voya Senior Income Fund, et al., Rel. No. IC-34609 (June 3, 2022) (notice) and Rel. No. IC-34640 (June 29, 2022) (order) (Voya); In the Matter of Lord Abbett Floating Rate
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B. | Monthly Repurchases |
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from Rule 23c-3(a)(1) solely to the extent necessary to permit the Fund (and any Future Fund) to make monthly repurchase offers. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) solely to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to shareholders at least seven days but not more than fourteen days in advance of the repurchase request deadline. In Applicants view, this modification would enhance, rather than diminish, the investor benefits provided by Rule 23c-3 and is consistent with the public interest and investor protection. As long as the Fund (and any Future Fund), as supervised by its Board of Trustees, can make monthly repurchase offers pursuant to the modified notification requirements requested herein and otherwise comply with the remainder of Rule 23c-3, including its requirements with respect to liquidityand Applicants believe the Fund (and any Future Fund) will be able to do sothere is no public interest nor investor protection concern that justifies prohibiting monthly repurchase offers.
In the rulemaking proceeding in which Rule 23c-3 was adopted, certain commenters requested that a provision for monthly repurchases be incorporated in the final Rule. At the time of adoption, the Commission declined to do so. The Commission was concerned that shorter repurchase intervals would not be compatible with the notification requirement in paragraph (b)(4) of the Rule because a fund would need to send out a notification for a repurchase offer before it had completed the previous offer.19 Applicants believe that this concern should not deter the Commission from granting the relief requested in this case. First, it is understandable that, in its initial efforts to chart new territory, the Commission was reluctant to provide too many options. Regulatory prudence might well have dictated adopting a more limited rule and considering more flexible proposals on a case-by-case basis. Second, it is significant that the reason given is one of logistics rather than substance. In fact, as discussed below, the logistical concern mentioned would not pertain to Applicants proposal.
Rule 23c-3(b)(4) requires that notification of each repurchase offer be sent to common shareholders no less than 21 days and no more than 42 days before the repurchase request deadline. In order to prevent any overlap between payment for a repurchase and notification of the next months repurchase offer or resulting investor confusion, Applicants request an exemption from the notice provisions of Rule 23c-3(b)(4) to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven calendar days, but not more than fourteen calendar days, in advance of the repurchase request deadline. Because the Fund, upon commencing monthly repurchase offers, intends (and any Future Fund intends) to price on the repurchase request deadline, and pay by the fifth business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date (and, in any event, no later than seven calendar days after the repurchase pricing date), this proposed timing will ensure that common shareholders have received payment in full for any repurchases before receiving notification of the next repurchase offer. The entire repurchase procedure will be completed before the next notification is sent out, thus avoiding any overlap. Applicants believe that these procedures will eliminate any possibility of
High Income Fund, et al., Rel. No. IC-34308 (June 22, 2021) (notice) and Rel. No. IC-34336 (July 19, 2021) (order) (Lord Abbett). In the Matter of Aspiriant Defensive Allocation Fund, et. al., Rel. No. IC-33924 (July 10, 2020) (notice) and Rel. No. IC-33961 (July 31, 2020) (order) (Aspiriant). In the Matter of Weiss Strategic Interval Fund, et al., Rel. No. IC-33101 (May 21, 2018) (notice), Rel. No. IC-33124 (June 18, 2018) (order) (Weiss). In the Matter of Blackstone / GSO Floating Rate Enhanced Income Fund, et al., Rel. No. IC-32866 (Oct. 23, 2017) (notice), Rel. No. IC-32902 (Nov. 20, 2017) (order) (Blackstone). In the Matter of Van Kampen Asset Management, et al., Rel. No. IC-27317 (May 12, 2006) (notice), Rel. No. IC-27390 (June 7, 2006) (order) (Van Kampen). In the Matter of CypressTree Asset Management Corporation Inc., et al., Rel. No. IC-23020 (Feb. 4, 1998) (notice), Rel. No. IC-23055 (Mar. 3, 1998) (order) (CypressTree). In the Matter of ING Pilgrim Investments. LLC, et al., Rel. No. IC-25167 (Sep. 21, 2001) (notice), Rel. No. IC-25212 (Oct. 17, 2001) (order) (Pilgrim Investments).
19 See Adopting Release at 28-29.
10
investor confusion from monthly repurchases.
The Funds prospectus will provide (and any Future Funds prospectus will provide) a clear explanation of the repurchase program. Moreover, shareholders in the Fund and any Future Fund that seeks shareholder approval to adopt or change a fundamental policy to permit monthly repurchase offers will receive full disclosure in the proxy materials sent to obtain the requisite shareholder approval. Applicants expect that, before long, the monthly repurchase opportunity will become as routine in the shareholders mind as daily redemptions, and that the significance of the notification will diminish. Thus, any remote possibility of investor confusion due to the proximity in time of the repurchase payment deadline to the sending of the next notification will be adequately dealt with by disclosure.
Finally, upon commencing monthly repurchase offers, the Funds (and any Future Funds) procedures will provide that the Funds Board of Trustees (and any Future Funds Board of Trustees) will be informed of the number of repurchase requests made in the previous repurchase offerwhich repurchases will have been completedat the time such funds Board of Trustees determines the repurchase offer amount for the current month. This will enable the Funds Board of Trustees (and any Future Funds Board of Trustees) to take that information, as well as relevant liquidity reports from the portfolio manager, into account in setting the repurchase offer amount.
Applicants believe that monthly rather than quarterly repurchases offer many benefits and therefore would be in the public interest and in the common shareholders interests and be consistent with the policies underlying Rule 23c-3. Rule 23c-3 currently permits periodic repurchase offers no more frequently than once every three months, but monthly repurchases would provide significant benefits to common shareholders because their investments will be more liquid than an investment in a fund conducting only quarterly repurchase offers. Investors also will be better able to manage their investments and plan transactions because they will know that, if they decide to forego a repurchase offer, they only need to wait one (rather than three) months for the next offer. Applicants believe the requested relief allowing monthly repurchases provides the public marketplace and the Fund (and any Future Fund) common shareholders with more investment options. Finally, consistent with Section 23(c)(3), monthly repurchase offers will be made available to all common shareholders and thus, will not unfairly discriminate against any holders of the common shares to be purchased.
For all of these reasons, Applicants believe that the requested relief is 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. Because the Fund will describe (and any Future Fund will describe) its repurchase policy fully in its prospectus and annual report, shareholders and potential investors will have available all information about the Fund (and any Future Fund) and its differences from a traditional open-end fund and traditional closed-end fund. Finally, because the requested Order will increase the investment alternatives available to investors, the requested Order is appropriate in the public interest. Because the monthly repurchase offers will be made available to all common shareholders and otherwise comply with the requirements of Rule 23c-3 (except as it relates to the imposition of early withdrawal fees), the repurchase offers will not be made in a manner or on a basis which unfairly discriminates against holders of the common shares to be purchased.
Applicants believe that there is precedent for the requested relief and that monthly repurchases are consistent with the policies underlying Rule 23c-3. The Commission has granted exemptive relief under Rule 23c-3 to permit other interval funds to make monthly repurchase offers under modified notice procedures.20 Under the Weiss and Blackstone orders, closed-end funds operating as interval funds sought to make monthly repurchase offers of not less than 5% of their outstanding common shares but not more than 25% in any three month period pursuant to modified notice procedures under Rule 23c-3. Under the Van
20 See Weiss supra at note 18, See Blackstone supra at note 18, See Van Kampen supra at note 18, See Pilgrim Investments supra at note 18. See also CypressTree, supra at note 18.
11
Kampen order, a closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the trailing three month period pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the Pilgrim Investments order, a closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the aggregate in any one quarter pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the CypressTree order, another closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not more than 10% of its outstanding common shares. Applicants submit that the requested relief is appropriate under the applicable statutory standards.
Applicants agree that any order granting the requested relief will be subject to the following conditions:
a. | The Fund (and any Future Fund relying on this relief) will make a repurchase offer pursuant to Rule 23c-3(b) for a repurchase offer amount of not less than 5% in any one-month period. In addition, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of the Funds (or Future Funds, as applicable) outstanding common shares. The Fund (and any Future Fund relying on this relief) may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period. |
b. | Payment for repurchased common shares will occur at least five business days before notification of the next repurchase offer is sent to common shareholders of the Fund (or any Future Fund relying on this relief). |
For the reasons stated above, Applicants submit that the exemptions requested are necessary or 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, and thus meet the standards of Section 6(c). Applicants further submit that the relief requested pursuant to Section 23(c)(3) will be consistent with the protection of investors and will ensure that any purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class of securities to be purchased. Finally, Applicants submit that the relief requested is consistent with that previously provided by the Commission in the Weiss, Blackstone, Van Kampen, Pilgrim Investments and CypressTree orders.
Applicants desire that the Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
As required by Rule 0-2(c)(1) under the Act, each Applicant hereby states that all of the requirements for execution and filing of this Application have been complied with in accordance with the operating agreements of the Applicants, as applicable, and the persons signing and filing this document are authorized to do so on behalf of the Applicants. The resolutions of the Funds Board of Trustees are attached as Exhibit A to this Application in accordance with the requirements of Rule 0-2(c)(1) under the Act, and the verifications required by Rule 0-2(d) under the Act, are attached as Exhibits B to this Application, respectively. In accordance with the requirements for a request for expedited review of this Application, marked copies of two recent applications seeking the same relief as Applicants that are substantially identical as required by Rule 0-5(e) of the Act are attached as Exhibits C and D. Pursuant to Rule 0-2(f) under the Act, the Applicants address is
12
333 West Wacker Drive, Chicago, Illinois 60606 and that all written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
[Signature page follows.]
13
SIGNATURES
NUVEEN ENHANCED FLOATING RATE INCOME FUND |
By: /s/ Mark L. Winget |
Name: Mark L. Winget |
Title: Vice President and Secretary |
Dated: November 21, 2023 |
NUVEEN FUND ADVISORS, LLC |
By: /s/ Mark L. Winget |
Name: Mark L. Winget |
Title: Vice President and Assistant Secretary |
Dated: November 21, 2023 |
NUVEEN ASSET MANAGEMENT, LLC |
By: /s/ Mark L. Winget |
Name: Mark L. Winget |
Title: Vice President, Associate General Counsel and Assistant Secretary |
Dated: November 21, 2023 |
NUVEEN SECURITIES, LLC |
By: /s/ Lucas A. Satre |
Name: Lucas A. Satre |
Title: Managing Director, Secretary and General Counsel |
Dated: November 21, 2023 |
14
EXHIBIT A
Resolutions of the Board of Trustees of
Nuveen Enhanced Floating Rate Income Fund
RESOLVED, that the appropriate officers of the Fund be and they hereby are, and each of them acting individually hereby is, authorized to prepare, execute and file with the Securities and Exchange Commission (the SEC) on behalf of the Fund an application for an exemptive order pursuant to Sections 6(c) and 23(c)(3) under the 1940 Act to allow the Fund to conduct monthly repurchase offers, such application to be in form and substance satisfactory to counsel for the Fund, the execution and filing of any such application, or amendment to such application, to be conclusive evidence of its authorization hereby; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to prepare execute and file with the SEC any amendments to such exemptive application requested by the SEC or as they believe necessary or appropriate; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to take all such further action and to execute and deliver all such further instruments and documents, in the name of and on behalf of the Fund, on the advice and assistance of counsel, and to pay all such expenses as shall be necessary, proper, or advisable, in order to fully carry out the intent, and accomplish the purposes of, the foregoing; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized and directed, for and on the Funds behalf, to take or cause to be taken, any and all action, to execute and deliver any and all certificates, instructions, requests, or other instruments, and to do any and all things that in their judgment, on the advice and assistance of counsel, as may be necessary or advisable to effect each of the resolutions adopted to carry out the purposes and intent thereof, and as may be necessary or advisable for the conduct of the Funds business.
15
EXHIBIT B
VERIFICATION OF
NUVEEN ENHANCED FLOATING RATE INCOME FUND
The undersigned states that he has duly executed the attached Application dated November 21, 2023, for and on behalf of Nuveen Enhanced Floating Rate Income Fund in his capacity as Vice President and Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
NUVEEN ENHANCED FLOATING RATE INCOME FUND
By: /s/ Mark L. Winget |
Name: Mark L. Winget |
Title: Vice President and Secretary |
Dated: November 21, 2023 |
16
VERIFICATION OF
NUVEEN FUND ADVISORS, LLC
The undersigned states that he has duly executed the attached Application dated November 21, 2023, for and on behalf of Nuveen Fund Advisors, LLC in his capacity as Vice President and Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
NUVEEN FUND ADVISORS, LLC
By: /s/ Mark L. Winget
Name: Mark L. Winget
Title: Vice President and Assistant Secretary
Dated: November 21, 2023
17
VERIFICATION OF
NUVEEN ASSET MANAGEMENT, LLC
The undersigned states that he has duly executed the attached Application dated November 21, 2023, for and on behalf of Nuveen Asset Management, LLC in his capacity as Vice President, Associate General Counsel and Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
NUVEEN ASSET MANAGEMENT, LLC
By: /s/ Mark L. Winget
Name: Mark L. Winget
Title: Vice President, Associate General Counsel and Assistant Secretary
Dated: November 21, 2023
18
VERIFICATION OF
NUVEEN SECURITIES, LLC
The undersigned states that he has duly executed the attached Application dated November 21, 2023, for and on behalf of Nuveen Securities, LLC in his capacity as Managing Director, Secretary and General Counsel of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
NUVEEN SECURITIES, LLC
By: /s/ Lucas A. Satre
Name: Lucas A. Satre
Title: Managing Director, Secretary and General Counsel
Dated: November 21, 2023
19
EXHIBIT C
First Marked Copy of the Application Showing Changes from the Final Versions of the Two
Applications Identified as Substantially Identical under Rule 0-5(e)(3)
20
As filed with the U.S. Securities and Exchange Commission on February 23November 21, 20212023
File No. 812-15097[ ]
UNITED STATES OF AMERICA
BEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Application Pursuant to Sections 6(c) and 23(c)(3) of the Investment Company Act of 1940
(the Act) for an Order Granting Certain Exemptions from the Provisions of Rule 23c-3
thereunder
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
In the Matter of the Application of:
Lord AbbettNuveen Enhanced Floating Rate High Income Fund
90 Hudson Street333 West Wacker Drive
Jersey City, New Jersey 07302-3973Chicago, Illinois 60606
and
Lord, Abbett & Co.
LLCNuveen Fund Advisors, LLC
90 Hudson Street333 West Wacker Drive
Jersey City, New Jersey 07302-3973Chicago, Illinois 60606
and
Nuveen Asset Management, LLC
333 West Wacker Drive
Chicago, Illinois 60606
and
Lord Abbett Distributor LLCNuveen Securities, LLC
90 Hudson Street333 West Wacker Drive
Jersey City, New Jersey 07302-3973Chicago, Illinois 60606
Please send all communications, notices and orders regarding this Application to:
John T. FitzgeraldMark L. Winget
Vice President and Assistant Secretary
90
Hudson Street333 West Wacker Drive
Jersey City, New Jersey 07302-3973Chicago, Illinois 60606
With copies to:
Bryan ChegwiddenJoel D.
Corriero, Esq.
Ropes & Gray
LLPStradley Ronon Stevens & Young, LLP
1211 Avenue of the Americas2005 Market Street
Suite 2600
New York, New York 10036-8704Philadelphia, Pennsylvania 19103
Page 1 of 1958 sequentially numbered pages (including exhibits)
21
TABLE OF CONTENTS
I. |
THE PROPOSAL | 3 | ||||||
II. |
STATEMENT OF FACTS | 3 | ||||||
A. | 3 | |||||||
B. | ||||||||
C. | ||||||||
D. | Nuveen Securities, LLC | 5 | ||||||
E. | Other Requirements for a Rule 23c-3 Fund | 6 | ||||||
III. |
EXEMPTIONS REQUESTED | |||||||
IV. |
COMMISSION AUTHORITY | |||||||
V. |
DISCUSSION | |||||||
A. | Background | |||||||
B. | Monthly Repurchases | |||||||
VI. |
APPLICANTS CONDITIONS | |||||||
VII. |
CONCLUSION | |||||||
22
File
No. 812-15097[
]
I. THE PROPOSAL
Lord AbbettNuveen Enhanced Floating Rate High Income Fund (the Fund)1 is a newly organized Delaware
statutoryMassachusetts business trust registered
under the Investment Company Act of 1940, as amended (the Act), as a non-diversifieddiversified, closed-end management investment company that will be
operated as an interval fund. The Fund is externally advised by Lord, Abbett & Co. LLC (advised by Nuveen Fund Advisors, LLC (Nuveen Fund Advisors) and sub-advised by Nuveen Asset Management,
LLC (Nuveen Asset Management and together with Nuveen Fund Advisors, the Adviser). Lord Abbett
DistributorNuveen Securities, LLC (the
Distributor) is the principal underwriter and distributor of the Funds shares. The Fund, the Adviser and the Distributor are referred to herein as the Applicants.
The Applicants hereby seek an order (the Order) from the U.S. Securities and Exchange Commission (the Commission or the SEC) pursuant to Sections 6(c) and 23(c)(3) of the Act for an exemption from certain provisions of Rule 23c-3 under the Act to permit the Fund to make repurchase offers to its common shareholders every month and to provide notification to its common shareholders of an upcoming repurchase offer no less than seven and no more than fourteen calendar days in advance of the repurchase request deadline.
Applicants request that the Order also apply to any registered closed-end management investment company that has been previously organized or
that may be organized 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,21 acts as an investment adviser, and which operates as an interval fund pursuant to Rule 23c-3 under the Act (each a Future Fund
and, together with the Fund, the Funds). Any of the Funds relying on this relief in the future will do so in compliance with the terms and conditions of this application (the Application). Applicants represent
that each entity presently intending to rely on the requested relief is listed as an Applicant. Unless otherwise provided relief, the Fund will comply with all other provisions of Rule 23c-3. Terms as used in this Application that are defined in
Rule 23c-3 have the same meaning as they are given in Rule 23c-3.
II. STATEMENT OF FACTS
A. |
|
The Fund is a newly organized
Delaware statutoryMassachusetts business trust
registered under the Act as a
non-diversifieddiversified, closed-end management
investment company that will be operated as an interval fund pursuant to Rule 23c-3 under the Act. The Funds
principal investment objective is to seek a high level of
current income and the secondary investment objective of the Fund is to seek capital appreciation. Common shares of the Fund are offered on a continuous basis at net asset value per share plus the applicable sales load, if any, and are not offered or traded in the secondary market and are not listed on any
exchange or quoted on any quotation medium.
The Fund will be operated as an interval fund pursuant to Rule 23c-3 under the Act and 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 investment companies or (ii) other registered closed-end investment companies that
1 At a meeting of the Funds Board of Trustees on April 1-2, 2020, the Funds name was changed from Lord
Abbett Enhanced Floating Rate Fund to Lord Abbett Floating Rate High Income Fund.
2
1 A successor in interest is limited to an entity that results from reorganization into another jurisdiction or a change in the type of business organization.
23
comply with Rule 23c-3 under the 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 any of the Funds operating pursuant to Rule 23c-3 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 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 under the Act, the Fund will treat an early withdrawal charge as if it were a contingent
deferred sales load (CDSL).32
As further discussed below, the Fund seeks an Order to make offers to repurchase a portion of its common shares at one-month intervals, rather than the periodic intervals (three, six or twelve months) specified by Rule 23c-3, and to notify common shareholders seven to fourteen calendar days in advance of the repurchase request deadlines, rather than the no less than twenty-one and no more than forty-two days before each repurchase request deadline specified by Rule 23c-3. In connection with making monthly repurchases with modified notice provisions, the Fund will be subject to conditions (as described herein) such that the aggregate percentage of common shares subject to repurchase in any three-month period will not exceed 25% of the Funds outstanding common shares and payment for such common shares will occur at least five business days before notification of the next repurchase offer.
The Funds Board of Trustees has adopted a fundamental policy of making quarterly
repurchase offers. To the extent the Fund receives the requested Order, the Funds Board of Trustees may, in the future, determine to adopt a fundamental policy of making monthly repurchase offers. Prior to relying on the requested Order, the
Fund will obtain the approval of a majority of the Funds outstanding voting securities to adopt a fundamental policy to permit monthly repurchase offers.43 If the Fund relies on the requested Order, the Fund will disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset
value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1), and the imposition of early withdrawal charges as permitted pursuant to the Multi-Class Order (as defined below). The Funds fundamental policies with respect
to repurchase offers, including the periodic repurchase offer interval, will be changeable by majority vote of the holders of the Funds outstanding voting securities. Monthly repurchase offers shall be for an amount not less than 5% nor more
than 25% of the common shares outstanding during any three month period in accordance with any exemptive relief granted by the
Commission.54
The Funds fundamental policies will also specify the means to determine the dates of the repurchase request deadlines and the maximum number of days between each repurchase request
deadline and the repurchase pricing date as required by Rule 23c-3(b)(2)(i)(C) and (D) and in accordance with Rule
23c-3(a)(5).65
The Funds repurchase pricing date normally will be the same
32
A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 of the Act, is a distribution related 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 as distinguished from a repurchase fee which is payable to a Fund to reimburse a Fund for costs incurred in liquidating securities in the Funds portfolio.
4
3 In the case of a Future Fund that has not yet offered its
shares to the public, the Future Fund will obtain the approval of its sole initial shareholder to adopt a fundamental policy to permit monthly repurchase offers. In the case of a Future Fund that seeks to adopt a fundamental policy of making monthly
repurchase offers after selling shares to the public, the Future Fund will obtain the approval of a majority of the Funds outstanding voting securities to the adoption of such policy.
5
4 Applicants agree that, as a condition to the relief
requested in this Application, the repurchase offer amount for the then-current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of its
outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). The Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of
additional common shares so repurchased does not exceed 2% in any three-month period.
6
5 A Future Fund that relies on the exemptive relief
requested hereby will have fundamental investment policies in compliance with Rule 23c-3(b)(2)(i), as modified by the requested Order, which will include the date of repurchase request deadlines or the means of determining the repurchase request
deadlines and the maximum number of days between each repurchase request deadline and the next repurchase pricing date (as required by Rule 23c-3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5)). A Future Funds repurchase
pricing date normally will be the same date as the repurchase request deadline and pricing will be determined after close of business on that date. A Future Fund will disclose in its prospectus and annual reports its
24
date as the repurchase request deadline and pricing will be determined after the close of business on that date.
The Fund intends to offer three classesone class of common shares upon commencement of operations: Class A common shares (Class A Shares), Class I common shares (Class I Shares) and Class U common shares (Class U Shares). The Fund is relying on an exemptive
order (Multi-Class Order) from the SEC that permits the Fund to issue multiple classes of shares and to impose asset-based distribution fees and early-withdrawal fees.76 From time to time the Fund may create additional classes of shares, the terms of which may differ from the Funds
Class A, Class
I and Class U Shares in the following respects: (i) the amount of fees permitted by a
distribution and service plan as to such class; (ii) voting rights with respect to a distribution and service plan as to such 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 Multi-Class Order; (v) differences in any dividends and net asset values per share resulting from differences in fees under a distribution and service plan or in class
expenses; (vi) any early withdrawal charge or other sales load structure; (vii) all shares will be offered to the public at net asset value plus any applicable sales charge; and (viii) any exchange or conversion features, in each
case, as permitted under the Act.
B. |
|
Founded in 1929, the AdviserNuveen Fund Advisors is a limited liability company organized under the
laws of the state of Delaware. The
AdviserNuveen Fund Advisors serves as investment
adviser to the Fund. The
AdviserNuveen Fund Advisors is registered with the
Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act).
Nuveen Fund Advisors will provide services to the Fund pursuant to an investment management agreement between the Fund and Nuveen Fund Advisors. Nuveen Fund Advisors will have overall responsibility for the management of the Fund. Nuveen Fund Advisors will oversee all investment advisory and portfolio management services and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance and related services.
C. | Nuveen Asset Management, LLC |
Nuveen Asset Management is a limited liability company organized under the laws of the state of Delaware. Nuveen Asset Management serves as sub-adviser to the Fund and is a subsidiary of Nuveen Fund Advisors. Nuveen Asset Management is registered with the Commission as an investment adviser under the Advisers Act.
The AdviserNuveen Asset
Management will provide services to the Fund pursuant to an investment advisorya sub-advisory agreement between the FundNuveen Fund
Advisors and the AdviserNuveen Asset Management. Under the investment
advisorysub-advisory agreement, subject to the
supervision and direction of the Funds Board of Trustees, the AdviserNuveen Asset Management will manage the Funds portfolio in
accordance with the Funds investment objective and policies, make investment decisions for the Fund, place orders to purchase and sell securities, and employ professional portfolio
fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1). A Future Funds fundamental policies with respect to repurchase offers, including the periodic offer interval, will be changeable only by majority vote of the holders of such Future Funds outstanding voting securities. Under a Future Funds fundamental policy, the repurchase offer amount will be determined by such Future Funds Board of Trustees prior to each repurchase offer and will not be less than 5% of its outstanding common shares on the repurchase request deadline. Applicants agree that, as a condition to the relief requested in this application, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then-current monthly period, will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). A Future Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
7
6 In the Matter of Lord Abbett Credit OpportunitiesNuveen Floating Rate Fund, et al., Rel. No. IC- 33513 (June 19,
2019-24066 (October 8, 1999) (notice), Rel. No.
IC- 33558 (July 16,
2019-24114 (October 27, 1999) (order).
25
managers and securities analysts who provide research services to the Fund.
D. |
|
The Distributor is a New YorkDelaware limited liability company and subsidiaryaffiliate
of the Adviser. The Distributor is a broker-dealer registered with the Commission and a member of FINRA.
The Distributor will act as the distributor of Shares for the Fund on a best efforts basis, subject to various conditions, pursuant to the terms of the distribution agreement with the Fund. The Distributor is not obligated to sell any specific amount of Shares of the Fund.
Shares will also be offered through other brokers or dealers that will have entered into selling agreements with the Distributor. The Distributor may reallocate the full amount of the sales load to the brokers or dealers that offer shares of the Fund. The actual front- end sales load paid by investors may vary among and within selling agents.
E. |
|
Rule 23c-3(b)(4) requires that common shareholders be provided with notification of each quarterly repurchase offer no less than twenty-one and no more than forty-two days before each repurchase request deadline. If the relief requested herein is obtained, however, the Fund, upon commencing monthly repurchase offers, will provide (and any Future Fund will provide) common shareholders with notification of each monthly repurchase offer no less than seven and no more than fourteen days before each repurchase request deadline. The Funds notification will include (and any Future Funds notification will include), all information required by Rule 23c-3(b)(4)(i). Applicants agree that, as a condition of the relief requested in this application, the Fund, upon commencing monthly repurchase offers, will make (and any Future Fund will make) payment for common shares repurchased in the previous months repurchase offer at least five business days before sending notification of the next repurchase offer. The Fund, upon commencing monthly repurchase offers, will file (and any Future Fund will file), copies of the notification with the Commission, together with Form N-23c-3, within three business days after sending the notification to common shareholders as required by Rule 23c-3(b)(4)(ii).
Pursuant to Rule 23c-3(b)(1), the Fund, upon commencing monthly repurchase offers, will repurchase (and any
Future Fund will repurchase), common shares for cash at the net asset value determined on the repurchase pricing date and will pay the holders on or before the repurchase payment deadline,87 which will be no later than seven calendar days after the repurchase pricing date, unless the offer is suspended or postponed as provided in Rule 23c-3(b)(3). Upon commencing monthly repurchase
offers, the Fund intends to make payment by the fifth business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date. The Fund and a Future Fund may deduct a repurchase fee in an amount not to exceed 2% from
the repurchase proceeds payable to tendering common shareholders, in compliance with Rule 23c-3(b)(1), and then only to the extent such repurchase fee is reasonably intended to compensate the Fund (and any Future Fund) for expenses directly related
to the repurchase. Such a fee would be in addition to the early withdrawal charges the Fund (or any Future Fund relying on the Multi-Class Order or similar relief) may charge pursuant to the Multi-Class Order or similar relief. The Fund, upon
commencing monthly repurchase offers, will not condition (and any Future Fund will not condition), a repurchase offer upon tender of any minimum amount of common shares. The Fund, upon commencing monthly repurchase offers, will comply (and any
Future Fund will comply), with the pro ration and other allocation requirements applicable if common shareholders tender more than the repurchase offer amount in accordance with Rule 23c-3(b)(5). The Fund, upon commencing monthly repurchase offers,
will permit (and any Future Fund will permit),
87 Rule 23c-3(a)(4).
26
tenders to be withdrawn or modified at any time until the repurchase request deadline, but will not permit tenders to be withdrawn or modified thereafter in accordance with Rule 23c-3(b)(6). The Fund, upon commencing monthly repurchase offers, will compute (and any Future Fund will compute), the net asset value for its common shares in accordance with Rule 23c-3(b)(7). The Fund (and any Future Fund) will not suspend or postpone a repurchase offer except pursuant to the vote of a majority of its trustees, including a majority of its Disinterested Trustees (as defined below), and only under the limited circumstances specified by Rule 23c-3(b)(3)(i). At least a majority of the trustees of the Fund will be (and at least a majority of trustees of any Future Fund will be) persons who are not interested persons of the Fund (or a Future Fund, as applicable) within the meaning of Section 2(a)(19) of the Act (Disinterested Trustees), and the selection or nomination of those trustees is, in the case of the Fund, or will be, in the case of any Future Fund, committed to the discretion of the Disinterested Trustees in accordance with Rule 23c-3(b)(8)(i). The Fund (and any Future Fund) will comply with Rule 23c-3(b)(8)s requirements with respect to its Disinterested Trustees and their legal counsel. Any senior security issued by the Fund (and any Future Fund) or other indebtedness of the Fund (and any Future Fund) will either mature by the next repurchase pricing date or provide for the Funds (or Future Funds, as applicable) ability to call, repay of redeem such senior security or other indebtedness by the repurchase pricing date, either in whole or in part without penalty or premium, as necessary to permit the Fund (or Future Fund, as applicable) to complete the repurchase offer in such amounts, as the trustees have determined, in compliance with the asset coverage requirements of Section 18 of the Act and in accordance with Rule 23c-3(b)(9).
In accordance with Rule 23c-3(b)(10), from the time the Fund (or any Future Fund) sends its notification to common shareholders of the repurchase offer, which shall be sent in compliance with the requirements of Rule 23c-3(b)(4) as modified by the requested Order, until the repurchase pricing date, a percentage of such funds assets equal to at least 100% of the repurchase offer amount will consist of: (1) assets that can be sold or disposed of in the ordinary course of business at approximately the price at which such fund has valued such investment, within a period equal to the period between the repurchase request deadline and the repurchase payment deadline, or (2) assets that mature by the next repurchase payment deadline; and in the event the Funds (or any Future Funds) assets fail to comply with this requirement, the Board of Trustees of such fund will cause such fund to take such action as it deems appropriate to ensure compliance. The Funds Board of Trustees will adopt (and any Future Funds Board of Trustees will adopt) written procedures reasonably designed, taking into account current market conditions and such funds investment objectives, to ensure that such funds portfolio assets are sufficiently liquid so that the Fund (and any Future Fund, as applicable) can comply with its fundamental policy on repurchases and with the liquidity requirements described above. The Funds Board of Trustees (and any Future Funds Board of Trustees) will review the overall composition of the portfolio and make and approve such changes to the procedures as it deems necessary. Applicants believe the Funds portfolio can be (and any Future Funds portfolio will be) managed to provide ample liquidity for its proposed monthly repurchase offers in accordance with the requirements of Rule 23c-3(b)(10).
The Fund and the Distributor will (and any Future Fund and any respective underwriter for such fund will) comply as if the Fund (and any Future Fund, as applicable) was an open-end investment company, with the provisions of Section 24(b) of the Act and the rules thereunder with respect to any advertisement, pamphlet, circular, form letter, or other sales literature addressed to, of intended for distribution to, prospective investors in accordance with Rule 23c-3(b)(11).
III. EXEMPTIONS REQUESTED
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase any securities of any class 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 such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors in order to insure that such purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class or classes of securities to be purchased. Repurchase offers made pursuant to the exception which permits closed-
27
end funds to make repurchases pursuant to tender offers are considered issuer tender offers and thus, absent further relief, must comply with the requirements of the tender offer rules under the Securities Exchange Act of 1934, as amended (the Exchange Act), including Rules 13e-4 and 14e-1.
The Commission also
may exempt closed-end issuer repurchases from the prohibitions in Section 23(c) pursuant to Section 23(c)(3). Rule 23c-3 provides such an exemption as it permits a registered closed-end investment company to make repurchase offers for its
common stock at net asset value at periodic intervals pursuant to a fundamental policy of the investment company. Periodic interval is defined in Rule 23c-3(a)(1) as an interval of three, six or twelve months. Rule 23c-3(b)(4) requires
that notification of each repurchase offer be sent to common shareholders no less than 21 calendar days and no more than 42 calendar days before the repurchase request deadline. Rule 23c-3(a)(3) provides that a repurchase offer amount may be between
5% and 25% of the common stock outstanding on the repurchase request deadline. At the time the Commission adopted Rule 23c-3, corresponding amendments to Rules 10b-698 and 13e-4 of the Exchange Act and Regulation 14E of the Exchange Act were also adopted, exempting repurchase offers pursuant to Rule 23c-3 from most of the provisions of those rules.109
Applicants request an order pursuant to Sections 6(c) and 23(c)
of the Act exempting them from the definition of periodic interval under Rule 23c-3(a)(1) that would permit the Fund (and any Future Fund) to rely on the relief provided by Rule 23c-3 while making repurchase offers on a monthly basis.
Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven but no more than fourteen
calendar days in advance of the repurchase request deadline.1110
IV. COMMISSION AUTHORITY
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and 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.
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 such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
Section 23(c)(3) of the Act 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.
V. DISCUSSION
A. | Background |
In its 1992 study entitled Protecting Investors: A Half Century of Investment Company Regulation
98
Rule 102(b)(2) of Regulation M continues this exception.
109
Subsequently, the Commission also added paragraph (a)(1)(xi) to Rule 415 under the Securities Act of 1933, as amended (the Securities Act), in order to permit closed-end funds relying on Rule 23c-3 to make continuous or delayed offerings.
11
10 Based on the requested relief the Fund (or any Future
Fund) will be able to rely on the exemptions provided under Exchange Act and Securities Act rules for repurchase offers made in accordance with Rule 23c-3.
28
(Protecting Investors), the Commissions Division of Investment Management (the Division) recognized that the Act imposes a rigid classification system
that dictates many important regulatory consequences.1211 For example, the characterization of a management company as
open-end or closed-end has historically been crucial to the determination of the degree of liquidity a funds shareholders will have, and thus the liquidity required of a funds investments.
Furthermore, except as noted below, there has been no middle ground between the two extremes. Open-end funds have offered complete liquidity
to their shareholders and thus required virtually complete liquidity of the underlying investments, while closed-end funds have been subject to requirements that in fact restrict the liquidity they are permitted to offer their investors. Under this
dual system of regulation, neither form has provided the best vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors, the Division determined that, given the changes in the securities market since
1940in particular the emergence of semi-liquid investment opportunitiesit was appropriate to re-examine the classification system and its regulatory requirements.1312
The one exception to the liquid/illiquid dichotomy has been the so called prime-rate funds. These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting Investors recognized that the rigidity of the Acts classification system had become a limitation on sponsors ability to
offer innovative products that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The report also noted the pioneering efforts of the prime rate funds and the market success they had experienced.1413
The report thus concluded that it would be appropriate to provide the opportunity for investment companies to chart new territory between the two extremes of the open-end and
closed-end forms, consistent with the goals of investor protection.1514 The Division thus recommended giving the industry the ability to
employ new redemption and repurchasing procedures, subject to Commission rulemaking and oversight.
In accordance with this
recommendation, and shortly after Protecting Investors was published, the Commission proposed for comment a new rule designed to assist the industry in this endeavor.1615 The Commission proposed Rule 23c-3, which began from the closed-end, illiquid perspective under Section 23(c), and provided flexibility to increase shareholder liquidity through periodic repurchase offers
under simplified procedures. Rule 23c-3 was adopted in April 1993.1716
The prime rate funds were cited in both Protecting Investors and the Proposing Release as the prototype for the interval concept.1817
Nonetheless, while the prime rate funds broke the path for innovation in this area, developments since the origin of these funds make further innovation appropriate. Precedent exists for
the granting of exemptive relief to permit funds other than prime rate interval funds to engage in repurchases on a monthly
basis.1918
1211
SEC Staff Report, Protecting Investors: A Half Century of Investment Company Regulation (May 1992) at 421.
13
12 Id. at 424.
1413 Id. at 439-40.
1514
Id. at 424.
16
15 Investment Co. Act Rel. No. 18869 (July 28, 1992)
(the Proposing Release).
1716
Investment Co. Act Rel. No. 19399 (April 7, 1993) (the Adopting Release). The Commission also had
proposed Rule 22e-3, which began from the open-end, complete liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The Commission neither adopted nor withdrew proposed Rule 22e-3.
To Applicants knowledge, the Commission has taken no further action with respect to Rule 22e-3.
1817
Protecting Investors at 439-40; Proposing Release at 27.
1918
In the Matter of Arca U.S. Treasury Fund
and Arca Capital Management, LLC, Rel. No. IC-34935 (June 2, 2023) (notice) and Rel. No. IC-34952 (June 28, 2023) (order) (Arca). In the Matter of Voya Senior Income Fund, et al., Rel. No. IC-34609 (June 3, 2022) (notice) and Rel.
No. IC-34640 (June 29, 2022) (order) (Voya); In the Matter of Lord Abbett Floating Rate High Income Fund, et al., Rel. No. IC-34308 (June 22, 2021) (notice) and Rel. No. IC-34336 (July 19, 2021) (order)
(Lord
29
B. | Monthly Repurchases |
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from Rule 23c-3(a)(1) solely to the extent necessary to permit the Fund (and any Future Fund) to make monthly repurchase offers. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) solely to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to shareholders at least seven days but not more than fourteen days in advance of the repurchase request deadline. In Applicants view, this modification would enhance, rather than diminish, the investor benefits provided by Rule 23c-3 and is consistent with the public interest and investor protection. As long as the Fund (and any Future Fund), as supervised by its Board of Trustees, can make monthly repurchase offers pursuant to the modified notification requirements requested herein and otherwise comply with the remainder of Rule 23c-3, including its requirements with respect to liquidityand Applicants believe the Fund (and any Future Fund) will be able to do sothere is no public interest nor investor protection concern that justifies prohibiting monthly repurchase offers.
In the
rulemaking proceeding in which Rule 23c-3 was adopted, certain commenters requested that a provision for monthly repurchases be incorporated in the final Rule. At the time of adoption, the Commission declined to do so. The Commission was concerned
that shorter repurchase intervals would not be compatible with the notification requirement in paragraph (b)(4) of the Rule because a fund would need to send out a notification for a repurchase offer before it had completed the previous offer.2019
Applicants believe that this concern should not deter the Commission from granting the relief requested in this case. First, it is understandable that, in its initial efforts to chart
new territory, the Commission was reluctant to provide too many options. Regulatory prudence might well have dictated adopting a more limited rule and considering more flexible proposals on a case-by-case basis. Second, it is significant that
the reason given is one of logistics rather than substance. In fact, as discussed below, the logistical concern mentioned would not pertain to Applicants proposal.
Rule 23c-3(b)(4) requires that notification of each repurchase offer be sent to common shareholders no less than 21 days and no more than 42 days before the repurchase request deadline. In order to prevent any overlap between payment for a repurchase and notification of the next months repurchase offer or resulting investor confusion, Applicants request an exemption from the notice provisions of Rule 23c-3(b)(4) to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven calendar days, but not more than fourteen calendar days, in advance of the repurchase request deadline. Because the Fund, upon commencing monthly repurchase offers, intends (and any Future Fund intends) to price on the repurchase request deadline, and pay by the fifth business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date (and, in any event, no later than seven calendar days after the repurchase pricing date), this proposed timing will ensure that common shareholders have received payment in full for any repurchases before receiving notification of the next repurchase offer. The entire repurchase procedure will be completed before the next notification is sent out, thus avoiding any overlap. Applicants believe that these procedures will eliminate any possibility of investor confusion from monthly repurchases.
Abbett). In the Matter of Aspiriant Defensive Allocation Fund, et. al., Rel. No. IC-33924 (July 10, 2020) (notice) and Rel. No. IC-33961 (July 31, 2020) (order) (Aspiriant). In the Matter of Weiss Strategic Interval Fund, et al., Rel. No. IC-33101 (May 21, 2018) (notice), Rel. No. IC-33124 (June 18, 2018) (order) (Weiss). In the Matter of Blackstone / GSO Floating Rate Enhanced Income Fund, et al., Rel. No. IC-32866 (Oct. 23, 2017) (notice), Rel. No. IC-32902 (Nov. 20, 2017) (order) (Blackstone). In the Matter of Van Kampen Asset Management, et al., Rel. No. IC-27317 (May 12, 2006) (notice), Rel. No. IC-27390 (June 7, 2006) (order) (Van Kampen). In the Matter of CypressTree Asset Management Corporation Inc., et al., Rel. No. IC-23020 (Feb. 4, 1998) (notice), Rel. No. IC-23055 (Mar. 3, 1998) (order) (CypressTree). In the Matter of ING Pilgrim Investments. LLC, et al., Rel. No. IC-25167 (Sep. 21, 2001) (notice), Rel. No. IC-25212 (Oct. 17, 2001) (order) (Pilgrim Investments).
2019 See Adopting Release at 28-29.
30
The Funds prospectus will provide (and any Future Funds prospectus will provide) a clear explanation of the repurchase program. Moreover, shareholders in the Fund and any Future Fund that seeks shareholder approval to adopt or change a fundamental policy to permit monthly repurchase offers will receive full disclosure in the proxy materials sent to obtain the requisite shareholder approval. Applicants expect that, before long, the monthly repurchase opportunity will become as routine in the shareholders mind as daily redemptions, and that the significance of the notification will diminish. Thus, any remote possibility of investor confusion due to the proximity in time of the repurchase payment deadline to the sending of the next notification will be adequately dealt with by disclosure.
Finally, upon commencing monthly repurchase offers, the Funds (and any Future Funds) procedures will provide that the Funds Board of Trustees (and any Future Funds Board of Trustees) will be informed of the number of repurchase requests made in the previous repurchase offerwhich repurchases will have been completedat the time such funds Board of Trustees determines the repurchase offer amount for the current month. This will enable the Funds Board of Trustees (and any Future Funds Board of Trustees) to take that information, as well as relevant liquidity reports from the portfolio manager, into account in setting the repurchase offer amount.
Applicants believe that monthly rather than quarterly repurchases offer many benefits and therefore would be in the public interest and in the common shareholders interests and be consistent with the policies underlying Rule 23c-3. Rule 23c-3 currently permits periodic repurchase offers no more frequently than once every three months, but monthly repurchases would provide significant benefits to common shareholders because their investments will be more liquid than an investment in a fund conducting only quarterly repurchase offers. Investors also will be better able to manage their investments and plan transactions because they will know that, if they decide to forego a repurchase offer, they only need to wait one (rather than three) months for the next offer. Applicants believe the requested relief allowing monthly repurchases provides the public marketplace and the Fund (and any Future Fund) common shareholders with more investment options. Finally, consistent with Section 23(c)(3), monthly repurchase offers will be made available to all common shareholders and thus, will not unfairly discriminate against any holders of the common shares to be purchased.
For all of these reasons, Applicants believe that the requested relief is 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. Because the Fund will describe (and any Future Fund will describe) its repurchase policy fully in its prospectus and annual report, shareholders and potential investors will have available all information about the Fund (and any Future Fund) and its differences from a traditional open-end fund and traditional closed-end fund. Finally, because the requested Order will increase the investment alternatives available to investors, the requested Order is appropriate in the public interest. Because the monthly repurchase offers will be made available to all common shareholders and otherwise comply with the requirements of Rule 23c-3 (except as it relates to the imposition of early withdrawal fees), the repurchase offers will not be made in a manner or on a basis which unfairly discriminates against holders of the common shares to be purchased.
Applicants believe that there is precedent for the requested relief and that monthly repurchases are consistent with the policies underlying
Rule 23c-3. The Commission has granted exemptive relief under Rule 23c-3 to permit other interval funds to make monthly repurchase offers under modified notice procedures.2120 Under the Weiss and Blackstone orders, closed-end funds operating as interval funds sought to make monthly repurchase offers of not
less than 5% of their outstanding common shares but not more than 25% in any three month period pursuant to modified notice procedures under Rule 23c-3. Under the Van Kampen order, a closed-end fund investing in senior secured floating rate
loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in
2120
See Weiss supra at note
1718
, See Blackstone supra at note 1718, See Van Kampen supra at note 1718, See Pilgrim Investments supra at note 1718. See also CypressTree, supra at note 1718.
31
the trailing three month period pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the Pilgrim Investments order, a closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the aggregate in any one quarter pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the CypressTree order, another closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not more than 10% of its outstanding common shares. Applicants submit that the requested relief is appropriate under the applicable statutory standards.
VI. APPLICANTS CONDITIONS
Applicants agree that any order granting the requested relief will be subject to the following conditions:
a. | The Fund (and any Future Fund relying on this relief) will make a repurchase offer pursuant to Rule 23c-3(b) for a repurchase offer amount of not less than 5% in any one-month period. In addition, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of the Funds (or Future Funds, as applicable) outstanding common shares. The Fund (and any Future Fund relying on this relief) may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period. |
b. | Payment for repurchased common shares will occur at least five business days before notification of the next repurchase offer is sent to common shareholders of the Fund (or any Future Fund relying on this relief). |
VII. CONCLUSION
For the reasons stated above, Applicants submit that the exemptions requested are necessary or 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, and thus meet the standards of Section 6(c). Applicants further submit that the relief requested pursuant to Section 23(c)(3) will be consistent with the protection of investors and will ensure that any purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class of securities to be purchased. Finally, Applicants submit that the relief requested is consistent with that previously provided by the Commission in the Weiss, Blackstone, Van Kampen, Pilgrim Investments and CypressTree orders.
Applicants desire that the Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
As required by Rule 0-2(c)(1) under the Act, each Applicant hereby states that all of the requirements for execution and filing of this
Application have been complied with in accordance with the operating agreements of the Applicants, as applicable, and the persons signing and filing this document are authorized to do so on behalf of the Applicants. The resolutions of the
Funds Board of Trustees are attached as Exhibit A to this Application in accordance with the requirements of Rule 0-2(c)(1) under the Act, and the verifications required by Rule 0-2(d) under the Act, are attached as Exhibits B to this
Application, respectively. In accordance with the requirements for a request for expedited review of this Application,
marked copies of two recent applications seeking the same relief as Applicants that are substantially identical as required by Rule 0-5(e) of the Act are attached as Exhibits C and D. Pursuant to
Rule 0-2(f) under the Act, the Applicants address is 90 Hudson Street, Jersey City, New Jersey 07302-3973333 West Wacker Drive, Chicago, Illinois 60606 and that all written
communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
[Signature page follows.]
32
SIGNATURES
By: /s/ |
Name: |
Title: Vice President and |
Dated: |
NUVEEN FUND ADVISORS, LLC |
By: /s/ |
Name: |
Title: |
Dated: |
NUVEEN ASSET MANAGEMENT, LLC |
By: /s/ Mark L. Winget |
Name: Mark L. Winget |
Title: Vice President, Associate General Counsel and Assistant Secretary |
Dated: November 21, 2023 |
NUVEEN SECURITIES, LLC |
By: /s/ |
Name: |
Title: |
Dated: |
33
EXHIBIT A
Resolutions of the Board of Trustees of Lord Abbett
Nuveen Enhanced
Floating Rate High Income Fund
RESOLVED, that the appropriate officers of the Fund be and they hereby are, and each of them acting individually hereby is, authorized to prepare, execute and file with the Securities and Exchange Commission (the SEC) on behalf of the Fund an application for an exemptive order pursuant to Sections 6(c) and 23(c)(3) under the 1940 Act to allow the Fund to conduct monthly repurchase offers, such application to be in form and substance satisfactory to counsel for the Fund, the execution and filing of any such application, or amendment to such application, to be conclusive evidence of its authorization hereby; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to prepare execute and file with the SEC any amendments to such exemptive application requested by the SEC or as they believe necessary or appropriate; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to take all such further action and to execute and deliver all such further instruments and documents, in the name of and on behalf of the Fund, on the advice and assistance of counsel, and to pay all such expenses as shall be necessary, proper, or advisable, in order to fully carry out the intent, and accomplish the purposes of, the foregoing; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized and directed, for and on the Funds behalf, to take or cause to be taken, any and all action, to execute and deliver any and all certificates, instructions, requests, or other instruments, and to do any and all things that in their judgment, on the advice and assistance of counsel, as may be necessary or advisable to effect each of the resolutions adopted to carry out the purposes and intent thereof, and as may be necessary or advisable for the conduct of the Funds business.
34
EXHIBIT B
VERIFICATION OF
LORD ABBETTNUVEEN ENHANCED FLOATING RATE HIGH INCOME FUND
The undersigned states that he has duly
executed the attached Application dated
February 23November 21, 20212023, for and on behalf of Lord
AbbettNuveen Enhanced Floating Rate High Income Fund in his capacity as Vice President and Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the
undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge,
information and belief.
By: /s/ |
Name: |
Title: Vice President and |
Dated: |
35
VERIFICATION OF
LORD, ABBETT & CO.NUVEEN FUND ADVISORS, LLC
The undersigned states that he has duly executed the attached Application dated February 23November
21,
20212023, for and on behalf of Lord, Abbett &
Co.Nuveen Fund Advisors, LLC in his capacity
as Member and General
CounselVice President and Assistant Secretary of
such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents
thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
NUVEEN FUND ADVISORS, LLC |
By: /s/ |
Name: |
Title: |
Dated: |
36
VERIFICATION OF
NUVEEN ASSET MANAGEMENT, LLC
The undersigned states that he has duly executed the attached Application dated November 21, 2023, for and on behalf of Nuveen Asset Management, LLC in his capacity as Vice President, Associate General Counsel and Assistant Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
NUVEEN ASSET MANAGEMENT, LLC |
By: /s/ Mark L. Winget |
Name: Mark L. Winget |
Title: Vice President, Associate General Counsel and Assistant Secretary |
Dated: November 21, 2023 |
37
VERIFICATION OF
LORD ABBETT DISTRIBUTORNUVEEN SECURITIES, LLC
The undersigned states that he has duly executed the attached Application dated February 23November
21,
20212023, for and on behalf of Lord Abbett
DistributorNuveen Securitites, LLC in his capacity
as Member and General
CounselManaging Director, Secretary and General Counsel of Lord, Abbett & Co.
LLCsuch entity and that all actions by the holders
and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are
true to the best of his knowledge, information and belief.
NUVEEN SECURITIES, LLC |
By: /s/ |
Name: |
Title: |
Dated: |
38
EXHIBIT D
Second Marked Copy of the Application Showing Changes from the Final Versions of the Two
Applications Identified as Substantially Identical under Rule 0-5(e)(3)
39
As filed with the U.S. Securities and Exchange Commission on May
25November
21, 20222023
File No.
812-15314812-
[
]
UNITED STATES OF AMERICA
BEFORE THE
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO THE Application
Pursuant
to
Sections
6(c)
and
23(c)(3)
of
the
Investment
Company
Act
of
1940
(the
Act
)
for
an
Order
Granting
Certain
Exemptions
from
the
Provisions
of
Rule
23c-3
thereunder
EXPEDITED REVIEW REQUESTED UNDER 17 CFR 270.0-5(d)
In the Matter of the Application of:
Voya SeniorNuveen Enhanced Floating Rate Income Fund
7337 E. Doubletree Ranch Road, Suite 100333 West Wacker Drive
Scottsdale, AZ 85258Chicago, Illinois 60606
and
Voya InvestmentsNuveen
Fund Advisors,
LLC
7337 E. Doubletree Ranch Road, Suite 100333 West Wacker Drive
Scottsdale, AZ 85258Chicago, Illinois 60606
and
Voya Investment Management Co. LLCNuveen Asset
Management, LLC
230 Park Avenue333 West Wacker Drive
New York, NY, 10169Chicago, Illinois 60606
and
Voya Investments DistributorNuveen
Securities, LLC
7337 E. Doubletree Ranch Road, Suite 100333 West Wacker
Drive
Scottsdale, AZ 85258Chicago, Illinois 60606
Please send all communications, notices and orders regarding this Application to:
Huey P. Falgout, Jr.Mark L. Winget
Voya Investments, LLCVice
President
and
Secretary
7337 E. Doubletree Ranch Road, Suite 100333 West Wacker Drive
Scottsdale, AZ 85258Chicago, Illinois 60606
Huey.Falgout@voya.com
With copies to:
Elizabeth J. RezaJoel D.
Corriero,
Esq.
Ropes & Gray LLPStradley Ronon
Stevens &
Young, LLP
Prudential Tower
800 Boylston Street2005 Market Street
Suite 2600
Boston, MA 02199-3600Philadelphia,
Pennsylvania 19103
Page 1 of 9158 sequentially numbered pages (including exhibits)
40
TABLE OF CONTENTS
I. |
THE PROPOSAL | |||||||
II. |
STATEMENT OF FACTS | 3 | ||||||
A. | 3 | |||||||
B. | 5 | |||||||
C. | ||||||||
D. | ||||||||
E. | Other Requirements for a Rule 23c-3 Fund | 6 | ||||||
III. |
EXEMPTIONS REQUESTED | |||||||
IV. |
COMMISSION AUTHORITY | |||||||
V. |
DISCUSSION | |||||||
A. | Background | |||||||
B. | Monthly Repurchases | |||||||
VI. |
APPLICANTS CONDITIONS | |||||||
VII. |
CONCLUSION | |||||||
41
File
No. 812-15314812-[
]
I. THE PROPOSAL
Voya SeniorNuveen Enhanced Floating Rate Income Fund (the Fund)
is a Delaware statutory trust organized on December 14, 2000 and isnewly
organized
Massachusetts
business
trust registered under the Investment Company Act of
1940, as amended (the Act), as a diversified, closed-end management investment company that operateswill be
operated as an interval fund. The Fund is advised by Voya InvestmentsNuveen Fund Advisors, LLC (Voya
InvestmentsNuveen Fund Advisors) and sub-advised by
Voya InvestmentNuveen
Asset
Management Co., LLC (Voya
IMNuveen Asset Management and together with Voya InvestmentsNuveen Fund
Advisors, the Adviser). Voya Investments DistributorNuveen Securities, LLC (the Distributor) is the
principal underwriter and distributor of the Funds shares. The Fund, the Adviser and the Distributor are referred to herein as the Applicants.
The Applicants hereby seek an order (the Order) from the U.S. Securities and Exchange Commission (the Commission or the SEC) pursuant to Sections 6(c) and 23(c)(3) of the Act for an exemption from certain provisions of Rule 23c-3 under the Act to permit the Fund to make repurchase offers to its common shareholders every month and to provide notification to its common shareholders of an upcoming repurchase offer no less than seven and no more than fourteen calendar days in advance of the repurchase request deadline.
The Order sought by this application (the Application)
would supersede the order dated October 17, 2001, issued by the Commission to ING Pilgrim Investments, LLC and certain
of its affiliates under Sections 6(c) and
23(c)(3) of the Act and Rule 23c-3 under the Act permitting the Fund to make repurchase offers to its common shareholders every month subject to certain conditions set forth in the order (the Prior Order),1with the result that no person will continue to rely on the Prior Order if the Order is granted.
Applicants request that the Order also apply to any registered closed-end management investment company
that has been previously organized or that may be organized 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 entity2,1 acts as an
investment adviser, and which operates as an interval fund pursuant to Rule 23c-3 under the Act (each a Future Fund and, together with the Fund, the
Funds). Any of the Funds relying on this relief in the future will do so in compliance with the terms and conditions of this
application
(the Application
). Applicants represent that each entity presently intending to rely on the requested relief is
listed as an Applicant. Unless otherwise provided relief, the Fund will comply with all other provisions of Rule 23c-3. Terms as used in this Application that are defined in Rule
23c-3 have the same meaning as they are given in Rule 23c-3.
II. STATEMENT OF FACTS
A. |
|
The Fund is a
Delaware statutory trust organized on December 14, 2000 and
isnewly
organized
Massachusetts
business
trust registered under the Act as a diversified, closed-end management investment company that operateswill be operated as an interval fund pursuant to Rule 23c-3 under the Act. The Funds principal investment objective is to
provide investors withseek a high level of
monthly
incomecurrent
income and the secondary investment objective of the Fund is to seek capital appreciation. Common shares of the Fund are
1 In the
Matter of ING Pilgrim Investments, LLC, et al., Rel. No. IC-25167 (Sep. 21, 2001) (notice), Rel. No. IC-25212 (order) (Oct. 17, 2001) (the Prior Order).
2
1 A successor in interest is limited to an entity that results from reorganization into another jurisdiction or a change in the type of business organization.
42
offered on a continuous basis at net asset value per share plus the applicable sales load, if any, and are not offered or traded in the secondary market and are not listed on any exchange or quoted on any quotation medium.
The Fund
operateswill
be
operated as an interval fund pursuant to Rule 23c-3 under the Act and
offersmay
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 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 Funds group of investment companies (collectively, the Other Funds). Shares of any of the Funds operating pursuant to Rule 23c-3 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 23c-3 under the Act. Any exchange
option will
continue
to 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 under the Act, the Fund will treat an early withdrawal charge as if it were a contingent deferred sales load (CDSL).32
As further discussed below, the Fund seeks an Order to make offers to repurchase a portion of its common shares at one-month intervals, rather than the periodic intervals (three, six or twelve months) specified by Rule 23c-3, and to notify common shareholders seven to fourteen calendar days in advance of the repurchase request deadlines, rather than the no less than twenty-one and no more than forty-two days before each repurchase request deadline specified by Rule 23c-3. In connection with making monthly repurchases with modified notice provisions, the Fund will be subject to conditions (as described herein) such that the aggregate percentage of common shares subject to repurchase in any three-month period will not exceed 25% of the Funds outstanding common shares and payment for such common shares will occur at least five business days before notification of the next repurchase offer.
The Funds Board of Trustees has adopted a fundamental policy of making quarterly
repurchase
offers.
To
the
extent
the
Fund
receives
the
requested
Order,
the
Fund
s
Board
of
Trustees
may,
in
the
future,
determine
to
adopt
a
fundamental
policy
of
making monthly repurchase offers in reliance
.
Prior
to
relying on the Priorrequested
Order.
The,
the Fund obtainedwill
obtain the approval of a majority of the Funds
outstanding voting securities to adopt a fundamental policy to permit monthly repurchase offers in connection with the
Prior.
3 If the Fund relies on the
requested Order.4
The,
the Fund will continue
to
disclose in its prospectus and annual reports its fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee,
if any, as permitted by Rule 23c-3(b)(1), and the imposition of early withdrawal charges as permitted pursuant to the Multi-Class Order (as defined below). The Funds fundamental policies with respect to
repurchase offers, including the periodic repurchase offer interval,
arewill
be changeable by majority vote of the holders of the
Funds outstanding voting securities. Monthly repurchase offers shall be for an amount not less than 5% nor more than 25% of the common shares outstanding during any three month period in accordance with any exemptive relief granted by the
Commission.54 The Funds
fundamental policies
will
also specify the means to determine the dates of the
3
2 A CDSL, assessed by an open-end fund pursuant to Rule 6c-10
of the Act, is a distribution related 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 as distinguished from a repurchase fee
which is payable to a Fund to reimburse a Fund for costs incurred in liquidating securities in the Funds portfolio.
4
3 In the case of a Future Fund that has not yet offered its shares to the public, the Future Fund will obtain the approval of its sole initial
shareholder to adopt a fundamental policy to permit monthly repurchase offers. In the case of a Future Fund that seeks to adopt a fundamental policy of making monthly repurchase offers after selling shares to the public, the Future Fund will obtain
the approval of a majority of the Funds outstanding voting securities to the adoption of such policy.
54 Applicants agree that, as a condition to the relief requested
in this Application, the repurchase offer amount for the then-current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of its outstanding common
shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). The Fund may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so
repurchased does not exceed 2% in any three-month
43
repurchase request deadlines and the maximum number of days between each repurchase request deadline and the repurchase pricing date as required by Rule
23c-3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5).65 The Funds repurchase pricing date normally will continue to be the same date as the repurchase request deadline and pricing will be determined after the close of business on that date.
The Fund offers five
classesintends to offer one
class of common shares: Class A
common
shares (Class
A Shares),
Class
C common
shares (Class
C Shares), upon commencement of operations: Class I common shares (Class I Shares),
Class
T common
shares (Class
T Shares)
and
Class W
common shares
(Class
W Shares). The Fund is
relying on an exemptive order (Multi-Class Order) from the SEC that permits the Fund to issue multiple classes of shares and to impose asset-based distribution fees and early-withdrawal fees.7
6 From time to time the Fund may create additional classes of shares, the terms of which may differ from the Funds Class A,
Class C,
Class I,
Class T
and Class
W Shares in the following respects:
(i) the amount of fees permitted by a distribution and service plan as to such class; (ii) voting rights with respect to a distribution and service plan as to such 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 Multi-Class Order; (v) differences in any dividends and net asset values per share resulting from differences in fees under a
distribution and service plan or in class expenses; (vi) any early withdrawal charge or other sales load structure; (vii) all shares will be offered to the public at net asset value plus any applicable sales charge; and (viii) any
exchange or conversion features, in each case, as permitted under the Act.
B. |
|
Voya InvestmentsNuveen Fund Advisors is a limited liability company organized under the
laws of the state of Arizona. Voya
InvestmentsDelaware.
Nuveen Fund Advisors serves as investment adviser to the Fund. Voya InvestmentsNuveen Fund Advisors is registered with the Commission as an investment
adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act).
Voya Investments providesNuveen Fund
Advisors will
provide services to the Fund pursuant to an investment
management agreement between the Fund and Voya
Investments. Voya Investments hasNuveen Fund Advisors. Nuveen Fund Advisors will have overall
responsibility for the management of the Fund.
Voya Investments overseesNuveen Fund
Advisors will oversee all investment advisory and portfolio management services and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance and related services.
C. |
|
period.
65 A Future Fund that relies on the exemptive relief requested hereby will have fundamental investment policies in compliance with Rule 23c-3(b)(2)(i), as modified by the requested Order, which will include the date of repurchase request deadlines or the means of determining the repurchase request deadlines and the maximum number of days between
each repurchase request deadline and the next repurchase pricing date (as required by Rule 23c-3(b)(2)(i)(C) and (D) and in accordance with Rule 23c-3(a)(5)). A
Future Funds repurchase pricing date normally will be the same date as the repurchase request deadline and pricing will be determined after close of business on that date. A Future Fund will disclose in its prospectus and annual reports its
fundamental policy to make monthly offers to repurchase a portion of its common shares at net asset value, less deduction of a repurchase fee, if any, as permitted by Rule 23c-3(b)(1). A Future Funds
fundamental policies with respect to repurchase offers, including the periodic offer interval, will be changeable only by majority vote of the holders of such Future Funds outstanding voting securities. Under a Future Funds fundamental
policy, the repurchase offer amount will be determined by such Future Funds Board of Trustees prior to each repurchase offer and will not be less than 5% of its outstanding common shares on the repurchase request deadline. Applicants agree
that, as a condition to the relief requested in this application, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then-current monthly period,
will not exceed 25% of its outstanding common shares, subject to any additional tendered common shares repurchased pursuant to Rule 23c-3(b)(5). A Future Fund may repurchase additional tendered common shares
pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period.
7
6
In the Matter of ING Pilgrim Investments,
LLCNuveen Floating Rate Fund, et al., Rel.
No. IC-24881 (Feb. 28,
2001-24066 (October 8, 1999) (notice), Rel. No.
IC-24916
(Mar.-24114 (October 27, 20011999) (order).
44
Voya IMNuveen Asset Management is a limited liability company organized under
the laws of the state of Delaware. Voya IMNuveen Asset
Management serves as sub-adviser to the Fund and is
an indirect,
wholly-owneda subsidiary of Voya Financial, Inc. and is an affiliate of Voya Investments. Voya IMNuveen Fund
Advisors. Nuveen Asset Management is registered with the Commission as an investment adviser under the Advisers Act.
Voya IM providesNuveen Asset Management
will
provide services to the Fund pursuant to a sub-advisory agreement between
Voya InvestmentsNuveen
Fund Advisors and Voya IMNuveen Asset Management. Under the
sub-advisory agreement, subject to the supervision and direction of the Funds Board of Trustees, Voya IM
managesNuveen Asset Management will manage the Funds portfolio in accordance with the Funds
investment objective and policies,
makesmake
investment decisions for the Fund, placesplace orders to purchase and sell securities, and employsemploy professional portfolio managers and securities analysts who provide research services to the Fund.
D. |
|
The Distributor is a Delaware limited liability company and affiliate of the Adviser. The Distributor is a broker-dealer registered with the Commission and a member of FINRA.
The Distributor
actswill
act as the distributor of Shares for the Fund on a best
efforts basis, subject to various conditions, pursuant to the terms of the distribution agreement with the Fund. The Distributor is not obligated to sell any specific amount of Shares of the Fund.
Shares arewill also be
offered through other brokers or dealers that
will
have entered into selling agreements with the Distributor. The Distributor may reallocate the full amount of the sales load to the brokers or dealers that offer shares of the Fund. The actual
front- end sales load paid by investors may vary among and within selling agents.
E. | Other Requirements for a Rule
23c-3 Fund |
Rule 23c-3(b)(4) requires that common shareholders be provided with notification of each quarterly repurchase offer no less than twenty-one and no more than forty-two days before each repurchase request deadline. If the relief requested herein is obtained, however, the Fund, upon commencing monthly repurchase offers, will provide (and any Future Fund will provide) common shareholders with notification of each monthly repurchase offer no less than seven and no more than fourteen days before each repurchase request deadline. The Funds notification will include (and any Future Funds notification will include), all information required by Rule 23c-3(b)(4)(i). Applicants agree that, as a condition of the relief requested in this application, the Fund, upon commencing monthly repurchase offers, will make (and any Future Fund will make) payment for common shares repurchased in the previous months repurchase offer at least five business days before sending notification of the next repurchase offer. The Fund, upon commencing monthly repurchase offers, will file (and any Future Fund will file), copies of the notification with the Commission, together with Form N-23c-3, within three business days after sending the notification to common shareholders as required by Rule 23c-3(b)(4)(ii).
Pursuant to Rule 23c-3(b)(1), the
Fund, upon commencing monthly repurchase offers, will repurchase
(and any Future Fund will repurchase), common shares for cash at the net asset value determined on the repurchase pricing date and will pay the holders on or before the repurchase payment deadline,97 which will be no
later than seven calendar days after the repurchase pricing date, unless the offer is suspended or postponed as provided in Rule 23c-3(b)(3). TheUpon
commencing
monthly
repurchase
offers,
the Fund intends to make payment by the fifth business
day or seventh calendar day (whichever period is shorter) following the repurchase pricing date. The Fund and a Future Fund may deduct a repurchase fee in an
8 The Fund is currently
in compliance with the requirements described in this section in reliance on the Prior Order.
97 Rule 23c-3(a)(4).
45
amount not to exceed 2% from the repurchase proceeds payable to tendering common shareholders, in compliance with Rule 23c-3(b)(1), and then only to the extent such repurchase fee is reasonably intended to compensate the Fund (and any Future Fund) for expenses directly related to the repurchase. Such a fee would be in addition to the early withdrawal charges the Fund (or any Future Fund relying on the Multi-Class Order or similar relief) may charge pursuant to the Multi-Class Order or similar relief. The Fund, upon commencing monthly repurchase offers, will not condition (and any Future Fund will not condition), a repurchase offer upon tender of any minimum amount of common shares. The Fund, upon commencing monthly repurchase offers, will comply (and any Future Fund will comply), with the pro ration and other allocation requirements applicable if common shareholders tender more than the repurchase offer amount in accordance with Rule 23c-3(b)(5). The Fund, upon commencing monthly repurchase offers, will permit (and any Future Fund will permit), tenders to be withdrawn or modified at any time until the repurchase request deadline, but will not permit tenders to be withdrawn or modified thereafter in accordance with Rule 23c-3(b)(6). The Fund, upon commencing monthly repurchase offers, will compute (and any Future Fund will compute), the net asset value for its common shares in accordance with Rule 23c-3(b)(7). The Fund (and any Future Fund) will not suspend or postpone a repurchase offer except pursuant to the vote of a majority of its trustees, including a majority of its Disinterested Trustees (as defined below), and only under the limited circumstances specified by Rule 23c-3(b)(3)(i). At least a majority of the trustees of the Fund will be (and at least a majority of trustees of any Future Fund will be) persons who are not interested persons of the Fund (or a Future Fund, as applicable) within the meaning of Section 2(a)(19) of the Act (Disinterested Trustees), and the selection or nomination of those trustees is, in the case of the Fund, or will be, in the case of any Future Fund, committed to the discretion of the Disinterested Trustees in accordance with Rule 23c-3(b)(8)(i). The Fund (and any Future Fund) will comply with Rule 23c-3(b)(8)s requirements with respect to its Disinterested Trustees and their legal counsel. Any senior security issued by the Fund (and any Future Fund) or other indebtedness of the Fund (and any Future Fund) will either mature by the next repurchase pricing date or provide for the Funds (or Future Funds, as applicable) ability to call, repay of redeem such senior security or other indebtedness by the repurchase pricing date, either in whole or in part without penalty or premium, as necessary to permit the Fund (or Future Fund, as applicable) to complete the repurchase offer in such amounts, as the trustees have determined, in compliance with the asset coverage requirements of Section 18 of the Act and in accordance with Rule 23c-3(b)(9).
In accordance with Rule 23c-3(b)(10), from the time the Fund (or any Future Fund) sends its notification to common shareholders of the repurchase offer, which shall be sent in compliance with the requirements of Rule 23c-3(b)(4) as modified by the requested Order, until the repurchase pricing date, a percentage of such funds assets equal to at least 100% of the repurchase offer amount will consist of: (1) assets that can be sold or disposed of in the ordinary course of business at approximately the price at which such fund has valued such investment, within a period equal to the period between the repurchase request deadline and the repurchase payment deadline, or (2) assets that mature by the next repurchase payment deadline; and in the event the Funds (or any Future Funds) assets fail to comply with this requirement, the Board of Trustees of such fund will cause such fund to take such action as it deems appropriate to ensure compliance. The Funds Board of Trustees will adopt (and any Future Funds Board of Trustees will adopt) written procedures reasonably designed, taking into account current market conditions and such funds investment objectives, to ensure that such funds portfolio assets are sufficiently liquid so that the Fund (and any Future Fund, as applicable) can comply with its fundamental policy on repurchases and with the liquidity requirements described above. The Funds Board of Trustees (and any Future Funds Board of Trustees) will review the overall composition of the portfolio and make and approve such changes to the procedures as it deems necessary. Applicants believe the Funds portfolio can be (and any Future Funds portfolio will be) managed to provide ample liquidity for its proposed monthly repurchase offers in accordance with the requirements of Rule 23c-3(b)(10).
The Fund and the Distributor will (and any Future Fund and any respective underwriter for such fund will) comply as if the Fund (and any Future Fund, as applicable) was an open-end investment company, with the provisions of Section 24(b) of the Act and the rules thereunder with respect to any advertisement, pamphlet, circular, form letter, or other sales literature addressed to, of intended for distribution to, prospective
46
investors in accordance with Rule 23c-3(b)(11).
III. EXEMPTIONS REQUESTED
Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase any securities of any class 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 such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors in order to insure that such purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class or classes of securities to be purchased. Repurchase offers made pursuant to the exception which permits closed-end funds to make repurchases pursuant to tender offers are considered issuer tender offers and thus, absent further relief, must comply with the requirements of the tender offer rules under the Securities Exchange Act of 1934, as amended (the Exchange Act), including Rules 13e-4 and 14e-1.
The
Commission also may exempt closed-end issuer repurchases from the prohibitions in Section 23(c) pursuant to Section 23(c)(3). Rule 23c-3 provides such an
exemption as it permits a registered closed-end investment company to make repurchase offers for its common stock at net asset value at periodic intervals pursuant to a fundamental policy of the investment
company. Periodic interval is defined in Rule 23c-3(a)(1) as an interval of three, six or twelve months. Rule 23c-3(b)(4) requires that notification of each
repurchase offer be sent to common shareholders no less than 21 calendar days and no more than 42 calendar days before the repurchase request deadline. Rule 23c-3(a)(3) provides that a repurchase offer amount
may be between 5% and 25% of the common stock outstanding on the repurchase request deadline. At the time the Commission adopted Rule 23c-3, corresponding amendments to Rules
10b-6108 and 13e-4 of the Exchange
Act and Regulation 14E of the Exchange Act were also adopted, exempting repurchase offers pursuant to Rule 23c-3 from most of the provisions of those rules.119
Applicants request an order pursuant to Sections 6(c) and 23(c) of the
Act exempting them from the definition of periodic interval under Rule 23c-3(a)(1) that would permit the Fund (and any Future Fund) to rely on the relief provided by Rule 23c-3 while making repurchase offers on a monthly basis. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) to permit the Fund (and any Future Fund) to send notification of an
upcoming repurchase offer to common shareholders at least seven but no more than fourteen calendar days in advance of the repurchase request deadline.1210
IV. COMMISSION AUTHORITY
Pursuant to Section 6(c) of the Act, the Commission may, by order on application, conditionally or unconditionally, exempt any person, security or transaction, or any class or classes of persons, securities or transactions from any provision or provisions of the Act or from any rule or regulation under the Act, if and 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.
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 such other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors.
108
Rule 102(b)(2) of Regulation M continues this exception.
11
9 Subsequently, the Commission also added paragraph (a)(1)(xi) to Rule 415 under the Securities Act of 1933, as amended (the
Securities Act), in order to permit closed-end funds relying on Rule 23c-3 to make continuous or delayed offerings.
12
10
Based on the requested relief the Fund (or any Future Fund) will be able to rely on the exemptions provided under Exchange Act and Securities Act rules for repurchase offers made in accordance with Rule 23c-3.
47
Section 23(c)(3) of the Act 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.
V. DISCUSSION
A. | Background |
In its 1992 study entitled Protecting Investors: A Half Century of Investment Company Regulation (Protecting
Investors), the Commissions Division of Investment Management (the Division) recognized that the Act imposes a rigid classification system that dictates many important regulatory consequences.1311 For example, the characterization of a management company as open-end or closed-end has historically been crucial to the determination of the degree of liquidity a funds shareholders will have, and thus the
liquidity required of a funds investments.
Furthermore, except as noted below, there has been no middle ground
between the two extremes. Open-end funds have offered complete liquidity to their shareholders and thus required virtually complete liquidity of the underlying investments, while
closed-end funds have been subject to requirements that in fact restrict the liquidity they are permitted to offer their investors. Under this dual system of regulation, neither form has provided the best
vehicle for offering portfolios that have substantial, but not complete, liquidity. In Protecting Investors, the Division determined that, given the changes in the securities market since 1940in particular the emergence of semi-liquid
investment opportunitiesit was appropriate to re-examine the classification system and its regulatory requirements.1412
The one exception to the liquid/illiquid dichotomy has been the so called prime-rate funds. These funds, first introduced in 1988, invest primarily in loans and provide shareholders liquidity through periodic tender offers or, more recently, periodic repurchases under Rule 23c-3.
Protecting Investors recognized that the rigidity of the Acts classification system had
become a limitation on sponsors ability to offer innovative products that would take advantage of the vast array of semi-liquid portfolio securities currently existing. The report also noted the pioneering efforts of the prime rate funds and
the market success they had experienced.1513 The report thus concluded that
it would be appropriate to provide the opportunity for investment companies to chart new territory between the two extremes of the open-end and closed-end
forms, consistent with the goals of investor protection.1614 The Division thus recommended
giving the industry the ability to employ new redemption and repurchasing procedures, subject to Commission rulemaking and oversight.
In accordance with this recommendation, and shortly after Protecting Investors was published, the Commission proposed for comment a new rule
designed to assist the industry in this endeavor.1715 The Commission proposed Rule 23c-3, which began from the closed-end, illiquid perspective under Section 23(c), and provided flexibility to increase shareholder liquidity through periodic repurchase
offers under simplified procedures. Rule 23c-3 was adopted in April
1993.1816
1311
SEC Staff Report, Protecting Investors: A Half Century of Investment Company Regulation (May 1992) at 421.
1412 Id. at 424.
1513 Id. at 439-40.
1614
Id. at 424.
1715 Investment Co. Act Rel. No. 18869 (July 28, 1992) (the Proposing Release).
18
16 Investment Co. Act Rel. No. 19399 (April 7, 1993) (the Adopting Release). The Commission also had proposed Rule 22e-3, which began from the open-end, complete liquidity perspective under Section 22 of the Act, and permitted periodic or delayed, rather than constant liquidity. The
Commission neither adopted nor withdrew proposed Rule 22e-3. To Applicants knowledge, the Commission has taken no further action with respect to Rule 22e-3.
48
The prime rate funds were cited in both Protecting Investors and the Proposing Release as
the prototype for the interval concept.1917 Nonetheless, while the prime
rate funds broke the path for innovation in this area, developments since the origin of these funds make further innovation appropriate. Precedent exists for the granting of exemptive relief to permit funds other than prime rate interval
funds to engage in repurchases on a monthly
basis.2018
B. | Monthly Repurchases |
Applicants request an order pursuant to Sections 6(c) and 23(c) of the Act exempting them from Rule 23c-3(a)(1) solely to the extent necessary to permit the Fund (and any Future Fund) to make monthly repurchase offers. Applicants also request an exemption from the notice provisions of Rule 23c-3(b)(4) solely to the extent necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to shareholders at least seven days but not more than fourteen days in advance of the repurchase request deadline. In Applicants view, this modification would enhance, rather than diminish, the investor benefits provided by Rule 23c-3 and is consistent with the public interest and investor protection. As long as the Fund (and any Future Fund), as supervised by its Board of Trustees, can make monthly repurchase offers pursuant to the modified notification requirements requested herein and otherwise comply with the remainder of Rule 23c-3, including its requirements with respect to liquidityand Applicants believe the Fund (and any Future Fund) will be able to do sothere is no public interest nor investor protection concern that justifies prohibiting monthly repurchase offers.
In the rulemaking proceeding in which Rule
23c-3 was adopted, certain commenters requested that a provision for monthly repurchases be incorporated in the final Rule. At the time of adoption, the Commission declined to do so. The Commission was
concerned that shorter repurchase intervals would not be compatible with the notification requirement in paragraph (b)(4) of the Rule because a fund would need to send out a notification for a repurchase offer before it had completed the previous
offer.2119 Applicants believe that this concern should not deter the Commission from granting the
relief requested in this case. First, it is understandable that, in its initial efforts to chart new territory, the Commission was reluctant to provide too many options. Regulatory prudence might well have dictated adopting a more
limited rule and considering more flexible proposals on a case-by-case basis. Second, it is significant that the reason given is one of logistics rather than substance. In fact, as discussed below, the
logistical concern mentioned would not pertain to Applicants proposal.
Rule 23c-3(b)(4) requires that notification of each repurchase offer be sent to common shareholders no less than 21 days and no more than 42 days before the repurchase request deadline. In order to prevent any overlap between payment for a repurchase and notification of the next months repurchase offer or resulting investor confusion, Applicants request an exemption from the notice provisions of Rule 23c-3(b)(4) to the extent
1917 Protecting Investors at 439-40; Proposing Release at 27.
20
18 In the Matter of Arca U.S. Treasury Fund and Arca Capital Management, LLC, Rel. No.
IC-34935 (June 2, 2023) (notice) and Rel. No. IC-34952 (June 28, 2023) (order) (Arca). In the Matter of Voya Senior Income Fund, et al., Rel. No. IC-34609 (June 3, 2022) (notice) and Rel. No. IC-34640 (June 29, 2022) (order) (Voya); In the Matter
of Lord Abbett Floating Rate High Income Fund, et al., Rel. No. IC-34308 (June 22, 2021) (notice), and Rel. No. IC-34336 (July 19, 2021) (order) (Lord Abbett). In the Matter of Arca U.S. TreasuryAspiriant Defensive Allocation Fund, et. al., Rel. No. IC-34026 (Sep. 24-33924 (July
10, 2020) (notice), and Rel. No. IC-34055 (Oct.
20-33961 (July 31, 2020) (order) (ArcaAspiriant). In the Matter of Weiss Strategic Interval Fund, et al., Rel. No.
IC-33101 (May 21, 2018) (notice), Rel. No. IC-33124 (June 18, 2018) (order) (Weiss). In the Matter of Blackstone / GSO Floating Rate Enhanced
Income Fund, et al., Rel. No. IC-32866 (Oct. 23, 2017) (notice), Rel. No. IC-32902 (Nov. 20, 2017) (order) (Blackstone). In the Matter of Van
Kampen Asset Management, et al., Rel. No. IC-27317 (May 12, 2006) (notice), Rel. No. IC-27390 (June 7, 2006) (order) (Van Kampen). In the
Matter of CypressTree Asset Management Corporation Inc., et al., Rel. No. IC-23020 (Feb. 4, 1998) (notice), Rel. No. IC-23055 (Mar. 3, 1998) (order)
(CypressTree). Prior Order supra at note
1In the Matter of ING Pilgrim Investments. LLC, et al., Rel. No.
IC-25167 (Sep. 21, 2001) (notice), Rel. No. IC-25212 (Oct. 17, 2001) (order) (Pilgrim
Investments).
2119 See Adopting Release at 28-29.
49
necessary to permit the Fund (and any Future Fund) to send notification of an upcoming repurchase offer to common shareholders at least seven calendar days, but not more than fourteen calendar
days, in advance of the repurchase request deadline. Because the
Fund prices,
upon
commencing
monthly
repurchase
offers,
intends (and any Future Fund willintends)
to price) on the
repurchase request deadline, and pay by the fifth business day or seventh calendar day (whichever period is shorter) following the repurchase pricing date (and, in any event, no later than seven calendar days after the repurchase pricing date), this
proposed timing ensureswill
ensure that common shareholders have received payment in full for any repurchases before receiving notification of the next repurchase offer. The entire repurchase procedure iswill be completed before the next notification is sent out, thus avoiding any overlap. Applicants believe that these procedures
will
eliminate any possibility of investor confusion from monthly repurchases.
The Funds prospectus will continue to provide
(and any Future Funds prospectus will provide) a clear explanation of the repurchase program. Moreover, shareholders in the Fund and any Future Fund that seeks shareholder approval to adopt or change a fundamental policy to permit monthly
repurchase offers will receive full disclosure in the proxy materials sent to obtain the requisite shareholder approval. Applicants believeexpect that,
before
long, the monthly repurchase opportunity haswill become as routine in the shareholders mind as daily redemptions, and that the significance of the notification
has
diminishedwill
diminish. Thus, any remote possibility of investor
confusion due to the proximity in time of the repurchase payment deadline to the sending of the next notification iswill
be adequately dealt with by disclosure.
Finally,
upon
commencing
monthly
repurchase
offers,
the Funds procedures provide (and any Future
Funds) procedures will provide) that the
Funds Board of Trustees are (and any Future Funds Board of Trustees) will be) informed
of the number of repurchase requests made in the previous repurchase offerwhich repurchases
will
have been completedat the time such funds Board of Trustees determines the repurchase offer amount for the current month. This enableswill
enable the Funds Board of Trustees (and any
Future Funds Board of Trustees) to take that information, as well as relevant liquidity reports from the portfolio manager, into account in setting the repurchase offer amount.
Applicants believe that monthly rather than quarterly repurchases offer many benefits and therefore would be in the public interest and in the common shareholders interests and be consistent with the policies underlying Rule 23c-3. Rule 23c-3 currently permits periodic repurchase offers no more frequently than once every three months, but monthly repurchases would provide significant benefits to common shareholders because their investments will be more liquid than an investment in a fund conducting only quarterly repurchase offers. Investors also will be better able to manage their investments and plan transactions because they will know that, if they decide to forego a repurchase offer, they only need to wait one (rather than three) months for the next offer. Applicants believe the requested relief allowing monthly repurchases provides the public marketplace and the Fund (and any Future Fund) common shareholders with more investment options. Finally, consistent with Section 23(c)(3), monthly repurchase offers will be made available to all common shareholders and thus, will not unfairly discriminate against any holders of the common shares to be purchased.
For all of these reasons, Applicants believe that
the requested relief is 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. Because the Fund will continue to describe (and any Future Fund will describe) its repurchase policy fully in its prospectus and annual report,
shareholders and potential investors will have available all information about the Fund (and any Future Fund) and its differences from a traditional open-end fund and traditional
closed-end fund. Finally, because the requested Order will increase the investment alternatives available to investors, the requested Order is appropriate in the public interest. Because the monthly repurchase
offers will continue to be made available to all common shareholders and otherwise comply with the requirements of Rule 23c-3 (except as it relates to the imposition of early withdrawal fees), the repurchase offers arewill not be
made in a manner or on a basis which unfairly discriminates against holders of the common shares to be purchased.
50
Applicants believe that there is precedent for the requested relief and that monthly repurchases
are consistent with the policies underlying Rule 23c-3. The Commission has granted exemptive relief under Rule 23c-3 to permit other interval funds to make monthly
repurchase offers under modified notice procedures.2220 Under the
Weiss and Blackstone orders, closed-end funds operating as interval funds sought to make monthly repurchase offers of not less than 5% of their outstanding common shares but not more than 25% in
any three month period pursuant to modified notice procedures under Rule 23c-3. Under the Van Kampen order, a closed-end fund investing in senior
secured floating rate loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the trailing three month period pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the Prior Order
,Pilgrim
Investments
order, a
closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not less than 5% of its outstanding common shares but not more than 25% in the aggregate in any one
quarter pursuant to modified notice procedures under Rule 23c-3, and was granted relief that was similar to that which the Applicants seek here. Under the CypressTree order, another closed-end fund investing in senior secured floating rate loans sought to make monthly repurchase offers of not more than 10% of its outstanding common shares. Applicants submit that the requested relief is
appropriate under the applicable statutory standards.
VI. APPLICANTS CONDITIONS
Applicants agree that any order granting the requested relief will be subject to the following conditions:
a. | The Fund (and any Future Fund relying on this relief) will make a repurchase offer pursuant to Rule 23c-3(b) for a repurchase offer amount of not less than 5% in any one-month period. In addition, the repurchase offer amount for the then current monthly period, plus the repurchase offer amounts for the two monthly periods immediately preceding the then current monthly period, will not exceed 25% of the Funds (or Future Funds, as applicable) outstanding common shares. The Fund (and any Future Fund relying on this relief) may repurchase additional tendered common shares pursuant to Rule 23c-3(b)(5) only to the extent the percentage of additional common shares so repurchased does not exceed 2% in any three-month period. |
b. | Payment for repurchased common shares will occur at least five business days before notification of the next repurchase offer is sent to common shareholders of the Fund (or any Future Fund relying on this relief). |
VII. CONCLUSION
For the reasons stated above, Applicants submit that the exemptions requested are necessary or 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, and thus meet the standards of Section 6(c). Applicants further submit that the relief requested pursuant to
Section 23(c)(3) will be consistent with the protection of investors and will ensure that any purchases are made in a manner or on a basis which does not unfairly discriminate against any holders of the class of securities to be purchased.
Finally, Applicants submit that the relief requested is consistent with that previously provided by the Commission in the Weiss, Blackstone, Van Kampen,
Prior
OrderPilgrim Investments and
CypressTree orders.
Applicants desire that the Commission issue the requested Order pursuant to Rule 0-5 under the Act without conducting a hearing.
As required by Rule 0-2(c)(1) under the Act, each Applicant hereby states that all of the requirements for
2220
See Weiss supra at note 2018, See Blackstone supra at note 2018, See Van Kampen supra at note 2018, See Pilgrim Investments supra at note 118. See also CypressTree, supra at note 2018.
51
execution and filing of this Application have been complied with in accordance with the operating agreements of the Applicants, as applicable, and the persons signing and filing this document are
authorized to do so on behalf of the Applicants. The resolutions of the Funds Board of Trustees are attached as Exhibit A to this Application in accordance with the requirements of Rule 0-2(c)(1) under
the Act, and the verifications required by Rule 0-2(d) under the Act, are attached as Exhibits B to this Application, respectively. In accordance with the requirements for a request for expedited review of
this Application, marked copies of two recent applications seeking the same relief as Applicants that are substantially identical as required by Rule 0-5(e) of the Act are attached as Exhibits C and D.
Pursuant to Rule 0-2(f) under the Act, the Applicants address is 7337 E. Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258333
West Wacker Drive, Chicago, Illinois 60606 and that all
written communications regarding this Application should be directed to the individuals and addresses indicated on the first page of this Application.
[Signature page follows.]
52
SIGNATURES
By: /s/ |
Name: |
Title:
|
Dated: |
By: /s/ |
Name:
|
Title: |
Dated: |
By: /s/ |
Name: |
Title: |
Dated:
|
By: /s/ |
Name:
|
Title:
|
Dated:
|
53
EXHIBIT A
Resolutions of the Board of Trustees of Voya Senior Income
Fund
Nuveen Enhanced Floating Rate Income Fund
RESOLVED, that the appropriate officers of
Voya Senior Incomethe Fund (the Fund) be and they
hereby are, and each of them acting individually hereby is, authorized to prepare, execute and file with the Securities and Exchange Commission (the SEC) on behalf of the Fund an application for an exemptive order pursuant to Sections
6(c) and 23(c)(3) under the Investment Company
Act of 1940, as amended (the 1940
Act) to allow the Fund to conduct monthly repurchase offers, such application to be in form and substance
satisfactory to counsel for the Fund, and subject to review by counsel to the Trustees who are not interested persons as defined in the 1940 Act, the execution
and filing of any such application, or amendment to such application, to be conclusive evidence of its authorization hereby; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to prepare execute and file with the SEC any amendments to such exemptive application requested by the SEC or as they believe necessary or appropriate; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized to take all such further action and to
execute and deliver all such further instruments and documents, in the name of and on behalf of the Fund, on the advice and assistance of Fund counsel,
and to pay all such expenses as shall be necessary, proper, or advisable, in order to fully carry out the intent, and accomplish the purposes of, the foregoing; and further
RESOLVED, that the appropriate officers of the Fund be, and they hereby are, authorized and directed, for and on the
Funds behalf, to take or cause to be taken, any and all action, to execute and deliver any and all certificates, instructions, requests, or other instruments, and to do any and all things that in their judgment, on the advice and assistance of
Fund counsel, as may be necessary or advisable to effect each of the resolutions adopted to carry out the purposes
and intent thereof, and as may be necessary or advisable for the conduct of the Funds business.
54
EXHIBIT B
VERIFICATION OF VOYA
SENIOR
NUVEEN ENHANCED FLOATING RATE INCOME FUND
The undersigned states that he has duly executed the attached Application dated May 25November 2
1, 20222023, for and on behalf of
Voya SeniorNuveen Enhanced
Floating Rate Income Fund in his capacity as AssistantVice
President
and Secretary of such entity and that all actions by
the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein
set forth are true to the best of his knowledge, information and belief.
VOYA
SENIORNUVEEN ENHANCED FLOATING
RATE INCOME FUND
By: /s/ Paul A.
CaldarelliMark L. Winget
Name: Paul A. Caldarelli Mark L.
Winget
Title:
AssistantVice
President
and Secretary
Dated: May 25November
21, 20222023
55
VERIFICATION OF
VOYA
INVESTMENTS
NUVEEN FUND ADVISORS, LLC
The undersigned states that he has duly executed the attached Application dated May 25November 2
1, 20222023, for and on behalf of
Voya InvestmentsNuveen
Fund Advisors, LLC in his capacity as Senior Vice President
and Assistant Secretary of such entity and that all actions
by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein
set forth are true to the best of his knowledge, information and belief.
By: |
Name:
|
Title: |
Dated: |
56
VERIFICATION OF
VOYA
INVESTMENTNUVEEN
ASSET MANAGEMENT CO., LLC
The
undersigned states that
shehe has duly executed the attached Application dated May 25November
21, 20222023, for and on behalf of
Voya InvestmentNuveen
Asset
Management Co., LLC in herhis capacity as
Senior Vice
President, Associate General Counsel and Assistant
Secretary of such entity and that all actions by the holders and other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that shehe is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of
herhis
knowledge, information and belief.
By: /s/ |
Name: |
Title: |
Dated:
|
57
VERIFICATION OF
VOYA
INVESTMENTS DISTRIBUTORNUVEEN SECURITIES, LLC
The undersigned states that he has duly executed the attached Application dated May 25November 2
1, 20222023, for and on behalf of
Voya Investments DistributorNuveen
Securities, LLC in his capacity as Vice President of Voya Investment Distributor, LLCManaging Director, Secretary and General Counsel of
such entity and that all actions by the holders and
other bodies necessary to authorize the undersigned to execute and file such instrument have been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true
to the best of his knowledge, information and belief.
By: /s/ |
Name:
|
Title:
|
Dated:
|
58