[Federal Register Volume 85, Number 10 (Wednesday, January 15, 2020)]
[Notices]
[Pages 2465-2468]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00451]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33743; 812-15081]


Goldman Sachs Real Estate Diversified Income Fund, et al.

January 9, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from sections 
18(a)(2), 18(c), and 18(i) of the Act, under sections 6(c) and 23(c) of 
the Act for an exemption from rule 23c-3 under the Act, and for an 
order pursuant to section 17(d) of the Act and rule 17d-1 under the 
Act.

Summary of Application:  Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of shares and to impose asset-based service and distribution 
fees, and early withdrawal charges (``EWCs'').

Applicants:  Goldman Sachs Real Estate Diversified Income Fund and 
Goldman Sachs Credit Income Fund (the ``Initial Funds''), Goldman Sachs 
Asset Management, LP (the ``Adviser''), and Goldman Sachs & Co. LLC 
(the ``Distributor'').

Filing Dates:  The application was filed on December 11, 2019.

Hearing or Notification of Hearing:  An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on February 3, 2020, and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, the 
reason for the

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request, and the issues contested. Persons who wish to be notified of a 
hearing may request notification by writing to the Commission's 
Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE, Washington, DC 20549-1090; Applicants: 200 West Street, New 
York, NY 10282.

FOR FURTHER INFORMATION CONTACT: Edward J. Rubenstein, Senior Special 
Counsel, at (202) 551-6854, or Kaitlin C. Bottock, Branch Chief, at 
(202) 551-6825 (Division of Investment Management, Chief Counsel's 
Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Goldman Sachs Real Estate Diversified Income Fund (the ``GS 
Real Estate Fund'') is a Delaware statutory trust that is registered 
under the Act and will operate as a diversified, closed-end management 
investment company. The GS Real Estate Fund will operate as an 
``interval fund'' pursuant to rule 23c-3 under the Act and intends to 
continuously offer its shares.
    2. The Goldman Sachs Credit Income Fund (the ``GS Credit Fund'') is 
a Delaware statutory trust that is registered under the Act and will 
operate as a diversified closed-end management investment company. The 
GS Credit Fund will operate as an ``interval fund'' pursuant to rule 
23c-3 under the Act and intends to continuously offer its shares.
    3. The Adviser is a Delaware limited liability partnership 
registered as an investment adviser under the Investment Advisers Act 
of 1940. The Adviser will serve as investment adviser to the Initial 
Funds.
    4. The Distributor is registered with the Commission as a broker-
dealer under the Securities Exchange Act of 1934 (the ``Exchange 
Act''), and will act as the distributor of the Initial Funds.
    5. Applicants seek an order to permit the Initial Funds to issue 
multiple classes of shares, each having its own fee and expense 
structure, and to impose asset-based distribution and service fees, and 
EWCs.
    6. Applicants request that the order also apply to any continuously 
offered registered closed-end management investment company that has 
been previously organized or that may be organized in the future for 
which the Adviser or the Distributor or any entity controlling, 
controlled by, or under common control with the Adviser or the 
Distributor, or any successor in interest to any such entity,\1\ acts 
as investment adviser or principal underwriter, respectively, and which 
operates as an interval fund pursuant to rule 23c-3 under the Act or 
provides periodic liquidity with respect to its shares pursuant to rule 
13e-4 under the Exchange Act (each, a ``Future Fund'' and together with 
the Initial Fund, the ``Funds'').\2\
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    \1\ A successor in interest is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization.
    \2\ Any Fund relying on this relief in the future will do so in 
compliance with the terms and conditions of the application. 
Applicants represent that each entity presently intending to rely on 
the requested relief is listed as an applicant.
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    7. Each Initial Fund will make a continuous public offering of its 
shares. Applicants state that additional offerings by any Fund relying 
on the order may be on a private placement or public offering basis. 
Shares of the Funds will not be listed on any securities exchange, nor 
quoted on any quotation medium. The Funds do not expect there to be a 
secondary trading market for their shares.
    8. If the requested relief is granted, the GS Real Estate Fund 
expects to offer at least eight classes of shares and the GS Credit 
Fund expects to offer at least five classes of shares. The Initial 
Funds may also offer additional classes of shares in the future, with 
each class having its own fee and expense structure.
    9. Applicants state that, from time to time, the Funds may create 
additional classes of shares, the terms of which may differ from the 
initial class pursuant to and in compliance with rule 18f-3 under the 
Act.
    10. Applicants state that shares of a Fund may be subject to a 
repurchase fee at a rate of no greater than 2% of the shareholder's 
repurchase proceeds if the interval between the date of purchase of the 
shares and the valuation date with respect to the repurchase of those 
shares is less than one year. Any repurchase fee will apply equally to 
all classes of shares of a Fund, consistent with section 18 of the Act 
and rule 18f-3 thereunder. Further, applicants represent that to the 
extent a Fund determines to waive, impose scheduled variations of, or 
eliminate any repurchase fee, it will do so consistently with the 
requirements of rule 22d-1 under the Act as if the repurchase fee were 
a CDSL (defined below) and as if the Fund were an open-end investment 
company and the Fund's waiver of, scheduled variation in, or 
elimination of, any such repurchase fee will apply uniformly to all 
shareholders of the Fund regardless of class.
    11. Applicants state that the Initial Funds will adopt a 
fundamental policy to repurchase a specified percentage of its shares 
(no less than 5% and not more than 25%) at net asset value on a 
periodic basis. Such repurchase offers will be conducted pursuant to 
rule 23c-3 under the Act.\3\ Each Future Fund will likewise adopt a 
fundamental investment policy in compliance with rule 23c-3 and make 
periodic repurchase offers to its shareholders, or provide periodic 
liquidity with respect to its shares pursuant to rule 13e-4 under the 
Exchange Act. Any repurchase offers made by the Funds will be made to 
all holders of shares of each such Fund.
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    \3\ Applicants submit that rule 23c-3 and Regulation M under the 
Exchange Act permit an interval fund to make repurchase offers to 
repurchase its shares while engaging in a continuous offering of its 
shares pursuant to rule 415 under the Securities Act of 1933.
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    12. Applicants represent that any asset-based service and/or 
distribution fees for each class of shares will comply with the 
provisions of FINRA Rule 2341 (``Sales Charge Rule'').\4\ Applicants 
also represent that each Fund will disclose in its prospectus the fees, 
expenses, and other characteristics of each class of shares offered for 
sale by the prospectus, as is required for open-end multiple class 
funds under Form N-1A. As is required for open-end funds, each Fund 
will disclose its expenses in shareholder reports, and describe any 
arrangements that result in breakpoints in or elimination of sales 
loads in its prospectus.\5\ In addition, applicants will comply with 
applicable enhanced fee disclosure requirements for fund of funds, 
including registered funds of hedge funds.\6\
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    \4\ Any reference to the Sales Charge Rule includes any 
successor or replacement rule that may be adopted by the Financial 
Industry Regulatory Authority (``FINRA'').
    \5\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Company 
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring 
open-end investment companies to disclose fund expenses in 
shareholder reports); and Disclosure of Breakpoint Discounts by 
Mutual Funds, Investment Company Act Release No. 26464 (June 7, 
2004) (adopting release) (requiring open-end investment companies to 
provide prospectus disclosure of certain sales load information).
    \6\ Fund of Funds Investments, Investment Company Act Rel. Nos. 
26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) 
(adopting release). See also Rules 12d1-1, et seq. of the Act.
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    13. Each of the Funds will comply with any requirements that the

[[Page 2467]]

Commission or FINRA may adopt regarding disclosure at the point of sale 
and in transaction confirmations about the costs and conflicts of 
interest arising out of the distribution of open-end investment company 
shares, and regarding prospectus disclosure of sales loads and revenue 
sharing arrangements, as if those requirements applied to each Fund. In 
addition, each Fund will contractually require that any distributor of 
the Fund's shares comply with such requirements in connection with the 
distribution of such Fund's shares.
    14. Applicants state that each Fund may impose an EWC on shares 
submitted for repurchase that have been held less than a specified 
period and may waive the EWC for certain categories of shareholders or 
transactions to be established from time to time. Applicants state that 
each of the Funds will apply the EWC (and any waivers or scheduled 
variations of the EWC) uniformly to all shareholders in a given class 
and consistently with the requirements of rule 22d-1 under the Act as 
if the Funds were open-end investment companies.
    15. Each Fund operating as an interval fund pursuant to rule 23c-3 
under the Act may offer its shareholders an exchange feature under 
which the shareholders of the Fund may, in connection with the Fund's 
periodic repurchase offers, exchange their shares of the Fund for 
shares of the same class of (i) registered open-end investment 
companies or (ii) other registered closed-end investment companies that 
comply with rule 23c-3 under the Act and continuously offer their 
shares at net asset value, that are in the Fund's group of investment 
companies (collectively, ``Other Funds''). Shares of a Fund operating 
pursuant to rule 23c-3 that are exchanged for shares of Other Funds 
will be included as part of the amount of the repurchase offer amount 
for such Fund as specified in rule 23c-3 under the Act. Any exchange 
option will comply with rule 11a-3 under the Act, as if the Fund were 
an open-end investment company subject to rule 11a-3. In complying with 
rule 11a-3, each Fund will treat an EWC as if it were a contingent 
deferred sales load (``CDSL'').

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(a)(2) of the Act makes it unlawful for a closed-end 
investment company to issue a senior security that is a stock unless 
certain requirements are met. Applicants state that the creation of 
multiple classes of shares of the Funds may violate section 18(a)(2) 
because the Funds may not meet such requirements with respect to a 
class of shares that may be a senior security.
    2. Section 18(c) of the Act provides, in relevant part, that a 
registered closed-end investment company may not issue or sell any 
senior security if, immediately thereafter, the company has outstanding 
more than one class of senior security. Applicants state that the 
creation of multiple classes of Shares of a Fund proposed herein may 
result in Shares of a class having ``priority over [another] class as 
to . . . payment of dividends,'' and being deemed a ``senior 
security,'' because shareholders of different classes may pay different 
distribution fees, different shareholder services fees, and any other 
expense. Accordingly, applicants state that the creation of multiple 
classes of Shares of a Fund with different fees and expenses may be 
prohibited by section 18(c).
    3. Section 18(i) of the Act provides, in relevant part, that each 
share of stock issued by a registered management investment company 
will be a voting stock and have equal voting rights with every other 
outstanding voting stock. Applicants state that multiple classes of 
shares of the Funds may violate section 18(i) of the Act because each 
class would be entitled to exclusive voting rights with respect to 
matters solely related to that class.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction or any class or classes of persons, 
securities or transactions from any provision of the Act, or from any 
rule or regulation under the Act, if and to the extent such exemption 
is necessary or appropriate in the public interest and consistent with 
the protection of investors and the purposes fairly intended by the 
policy and provisions of the Act. Applicants request an exemption under 
section 6(c) from sections 18(a)(2), 18(c) and 18(i) to permit the 
Funds to issue multiple classes of shares.
    5. Applicants submit that the proposed allocation of expenses 
relating to distribution and voting rights among multiple classes is 
equitable and will not discriminate against any group or class of 
shareholders. Applicants submit that the proposed arrangements would 
permit a Fund to facilitate the distribution of its securities and 
provide investors with a broader choice of shareholder services. 
Applicants assert that the proposed closed-end investment company 
multiple class structure does not raise the concerns underlying section 
18 of the Act to any greater degree than open-end investment companies' 
multiple class structures that are permitted by rule 18f-3 under the 
Act. Applicants state that each Fund will comply with the provisions of 
rule 18f-3 as if it were an open-end investment company.

Early Withdrawal Charges

    1. Section 23(c) of the Act provides, in relevant part, that no 
registered closed-end investment company shall purchase securities of 
which it is the issuer, except: (a) On a securities exchange or other 
open market; (b) pursuant to tenders, after reasonable opportunity to 
submit tenders given to all holders of securities of the class to be 
purchased; or (c) under other circumstances as the Commission may 
permit by rules and regulations or orders for the protection of 
investors.
    2. Rule 23c-3 under the Act permits an interval fund to make 
repurchase offers of between five and twenty-five percent of its 
outstanding shares at net asset value at periodic intervals pursuant to 
a fundamental policy of the interval fund. Rule 23c-3(b)(1) under the 
Act permits an interval fund to deduct from repurchase proceeds only a 
repurchase fee, not to exceed two percent of the proceeds, that is paid 
to the interval fund and is reasonably intended to compensate the fund 
for expenses directly related to the repurchase.
    3. Section 23(c)(3) provides that the Commission may issue an order 
that would permit a closed-end investment company to repurchase its 
shares in circumstances in which the repurchase is made in a manner or 
on a basis that does not unfairly discriminate against any holders of 
the class or classes of securities to be purchased.
    4. Applicants request relief under section 6(c), discussed above, 
and section 23(c)(3) from rule 23c-3 to the extent necessary for the 
Funds to impose EWCs on shares of the Funds submitted for repurchase 
that have been held for less than a specified period.
    5. Applicants state that the EWCs they intend to impose are 
functionally similar to CDSLs imposed by open-end investment companies 
under rule 6c-10 under the Act. Rule 6c-10 permits open-end investment 
companies to impose CDSLs, subject to certain conditions. Applicants 
note that rule 6c-10 is grounded in policy considerations supporting 
the employment of CDSLs where there are adequate safeguards for the 
investor and state that the same policy considerations support 
imposition of EWCs in the interval fund context. In addition, 
applicants state that EWCs may be necessary for the distributor to 
recover distribution costs. Applicants represent that any EWC

[[Page 2468]]

imposed by the Funds will comply with rule 6c-10 under the Act as if 
the rule were applicable to closed-end investment companies. The Funds 
will disclose EWCs in accordance with the requirements of Form N-1A 
concerning CDSLs.

Asset-Based Service and Distribution Fees

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company, or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the Act, and 
the extent to which the participation is on a basis different from or 
less advantageous than that of other participants.
    2. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) and rule 17d-1 under 
the Act to the extent necessary to permit the Funds to impose asset-
based service and distribution fees. Applicants have agreed to comply 
with rules 12b-1 and 17d-3 as if those rules applied to closed-end 
investment companies, which they believe will resolve any concerns that 
might arise in connection with a Fund financing the distribution of its 
shares through asset-based service and distribution fees.
    3. For the reasons stated above, applicants submit that the 
exemptions requested under section 6(c) are necessary and appropriate 
in the public interest and are consistent with the protection of 
investors and the purposes fairly intended by the policy and provisions 
of the Act. Applicants further submit that the relief requested 
pursuant to section 23(c)(3) will be consistent with the protection of 
investors and will insure that applicants do not unfairly discriminate 
against any holders of the class of securities to be purchased. 
Finally, applicants state that the Funds' imposition of asset-based 
service and distribution fees is consistent with the provisions, 
policies, and purposes of the Act and does not involve participation on 
a basis different from or less advantageous than that of other 
participants.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Each Fund relying on the order will comply with the provisions of 
rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 
under the Act, as amended from time to time, as if those rules applied 
to closed-end management investment companies, and will comply with the 
Sales Charge Rule, as amended from time to time, as if that rule 
applied to all closed-end management investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-00451 Filed 1-14-20; 8:45 am]
 BILLING CODE 8011-01-P


