Fidelity Seeks SEC Approval to Operate New Interval Fund
Applicants Fidelity Diversifying Solutions LLC and Fidelity Distributors Company LLC are seeking approval from the U.S. Securities and Exchange Commission to advance Fidelity Floating Rate Opportunities Fund – a newly organized Delaware statutory trust that will be registered under the Investment Company Act of 1940 as a diversified, closed-end management investment company and will be operated as an interval fund.
The fund seeks to provide investors with a high level of current income and will offer four classes of common shares: Class A, C, I, and L. Common shares will be offered on a continuous basis at net asset value per share plus the applicable sales load, if any, and will not be offered or traded in the secondary market. Also, the fund will not be listed on any exchange or quoted on any quotation medium.
From time to time, the fund may create additional classes of shares, the terms of which may differ from the initial common shares.
Per standard protocol, Fidelity seeks SEC approval for the fund, organized in November 2023, 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 14 calendar days in advance of the repurchase request deadline.
The adviser-distributor applicants said the fund’s prospectus will provide a clear explanation of the repurchase program. Shareholders in the fund will also receive full disclosure in the proxy materials sent to obtain the requisite shareholder approval.
According to the recent filing, the applicants “believe that the monthly repurchase opportunity has become as routine in the shareholder’s mind as daily redemptions, and that the significance of the notification has diminished. 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 is adequately dealt with by disclosure.”
Finally, the fund’s procedures will provide that the fund’s board of trustees will be informed of the number of repurchase requests made in the previous repurchase offer – which repurchases will have been completed – at the time such fund’s board determines the repurchase offer amount for the current month.
The 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 policy.
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