SEC Company Response from Goldman Sachs Credit Income Fund (CIK 0001796233) — Feb 19, 2020
Goldman Sachs Credit Income Fund (CIK 0001796233)
Date: Feb. 19, 2020 · CIK: 0001796233 · Accession: 0001193125-20-042014
AI Filing Summary & Sentiment
File numbers found in text: 333-235443, 333-235444, 811-23498, 811-23499
Referenced dates: January 8, 2020
Letter
VIA EDGAR Division of Investment Management File Nos. 333-235444 and 811-23498 Goldman Sachs Real Estate Diversified Income Fund Registration Statement on Form N-2 File Nos. 333-235443 and 811-23499
Dear Mr. Bellacicco:
This letter responds to comments that you conveyed in a letter dated January 8, 2020 with respect to the registration statements filed on Form N-2 (the “Registration Statements”) under the Securities Act of 1933, as amended (“Securities Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 10, 2019 on behalf of Goldman Sachs Credit Income Fund (the “Credit Fund”) and Goldman Sachs Real Estate Diversified Income Fund (the “Real Estate Fund,” and, together with the Credit Fund, the “Funds”). The Funds have considered your comments and have authorized us to make the responses and changes discussed below to the Registration Statements on their behalf. Capitalized terms have the meanings attributed to such terms in the Registration Statements.
Concurrently with this letter, each Fund is filing Pre-Effective Amendment No. 1 to its Registration Statement, which reflects the disclosure changes discussed below.
On behalf of the Funds, set forth below are the comments of the SEC staff (“Staff”) along with our responses to or any supplemental explanations of such comments, as requested.
GENERAL
1. Comment: Please tell us if you have presented any test the waters materials to potential investors in connection with these offerings. If so, please provide us with copies of such materials.
Response: The Funds confirm that they have not presented any test the waters materials to potential investors in connection with these offerings.
Mr. Bellacicco
February 19, 2020
Page
PROSPECTUS
Cover Page
2. Comment: We note that the cover page is four pages long. Please consider revising so that the cover page does not exceed two pages.
Response: The Funds have revised the disclosure to shorten the length of the cover page.
3. Comment: Interval Fund. Please disclose the intervals between deadlines for repurchase requests, pricing and repayment and the anticipated timing of the registrant’s initial repurchase offer. This response should include a cross-reference to those sections of the prospectus that discuss the registrant’s repurchase policies and the risks attendant thereto. See Guide 10 to Form N-2.
Response: The Funds have revised the disclosure consistent with this comment.
4. Comment: Interval Fund. The disclosure in this paragraph states that “it is possible that the Fund may offer to repurchase only the minimum amount of 5% of its outstanding Shares.” However, disclosure later in each prospectus indicates that the Funds expect to repurchase only 5% of its outstanding Shares per quarter. Please revise the quoted language, as repurchasing only 5% of outstanding Shares per quarter is not just a possibility, but appears to be the Funds’ expectation.
Response: The Funds have revised the disclosure consistent with this comment.
5. Comment: The two paragraphs immediately preceding the offering table discuss special risks that investors may face because the Funds are non-traded. Please revise the format of this disclosure so that each of the risks is discussed in a separate bullet point. The disclosure should remain in bold.
Response: The Funds have revised the disclosure consistent with this comment.
6. Comment: Offering Table. The “Proceeds, after expenses, to the Fund” line includes a superscript for footnote 2; however, such footnote appears to be missing. Please reconcile this discrepancy.
Response: The Funds have revised the disclosure to insert a footnote 2 to each Fund’s Offering Table.
7. Comment: Leverage. Please put the final sentence of the first paragraph, which is a cross reference to the borrowing and leverage discussions later in the prospectuses, in bold. See Item 1.1.j of Form N-2.
Response: The Funds have revised the disclosure consistent with this comment.
Mr. Bellacicco
February 19, 2020
Page
Prospectus Summary
8. Comment: Investment Objective and Strategies (page 2 of Real Estate Fund). The Real Estate Fund prospectus describes low to moderate correlation to the broader equity markets to mean “investment returns having a correlation of less than one to the S&P 500 Index.” Please explain what this means in plain English.
Response: The Real Estate Fund has revised the prospectus to delete this disclosure.
9. Comment: Investment Objective and Strategies (page 3). The prospectuses state that the Funds may lend portfolio securities. Please include corresponding risk disclosure regarding securities lending in the “Risk Factors” and “Principal Risks of the Fund” sections of the prospectuses.
Response: Each Fund may lend portfolio securities, but lending portfolio securities is not anticipated to be a principal investment strategy of the Fund. Accordingly, each Fund has deleted the disclosure indicating that the Fund may lend portfolio securities from the “Prospectus Summary – Investment Objective and Strategies” section of the Fund’s prospectus; however, each Fund has retained the disclosure in the “Investment Objective and Strategies” section of the Fund’s prospectus. Each Fund has revised the risk disclosure of the Fund’s prospectus consistent with this comment.
10. Comment: Investment Objective and Strategies (page 4). The prospectuses state that the Funds’ investments in derivatives are counted towards the Funds’ 80% investment policies. Please confirm that the Funds will use market value and not notional value of any derivatives for purposes of satisfying their 80% investment policies.
Response: Each Fund confirms that it will value each applicable derivative instrument based upon its market value for purposes of the Fund’s 80% investment policy.
11. Comment: Investment Objective and Strategies (page 4). The prospectuses indicate that the Funds will invest in Public Investment Funds, including mutual funds, ETFs and closed-end funds, as part of its principal investment strategy. Please explain how such investments in Underlying Funds will comply with the limitations imposed by Section 12(d)(1) of the 1940 Act.
Response: Section 12(d)(1)(A) of the 1940 Act provides a general prohibition on a fund acquiring more than 3% of the voting shares of a single investment company, investing more than 5% of its total assets in securities issued by a single investment company or investing more than 10% of its total assets in securities issued by investment companies in the aggregate. However, elsewhere under Section 12(d)(1) of the 1940 Act and certain rules thereunder, there are certain exceptions to this general prohibition. The Funds may also rely on exemptive relief obtained by other unaffiliated funds, provided certain conditions are satisfied.
12. Comment: Investment Objective and Strategies (page 4). The Credit Fund prospectus states that the Fund may invest in Private Investment Funds. Please tell us how much the Credit Fund will invest in hedge funds and/or private equity funds that rely on section 3(c)(1) or 3(c)(7) of the 1940
Mr. Bellacicco
February 19, 2020
Page
Act. If the Credit Fund will invest more than 15% of its net assets in hedge funds and private equity funds that rely on sections 3(c)(1) or 3(c)(7), please note that registered closed-end funds that invest more than 15% of their net assets in such hedge funds or private equity funds should impose a minimum initial investment requirement of at least $25,000 and restrict sales to investors that, at a minimum, satisfy the accredited investor standard. Please confirm to us that the Funds will invest 15% or less or that they will impose a $25,000 initial investment minimum and will limit investments to accredited investors. We may have additional comments after reviewing your response.
Response:
Credit Fund
The Credit Fund has revised its prospectus disclosure to state that the percentage of the Fund’s net assets that may be invested in hedge funds and private equity funds that rely on sections 3(c)(1) or 3(c)(7) of the 1940 Act will be 15% of its net assets. This 15% limit will be measured at the time that the Credit Fund makes a new commitment in a hedge fund or private equity fund.
As of the end of its most recent completed fiscal year (September 30, 2019), the Target Fund held 23% of its net assets (exclusive of any uncalled capital commitments) in hedge funds and private equity funds that rely on sections 3(c)(1) and/or 3(c)(7).
At the time of the proposed reorganization, the Credit Fund will assume all the assets of the Target Fund, which is expected to include investments in hedge funds and private equity funds in excess of 15% of its assets. Thus, if the reorganization is approved by the Target Fund’s shareholders, it is expected that the proportion of the Credit Fund’s net assets that consist of hedge funds and private equity funds will initially be above 15%. However, under the limit that the Credit Fund is adopting, the Credit Fund’s aggregate exposure to hedge funds and private equity funds would be expected to gradually decline to 15% (or lower) as existing investments run off and to the extent that the Fund’s assets grow due to net inflows and/or appreciation. In accordance with the 15% limit that the Credit Fund has adopted, the Credit Fund will not, during any period that it has investments in hedge funds and private equity funds exceeding the 15% limit, make any new commitments to hedge funds and private equity funds (although the Credit Fund may fund existing commitments that were made by the Target Fund) that would further increase the Credit Fund’s investments in hedge funds and private equity funds. The Credit Fund does not plan to sell investments in the secondary market to come into compliance with the 15% limit.
Real Estate Fund
We note that the Real Estate Fund has revised the disclosure in its prospectus to disclose the following:
“The Fund will invest no more than 15% of its net assets in private investment funds that are commonly known as hedge funds, which (i) based on their investment activities, meet
Mr. Bellacicco
February 19, 2020
Page
the definition of “investment company” found in Section 3(a)(1) of the 1940 Act; and (ii) do not qualify for any exemption from such definition other than that provided by Section 3(c)(1) or 3(c)(7) of the 1940 Act (measured at the time of investment). For the avoidance of doubt, the Fund does not consider a Private Real Estate Investment Fund to be a hedge fund or a private equity fund. (Private Real Estate Investment Funds are defined as: “private real estate investment funds that invest in real estate equity and private real estate investment funds that invest in real estate credit managed by unaffiliated institutional asset managers.”
13. Comment: Repurchase Offers Risk (page 5). In discussing this risk, please disclose (a) the effect that share repurchase offers might have on portfolio turnover; and (b) the possible decrease in share value as a result of currency fluctuations between the date of tender and the repurchase pricing date if the registrant has invested all or a portion of its portfolio in foreign markets. See Guide 10 to Form N-2.
Response: The Funds have revised the disclosure consistent with this comment.
14. Comment: Repurchase Offers Risk (page 6). The prospectuses notes that the Funds may borrow money to finance repurchases. Please disclose the maximum amount of debt that may be incurred for such purposes and the restrictions on leverage imposed by the 1940 Act and Rule 23c-3. See Guide 10 to Form N-2.
Response: The Funds have revised the disclosure consistent with this comment.
15. Comment: Loan-Related Investments Risk (pages 11-12). In the Credit Fund prospectus, the final sentence of the disclosure for this risk discusses the risk of investing in loans with fewer restrictive covenants. If the Credit Fund will invest in covenant lite loans as part of its principal investment strategy, please disclose in the strategy section.
Response: The Credit Fund has revised the disclosure consistent with this comment.
16. Comment: Convertible Securities Risk (page 13).
a. The prospectuses include a Convertible Securities Risk, but convertible securities are not mentioned in the investment strategies section beginning on page one of the prospectuses. If the Funds will invest in convertible securities as part of their investment strategies, please include a discussion in the strategy section.
b. If the Funds expect to invest in contingent convertible securities (“CoCos”), the Funds should consider what, if any, disclosure is appropriate. The type of disclosure will depend on, among other things, the extent to which the Funds will invest in CoCos and the characteristics of the CoCos (e.g., the credit quality, the conversion triggers). If CoCos will be a principal type of investment, the Funds should provide a description of them and should provide appropriate risk disclosure.
Mr. Bellacicco
February 19, 2020
Page
Response:
a. The Real Estate Fund respectfully notes that investing in convertible securities is disclosed in the “Prospectus Summary – Investment Objective and Strategies” section of the Fund’s prospectus. The Credit Fund may invest in convertible securities, but investing in convertible securities is not anticipated to be a principal investment strategy of the Fund. Nevertheless, the Credit Fund has included disclosure in the “Investment Objective and Strategies” section of the Fund’s prospectus to disclose that the Fund may invest in convertible securities.
b. Each Fund may invest in contingent convertible securities, but investing in contingent convertible securities is not anticipated to be a principal investment strategy of the Fund. For this reason, the Funds respectfully decline to make any changes in response to this comment.
17. Comment: OID and PIK Interest Related Risks (page 14). In the Credit Fund prospectus, please disclose additional risks related to OID and PIK instruments, including that: (a) market prices of OID instruments are more volatile because they are affected to a greater extent by interest rate changes than instruments that pay interest periodically in cash; (b) use of OID and PIK securities may provide certain benefits to the Investment Adviser including increasing management fees and incentive compensation; (c) the Credit Fund may be required under the tax laws to make distributions of OID income to shareholders without receiving any cash and that such required cash distributions may have to be paid from offering proceeds or the sale of fund assets; and (d) the required recognition of OID, including PIK, interest for U.S. federal income tax purposes may have a negative impact on liquidity, because it represents a non-cash component of the Credit Fund’s taxable income that must, nevertheless, be distributed in cash to investors to avoid it being subject to corporate level taxation.
Response: The Credit Fund has revised the disclosure consistent with this comment.
18. Comment: The Fund May Make Commitments Representing a Substantial Portfolio of its Total Assets (page 22). Please note that the staff of the Division of Investment Management has taken the position that an unfunded commi
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CORRESP 1 filename1.htm GS Credit Income & GS Real Estate Diversified Funds 1900 K Street, N.W. Washington, DC 20006 +1 202 261 3300 Main +1 202 261 3333 Fax www.dechert.com WILLIAM J. BIELEFELD william.bielefeld@dechert.com +1 202 261 3386 Direct +1 202 261 3333 Fax February 19, 2020 VIA EDGAR Mr. Christopher R. Bellacicco U.S. Securities and Exchange Commission Division of Investment Management 100 F Street, NE Washington, D.C. 20549 Re: Goldman Sachs Credit Income Fund Registration Statement on Form N-2 File Nos. 333-235444 and 811-23498 Goldman Sachs Real Estate Diversified Income Fund Registration Statement on Form N-2 File Nos. 333-235443 and 811-23499 Dear Mr. Bellacicco: This letter responds to comments that you conveyed in a letter dated January 8, 2020 with respect to the registration statements filed on Form N-2 (the “Registration Statements”) under the Securities Act of 1933, as amended (“Securities Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”), filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 10, 2019 on behalf of Goldman Sachs Credit Income Fund (the “Credit Fund”) and Goldman Sachs Real Estate Diversified Income Fund (the “Real Estate Fund,” and, together with the Credit Fund, the “Funds”). The Funds have considered your comments and have authorized us to make the responses and changes discussed below to the Registration Statements on their behalf. Capitalized terms have the meanings attributed to such terms in the Registration Statements. Concurrently with this letter, each Fund is filing Pre-Effective Amendment No. 1 to its Registration Statement, which reflects the disclosure changes discussed below. On behalf of the Funds, set forth below are the comments of the SEC staff (“Staff”) along with our responses to or any supplemental explanations of such comments, as requested. GENERAL 1. Comment: Please tell us if you have presented any test the waters materials to potential investors in connection with these offerings. If so, please provide us with copies of such materials. Response: The Funds confirm that they have not presented any test the waters materials to potential investors in connection with these offerings. Mr. Bellacicco February 19, 2020 Page 2 PROSPECTUS Cover Page 2. Comment: We note that the cover page is four pages long. Please consider revising so that the cover page does not exceed two pages. Response: The Funds have revised the disclosure to shorten the length of the cover page. 3. Comment: Interval Fund. Please disclose the intervals between deadlines for repurchase requests, pricing and repayment and the anticipated timing of the registrant’s initial repurchase offer. This response should include a cross-reference to those sections of the prospectus that discuss the registrant’s repurchase policies and the risks attendant thereto. See Guide 10 to Form N-2. Response: The Funds have revised the disclosure consistent with this comment. 4. Comment: Interval Fund. The disclosure in this paragraph states that “it is possible that the Fund may offer to repurchase only the minimum amount of 5% of its outstanding Shares.” However, disclosure later in each prospectus indicates that the Funds expect to repurchase only 5% of its outstanding Shares per quarter. Please revise the quoted language, as repurchasing only 5% of outstanding Shares per quarter is not just a possibility, but appears to be the Funds’ expectation. Response: The Funds have revised the disclosure consistent with this comment. 5. Comment: The two paragraphs immediately preceding the offering table discuss special risks that investors may face because the Funds are non-traded. Please revise the format of this disclosure so that each of the risks is discussed in a separate bullet point. The disclosure should remain in bold. Response: The Funds have revised the disclosure consistent with this comment. 6. Comment: Offering Table. The “Proceeds, after expenses, to the Fund” line includes a superscript for footnote 2; however, such footnote appears to be missing. Please reconcile this discrepancy. Response: The Funds have revised the disclosure to insert a footnote 2 to each Fund’s Offering Table. 7. Comment: Leverage. Please put the final sentence of the first paragraph, which is a cross reference to the borrowing and leverage discussions later in the prospectuses, in bold. See Item 1.1.j of Form N-2. Response: The Funds have revised the disclosure consistent with this comment. Mr. Bellacicco February 19, 2020 Page 3 Prospectus Summary 8. Comment: Investment Objective and Strategies (page 2 of Real Estate Fund). The Real Estate Fund prospectus describes low to moderate correlation to the broader equity markets to mean “investment returns having a correlation of less than one to the S&P 500 Index.” Please explain what this means in plain English. Response: The Real Estate Fund has revised the prospectus to delete this disclosure. 9. Comment: Investment Objective and Strategies (page 3). The prospectuses state that the Funds may lend portfolio securities. Please include corresponding risk disclosure regarding securities lending in the “Risk Factors” and “Principal Risks of the Fund” sections of the prospectuses. Response: Each Fund may lend portfolio securities, but lending portfolio securities is not anticipated to be a principal investment strategy of the Fund. Accordingly, each Fund has deleted the disclosure indicating that the Fund may lend portfolio securities from the “Prospectus Summary – Investment Objective and Strategies” section of the Fund’s prospectus; however, each Fund has retained the disclosure in the “Investment Objective and Strategies” section of the Fund’s prospectus. Each Fund has revised the risk disclosure of the Fund’s prospectus consistent with this comment. 10. Comment: Investment Objective and Strategies (page 4). The prospectuses state that the Funds’ investments in derivatives are counted towards the Funds’ 80% investment policies. Please confirm that the Funds will use market value and not notional value of any derivatives for purposes of satisfying their 80% investment policies. Response: Each Fund confirms that it will value each applicable derivative instrument based upon its market value for purposes of the Fund’s 80% investment policy. 11. Comment: Investment Objective and Strategies (page 4). The prospectuses indicate that the Funds will invest in Public Investment Funds, including mutual funds, ETFs and closed-end funds, as part of its principal investment strategy. Please explain how such investments in Underlying Funds will comply with the limitations imposed by Section 12(d)(1) of the 1940 Act. Response: Section 12(d)(1)(A) of the 1940 Act provides a general prohibition on a fund acquiring more than 3% of the voting shares of a single investment company, investing more than 5% of its total assets in securities issued by a single investment company or investing more than 10% of its total assets in securities issued by investment companies in the aggregate. However, elsewhere under Section 12(d)(1) of the 1940 Act and certain rules thereunder, there are certain exceptions to this general prohibition. The Funds may also rely on exemptive relief obtained by other unaffiliated funds, provided certain conditions are satisfied. 12. Comment: Investment Objective and Strategies (page 4). The Credit Fund prospectus states that the Fund may invest in Private Investment Funds. Please tell us how much the Credit Fund will invest in hedge funds and/or private equity funds that rely on section 3(c)(1) or 3(c)(7) of the 1940 Mr. Bellacicco February 19, 2020 Page 4 Act. If the Credit Fund will invest more than 15% of its net assets in hedge funds and private equity funds that rely on sections 3(c)(1) or 3(c)(7), please note that registered closed-end funds that invest more than 15% of their net assets in such hedge funds or private equity funds should impose a minimum initial investment requirement of at least $25,000 and restrict sales to investors that, at a minimum, satisfy the accredited investor standard. Please confirm to us that the Funds will invest 15% or less or that they will impose a $25,000 initial investment minimum and will limit investments to accredited investors. We may have additional comments after reviewing your response. Response: Credit Fund The Credit Fund has revised its prospectus disclosure to state that the percentage of the Fund’s net assets that may be invested in hedge funds and private equity funds that rely on sections 3(c)(1) or 3(c)(7) of the 1940 Act will be 15% of its net assets. This 15% limit will be measured at the time that the Credit Fund makes a new commitment in a hedge fund or private equity fund. As of the end of its most recent completed fiscal year (September 30, 2019), the Target Fund held 23% of its net assets (exclusive of any uncalled capital commitments) in hedge funds and private equity funds that rely on sections 3(c)(1) and/or 3(c)(7). At the time of the proposed reorganization, the Credit Fund will assume all the assets of the Target Fund, which is expected to include investments in hedge funds and private equity funds in excess of 15% of its assets. Thus, if the reorganization is approved by the Target Fund’s shareholders, it is expected that the proportion of the Credit Fund’s net assets that consist of hedge funds and private equity funds will initially be above 15%. However, under the limit that the Credit Fund is adopting, the Credit Fund’s aggregate exposure to hedge funds and private equity funds would be expected to gradually decline to 15% (or lower) as existing investments run off and to the extent that the Fund’s assets grow due to net inflows and/or appreciation. In accordance with the 15% limit that the Credit Fund has adopted, the Credit Fund will not, during any period that it has investments in hedge funds and private equity funds exceeding the 15% limit, make any new commitments to hedge funds and private equity funds (although the Credit Fund may fund existing commitments that were made by the Target Fund) that would further increase the Credit Fund’s investments in hedge funds and private equity funds. The Credit Fund does not plan to sell investments in the secondary market to come into compliance with the 15% limit. Real Estate Fund We note that the Real Estate Fund has revised the disclosure in its prospectus to disclose the following: “The Fund will invest no more than 15% of its net assets in private investment funds that are commonly known as hedge funds, which (i) based on their investment activities, meet Mr. Bellacicco February 19, 2020 Page 5 the definition of “investment company” found in Section 3(a)(1) of the 1940 Act; and (ii) do not qualify for any exemption from such definition other than that provided by Section 3(c)(1) or 3(c)(7) of the 1940 Act (measured at the time of investment). For the avoidance of doubt, the Fund does not consider a Private Real Estate Investment Fund to be a hedge fund or a private equity fund. (Private Real Estate Investment Funds are defined as: “private real estate investment funds that invest in real estate equity and private real estate investment funds that invest in real estate credit managed by unaffiliated institutional asset managers.” 13. Comment: Repurchase Offers Risk (page 5). In discussing this risk, please disclose (a) the effect that share repurchase offers might have on portfolio turnover; and (b) the possible decrease in share value as a result of currency fluctuations between the date of tender and the repurchase pricing date if the registrant has invested all or a portion of its portfolio in foreign markets. See Guide 10 to Form N-2. Response: The Funds have revised the disclosure consistent with this comment. 14. Comment: Repurchase Offers Risk (page 6). The prospectuses notes that the Funds may borrow money to finance repurchases. Please disclose the maximum amount of debt that may be incurred for such purposes and the restrictions on leverage imposed by the 1940 Act and Rule 23c-3. See Guide 10 to Form N-2. Response: The Funds have revised the disclosure consistent with this comment. 15. Comment: Loan-Related Investments Risk (pages 11-12). In the Credit Fund prospectus, the final sentence of the disclosure for this risk discusses the risk of investing in loans with fewer restrictive covenants. If the Credit Fund will invest in covenant lite loans as part of its principal investment strategy, please disclose in the strategy section. Response: The Credit Fund has revised the disclosure consistent with this comment. 16. Comment: Convertible Securities Risk (page 13). a. The prospectuses include a Convertible Securities Risk, but convertible securities are not mentioned in the investment strategies section beginning on page one of the prospectuses. If the Funds will invest in convertible securities as part of their investment strategies, please include a discussion in the strategy section. b. If the Funds expect to invest in contingent convertible securities (“CoCos”), the Funds should consider what, if any, disclosure is appropriate. The type of disclosure will depend on, among other things, the extent to which the Funds will invest in CoCos and the characteristics of the CoCos (e.g., the credit quality, the conversion triggers). If CoCos will be a principal type of investment, the Funds should provide a description of them and should provide appropriate risk disclosure. Mr. Bellacicco February 19, 2020 Page 6 Response: a. The Real Estate Fund respectfully notes that investing in convertible securities is disclosed in the “Prospectus Summary – Investment Objective and Strategies” section of the Fund’s prospectus. The Credit Fund may invest in convertible securities, but investing in convertible securities is not anticipated to be a principal investment strategy of the Fund. Nevertheless, the Credit Fund has included disclosure in the “Investment Objective and Strategies” section of the Fund’s prospectus to disclose that the Fund may invest in convertible securities. b. Each Fund may invest in contingent convertible securities, but investing in contingent convertible securities is not anticipated to be a principal investment strategy of the Fund. For this reason, the Funds respectfully decline to make any changes in response to this comment. 17. Comment: OID and PIK Interest Related Risks (page 14). In the Credit Fund prospectus, please disclose additional risks related to OID and PIK instruments, including that: (a) market prices of OID instruments are more volatile because they are affected to a greater extent by interest rate changes than instruments that pay interest periodically in cash; (b) use of OID and PIK securities may provide certain benefits to the Investment Adviser including increasing management fees and incentive compensation; (c) the Credit Fund may be required under the tax laws to make distributions of OID income to shareholders without receiving any cash and that such required cash distributions may have to be paid from offering proceeds or the sale of fund assets; and (d) the required recognition of OID, including PIK, interest for U.S. federal income tax purposes may have a negative impact on liquidity, because it represents a non-cash component of the Credit Fund’s taxable income that must, nevertheless, be distributed in cash to investors to avoid it being subject to corporate level taxation. Response: The Credit Fund has revised the disclosure consistent with this comment. 18. Comment: The Fund May Make Commitments Representing a Substantial Portfolio of its Total Assets (page 22). Please note that the staff of the Division of Investment Management has taken the position that an unfunded commi