1933 Act File No.
|
333-248509
|
|
|
1940 Act File No.
|
811-05133
|
|
|
[X]
|
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
|
[ ]
|
Pre-Effective Amendment No. 1
|
[ ]
|
Post-Effective Amendment No. ___
|
and/or
|
|
[X]
|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
|
[ ]
|
Amendment No. 1
|
[ ] |
Check box if the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans.
|
[ ] |
Check box if any securities being registered on this Form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933 (“Securities Act”), other than securities offered
in connection with a dividend reinvestment plan.
|
[ ] |
Check box if this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment thereto.
|
[ ] |
Check box if this Form is a registration statement pursuant to General Instruction B or a post-effective amendment thereto that will become effective upon filing with the Commission pursuant to Rule 462(e) under
the Securities Act.
|
[ ] |
Check box if this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional securities or additional classes of securities pursuant to Rule
413(b) under the Securities Act.
|
[X] |
when declared effective pursuant to section 8(c) of the Securities Act
|
[ ] |
This [post-effective] amendment designates a new effective date for a previously filed [post-effective amendment] [registration statement].
|
[ ] |
This Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration
statement for the same offering is: __________.
|
[ ] |
This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same
offering is: __________.
|
[ ] |
This Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same
offering is: __________.
|
[X] |
Registered Closed-End Fund (closed-end company that is registered under the Investment Company Act of 1940 (“Investment Company Act”)).
|
[ ] |
Business Development Company (closed-end company that intends or has elected to be regulated as a business development company under the Investment Company Act).
|
[ ] |
Interval Fund (Registered Closed-End Fund or a Business Development Company that makes periodic repurchase offers under Rule 23c-3 under the Investment Company Act).
|
[X] |
A.2 Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form).
|
[ ] |
Well-Known Seasoned Issuer (as defined by Rule 405 under the Securities Act).
|
[ ] |
Emerging Growth Company (as defined by Rule 12b-2 under the Securities Exchange Act of 1934 (“Exchange Act”)).
|
[ ] |
If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 7(a)(2)(B) of Securities Act.
|
[ ] |
New Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months preceding this filing).
|
Title of Securities
Being Registered
|
Amount Being
Registered
|
Proposed Maximum
Offering Price Per Unit
|
Proposed Maximum
Aggregate Offering Price(1)
|
Amount of
Registration Fee(3)
|
Common Shares of Beneficial Interest, without par value
|
5,565,006
|
$7.91
|
43,924,375
|
$5,703
|
Rights to purchase
common shares(2)
|
5,565,006
|
—
|
—
|
—
|
(1)
|
Estimated solely for the purpose of calculating fee as required by Rule 457(o) under the Securities Act of 1933 based upon the closing price reported on the New York Stock Exchange
consolidated reporting system of $8.33 on September 30, 2020.
|
(2)
|
Evidencing the rights to subscribe for shares of beneficial interest of the Registrant being registered herewith. Pursuant to Rule 457(g) of the Securities Act of 1933, no separate
registration fee is required for the rights because the rights are being registered on the same registration statement as the shares of beneficial interest of the Registrant underlying the rights.
|
(3)
|
Includes $5,375 the Registrant previously paid in connection with the initial filing of this Registration Statement.
|
•
|
may substantially dilute the NAV of Shares owned by Shareholders who do not fully exercise their rights and purchase additional Shares;
|
•
|
may substantially dilute the voting power of Shareholders who do not fully exercise their Rights since they will own a smaller proportionate interest in the Fund upon
completion of the offering;
|
•
|
may increase the discount at which the Shares trade to NAV if the Subscription Price is set at a time when Shares are trading at a discount to NAV; and
|
•
|
may cause the discount below NAV at which the Fund’s shares are currently trading to increase, especially if Rights Holders exercising the Rights attempt to sell sizeable
numbers of Shares immediately after such issuance.
|
|
|
Estimated Subscription
Price(1)
|
|
|
Estimated
Sales Load
|
|
|
Estimated Proceeds to
the Fund(2)
|
|
|||
Per Share
|
|
$
|
7.91
|
|
|
|
None
|
|
|
$
|
43,924,375
|
|
Total
|
|
$
|
7.91
|
|
|
|
None
|
|
|
$
|
43,924,375
|
|
(1)
|
Because the Subscription Price will not be determined until after printing and distribution of this prospectus, the “Estimated Subscription Price” above is an estimate of the subscription
price based on the Fund’s per-Share NAV and market price at the close of trading on September 30, 2020. See “The Offering - Subscription Price” and “The Offering - Payment for Shares.”
|
(2)
|
Proceeds to the Fund are estimated to be approximately $43,924,375 or approximately $7.91 per Share, if fully subscribed. Proceeds to the Fund are before deduction of fees and expenses
incurred by the Fund in connection with the Offering, which are estimated to be approximately $117,303 or approximately $0.02 per Share, if fully subscribed. The calculation of the per Share amount does not take into account the
Over-Subscription Shares (as defined below). Funds received prior to the final due date of this Offering will be deposited in a segregated account pending allocation and distribution of Shares. Interest, if any, on subscription monies will
be paid to the Fund regardless of whether Shares are issued by the Fund; interest will not be used as credit toward the purchase of Shares.
|
|
Page
|
SUMMARY
|
1
|
SUMMARY OF FUND EXPENSES
|
6
|
THE FUND
|
7
|
THE OFFERING
|
7
|
FINANCIAL HIGHLIGHTS
|
16
|
USE OF PROCEEDS
|
17
|
INVESTMENT OBJECTIVE AND POLICIES
|
18
|
RISK FACTORS
|
22
|
LISTING OF SHARES
|
29
|
MANAGEMENT OF THE FUND
|
29
|
DETERMINATION OF NET ASSET VALUE
|
31
|
DISTRIBUTION POLICY
|
32
|
CERTAIN ADDITIONAL MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
|
32
|
DESCRIPTION OF CAPITAL STRUCTURE
|
37
|
LEGAL MATTERS
|
39
|
REPORTS TO STOCKHOLDERS
|
39
|
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
39
|
ADDITIONAL INFORMATION
|
39
|
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
|
40
|
The Fund
|
The Fund was formed on April 28, 1987 as a Massachusetts business trust under the laws of the Commonwealth of Massachusetts.
A proxy contest at the Fund’s 2018 annual shareholder meeting resulted in the election of a new Board of Trustees (the “Board”) and the approval of a proposal requesting the Board to authorize
a self-tender offer at or close to net asset value (NAV). These developments led to the Fund’s former investment adviser to resign in July 2018. In preparation for the self-tender offer (1) substantially all the Fund’s portfolio securities
were sold and the proceeds invested in cash equivalents and (2) the monthly dividends that were historically paid were discontinued after the August 2018 dividend. A self-tender offer for the Fund’s shares at a price of 99% of NAV was
completed in March 2019.
In April 2019, the Board of Trustees approved a transitional investment strategy to invest, within the parameters of the Fund’s existing investment policies and restrictions, in securities
likely to generate more income. Meanwhile, an investment search committee of the Board continued to explore potential acquisitions of controlling stakes in operating companies and other non-security investments. This committee’s efforts
did not bear fruit and, as a result, the Fund has continued, and is expected to continue, to operate as a closed-end fund. The investment search committee was disbanded in September 2020.
The Fund is internally managed by an Investment Committee of the Board (the “Investment Committee”). The Fund is registered under the Investment Company Act of 1940, as amended (together with
the rules promulgated thereunder, the “1940 Act”), as a closed–end, diversified management investment company. Our shares of beneficial interest are listed and trade on the NYSE under the trading symbol “PCF.”
|
||
The Offering
|
The Fund is issuing non-transferable rights (“Rights”) to its Shareholders as of the close of business on [●], 2020 (each such Shareholder, a “Rights Holder”), which Rights will allow Rights
Holders to subscribe for an aggregate of 5,565,006 Shares (the “Offering”). Rights are non-transferable. A Rights Holder will not be able to trade Rights on the secondary market. For each (1) Right a Rights Holder receives, such Rights
Holder will be entitled to buy one (1) new Share at a subscription price equal to 95% of the volume weighted average market price (“VWAP”) per Share for the three consecutive trading days ending on the trading day after the Expiration Date,
provided, however that such amount shall not be less than 85% of NAV per Share as calculated at the close on the trading day after the Expiration Date. Each Shareholder will receive one Right for each Share owned on the Record Date (the
“Basic Subscription”). Fractional Shares will not be issued upon the exercise of the Rights. Accordingly, the number of Rights to be issued to a Shareholder as of the Record Date will be rounded up to the nearest whole number of Rights.
Rights Holders may purchase Shares not acquired by other Rights Holders as discussed in this prospectus. See “The Offering - Additional Subscription Privilege” below. Additionally, if there are not enough unsubscribed Shares to honor all
over-subscription requests, the Fund may, in its discretion, issue additional Shares up to 100% of the Shares available in the Offering to honor over-subscription requests.
Shares will be issued as soon as practicable after the Expiration Date and will be entitled to receive the Fund’s next monthly distribution for which the record date is after the Expiration
Date.
|
Purpose of the Offering
|
At its meeting held on June 10, 2020, the Board of Trustees determined that the Offering, which will increase the assets of the Fund, is in the best interests of the Fund and its Shareholders.
The primary reasons for the Offering are summarized below.
• The Basic Subscription will
provide existing Shareholders an opportunity to purchase additional Shares at a price that is below market price and potentially below NAV without incurring any commission or transaction charges.
• Raising more cash will better
position the Fund to take advantage of investment opportunities that exist or may arise. Depending in part on the amount of proceeds raised in the Offering and subject to any required shareholder approval, the Board may consider changes
to the Fund’s investment policies and may expand the types of investments in which the Fund invests its assets, including the proceeds of the Offering. The types of investments the Board may consider expanding into include SPACs, higher
rated debt instruments, income oriented closed-end funds, and investments with a relatively short-term opportunity to obtain liquidity, e.g., liquidations, tender offers, and merger arbitrage.
• Increasing Fund assets may
lower the Fund’s expenses as a proportion of net assets as the Fund’s fixed costs would be spread over a larger asset base. There can be no assurance that by increasing the size of the Fund, the Fund’s expense ratio will be reduced.
The Offering is expected to be dilutive with respect to the net asset value per share, to all Shareholders, including those electing not to full participate. This expectation is based on the
fact that all the costs of the Offering will be borne by all Shareholders whether or not they exercise their Rights and because the Offering price is set at a discount to market value, which has historically been a discount to NAV. If there
are not enough unsubscribed Shares to honor all additional subscription requests and the Fund determines, in its sole discretion, to issue additional Shares up to 100% of the Shares available in the Offering to honor additional subscription
requests, the dilution to existing Shareholders will be greater. The Offering is expected to be dilutive with respect to the voting power of Shareholders electing not to fully participate in the Offering because they will own a smaller
percentage of the total number of shares outstanding after the completion of the Offering.
Proceeds of the Offering will not be used to support the Fund’s distribution policy.
Because the Offering will increase the number of the Fund’s outstanding Shares, it may increase the number of Shareholders over the long term, which could increase the level of market interest
in and visibility of the Fund and improve the trading liquidity of the Shares on the NYSE. Shareholders who choose not to exercise their full Rights to purchase additional Shares will permit Shareholders who exercise the Additional
Subscription Privilege to purchase additional Shares at a discount without furnishing additional rights or providing any compensation to the non-participating Shareholders for the dilution of their ownership percentage or voting rights.
The following illustrates the dilutive impact of the Offering if the Subscription Price is below the NAV on the pricing date. The amounts in the table are based on the Fund’s per-share NAV and market price at the end of business on
September 30, 2020 ($8.62 and $8.33, respectively) and estimated Subscription Price of $7.91 per share (95% of $8.33).
|
NAV Per Share
|
Market Price |
New NAV Per Share |
Percentage Dilution |
Dollar Amt Per Share Dilution
|
$8.62
|
$8.33
|
$8.27
|
4.1%
|
$0.35
|
|
|
|
|
|
Investment Objective and Policies
|
The Fund’s investment objective is to seek to provide high current income as a primary objective and capital appreciation as a secondary objective.
There is no assurance that the Fund will achieve its investment objective. Some of the Fund’s investment policies are considered fundamental policies and may not be changed without Shareholder
approval. The Statement of Additional Information contains a list of the fundamental and non-fundamental investment policies of the Fund under the heading “Investment Restrictions.”
The Board is currently reviewing and may determine if it is in the best interests of the Fund and its Shareholders to make changes to the Fund’s current investment objective, investment
strategies and fundamental and non-fundamental investment policies of the Fund, subject, where required, to the approval of the Shareholders. Any such changes would be disclosed in a future registration statement.
|
Investment Strategies
|
The Fund pursues its objective primarily by investing, under normal circumstances, at least 80% of its net assets in fixed income securities, including debt instruments, convertible securities
and preferred stocks. The Fund also invests in high-yielding non-convertible securities with the potential for capital appreciation. The primary focus of the Fund’s current investment strategy is to acquire discounted shares of unaffiliated
income-oriented closed-end investment companies and business development companies. In addition, units or common shares issued by special purpose acquisition companies (SPACs) may comprise up to 20% of the Fund’s portfolio.
During periods of adverse market or economic conditions, the Fund may temporarily invest all or a substantial portion of its net assets in cash or cash equivalents.
|
Risks Factors
|
Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. See “Risk Factors”
beginning on page 22 and the other information included in this Prospectus for a discussion of risks that you should carefully consider about us and about this offering.
|
Important Dates
|
Record Date
|
[●], 2020
|
Subscription Date
|
[●], 2020 - [●], 2020*
|
|
Expiration Date/ Deadline to Purchase Shares
|
[●], 2020*
|
|
Deadline for Notice of Guaranteed Delivery†
|
[●], 2020*
|
|
Deadline for Payment to Notice of Guaranteed Delivery†
|
[●], 2020*
|
|
* Unless the offering is extended.
† A person purchasing Shares pursuant to his or her Rights must deliver either (i) Subscription Certificate and payment for the Shares or (ii) a Notice of Guaranteed Delivery by the Expiration
Date, unless the offering is extended.
|
Shareholder Transaction Expenses
|
|
Sales load
|
None
|
Offering expenses(1)
|
$117,303
|
Dividend Reinvestment and Cash Purchase Plan Fees
|
None
|
Annual Expenses (as a percentage of net assets attributable to the Shares)
|
|
Management fees(2)
|
0.00%
|
Interest Payments on Borrowed Funds
|
None
|
Other expenses(2)(3)
|
1.89%
|
Acquired Fund fees and expenses(4)
|
2.71%
|
Total Annual Expenses
|
4.60%
|
|
1 Year
|
|
3 Years
|
|
5 Years
|
|
10 Years
|
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return
|
$46
|
|
$139
|
|
$232
|
$469
|
(1)
|
Assuming the Fund will have 11,130,012 Shares outstanding if fully subscribed and Offering expenses to be paid by the Fund are estimated to be approximately $117,303 or
approximately $0.02 per Share.
|
(2)
|
The Fund does not pay a management fee. The Fund’s assets are managed by the Investment Committee. The members of the Investment Committee are compensated by the Fund (on
an annual basis paid monthly in advance) as follows: $100,000 each for Messrs. Goldstein and Dakos and $50,000 for Mr. Das. This compensation is included in “Other Expenses.”
|
(3)
|
“Other Expenses” are based upon gross estimated amounts for the prior fiscal year and include, among other expenses, administration and fund accounting fees.
|
(4)
|
The Fund invests in other closed-end investment companies and ETFs (collectively, the “Acquired Funds”). The Fund’s shareholders indirectly bear a pro rata portion of the
fees and expenses of the Acquired Funds in which the Fund invests. Acquired Fund fees and expenses are based on estimated amounts for the current fiscal year.
|
(5)
|
The example assumes that the estimated “Other Expenses” set forth in the Annual Expenses table remain the same each year and that all dividends and distributions are
reinvested at net asset value. Actual expenses may be greater or less than those assumed. The example further assumes that the Fund uses no leverage, as currently intended and the Fund does not intent to utilize any leverage within one year
from the effective date of this Registration Statement. Moreover, the Fund’s actual rate of return will vary and may be greater or less than the hypothetical 5% annual return.
|
(i)
|
If there are sufficient Excess Shares to satisfy all additional subscriptions by Rights Holders exercising their rights under the Additional Subscription Privilege, each such Rights Holder
shall be allotted the number of Shares requested.
|
(ii)
|
If the aggregate number of Shares subscribed for under the Additional Subscription Privilege exceeds the number of Excess Shares, the Excess Shares will be allocated to Rights Holders who have
exercised all of their Rights in accordance with their Additional Subscription Privilege request.
|
(iii)
|
If there are not enough Excess Shares to fully satisfy all Additional Subscription Privilege requests by Rights Holders pursuant to paragraph (ii) above, the Excess Shares will be allocated
among Rights Holders who have exercised all of their Rights in proportion, not to the number of Shares requested pursuant to the Additional Subscription Privilege, but to the number of Rights exercised by them under their Basic Subscription
Rights; provided, however, that no Rights Holder shall be allocated a greater number of Excess Shares than such Rights Holder paid for and in no event shall the number of Shares allocated in connection with the Additional Subscription
Privilege exceed 100% of the Shares available in the Offering. The formula to be used in allocating the Excess Shares under this paragraph is as follows: (Rights Exercised by over-subscribing Rights Holder divided by Total Rights Exercised
by all over-subscribing Rights Holders) multiplied by Excess Shares Remaining.
|
If by first class mail:
Broadridge, Inc.
51 Mercedes Way
Edgewood, NY 11717
|
If by mail or overnight courier:
Broadridge, Inc.
51 Mercedes Way
Edgewood, NY 11717
|
•
|
If the Estimated Subscription Price is greater than the actual per Share purchase price, the excess payment will be applied toward the purchase of unsubscribed Shares to
the extent that there remain sufficient unsubscribed Shares available after the Basic Subscription and Additional Subscription Privilege allocations are completed.
|
•
|
To the extent that sufficient unsubscribed Shares are not available to apply all of the excess payment toward the purchase of unsubscribed Shares, available Shares will be
allocated in the manner consistent with that described in the section entitled “Additional Subscription Privilege” above.
|
|
|
For the Years Ended August 31,
|
|
|||||||||||||||||||
|
|
2020
|
2019
|
|
|
2018*
|
|
|
2017*
|
|
|
|
2016*
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
PER SHARE OPERATING PERFORMANCE
|
||||||||||||||||||||||
Net asset value, beginning of Period
|
|
$
|
9.49
|
$
|
9.69
|
|
|
|
$
|
9.53
|
|
|
$
|
8.92
|
|
|
$
|
8.67
|
|
|
||
Net investment Income
|
|
|
0.38
|
|
0.13
|
|
|
|
|
0.22
|
|
|
|
0.30
|
|
|
|
0.35
|
|
|
||
Net realized and unrealized gain/(loss) on securities
|
|
|
(0.32)
|
0.01
|
0.25
|
0.66
|
0.17
|
|
||||||||||||||
Total From Investment Operations
|
|
|
0.06
|
0.14
|
0.47
|
0.96
|
0.52
|
|
||||||||||||||
Dividends (from net investment income) to stockholders:
|
|
|
(0.34)
|
(0.05)
|
(0.31)
|
(0.37)
|
(0.37)
|
|
||||||||||||||
Distributions (from capital gains) to stockholders
|
(0.05)
|
(0.41)
|
-
|
-
|
-
|
|||||||||||||||||
Return of Capital
|
(0.51)
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Total Distributions
|
|
|
(0.90)
|
(0.46)
|
(0.31)
|
(0.37)
|
(0.37)
|
|
||||||||||||||
Increase from shares repurchased
|
|
|
-
|
-
|
(0.00)
|
(0.02)
|
(0.10)
|
|||||||||||||||
Anti-dilutive effect of Tender Offer
|
|
|
-
|
(0.12)
|
-
|
-
|
-
|
|||||||||||||||
Net Asset Value, End of Period
|
|
|
8.65
|
9.49
|
9.69
|
9.53
|
8.92
|
|
||||||||||||||
Per Share Market Value, End of Period
|
|
|
8.10
|
8.24
|
9.38
|
8.77
|
8.02
|
|
||||||||||||||
Total Investment Return
|
|
|
9.86%
|
-7.56%
|
10.65%
|
14.19%
|
14.96%
|
|||||||||||||||
RATIOS/SUPPLEMENTAL DATA
|
||||||||||||||||||||||
Net assets, End of Period
|
|
$
|
48,129
|
52,812
|
125,256
|
123,607
|
118,530
|
|
||||||||||||||
Ratio of Expenses to Average Net Assets
|
|
|
1.89
|
%
|
|
|
1.18
|
%
|
|
|
1.47
|
%
|
|
|
1.22
|
%
|
|
|
0.94
|
%
|
|
|
Ratio of Net Income to Average Net Assets
|
|
|
4.30
|
%
|
|
|
1.38
|
%
|
|
|
2.26
|
%
|
|
|
3.29
|
%
|
|
|
4.15
|
%
|
|
|
Portfolio Turnover Rate
|
|
|
81
|
%
|
|
|
43
|
%
|
|
|
49
|
%
|
|
|
50
|
%
|
|
|
26
|
%
|
|
|
|
For the Years Ended August 31,
|
||||||||||||||||||||||
|
|
2015*
|
2014*
|
|
|
2013*
|
|
|
2012*
|
|
|
|
2011*
|
|
|
2010*
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
PER SHARE OPERATING PERFORMANCE
|
||||||||||||||||||||||||
Net asset value, beginning of Period
|
|
$
|
9.56
|
$
|
8.76
|
|
|
|
$
|
8.21
|
|
|
$
|
8.12
|
$
|
7.93
|
|
$
|
7.13
|
|
||||
Net investment Income
|
|
|
0.35
|
|
0.36
|
|
|
|
|
0.44
|
|
|
|
0.49
|
|
|
0.50
|
|
|
0.51
|
|
|||
Net realized and unrealized gain/(loss) on securities
|
|
|
(0.95)
|
0.82
|
0.56
|
0.13
|
0.22
|
|
0.81
|
|||||||||||||||
Total From Investment Operations
|
|
|
(0.60)
|
1.18
|
1.00
|
0.62
|
0.72
|
|
1.32
|
|||||||||||||||
Dividends (from net investment income) to stockholders:
|
|
|
(0.37)
|
(0.43)
|
(0.48)
|
(0.53)
|
(0.53)
|
|
(0.53)
|
|||||||||||||||
Distributions (from capital gains) to stockholders
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Return of Capital
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Total Distributions
|
|
|
(0.37)
|
(0.43)
|
(0.48)
|
(0.53)
|
(0.53)
|
|
(0.53)
|
|||||||||||||||
Increase from shares repurchased
|
|
|
0.08
|
0.05
|
0.03
|
-
|
-
|
|
0.01
|
|||||||||||||||
Anti-dilutive effect of Tender Offer
|
|
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|||||||||||||||
Net Asset Value, End of Period
|
|
|
8.67
|
9.56
|
8.76
|
8.21
|
8.12
|
|
7.93
|
|||||||||||||||
Per Share Market Value, End of Period
|
|
|
7.33
|
8.61
|
7.68
|
8.27
|
8.10
|
|
8.19
|
|||||||||||||||
Total Investment Return
|
|
|
-10.87%
|
17.94%
|
-1.44%
|
9.08
|
5.22
|
29.08
|
||||||||||||||||
RATIOS/SUPPLEMENTAL DATA
|
||||||||||||||||||||||||
Net assets, End of Period
|
|
$
|
127,027
|
151,659
|
145,549
|
141,003
|
139,120
|
|
135,777
|
|||||||||||||||
Ratio of Expenses to Average Net Assets
|
|
|
0.90
|
%
|
|
|
0.94
|
%
|
|
|
0.90
|
%
|
|
|
0.93
|
%
|
0.91
|
%
|
|
0.93
|
%
|
|||
Ratio of Net Income to Average Net Assets
|
|
|
3.86
|
%
|
|
|
3.91
|
%
|
|
|
5.10
|
%
|
|
|
6.04
|
%
|
5.86
|
%
|
|
6.60
|
%
|
|||
Portfolio Turnover Rate
|
|
|
35
|
%
|
|
|
41
|
%
|
|
|
48
|
%
|
|
|
36
|
%
|
63
|
%
|
|
61
|
%
|
(1)
|
(2)
|
(3)
|
(4)
|
Title of Class |
Amount Authorized |
Amount Held By Registrant or for its Account
|
Amount Outstanding Exclusive of Amount Shown Under (3)
|
Common Shares of Beneficial Interest
|
Unlimited
|
7,365,349
|
5,565,006
|
Fiscal Quarter Ended
|
|
High Close
|
|
Low Close
|
|
High NAV
|
|
Low NAV
|
|
Premium/ (Discount) to
High NAV
|
|
Premium/ (Discount) to
Low NAV
|
|
||||||
11/30/17
|
$
|
9.15
|
$
|
8.68
|
$
|
9.82
|
$
|
9.51
|
-6.82
|
%
|
-8.73
|
%
|
|||||||
02/28/18
|
9.26
|
8.73
|
9.90
|
9.43
|
-6.46
|
-7.42
|
|||||||||||||
05/31/18
|
9.31
|
8.88
|
9.89
|
9.54
|
-5.86
|
-6.92
|
|||||||||||||
08/30/18*
|
9.52
|
9.18
|
9.85
|
9.61
|
-3.35
|
-4.47
|
|||||||||||||
11/30/18
|
9.48
|
9.37
|
9.72
|
9.69
|
-2.47
|
-3.30
|
|||||||||||||
02/28/19
|
9.42
|
8.90
|
9.73
|
9.32
|
-3.19
|
-4.51
|
|||||||||||||
05/31/19
|
9.16
|
8.24
|
9.49
|
9.34
|
-3.48
|
-11.78
|
|||||||||||||
08/30/19
|
8.51
|
8.20
|
9.62
|
9.41
|
-11.54
|
-12.86
|
|||||||||||||
11/30/19
|
8.62
|
8.22
|
9.64
|
9.49
|
-10.58
|
-13.38
|
|||||||||||||
02/29/20
|
9.52
|
8.51
|
9.89
|
9.40
|
-3.74
|
-9.47
|
|||||||||||||
05/31/20
|
8.97
|
5.17
|
9.68
|
6.41
|
-7.33
|
-19.34
|
|||||||||||||
08/31/20
|
8.16
|
7.44
|
8.69
|
8.20
|
-6.10
|
-9.27
|
* |
At the Fund’s 2018 annual meeting, a new Board was elected and the Fund’s former investment adviser was terminated as of July 23, 2018.
|
|
(1) |
merger or consolidation of the fund,
|
|
(2) |
sale of all or substantially all of the assets of the fund, or
|
|
(3) |
conversion of the fund to an open-end investment company.
|
|
Page
|
FORWARD-LOOKING STATEMENTS
|
1
|
GENERAL INFORMATION AND HISTORY
|
1
|
INVESTMENT RESTRICTIONS
|
1
|
MANAGEMENT
|
2
|
CODE OF ETHICS
|
13
|
PROXY VOTING PROCEDURES
|
13
|
ADMINISTRATIVE SERVICES, TRANSFER AGENT, CUSTODIAN
|
14
|
PORTFOLIO MANAGERS
|
15
|
ALLOCATION OF BROKERAGE
|
16
|
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
|
17
|
FINANCIAL STATEMENTS
|
24
|
OTHER INFORMATION
|
24
|
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
24
|
|
1. |
Information from the Consumer: this category includes information the Fund receives from you on or in applications or other forms, correspondence, or conversations (such as your name, address, phone number, social
security number, assets, income and date of birth); and
|
|
2. |
Information about the Consumer’s transactions: this category includes information about your transactions with the Fund, its affiliates, or others (such as your account number and balance, payment history, parties
to transactions, cost basis information, and other financial information).
|
|
Page
|
FORWARD-LOOKING STATEMENTS
|
1
|
GENERAL INFORMATION AND HISTORY
|
1
|
INVESTMENT RESTRICTIONS
|
1
|
MANAGEMENT
|
2
|
CODE OF ETHICS
|
13
|
PROXY VOTING PROCEDURES
|
13
|
ADMINISTRATIVE SERVICES, TRANSFER AGENT, CUSTODIAN
|
14
|
PORTFOLIO MANAGERS
|
15
|
ALLOCATION OF BROKERAGE
|
16
|
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
|
17
|
FINANCIAL STATEMENTS
|
24
|
OTHER INFORMATION
|
24
|
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
24
|
1.
|
Borrow money or issue senior securities (as defined in the 1940 Act), except that the fund may borrow amounts not exceeding 15% of the value (taken at the lower of cost or current value) of
its total assets (not including the amount borrowed) at the time the borrowing is made for temporary purposes (including repurchasing its shares while effecting an orderly liquidation of portfolio securities) or for emergency purposes.
|
2.
|
Underwrite securities issued by other persons except to the extent that, in connection with the disposition of its portfolio investments, it may be deemed to be an underwriter under the
federal securities laws.
|
3.
|
Purchase securities restricted as to resale if, as a result, such investments would exceed 10% of the value of the Fund's net assets.
|
4.
|
Purchase or sell real estate, although it may purchase securities of issuers which deal in real estate, securities which are secured by interests in real estate and securities which
represent interests in real estate or interests in real estate acquired through the exercise of its rights as a holder of debt obligations secured by real estate or interests therein.
|
5.
|
Purchase or sell commodities or commodity contracts, except that it may purchase or sell financial futures contracts and related options.
|
6.
|
Make loans, except by purchase of debt obligations in which the Fund may invest consistent with its investment policies, by entering into repurchase agreements or by lending its portfolio
securities.
|
7.
|
With respect to 75% of its total assets, invest in the securities of any issuer if, immediately after such investment, more than 5% of the total assets of the Fund (taken at current value)
would be invested in the securities of such issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities.
|
8.
|
With respect to 75% of its total assets, acquire more than 10% of the outstanding voting securities of any issuer.
|
9.
|
Purchase securities (other than securities of the U.S. government, its agencies or instrumentalities) if, as a result of such purchase, more than 25% of the Fund's total assets would be
invested in any one industry.
|
1.
|
The Fund may not invest in the securities of registered open-end investment companies, except as they may be acquired as part of a merger or consolidation or acquisition of assets or by purchases in the open
market involving only customary brokers' commissions.
|
Name, Address
and Age
|
Position(s)
Held with
the Fund
|
Term of
Office
and
Length
of Time
Served
|
Principal Occupation
During the Past
Five Years
|
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee*
|
Other
Directorships
held by
Trustee
|
INTERESTED TRUSTEES
|
|||||
Andrew Dakos**
(54)
|
President
as of
July 2018.
|
1 year;
Since
2018
|
Member of Bulldog Investors,
LLC since 2009; Principal of
the former general partner of several
private investment partnerships
in the Bulldog Investors group
of private funds.
|
1
|
Director, Brookfield
DTLA Fund Office
Trust Investor, Inc.;
Director, Emergent
Capital, Inc. (until
2017); Trustee,
Crossroads
Liquidating Trust;
Director, Special
Opportunities
Fund, Inc.;
Chairman, Swiss
Helvetia Fund, Inc.
|
Phillip Goldstein**
(75)
|
Secretary
as of
July 2018.
|
1 year;
Since
2018
|
Member of Bulldog Investors,
LLC since 2009; Principal of
The former general partner of several
private investment partnerships
in the Bulldog Investors group
of private funds.
|
1
|
Chairman, The
Mexico Equity and
Income Fund, Inc.;
Chairman, Special
Opportunities
Fund, Inc.; Director,
Brookfield DTLA
Fund Office Trust
Investor Inc.;
Director, MVC
Capital, Inc.;
Trustee, Crossroads
Liquidating Trust;
Director, Swiss
Helvetia Fund, Inc.;
Chairman,
Emergent Capital,
Inc. (until 2017).
|
Name, Address
and Age
|
Position(s)
Held with
the Fund
|
Term of
Office
and
Length
of Time
Served
|
Principal Occupation
During the Past
Five Years
|
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee*
|
Other
Directorships
held by
Trustee
|
Rajeev Das**
(51)
|
-
|
1 year;
Since
2018
|
Principal of Bulldog
Investors, LLC
|
1
|
Director, The
Mexico Equity &
Income Fund, Inc.
|
INDEPENDENT TRUSTEES
|
|||||
Gerald Hellerman
(82)
|
-
|
1 year;
Since
2018
|
Chief Compliance Officer
of The Mexico Equity and
Income Fund, Inc. and
Special Opportunities Fund, Inc. (through March 2020)
|
1
|
Director, The
Mexico Equity and
Income Fund, Inc.;
Director, Special
Opportunities
Fund, Inc.; Director,
MVC Capital, Inc.;
Trustee, Crossroad
Liquidating Trust;
Trustee, Fiera
Capital Series Trust;
Director, Swiss
Helvetia Fund, Inc.;
Director, Emergent
Capital, Inc. (until
2017); Director,
Ironsides Partners
Opportunity
Offshore Fund Ltd.
(until 2016).
|
Name, Address
and Age
|
Position(s)
Held with
the Fund
|
Term of
Office
and
Length
of Time
Served
|
Principal Occupation
During the Past
Five Years
|
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee*
|
Other
Directorships
held by
Trustee
|
Richard Dayan
(76)
|
-
|
1 year;
Since
2018
|
Owner of CactusTrading
|
1
|
Director, Swiss
Helvetia Fund, Inc.;
Director, Emergent
Capital Inc.
(until 2017).
|
Ben Harris (52)
|
-
|
1 year;
Since
2018
|
Chief Executive Officer of Hormel Harris Investments, LLC; Principal of NBC
Bancshares,
LLC; Chief Executive Officer of
Crossroads Capital, Inc.;
Administrator of Crossroads
Liquidating Trust.
|
1
|
Director, Special
Opportunities
Fund, Inc.
|
OFFICERS
|
|||||
Andrew Dakos***
(54)
|
President
as of
July 2018.
|
1 year;
Since
2018
|
Member of Bulldog Investors,
LLC; Principal of the former general
partner of several private
investment partnerships in the
Bulldog Investors group of
funds.
|
n/a
|
n/a
|
Thomas Antonucci**
(51)
|
Treasurer
as of
July 2018.
|
1 year;
Since
2018
|
Director of Operations of
Bulldog Investors, LLC.
|
n/a
|
n/a
|
Phillip Goldstein**
(75)
|
Secretary
as of
July 2018.
|
1 year;
Since
2018
|
Member of Bulldog Investors,
LLC; Principal of the former general
partner of several private
investment partnerships in the
Bulldog Investors group of
funds.
|
n/a
|
n/a
|
Stephanie Darling**
(50)
|
Chief
Compliance
Officer
as of
July 2018.
|
1 year;
Since
2018
|
General Counsel and Chief
Compliance Officer of Bulldog
Investors, LLC; Chief Compliance Officer of Special Opportunities Fund, Swiss Helvetia Fund and Mexico Equity and Income Fund; Principal, the
Law Office of Stephanie Darling;
Editor-In-Chief, the Investment
Lawyer.
|
n/a
|
n/a
|
Aggregate
|
Pension or Retirement Benefits
Accrued as
|
Estimated
|
Total Compensation From Fund
and Fund
|
||
Trustee
|
Compensation
From
|
Part of
Fund
|
Annual
Benefits Upon
|
Complex**
Paid to
|
|
Name of Trustee
|
Since*
|
Fund
|
Expenses
|
Retirement
|
Trustee
|
Independent Trustees
|
|||||
Gerald Hellerman
|
2018
|
$25,000
|
None
|
None
|
$25,000
|
Mortiz Sell
|
2018
|
$25,000
|
None
|
None
|
$25,000
|
Richard Dayan
|
2018
|
$25,000
|
None
|
None
|
$25,000
|
Ben H. Harris
Interested Trustees
|
2018
|
$25,000
|
None
|
None
|
$25,000
|
Andrew Dakos
|
2018
|
$150,000
|
None
|
None
|
$150,000
|
Phillip Goldstein
|
2018
|
$150,000
|
None
|
None
|
$150,000
|
Rajeev Das
|
2018
|
$75,000
|
None
|
None
|
$75,000
|
* |
Trustees were elected at the Fund’s annual meeting of shareholders convened on April 27, 2018 and adjourned until May 21, 2018.
|
Name
|
Position
|
Dollar Range of
Equity Securities in the Fund |
Aggregate Dollar
Range of Equity Securities In All Funds overseen by Trustee in Family of Investment Companies* |
Gerald Hellerman
|
Independent Trustee
|
$10,001-$50,000
|
$10,001-$50,000
|
Mortiz Sell
|
Independent Trustee
|
$10,001-$50,000
|
$10,001-$50,000
|
Richard Dayan
|
Independent Trustee
|
None
|
None
|
1.
|
The name of the issuer of the portfolio security;
|
2.
|
The exchange ticker symbol of the portfolio security;
|
3.
|
The CUSIP number (may be omitted if it is not available through reasonably practicable means);
|
4.
|
The shareholder meeting date;
|
5.
|
A brief description of the matter voted on;
|
6.
|
Whether the matter was proposed by the issuer or the security holder;
|
7.
|
Whether the Fund cast its vote on the matter;
|
8.
|
How the Fund cast its vote (e.g., for or against proposal, or abstain; for or withhold regarding election of directors); and
|
9.
|
Whether the Fund cast its vote for or against management.
|
•
|
An individual who is a citizen or resident of the United States or someone treated as a U.S. citizen for U.S. federal income tax purposes;
|
|
•
|
A corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District
of Columbia;
|
|
•
|
An estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
|
•
|
A trust if: (a) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or
(b) the trust was in existence on August 20, 1996 and has a valid election in effect under applicable Treasury Regulations (as defined below) to be treated as a U.S. person.
|
•
|
a dealer in securities or currencies;
|
|
•
|
a financial institution;
|
|
•
|
a regulated investment company;
|
|
•
|
a real estate investment trust;
|
|
•
|
an insurance company;
|
|
•
|
a tax-exempt organization;
|
|
•
|
a person holding shares as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle;
|
|
•
|
a trader in securities that has elected the mark-to-market method of accounting for its securities;
|
|
•
|
a person liable for alternative minimum tax;
|
|
•
|
a partnership or other pass-through entity for U.S. federal income tax purposes; or
|
|
•
|
a U.S. Holder whose “functional currency” is not the U.S. dollar.
|
(1)
|
Financial Statements (included in Part B)
|
*
|
Incorporated by reference to the Fund’s Annual Report on Form N-CSR for the year ended August 31, 2020 filed on November 6, 2020 (File No. 811-05133).
|
(2)
|
Exhibits
|
(a)(i)
|
Amended and Restated Agreement and Declaration of Trust, dated September 19, 2014
(1)
|
(a)(ii)
|
|
(b)
|
Amended and Restated Bylaws, dated as of October 17, 2014 (1)
|
(c)
|
Not applicable
|
(d)
|
|
(e)
|
Not applicable
|
(f)
|
Not applicable
|
(g)
|
Not applicable
|
(h)
|
Not applicable
|
(i)
|
Not applicable
|
(j)
|
|
(k)(i)
|
(k)(ii)
|
|
(l)
|
|
(m)
|
Not applicable
|
(n)
|
|
(o)
|
Not applicable
|
(p)
|
Not applicable
|
(q)
|
Not applicable
|
(r)
|
Code of Ethics of the Fund (2)
|
Information Agent’s Fees and Expenses
|
|
$
|
5,000
|
|
Subscription Agent’s Fees and Expenses
|
|
|
14,000
|
|
Auditing Fees and Expenses
|
|
|
-
|
|
Registration Fees
|
|
|
5,703
|
|
Legal Fees and Expenses
|
|
|
75,000
|
|
Printing, Typesetting, and Edgar Fees
|
|
|
11,000
|
|
Miscellaneous
|
|
|
6,600
|
|
|
|
$
|
117,303
|
|
Title of Class
|
Number of
Record Holders
|
Common Shares of Beneficial Interest, without par value
|
4,041
|
1.
|
The Registrant undertakes to suspend the offering of its Rights until the prospectus is amended if (1) subsequent to the effective date of this registration statement, the net asset value declines more than ten
percent from its net asset value as of the effective date of the registration statement or (2) the net asset value increases to an amount greater than its net proceeds as stated in the prospectus.
|
2.
|
Not applicable.
|
3.
|
Not applicable.
|
4.
|
Not applicable.
|
5.
|
The Registrant undertakes that:
|
(a)
|
for the purpose of determining any liability under the Securities Act of 1933, as amended, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the Registrant under Rule 497(h) under the 1933 Act shall be deemed to be part of this registration statement as of the time it was declared effective; and
|
(b)
|
for the purpose of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
6.
|
The Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, its Statement of Additional
Information.
|
|
HIGH INCOME SECURITIES FUND
|
|
|
|
|
||
|
By:
|
/s/ Andrew Dakos
|
|
|
|
President (Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Andrew Dakos
|
|
President (Principal Executive Officer)
|
|
November 23, 2020
|
Andrew Dakos
|
|
|
||
|
|
|
||
/s/ Thomas Antonucci
|
|
Treasurer (Principal Financial Officer)
|
|
November 23, 2020
|
Thomas Antonucci
|
|
|||
|
||||
/s/ Andrew Dakos
|
|
Trustee
|
|
November 23, 2020
|
Andrew Dakos
|
|
|||
|
||||
/s/ Phillip Goldstein
|
|
Trustee
|
|
November 23, 2020
|
Phillip Goldstein
|
|
|||
|
||||
/s/ Rajeev Das
|
|
Trustee
|
|
November 23, 2020
|
Rajeev Das
|
|
|||
|
||||
/s/ Gerald Hellerman
|
|
Trustee
|
|
November 23, 2020
|
Gerald Hellerman
|
|
|||
|
||||
/s/ Moritz Sell
|
|
Trustee
|
|
November 23, 2020
|
Moritz Sell
|
|
|||
|
||||
/s/ Richard Dayan
|
|
Trustee
|
|
November 23, 2020
|
Richard Dayan
|
|
|||
|
||||
/s/ Ben Harris
|
|
Trustee
|
|
November 23, 2020
|
Ben Harris
|
|
Exhibit No.
|
Description
|
(a)(ii)
|
Amendment No. 1 to Amended and Restated Agreement and Declaration of Trust, dated as of July 13, 2018
|
(d)
|
Form of Non-Transferable Subscription Rights Certificate
|
(j)
|
Custody Agreement between the Fund and U.S. Bank, N.A.
|
(k)(i)
|
Servicing Agreement Agreement between the Fund and U.S. Bancorp Fund Services, LLC
|
(k)(ii)
|
Transfer Agent Servicing Agreement between the Fund and U.S. Bancorp Fund Services, LLC
|
(l)
|
Opinion and Consent of Counsel
|
(n)
|
Consent of Independent Auditor
|
(s)
|
Information Agent Agreement
|
(t)
|
Subscription Agent Agreement
|
/s/ Andrew Dakos
|
/s/ Phillip Goldstein
|
President | Secretary |
If delivering by first class mail:
Broadridge, Inc.
51 Mercedes Way
Edgewood, NY 11717
|
If delivering by mail or overnight courier:
Broadridge, Inc.
51 Mercedes Way
Edgewood, NY 11717
|
|
|
|
|
|
|
I apply for ______________
|
shares x $[___]
|
= $_______________
|
(no. of new shares) | (estimated subscription price) | (amount enclosed) |
◻
|
Check or bank draft payable to “High Income Securities Fund.”
|
(a)
|
A copy of the Fund’s Articles of Incorporation, certified by the Secretary;
|
(b)
|
A copy of the Fund’s Bylaws, certified by the Secretary or other Authorized Person;
|
(c)
|
A copy of the resolution of the Board of Trustees of the Fund appointing the Custodian, certified by the Secretary or other Authorized Person;
|
(d)
|
A copy of the current prospectus of the Fund (the “Prospectus”);
|
(e)
|
A certification of the Chairman or the President and the Secretary or other Authorized Person of the Fund setting forth the names and signatures of the current Officers of the Fund and other Authorized Persons; and
|
(f)
|
An executed authorization required by the Shareholder Communications Act of 1985, attached hereto as Exhibit C.
|
(a)
|
In its discretion, the Custodian may appoint one or more Sub-Custodians to establish and maintain arrangements with (i) Eligible Securities Depositories or (ii) Eligible Foreign Custodians that are members of the Sub-Custodian’s
network to hold Securities and cash of the Fund and to carry out such other provisions of this Agreement as it may determine; provided, however, that the appointment of any such agents and maintenance of any Securities and cash of the
Fund shall be at the Custodian's expense and shall not relieve the Custodian of any of its obligations or liabilities under this Agreement. The Custodian shall be liable for the actions of any Sub-Custodians (regardless of whether assets
are maintained in the custody of a Sub-Custodian, a member of its network or an Eligible Securities Depository) appointed by it as if such actions had been done by the Custodian.
|
(b)
|
If, after the initial appointment of Sub-Custodians by the Board of Trustees in connection with this Agreement, the Custodian wishes to appoint other Sub-Custodians to hold property of the Fund, it will so notify the Fund and make the
necessary determinations as to any such new Sub-Custodian's eligibility under Rule 17f-5 under the 1940 Act.
|
(c)
|
In performing its delegated responsibilities as foreign custody manager to place or maintain the Fund’s assets with a Sub-Custodian, the Custodian will determine that the Fund’s assets will be subject to reasonable care, based on the
standards applicable to custodians in the country in which the Fund’s assets will be held by that Sub-Custodian, after considering all factors relevant to safekeeping of such assets, including, without limitation the factors specified in
Rule 17f-5(c)(1).
|
(d)
|
The agreement between the Custodian and each Sub-Custodian acting hereunder shall contain the required provisions set forth in Rule 17f-5(c)(2) under the 1940 Act.
|
(e)
|
At the end of each calendar quarter, the Custodian shall provide written reports notifying the Board of Trustees of the withdrawal or placement of the Securities and cash of the Fund with a Sub-Custodian and of any material changes in
the Fund’s arrangements. Such reports shall include an analysis of the custody risks associated with maintaining assets with any Eligible Securities Depositories. The Custodian shall promptly take such steps as may be required to
withdraw assets of the Fund from any Sub-Custodian arrangement that has ceased to meet the requirements of Rule 17f-5 or Rule 17f-7 under the 1940 Act, as applicable.
|
(f)
|
With respect to its responsibilities under this Section 3.3, the Custodian hereby warrants to the Fund that it agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of
property of the Fund. The Custodian further warrants that the Fund's assets will be subject to reasonable care if maintained with a Sub-Custodian, after considering all factors relevant to the safekeeping of such assets, including,
without limitation: (i) the Sub-Custodian's practices, procedures, and internal controls for certificated securities (if applicable), its method of keeping custodial records, and its security and data protection practices; (ii) whether
the Sub-Custodian has the requisite financial strength to provide reasonable care for Fund assets; (iii) the Sub-Custodian's general reputation and standing and, in the case of a Securities Depository, the Securities Depository's
operating history and number of participants; and (iv) whether the Fund will have jurisdiction over and be able to enforce judgments against the Sub-Custodian, such as by virtue of the existence of any offices of the Sub-Custodian in the
United States or the Sub-Custodian's consent to service of process in the United States.
|
(g)
|
The Custodian shall establish a system or ensure that its Sub-Custodian has established a system to monitor on a continuing basis (i) the appropriateness of maintaining the Fund’s assets with a Sub-Custodian or Eligible Foreign
Custodians who are members of a Sub-Custodian’s network; (ii) the performance of the contract governing the Fund’s arrangements with such Sub-Custodian or Eligible Foreign Custodian’s members of a Sub-Custodian’s network; and (iii) the
custody risks of maintaining assets with an Eligible Securities Depository. The Custodian must promptly notify the Fund or its investment adviser of any material change in these risks.
|
(h)
|
The Custodian shall use commercially reasonable efforts to collect all income and other payments with respect to Foreign Securities to which the Fund shall be entitled and shall credit such income, as collected, to the Fund. In the
event that extraordinary measures are required to collect such income, the Fund and Custodian shall consult as to the measures and as to the compensation and expenses of the Custodian relating to such measures.
|
(a)
|
The Custodian, on an on-going basis, shall deposit in a Securities Depository or Book-Entry System all Securities eligible for deposit therein and shall make use of such Securities Depository or Book-Entry System to the extent possible
and practical in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of collateral consisting of
Securities.
|
(b)
|
Securities of the Fund kept in a Book-Entry System or Securities Depository shall be kept in an account (“Depository Account”) of the Custodian in such Book-Entry System or Securities Depository which includes only assets held by the
Custodian as a fiduciary, custodian or otherwise for customers.
|
(c)
|
The records of the Custodian with respect to Securities of the Fund maintained in a Book-Entry System or Securities Depository shall, by book-entry, identify such Securities as belonging to the Fund.
|
(d)
|
If Securities purchased by the Fund are to be held in a Book-Entry System or Securities Depository, the Custodian shall pay for such Securities upon: (i) receipt of advice from the Book-Entry System or Securities Depository that such
Securities have been transferred to the Depository Account; and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Fund. If Securities sold by the Fund are held in a
Book-Entry System or Securities Depository, the Custodian shall transfer such Securities upon (i) receipt of advice from the Book-Entry System or Securities Depository that payment for such Securities has been transferred to the
Depository Account; and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Fund.
|
(e)
|
The Custodian shall provide the Fund with copies of any report (obtained by the Custodian from a Book-Entry System or Securities Depository in which Securities of the Fund are kept) on the internal accounting controls and procedures
for safeguarding Securities deposited in such Book-Entry System or Securities Depository.
|
(f)
|
Notwithstanding anything to the contrary in this Agreement, the Custodian shall be liable to the Fund for any loss or damage to the Fund resulting from: (i) the use of a Book-Entry System or Securities Depository by reason of any
negligence or willful misconduct on the part of the Custodian or any Sub-Custodian; or (ii) failure of the Custodian or any Sub-Custodian to enforce effectively such rights as it may have against a Book-Entry System or Securities
Depository. At its election, the Fund shall be subrogated to the rights of the Custodian with respect to any claim against a Book-Entry System or Securities Depository or any other person from any loss or damage to the Fund arising from
the use of such Book-Entry System or Securities Depository, if and to the extent that the Fund has not been made whole for any such loss or damage.
|
(g)
|
With respect to its responsibilities under this Section 3.05 and pursuant to Rule 17f‑4 under the 1940 Act, the Custodian hereby warrants to the Fund that it agrees to (i) exercise due care in accordance with reasonable commercial
standards in discharging its duty as a securities intermediary to obtain and thereafter maintain such assets, (ii) provide, promptly upon request by the Fund, such reports as are available concerning the Custodian’s internal accounting
controls and financial strength, and (iii) require any Sub-Custodian to exercise due care in accordance with reasonable commercial standards in discharging its duty as a securities intermediary to obtain and thereafter maintain assets
corresponding to the security entitlements of its entitlement holders.
|
(a)
|
For the purchase of Securities for the Fund but only in accordance with Section 4.01 of this Agreement and only (i) in the case of Securities (other than options on Securities, futures contracts and options on futures contracts),
against the delivery to the Custodian (or any Sub-Custodian) of such Securities registered as provided in Section 3.09 below or in proper form for transfer, or if the purchase of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set forth in Section 3.05 above; (ii) in the case of options on Securities, against delivery to the Custodian (or any Sub-Custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of futures contracts and options on futures contracts, against delivery to the Custodian (or any Sub-Custodian) of evidence of title thereto in favor of the Fund or any nominee
referred to in Section 3.09 below; and (iv) in the case of repurchase or reverse repurchase agreements entered into between the Fund and a bank that is a member of the Federal Reserve System or between the Fund and a primary dealer in
U.S. Government securities, against delivery of the purchased Securities either in certificate form or through an entry crediting the Custodian's account at a Book-Entry System or Securities Depository with such Securities;
|
(b)
|
In connection with the conversion, exchange or surrender, as set forth in Section 3.07(f) below, of Securities owned by the Fund;
|
(c)
|
For the payment of any dividends or capital gain distributions declared by the Fund;
|
(d)
|
In payment of the repurchase price of Shares as provided in Section 5.01 below;
|
(e)
|
For the payment of any expense or liability incurred by the Fund, including, but not limited to, the following payments for the account of the Fund: interest; taxes; administration, investment advisory, accounting, auditing, transfer
agent, custodian, director and legal fees; and other operating expenses of the Fund; in all cases, whether or not such expenses are to be in whole or in part capitalized or treated as deferred expenses;
|
(f)
|
For transfer in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA, relating to compliance with rules of the Options Clearing
Corporation and of any registered national securities exchange (or of any similar organization or organizations) regarding escrow or other arrangements in connection with transactions by the Fund;
|
(g)
|
For transfer in accordance with the provisions of any agreement among the Fund, the Custodian and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any contract market (or any similar organization or organizations) regarding account deposits in connection with transactions by the Fund;
|
(h)
|
For the funding of any uncertificated time deposit or other interest-bearing account with any banking institution (including the Custodian), which deposit or account has a term of one year or less; and
|
(i)
|
For any other proper purpose, but only upon receipt, in addition to Proper Instructions, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom such payment is to be made.
|
(a)
|
Upon the sale of Securities for the account of the Fund but only against receipt of payment therefor in cash, by certified or cashiers check or bank credit;
|
(b)
|
In the case of a sale effected through a Book-Entry System or Securities Depository, in accordance with the provisions of Section 3.05 above;
|
(c)
|
To an offeror’s depository agent in connection with tender or other similar offers for Securities of the Fund; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian;
|
(d)
|
To the issuer thereof or its agent (i) for transfer into the name of the Fund, the Custodian or any Sub-Custodian, or any nominee or nominees of any of the foregoing, or (ii) for exchange for a different number of certificates or other
evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new Securities are to be delivered to the Custodian;
|
(e)
|
To the broker selling the Securities, for examination in accordance with the “street delivery” custom;
|
(f)
|
For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the issuer of such Securities, or pursuant to provisions for conversion contained in such Securities, or
pursuant to any deposit agreement, including surrender or receipt of underlying Securities in connection with the issuance or cancellation of depository receipts; provided that, in any such case, the new Securities and cash, if any, are
to be delivered to the Custodian;
|
(g)
|
Upon receipt of payment therefor pursuant to any repurchase or reverse repurchase agreement entered into by the Fund;
|
(h)
|
In the case of warrants, rights or similar Securities, upon the exercise thereof, provided that, in any such case, the new Securities and cash, if any, are to be delivered to the Custodian;
|
(i)
|
For delivery in connection with any loans of Securities of the Fund, but only against receipt of such collateral as the Fund shall have specified to the Custodian in Proper Instructions;
|
(j)
|
For delivery as security in connection with any borrowings by the Fund requiring a pledge of assets by the Fund, but only against receipt by the Custodian of the amounts borrowed;
|
(k)
|
Pursuant to any authorized plan of liquidation, reorganization, merger, consolidation or recapitalization of the Fund;
|
(l)
|
For delivery in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA, relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange (or of any similar organization or organizations) regarding escrow or other arrangements in connection with transactions by the Fund;
|
(m)
|
For delivery in accordance with the provisions of any agreement among the Fund, the Custodian and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any contract market (or any similar organization or organizations) regarding account deposits in connection with transactions by the Fund;
|
(n)
|
For any other proper corporate purpose, but only upon receipt, in addition to Proper Instructions, specifying the Securities to be delivered, declaring such purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made; or
|
(o)
|
To brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the Custodian shall have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian’s own negligence or willful misconduct.
|
(a)
|
Subject to Section 9.04 below, collect on a timely basis all income and other payments to which the Fund is entitled either by law or pursuant to custom in the securities business;
|
(b)
|
Present for payment and, subject to Section 9.04 below, collect on a timely basis the amount payable upon all Securities that may mature or be called, redeemed, or retired, or otherwise become payable;
|
(c)
|
Endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments;
|
(d)
|
Surrender interim receipts or Securities in temporary form for Securities in definitive form;
|
(e)
|
Execute, as custodian, any necessary declarations or certificates of ownership under the federal income tax laws or the laws or regulations of any other taxing authority now or hereafter in effect, and prepare and submit reports to the
IRS and the Fund at such time, in such manner and containing such information as is prescribed by the IRS;
|
(f)
|
Hold for the Fund, either directly or, with respect to Securities held therein, through a Book-Entry System or Securities Depository, all rights and similar Securities issued with respect to Securities of the Fund; and
|
(g)
|
In general, and except as otherwise directed in Proper Instructions, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with Securities and other assets of
the Fund.
|
(a)
|
The Custodian shall maintain complete and accurate records with respect to Securities, cash or other property held for the Fund, including (i) journals or other records of original entry containing an itemized daily record in detail of
all receipts and deliveries of Securities and all receipts and disbursements of cash; (ii) ledgers (or other records) reflecting (A) Securities in transfer, (B) Securities in physical possession, (C) monies and Securities borrowed and
monies and Securities loaned (together with a record of the collateral therefor and substitutions of such collateral), (D) dividends and interest received, and (E) dividends receivable and interest receivable; (iii) canceled checks and
bank records related thereto; and (iv) all records relating to its activities and obligations under this Agreement. The Custodian shall keep such other books and records of the Fund as the Fund shall reasonably request, or as may be
required by the 1940 Act, including, but not limited to, Section 31 of the 1940 Act and Rule 31a-2 promulgated thereunder.
|
(b)
|
All such books and records maintained by the Custodian shall (i) be maintained in a form acceptable to the Fund and in compliance with the rules and regulations of the SEC, (ii) be the property of the Fund and at all times during the
regular business hours of the Custodian be made available upon request for inspection by duly authorized officers, employees or agents of the Fund and employees or agents of the SEC, and (iii) if required to be maintained by Rule 31a-1
under the 1940 Act, be preserved for the periods prescribed in Rules 31a‑1 and 31a-2 under the 1940 Act.
|
(a)
|
in accordance with the provisions of any agreement among the Fund, the Custodian and a broker-dealer registered under the 1934 Act and a member of FINRA (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with the rules of the Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Fund;
|
(b)
|
for purposes of segregating cash or Securities in connection with securities options purchased or written by the Fund or in connection with financial futures contracts (or options thereon) purchased or sold by the Fund;
|
(c)
|
which constitute collateral for loans of Securities made by the Fund;
|
(d)
|
for purposes of compliance by the Fund with requirements under the 1940 Act for the maintenance of segregated accounts by registered investment companies in connection with reverse repurchase agreements and when-issued, delayed
delivery and firm commitment transactions; and
|
(e)
|
for other proper corporate purposes, but only upon receipt of Proper Instructions, setting forth the purpose or purposes of such segregated account and declaring such purposes to be proper corporate purposes.
|
(a)
|
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
|
(b)
|
This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and
|
(c)
|
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there
is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.
|
(a)
|
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
|
(b)
|
It is a “U.S. Bank” as defined in section (a)(7) of Rule 17f-5.
|
(c)
|
This Agreement has been duly authorized, executed and delivered by the Custodian in accordance with all requisite action and constitutes a valid and legally binding obligation of the Custodian, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties; and
|
(d)
|
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there
is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement.
|
(a)
|
Neither party to this Agreement shall be liable to the other party for consequential, special or punitive damages under any provision of this Agreement.
|
(b)
|
The indemnity provisions of this Article shall indefinitely survive the termination and/or assignment of this Agreement.
|
(c)
|
In order that the indemnification provisions contained in this Article shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or
appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification. In the event that the indemnitor
so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek
indemnification under this Article X. The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written
consent.
|
Name
|
Telephone/Fax Number
|
Signature
|
______________________
|
||
______________________
|
||
______________________
|
||
______________________
|
||
______________________
|
◾
|
$ 4.00 – Book entry DTC transaction, Federal Reserve
transaction, principal paydown
|
◾
|
$ 7.00 – Repurchase agreement, reverse repurchase
agreement, time deposit/CD or other non-depository transaction
|
◾
|
$ 8.00 – Option/SWAPS/future contract written,
exercised or expired
|
◾
|
$15.00 – Mutual fund trade, Margin Variation Wire and
outbound Fed wire
|
◾
|
$50.00 – Physical security transaction
|
◾
|
$ 5.00 – Check disbursement (waived if U.S. Bancorp is
Administrator)
|
◾
|
1–25 foreign securities – $500; 26–50 foreign securities – $1,000; Over 50 foreign securities – $1,500
|
◾
|
Euroclear – Eurobonds only. Eurobonds are held in Euroclear at a standard rate, but other types of securities (including but not limited to equities, domestic market debt and mutual funds) will be subject to a
surcharge. In addition, certain transactions that are delivered within Euroclear or from a Euroclear account to a third party depository or settlement system, will be subject to a surcharge.
|
◾
|
For all other markets specified in above grid, surcharges may apply if a security is held outside of the local market.
|
◾
|
Tax reclaims that have been outstanding for more than 6 (six) months with the client will be charged $50 per claim.
|
◾
|
Charges incurred by U.S. Bank, N.A. directly or through sub-custodians for account opening fees, local taxes, stamp duties or other local duties and assessments, stock exchange fees, foreign exchange
transactions, postage and insurance for shipping, facsimile reporting, extraordinary telecommunications fees, proxy services and other shareholder communications, recurring administration fees, negative interest charges, overdraft charges
or other expenses which are unique to a country in which the client or its clients is investing will be passed along as incurred.
|
◾
|
A surcharge may be added to certain miscellaneous expenses listed herein to cover handling, servicing and other administrative costs associated with the activities giving rise to such expenses. Also, certain
expenses are charged at a predetermined flat rate.
|
◾
|
SWIFT reporting and message fees.
|
|
|
__X__ YES
|
U.S. Bank is authorized to provide the Fund’s name, address and security position to requesting companies whose stock is owned by the Company.
|
______ NO
|
U.S. Bank is NOT authorized to provide the Fund’s name, address and security position to requesting companies whose stock is owned by the Company.
|
1.
|
Appointment of USBFS as Administrator
|
2.
|
Services and Duties of USBFS
|
A.
|
General Fund Management:
|
(1)
|
Act as liaison among Fund service providers.
|
(2)
|
Supply:
|
a.
|
Corporate secretarial services.
|
b.
|
Office facilities (which may be in USBFS’, or an affiliate’s, own offices).
|
c.
|
Non-investment-related statistical and research data as reasonably required by the Fund.
|
(3)
|
Coordinate the Fund’s Board of Trustees (the “Board of Trustees” or the “Trustees”) reasonably required communications, including, but not limited to:
|
a.
|
Prepare meeting agendas and resolutions, with the assistance of the Fund’s counsel.
|
b.
|
Prepare reports for the Board of Trustees based on financial and administrative data.
|
c.
|
Evaluate independent auditor.
|
d.
|
If requested, secure and monitor fidelity bond and director and officer liability coverage, and make the necessary Securities and Exchange Commission (the “SEC”) filings relating thereto.
|
e.
|
If requested, prepare minutes of meetings of the Board of Trustees and holders of the Shares (collectively, the “Shareholders”).
|
f.
|
Recommend dividend declarations to the Board of Trustees and prepare and distribute to appropriate parties notices announcing declaration of dividends and other distributions to
Shareholders.
|
g.
|
Attend Board of Trustees meetings and present materials for Trustees’ review at such meetings.
|
(4)
|
Audits:
|
a.
|
Prepare appropriate schedules and assist independent auditors.
|
b.
|
Provide information to the SEC and facilitate audit process.
|
c.
|
Provide office facilities.
|
(5)
|
Assist in overall operations of the Fund.
|
(6)
|
Pay Fund expenses upon written authorization from the Fund.
|
(7)
|
Keep the Fund’s governing documents, including its certificate of formation, the Operating Agreement (and amendments thereto) and minute books (“Governing Documents”), but only to the extent
such documents are provided to USBFS by the Fund or its representatives for safe keeping.
|
(1)
|
Regulatory Compliance:
|
a.
|
Monitor compliance with the Acts’ requirements, including:
|
|
(i) |
Asset and diversification tests.
|
|
(ii) |
Total return and SEC yield calculations.
|
|
(iii) |
Documents held by USBFS, maintenance of books and records pursuant to Section 31 of the 1940 Act and the rules thereunder.
|
|
(iv) |
Code of ethics requirements pursuant to Rule 17j-1 under the 1940 Act for the disinterested Trustees.
|
b.
|
Monitor Fund’s compliance with the policies and investment limitations as set forth in its prospectus (the “Prospectus”) and statement of additional information (the “SAI”).
|
c.
|
Perform its duties hereunder in compliance with all applicable laws and regulations and provide any sub-certifications reasonably requested by the Fund in connection with: (i) any certification required of the Fund pursuant to the
Sarbanes-Oxley Act of 2002 (the “SOX Act”) or any rules or regulations promulgated by the SEC thereunder, and (ii) the operation of USBFS’ compliance program as it relates to the Fund provided the same shall not be deemed to change USBFS’
standard of care as set forth herein.
|
d.
|
Monitor applicable regulatory and operational service issues, and update Board of Trustees periodically.
|
e.
|
In order to assist the Fund in satisfying the requirements of Rule 38a-1 under the 1940 Act (the “Rule”), USBFS will provide the Fund’s Chief Compliance Officer with reasonable access to Fund records held by USBFS relating to the
services provided by it under this Agreement, and will provide quarterly compliance reports and related certifications regarding any Material Compliance Matter (as defined in the Rule) involving USBFS that affect or could affect the Fund.
|
f.
|
During the terms of this Agreement and upon the Fund’s reasonable request at a mutually agreeable time, authorized representatives of the Fund may conduct periodic site visits of Fund Administration facilities and inspect related
records and procedures solely as it pertains to the fund accounting services for the Fund under or pursuant to this Agreement.
|
(2)
|
SEC Registration and Reporting:
|
a.
|
Assist Fund counsel in annual update of the Registration Statement and in preparation of proxy statements and information statements, as requested by the Fund.
|
b.
|
Prepare and file annual and semiannual shareholder reports, Form N-SAR, Form N-CSR, Form N-Q filings and Rule 24f-2 notices. As requested by the Fund, prepare and file Form N-PX, Form N-CEN and Form N-Port.
|
c.
|
Coordinate the printing, filing and mailing of Prospectuses and shareholder reports, and amendments and supplements thereto.
|
d.
|
File periodic tender offer statements und Rule 13e-4
|
a.
|
Monitor the Fund’s status as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), including without limitation, review of the following:
|
|
(i) |
Diversification requirements.
|
|
(ii) |
Qualifying income requirements.
|
|
(iii) |
Distribution requirements.
|
b.
|
Calculate required distributions (including excise tax distributions).
|
C
|
Financial Reporting:
|
(1)
|
Provide financial data required by the Prospectus and SAI.
|
(2)
|
Prepare financial reports for officers, shareholders, tax authorities, performance reporting companies, the Board of Trustees, the SEC, and the independent registered public accounting firm.
|
(3)
|
Coordinate with the Fund’s custodians and fund accountants, the Fund’s data providers, in the maintenance of the Fund’s general ledger and in the preparation of the Fund’s financial statements, including oversight of expense accruals
and payments, the determination of net asset value and the declaration and payment of dividends and other distributions to shareholders.
|
(4)
|
Compute the yield, total return, expense ratio and portfolio turnover rate of the Fund.
|
(5)
|
Monitor expense accruals and make adjustments as necessary; notify the Fund’s management of any adjustments expected to materially affect the Fund’s expense ratio.
|
(6)
|
Prepare financial statements, which include, without limitation, the following items:
|
|
(7) |
Pursuant to Rule 31a-1(b)(9) of the 1940 Act, prepare quarterly broker security transaction summaries, if applicable.
|
D
|
Tax Reporting:
|
(1)
|
Prepare and file on behalf of Fund management Form 1099 MISC Forms for payments to disinterested Trustees and other qualifying service providers.
|
(2)
|
Calculate Qualified Dividend Income (“QDI”) for qualifying Fund shareholders.
|
3.
|
Portfolio Accounting
|
A.
|
Portfolio Accounting Services
|
(1)
|
Maintain portfolio records on a trade date+1 basis using security trade and lending platform information communicated from the Fund and communication by lending platform at individual loan trade level. For each valuation date, obtain
prices from a pricing source approved by the board of trustees of the Fund (the “Board of Trustees”) and apply those prices to the portfolio positions. For those securities where market quotations are not readily available, the Board of
Trustees shall approve, in good faith, procedures for determining the fair value for such securities and such fair values shall be provided to USBFS and USBFS shall apply those fair values to the relevant portfolio positions.
|
(2)
|
Identify interest and dividend accrual balances as of each valuation date and calculate gross earnings on investments for each accounting period.
|
(3)
|
Determine gain/loss on security sales and identify them as short-term or long-term; account for periodic distributions of gains or losses to shareholders and maintain undistributed gain or loss balances as of each valuation date.
|
(4)
|
On a daily basis, reconcile cash of the Fund with each of the Fund’s custodians.
|
(5)
|
Reconcile daily loan holdings of the Fund with each loan platforms providers’ data, if provided to USBFS, and Fund’s custodian records of all loans held under custody by the Fund’s custodian.
|
|
(6) |
On a monthly basis, reconcile loan valuation provided by the Fund’s valuation agent received by USBFS against Fund’s portfolio valuation record to insure it is accurately recorded in the Fund.
|
|
(7) |
Transmit a copy of the portfolio valuation to the Fund monthly or as needed on ad-hoc basis.
|
|
(8) |
Review the impact of current day’s activity on a per share basis, and review changes in market value.
|
B.
|
Expense Accrual and Payment Services:
|
(1)
|
For each valuation date, calculate the expense accrual amounts as directed by the Fund as to methodology, rate or dollar amount.
|
(2)
|
Process and record payments for Fund expenses upon receipt of written authorization from the Fund.
|
(3)
|
Account for Fund expenditures and maintain expense accrual balances at the level of accounting detail, as agreed upon by USBFS and the Fund on a periodic review basis
|
(4)
|
Provide expense accrual for approval and payment reporting.
|
C.
|
Fund Valuation and Financial Reporting Services:
|
(1)
|
Account for Fund share purchases, sales, exchanges, transfers, dividend reinvestments, and other Fund share activity as reported by the Fund’s transfer agent on a timely basis.
|
(2)
|
Determine net investment income (earnings) for the Fund as of each valuation date. Account for periodic distributions of earnings to shareholders and maintain undistributed net investment income balances as of each valuation date.
|
(3)
|
Determine the net asset value of the Fund according to the Fund’s policies and procedures.
|
(4)
|
Calculate per share net asset value, per share net earnings, and other per share amounts reflective of Fund operations at such time as required by the Fund.
|
(5)
|
Communicate to the Fund, at an agreed upon time in the service operating guideline, the per share net asset value for each valuation date.
|
(6)
|
Prepare monthly reports that document the adequacy of accounting detail to support month-end ledger balances.
|
(7)
|
Prepare monthly security transactions listings.
|
(1)
|
Maintain accounting records for the investment portfolio of the Fund to support the tax reporting required for “regulated investment companies” under the Internal Revenue Code of 1986, as amended (the “Code”).
|
(2)
|
Maintain tax lot detail for the Fund’s investment portfolio.
|
(3)
|
Calculate taxable gain/loss on security sales using the tax lot relief method designated by the Fund.
|
(4)
|
Provide the necessary financial information to calculate the taxable components of income and capital gains distributions to support tax reporting to the shareholders.
|
(5)
|
Provide the required security information to the Fund and its’Tax provider agent on specific to loan purchase, transaction and modification.
|
E.
|
Compliance Control Services:
|
(1)
|
Support reporting to regulatory bodies and support financial statement preparation by making the Fund’s accounting records available to the Fund, the Securities and Exchange Commission (the “SEC”), and the Fund’s independent registered
public accounting firm.
|
(2)
|
Maintain accounting records according to the 1940 Act and regulations provided thereunder.
|
(3)
|
Perform its duties hereunder in compliance with all applicable laws and regulations and provide any sub-certifications reasonably requested by the Fund in connection with any certification required of the Fund pursuant to the
Sarbanes-Oxley Act of 2002 (the “SOX Act”) or any rules or regulations promulgated by the SEC thereunder., Cooperate with the Fund’s independent registered public accounting firm and take all reasonable action in the performance of its
obligations under this Agreement to ensure that the necessary information is made available to such firm for the expression of their opinion on the Fund’s financial statements without any qualification as to the scope of its examination.
|
(4)
|
In order to assist the Fund in satisfying the requirements of Rule 38a-1 under the 1940 Act (the “Rule”), USBFS will provide the Fund’s Chief Compliance Officer with reasonable access to Fund records held by USBFS relating the services
provided by it under this Agreement, and will provide quarterly compliance reports and related certifications regarding any Material Compliance Matter (as defined in the Rule) involving USBFS that affect or could affect the Fund.
|
5.
|
Changes in Accounting Procedures
|
6.
|
Changes in Equipment, Systems, Etc.
USBFS reserves the right to make changes from time to time, as it deems advisable, relating to its systems, programs, rules, operating schedules and equipment, so long as such changes do not adversely affect the services provided to the Fund under this Agreement. |
7.
|
Compensation
|
A.
|
The Fund hereby represents and warrants to USBFS, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
|
|
(1) |
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
|
|
(2) |
This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties;
|
|
(3) |
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there
is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement; and
|
|
(4) |
Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Fund or any law or regulation applicable to it.
|
B.
|
USBFS hereby represents and warrants to the Fund, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
|
|
(1) |
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
|
|
(2) |
This Agreement has been duly authorized, executed and delivered by USBFS in accordance with all requisite action and constitutes a valid and legally binding obligation of USBFS, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties;
|
|
(3) |
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there
is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement; and
|
|
(5) |
Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of USBFS or any law or regulation applicable to it; and
|
|
(6) |
It is not a party to any contract or under default under any contractual obligations which materially and adversely affects, or is likely to materially and adversely affect, its ability to perform hereunder.
|
A.
|
USBFS shall exercise reasonable care in the performance of its duties under this Agreement. USBFS shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with its duties under
this Agreement, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond USBFS’ reasonable control or the failure of the Fund, its agents or service providers (other than USBFS) to
provide all required information, except any losses arising out of or relating to USBFS’ refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence, or willful misconduct in the performance of its
duties under this Agreement. Notwithstanding any other provision of this Agreement, if USBFS has exercised reasonable care in the performance of its duties under this Agreement, the Fund shall indemnify and hold harmless USBFS from and
against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees and expenses) that USBFS may sustain or incur or that may be asserted against USBFS by any person arising
out of any action taken or omitted to be taken by it in performing the services hereunder or as a result of acting in reasonable reliance upon any written or oral instruction provided to USBFS by any duly authorized officer of the Fund,
as approved by the Board of Trustees of the Fund, or due to the failure of the Fund, its agents or service providers (other than USBFS) to provide all required information, except for any and all claims, demands, losses,
expenses, and liabilities arising out of or relating to USBFS’ refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement.
This indemnity shall be a continuing obligation of the Fund, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “USBFS” shall include USBFS’ directors, officers and
employees.
|
B.
|
In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that presents or
appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification. In the event that the indemnitor
so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall seek
indemnification under this section. In the event the indemnitor elects to defend, it shall not settle any claim without indeminitees prior written consent, not to be unreasonably withheld. The indemnitee shall in no case confess any
claim or make any compromise or settlement in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written consent not to be unreasonably withheld.
|
C.
|
The indemnity and defense provisions set forth in this Section 6 shall indefinitely survive the termination and/or assignment of this Agreement.
|
D.
|
If USBFS is acting in another capacity for the Fund pursuant to a separate agreement, nothing herein shall be deemed to relieve USBFS of any of its obligations in such other capacity.
|
E.
|
It is understood and expressly stipulated that none of the Trustees, officers, agents or shareholders of the Fund shall be personally liable hereunder. All persons dealing with the Fund must look solely to the property of the Fund for
the enforcement of any claims against the Fund, as neither the Trustees, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Fund.
|
F.
|
Tax services provided to the Fund by USBFS hereunder, USBFS shall not be deemed to act as an income tax return preparer for any purpose including as such term is defined under Section 7701(a)(36) of the
IRC, or any successor thereof. Any information provided by USBFS to a Fund for income tax reporting purposes with respect to any item of income, gain, loss, or credit will be performed solely in USBFS’ administrative capacity. USBFS
shall not be required to determine, and shall not take any position with respect to whether, the reasonable belief standard described in Section 6694 of the IRC has been satisfied with respect to any income tax item. Each Fund, and any
appointees thereof, shall have the right to inspect the transaction summaries produced and aggregated by USBFS, and any supporting documents thereto, in connection with the tax reporting services provided to each Fund by USBFS. USBFS
shall not be liable for the provision or omission of any tax advice with respect to any information provided by USBFS to a Fund. The tax information provided by USBFS shall be pertinent to the data and information made available to us,
and is neither derived from nor construed as tax advice.
|
13 |
Early Termination.
|
a.
|
all monthly fees through the life of the Agreement, including the repayment of any negotiated discounts;
|
b.
|
all reasonable fees associated with converting services to a successor service provider;
|
c.
|
all fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor service provider;
|
d.
|
all miscellaneous costs associated with a-c above.
|
◾
|
Waived
|
◾
|
$0.08 – Domestic Equities, Options, ADRs, Foreign Equities, Futures, Forwards, Currency Rates, Mutual Funds, ETFs
|
◾
|
$0.50 – Domestic Corporates, Domestic Convertibles, Domestic Governments, Domestic Agencies, Mortgage Backed, Municipal Bonds
|
◾
|
$0.80 – CMOs, Money Market Instruments, Foreign Corporates, Foreign Convertibles, Foreign Governments, Foreign Agencies, Asset Backed, High Yield
|
◾
|
$0.90 – Interest Rate Swaps, Foreign Currency Swaps, Total Return Swaps, Total Return Bullet Swaps
|
◾
|
$1.00 – Bank Loans
|
◾
|
$1.50 – Swaptions
|
◾
|
$1.50 – Intraday money market funds pricing, up to 3 times per day
|
◾
|
$3.00 – Credit Default Swaps
|
◾
|
$500 per Month Manual Security Pricing (>25per day)
|
◾
|
$2.00 per Foreign Equity Security per Month
|
◾
|
$1.00 per Domestic Equity Security per Month
|
◾
|
$2.00 per CMOs, Asset Backed, Mortgage Backed Security per Month
|
◾
|
$1 per security per month for fund administrative data (based upon U.S. Bancorp standard data services and are subject to change)
|
◾
|
Form N-PORT – $12,000 per year, per Fund (not required until April 2019)
|
◾
|
Form N-CEN – $250 per year, per Fund (not required until April 2019)
|
1.
|
Appointment of USBFS as Transfer Agent
|
2.
|
Services and Duties of USBFS
|
A.
|
Receive and process all orders for the purchase, exchange, transfer and/or redemption of shares in accordance with Rule 22c-1 under the 1940 Act, other applicable regulations, and as specified in the Funds’
prospectus (the “Prospectus”).
|
B.
|
Process purchase and redemption orders with prompt delivery, where appropriate, of payment and supporting documentation to the shareholder based on the shareholder’s or the Fund’s custodian instructions, and
record the appropriate number of shares being held in the appropriate shareholder account.
|
C.
|
Process redemption requests received in good order and, where relevant, deliver appropriate documentation to the Fund's custodian.
|
D.
|
Pay proceeds upon receipt from the Fund's custodian, where relevant, in accordance with the instructions of redeeming shareholders.
|
E.
|
Process transfers of shares in accordance with the shareholder's instructions, after receipt of appropriate documentation from the shareholder as specified in the Prospectus.
|
F.
|
Prepare and transmit payments for dividends and distributions declared by the Fund, after deducting any amount required to be withheld by any applicable laws, rules and regulations and in accordance with
shareholder instructions.
|
G.
|
Serve as the Fund’s agent in connection with systematic plans including, but not limited to, systematic investment plans, systematic withdrawal plans, and systematic exchange plans.
|
H.
|
Make changes to shareholder records, including, but not limited to, address changes in plans (e.g., systematic withdrawal, automatic investment, dividend reinvestment).
|
I.
|
Record the issuance of shares of the Fund and maintain, pursuant to Rule 17Ad-10(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), a record of the total number of shares
of each Fund which are authorized, issued and outstanding.
|
J.
|
Prepare ad-hoc reports as necessary at prevailing rates.
|
K.
|
Mail shareholder reports and Prospectuses to current shareholders.
|
L.
|
Prepare and file U.S. Treasury Department Forms 1099 and other appropriate information returns required with respect to dividends and distributions for all shareholders.
|
M.
|
Provide shareholder account information upon shareholders or Fund requests and prepare and mail confirmations and statements of account to shareholders for all purchases, redemptions and other confirmable
transactions as agreed upon with the Fund.
|
N.
|
Mail and/or shareholders’ certifications under penalties of perjury and pay on a timely basis to the appropriate federal authorities any taxes to be withheld on dividends and distributions paid by the Fund, all
as required by applicable federal tax laws and regulations.
|
O.
|
Answer correspondence from shareholders, securities brokers and others relating to USBFS’s duties hereunder within required time periods established by applicable regulation.
|
P.
|
Reimburse the Fund each month for all material losses resulting from “as of” processing errors for which USBFS is responsible in accordance with the “as of” processing guidelines set forth on Exhibit A hereto.
|
Q.
|
Provide service and support to financial intermediaries including but not limited to trade placements, settlements and corrections.
|
3.
|
Lost Shareholder Due Diligence Searches and Servicing
|
4.
|
Anti-Money Laundering and Red Flag Identity Theft Prevention Programs
|
(a)
|
Prompt written notification of any transaction or combination of transactions that USBFS believes, based on the Procedures, evidence money laundering or identity theft activities in connection with the Fund or
any shareholder of the Fund;
|
(b)
|
Prompt written notification of any customer(s) that USBFS reasonably believes, based upon the Procedures, to be engaged in money laundering or identity theft activities, provided that the Fund agrees not to
communicate this information to the customer;
|
(c)
|
Any reports received by USBFS from any government agency or applicable industry self-regulatory organization pertaining to USBFS’s anti-money laundering monitoring or the Red Flag Identity Theft Prevention
Program on behalf of the Fund;
|
(d)
|
Prompt written notification of any action taken in response to anti-money laundering violations or identity theft activity as described in (a), (b) or (c); and
|
(e)
|
Certified annual and quarterly reports of its monitoring and customer identification activities on behalf of the Fund.
|
5.
|
Compensation
|
6.
|
Representations and Warranties
|
A.
|
The Fund hereby represents and warrants to USBFS, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
|
|
(1) |
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
|
|
(2) |
This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties;
|
|
(3) |
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there
is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement; and
|
|
(4) |
A registration statement under the 1940 Act and the Securities Act of 1933, as amended, will be made effective prior to the effective date of this Agreement and will remain effective during the term of this Agreement, and appropriate
state securities law filings will be made prior to the effective date of this Agreement and will continue to be made during the term of this Agreement as necessary to enable the Fund to make a continuous public offering of its shares.
|
B.
|
USBFS hereby represents and warrants to the Fund, which representations and warranties shall be deemed to be continuing throughout the term of this Agreement, that:
|
|
(1) |
It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
|
|
(2) |
This Agreement has been duly authorized, executed and delivered by USBFS in accordance with all requisite action and constitutes a valid and legally binding obligation of USBFS, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties;
|
|
(3) |
It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory approvals necessary to carry on its business as now conducted; there
is no statute, rule, regulation, order or judgment binding on it and no provision of its charter, bylaws or any contract binding it or affecting its property which would prohibit its execution or performance of this Agreement; and
|
|
(4) |
It is a registered transfer agent under the Exchange Act.
|
7.
|
Standard of Care; Indemnification; Limitation of Liability
|
A.
|
USBFS shall exercise reasonable care in the performance of its duties under this Agreement. USBFS shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with its duties under this Agreement, including losses resulting from mechanical breakdowns or the failure of communication or power supplies beyond USBFS’s control, except a loss arising out of or relating to USBFS’s refusal
or failure to comply with the terms of this Agreement or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. Notwithstanding any other provision of this Agreement, if USBFS has
exercised reasonable care in the performance of its duties under this Agreement, the Fund shall indemnify and hold harmless USBFS from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature
(including reasonable attorneys' fees) that USBFS may sustain or incur or that may be asserted against USBFS by any person arising out of any action taken or omitted to be taken by it in performing the services hereunder (i) in accordance
with the foregoing standards, or (ii) in reliance upon any written or oral instruction provided to USBFS by any duly authorized officer of the Fund, as approved by the Board of Trustees of the Fund (the “Board of Trustees”), except for
any and all claims, demands, losses, expenses, and liabilities arising out of or relating to USBFS’s refusal or failure to comply with the terms of this Agreement or from its bad faith, negligence or willful misconduct in the performance
of its duties under this Agreement. This indemnity shall be a continuing obligation of the Fund, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “USBFS” shall include
USBFS’s directors, officers and employees.
|
B.
|
In order that the indemnification provisions contained in this section shall apply, it is understood that if in any case the indemnitor may be asked to indemnify or hold the indemnitee harmless, the indemnitor
shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the indemnitee will use all reasonable care to notify the indemnitor promptly concerning any situation that
presents or appears likely to present the probability of a claim for indemnification. The indemnitor shall have the option to defend the indemnitee against any claim that may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon the indemnitor shall take over complete defense of the claim, and the indemnitee shall in such situation initiate no further legal or other expenses for which it shall
seek indemnification under this section. The indemnitee shall in no case confess any claim or make any compromise in any case in which the indemnitor will be asked to indemnify the indemnitee except with the indemnitor’s prior written
consent.
|
C.
|
The indemnity and defense provisions set forth in this Section 7 shall indefinitely survive the termination and/or assignment of this Agreement.
|
D.
|
If USBFS is acting in another capacity for the Fund pursuant to a separate agreement, nothing herein shall be deemed to relieve USBFS of any of its obligations in such other capacity.
|
8.
|
Data Necessary to Perform Services
|
9.
|
Proprietary and Confidential Information
|
10.
|
Records
|
11.
|
Compliance with Laws
|
12.
|
Duties in the Event of Termination
|
13.
|
Term of Agreement; Amendment
|
a.
|
all monthly fees through the life of the Agreement, including the repayment of any negotiated discounts;
|
b.
|
all fees associated with converting services to successor service provider;
|
c.
|
all fees associated with any record retention and/or tax reporting obligations that may not be eliminated due to the conversion to a successor service provider;
|
d.
|
all miscellaneous costs associated with a-c above.
|
◾
|
Base Fee Per CUSIP (Annual Income Distributions) $20,000 per year
|
◾
|
Base Fee Per CUSIP (Monthly/Quarterly Income Distributions) $25,000 per year
|
◾
|
Open Account $12.00 per open account
|
◾
|
Closed Accounts $3.00 per closed account
|
◾
|
CUSIP Setup Fee – $5,000
|
|
The Trustees of
High Income Securities Fund
|
-2-
|
November 19, 2020
|
|
1. |
The Trust is validly existing as a trust with transferable shares of the type commonly called a Massachusetts business trust.
|
|
2. |
The Trust is authorized to issue an unlimited number of shares of beneficial interest without par value.
|
|
3. |
Upon the effectiveness of the Amendment, the issuance of the Shares by the Trust will be duly authorized and, when issued and paid for in accordance with the
Registration Statement, the Prospectus and the Resolutions, will be validly issued, fully paid and non-assessable by the Trust.
|
|
4. |
Upon the effectiveness of the Amendment, the issuance of the Rights will be duly authorized and, when issued in accordance with the Prospectus and the Resolutions,
will constitute valid and legally binding obligations of the Trust.
|
The Trustees of
High Income Securities Fund
|
-3-
|
November 19, 2020
|
(a)
|
Monitor any trading activity and make best efforts to identify and profile major street name stockholders;
|
|
(b) |
Communicate with stockholders and brokers, through both outgoing and incoming calls on our toll-free number, to confirm receipt and understanding of the terms of the
Offer and answer questions relating solely to the Offer;
|
(c)
|
If requested, handle the issuance of press
releases and other public relations activities;
|
|
(d) |
If requested, distribute necessary printed materials to Broadridge, brokers, banks and registered name holders;
|
(e)
|
Communicate with back office personnel of brokerage
firms and banks to confirm redistribution of materials to beneficial owners.
|
2. |
In performing the services outlined in paragraph 1 (a) - (e) above, we will not render investment advice to the holders or others, and will not make recommendations,
either directly or indirectly, to anyone regarding a decision by such person to participate in the Offer.
|
|
(b) |
Continue to monitor trading activity, establishing contacts at holders to solidify support for the Offer;
|
|
(c) |
Contact individual beneficial holders to confirm receipt of material, answer questions, explain terms of the Offer, determine likelihood of support for the Offer and
provide assistance in participating in the Offer;
|
(d)
|
Contact reorganization departments at all banks and brokerage firms to remind them of the expiration date of the Offer and
to determine the responses from their clients. We will also arrange for brokers to contact those clients which have not yet given
instructions to participate; and
|
(e)
|
Follow up with holders whose participation is expected, but which have
not yet been received.
|
4. |
For our services, you will pay us a non-refundable fee of $5,000. In the event of a successful Offer, you agree to negotiate a fee of no greater than $2,500 to be
paid after completion of the Offer.
|
5. |
You represent to us and agree that you will indemnify and hold us harmless against any liability which we may incur by reason of a material omission or misstatement,
if any, in the Offer material. We will advise you promptly of any claims for any such liability. You may, at your election, assume the defense of any such action.
|
6. |
We represent to you that we will comply with applicable requirements of law relating to our services. We further agree not to make any representations not included
in the Offer material and not to make any recommendations as to whether a stockholder should participate in the Offer.
|
7. |
We agree to preserve the confidentiality of all non-public information provided by you or your agents for use in providing services under this Agreement, or
Information developed by us in connection with our services under this Agreement or based upon such non-public information.
|
Accepted:
|
Sincerely,
|
|
|
HIGH INCOME SECURITIES FUND
|
INVESTORCOM LLC
|
|
|
By:_____________________________
Name:
Title:
|
By: /s/John Glenn Grau
John Glenn Grau
President
|
Date:______________________________
|
Date:______________________________
|
A.
|
Shall have no duties or obligations other than those set forth herein, including those described under “Included Services” on Exhibit A, and no duties or
obligations shall be inferred or implied, nor shall Agent be obligated nor expected to perform those services described under “Non-Included Services” on Exhibit A
|
B.
|
May rely on, and shall be held harmless by, the Corporation in acting upon any certificate, statement, instrument, opinion, notice, letter, facsimile transmission, telegram electronic mail or other document, or any security
delivered to it, and reasonably believed by it to be genuine and to have been made or signed by the proper party or parties;
|
C.
|
May rely on and shall be held harmless by the Corporation in acting upon written or oral instructions from the Corporation with respect to any matter relating to
its acting as Agent;
|
D.
|
May consult on documents with counsel satisfactory to it (including counsel for the Corporation) and shall be held harmless by the Corporation in relying on the
advice or opinion of such counsel in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion of such counsel;
|
E.
|
Shall make the final determination as to whether or not a Subscription Certificate received
by Agent is duly, completely and correctly executed in order to qualify for the Rights Offering and Agent shall be held harmless by the Corporation in
respect of any action taken, suffered or omitted by Agent hereunder in good faith and in accordance with its determination; shall not be obligated to take any legal or other action hereunder which might, in its judgment subject or expose
it to any expense or liability unless it shall have been furnished with an indemnity satisfactory to it;
|
F.
|
Shall not be liable or responsible for any recital or statement contained in any Offering Document or any other documents relating thereto; and
|
G.
|
Shall not be liable or responsible for any failure of the Corporation to comply with any of its obligations relating to the Offering, including without limitation
obligations under applicable regulation or law.
|
BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC.
|
[CLIENT NAME]
|
By:
|
By:
|
Title:
|
Title:
|
1.
|
Changes to the Agreement.
|
a.
|
As of the Effective Date, Broadridge shall no longer act in the capacity of “Information Agent” pursuant to the Agreement.
|
b.
|
Delete the below listed language included in Section 3A:
|
c.
|
In Exhibit A, the reference to “$15,000” shall be changed to “$13,000”.
|
d.
|
The below listed language in Exhibit A to the Agreement shall be deleted in their entirety:
|
(i)
|
“• Designating an Information Agent account manager to review and become familiar with all Offer Documents and provide expert assistance to holders of Common Stock related to matters concerning the Rights
Offering.”
|
(ii)
|
Providing stockholder relations services to all holders of Common Stock related to the Rights Offering, including phone, email, and regular mail inquiries.
|
(iii)
|
|
2.
|
General terms
|
a.
|
In the event of any conflict between the terms and conditions of this Amendment and the terms and conditions of the Agreement, the terms and conditions of this Amendment shall prevail.
|
b.
|
This Amendment may be executed in two or more counterparts, each of which shall be considered an original, but all of which together shall constitute the same
instrument. Such counterpart copies may be executed in electronic versions, which scanned and emailed signatures shall be binding upon the parties.
|
BROADRIDGE INVESTOR COMMUNICATION SOLUTIONS, INC.
By:
Name and
Title:
Date:
|
HIGH INCOME SECURITIES FUND
By:
Name and
Title:
Date:
|