UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to SectionPROXY STATEMENT PURSUANT TO SECTION 14(a) ofOF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Securities Exchange Act of 1934Registrant ☒
Filed by a Party other than the☐
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Check the appropriate box:
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| Preliminary Proxy Statement |
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| ☐ | Definitive Proxy Statement |
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☐ | Definitive Additional Materials |
() Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 VOYA PRIME RATE TRUST (Name of Registrant as Specified in Its Charter) (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of No fee required. Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. Title of each class of securities to which transaction applies: Aggregate number of securities to which transaction applies: Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): Proposed maximum aggregate value of transaction: Total fee paid: Fee paid previously with preliminary materials. Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount previously Paid: Form, schedule or registration statement No.: Filing party: Date filed:(☐ ) Soliciting Material Under Rule 14a-12filing feeFiling Fee (Check the appropriate box):☒ (X)No fee required.☐ (1) ( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.(2) (1)Title of each class of securities to which transaction applies:(3) (2)Aggregate number of securities to which transaction applies:(4) (3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined.):(5) (4)Proposed maximum aggregate value of transaction:☐ ☐ 1) (5)Total fee paid:(2) ( ) Fee paid previously with preliminary materials:(3) () Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.(4) (1)Amount Previously Paid:(2)Form, Schedule or Registration Statement No.:(3)Filing Party:(4)Date Filed:
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-20341-800-992-0180
[Date]
Dear Shareholder:
You are cordially invited to attend the Special Meeting of the Board of Trustees, we are pleased to invite you to the annual meeting of shareholdersShareholders (the “Annual“Special Meeting”) of Voya Prime Rate Trust (the “Fund”). The Annual Meeting is scheduled for [ ], local time, to be held on [ ],May 21, 2021 at [ ].
At the AnnualSpecial Meeting, shareholders of the Fund (“Shareholders”) will be askedvote on a proposal to elect eight nominees toapprove a new investment management agreement between the Fund and Saba Capital Management, L.P. (“Saba”) (the “New Management Agreement”). The Fund’s current investment adviser, Voya Investments, LLC (“VIL”), and the Fund’s current sub-adviser, Voya Investment Management Co. LLC (“Voya IM”), have submitted their respective resignations, effective as of June 22, 2021. At meetings of the Board each of whom is a current TrusteeTrustees of the Fund (the “Board's Nominees”“Board”). If properly presented at held on March 22, 2021 and April 1, 2021, respectively, the Annual Meeting, shareholders will also be asked to vote on a proposal submitted by a fund managed by Saba Capital Management, L.P., a New York-based activist adviser (the “Saba Hedge Fund”). The Saba Hedge Fund’s proposal requests thatindependent members of the Board, consider authorizing a self-tender offer for 40% of the outstanding sharesafter careful consideration, determined to select Saba to serve as investment manager of the Fund at or closeand to net asset valueassume responsibility for providing the investment management services that are now provided to the Fund by VIL and Voya IM (the “Saba Hedge Fund Proposal”“Adviser Transition”).
As described in the accompanying Proxy Statement, the terms of the Annual Meeting appears [onNew Management Agreement differ from the next page], followedterms of the current investment management agreement between the Fund and VIL in view of revisions necessary to bring the New Management Agreement in line with recent market precedent in the registered closed-end fund space, and to reflect the fact that the Fund expects to retain a third-party administrator to provide administrative services to the Fund as part of the Adviser Transition. There will be no change in fees payable by the proxy statement (the “Proxy Statement”). Fund under the New Management Agreement, nor is it expected that the Fund will bear any increase in the aggregate amount of other fees or expenses as a result of the Adviser Transition. In addition, Saba expects to enter into an expense limitation agreement with the Fund, to be effective upon consummation of the Adviser Transition, on substantially the same terms as the current expense limitation agreement.
The proposalsBoard, including a majority of non-interested trustees, has approved the New Management Agreement and believes it to be in the best interests of the Fund and its Shareholders. Subject to obtaining approval by Shareholders of the New Management Agreement, and to the satisfaction of various other conditions that are discussed in detaildescribed in the enclosed Proxy Statement, which you should read carefully.
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In connection with the Adviser Transition, the Board recommends you vote “FOR”requested that the Board’s NomineesFund begin to liquidate a portion of its portfolio to provide additional liquidity and “AGAINST”investment flexibility subsequent to completion of the Adviser Transition. Accordingly, as of March 31, 2021, approximately $76.3 Million, representing approximately 12.7% of the portfolio, was held in cash or cash equivalents, and up to 30% of the Fund’s portfolio may ultimately consist of cash and cash equivalents immediately prior to completion of the Adviser Transition. As a result, the Fund’s expected average yield on its investments and corresponding net investment income available for distribution to shareholders will likely be reduced on a temporary basis.
Following the completion of the Adviser Transition, the Fund’s name will change to Saba HedgeCapital Income & Opportunities Fund. The common shares of the Fund Proposal by votingwill continue to be listed on the enclosed WHITE Proxy Ballot and returning it to us or by usingNew York Stock Exchange, although the other voting options discussedticker symbol will change upon the change in the Proxy Statement.
It is important that you vote “AGAINST” the Saba Hedge Fund Nominees by voting “FOR” the election of each of the Board’s Nominees using the enclosed WHITE Proxy Ballot or by following the instructions to submit a proxy ballot for your shares over the internet or by telephone or by votingbe represented at the AnnualSpecial Meeting.
Sincerely yours, |
Andrew Kellerman |
Chairperson of the Board and Trustee |
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of
Shareholders to Be Held on May 21, 2021.
This Proxy Statement even ifand Notice of the Special Meeting of Shareholders are
available at: [___]
The following information applicable to the Special Meeting may be found in the proxy statement and accompanying proxy card:
The date, time and location of the meeting;
A list of the matters intended to be acted on and our recommendations regarding those matters;
Any control/identification numbers that you planneed to attend the Annual Meeting, so that your shares can be voted regardless of whether you attend the Annual Meeting. Voting now will not limit your right to change your vote or to attend the Annual Meeting; if you should be present at the Annual Meeting and desire to vote, you may withdrawaccess your proxy at such time. Onlycard; and
Information about attending the latest validly executed Proxy Ballot that you timely submit will be counted. If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you received from the holder of record in order to vote your shares.
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7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-20341-800-992-0180
[ ]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 2021
To the Shareholders:
The Special Meeting of Shareholders (the “Annual“Special Meeting”) of Voya Prime Rate Trust (the “Fund”) is scheduled for [ ], local timewill be held on May 21, 2021 at [ ] at [ ].
1. | To approve the New Investment Management Agreement between the Fund and Saba Capital Management, L.P.; |
2. | To remove the Fund’s fundamental investment restriction relating to investing in warrants; |
3. | To remove the Fund’s fundamental investment restriction relating to purchasing or selling equity securities, engaging in short-selling and the use of certain option arrangements; |
4. | To remove the Fund’s fundamental investment restriction relating to investing in other investment companies; |
5. | To approve a change of the Fund’s investment objective and to make the investment objective non-fundamental; |
6. | To approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies; and |
7. | To transact such other business as may properly come before the Special Meeting, or any postponement or adjournment thereof. |
You will be asked:
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THE BOARD OF TRUSTEES, INCLUDING THE NON-INTERESTED TRUSTEES,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE PROPOSALS.
Each proposal is discussed in greater detail in the enclosed proxy statement (the “Proxy Statement”) carefully for information concerningProxy Statement. You have the proposalsright to be placed before the Annual Meeting. This Proxy Statement and form of Proxy Ballot were first sent or given to shareholders on or about [ ], 2020.
By Order of the Board of Trustees, |
Andrew Kellerman |
Chairperson of the Board and Trustee |
New York, New York
[____]
This is an important meeting. To ensure proper representation at the meeting, please complete, sign, date and return the proxy card in the enclosed, self-addressed envelope, vote your shares by telephone, or vote via the Internet. Even if you vote your shares prior to the Special Meeting, you still may attend the meeting virtually and vote your shares.
If you have any questions about the special meeting or any of the proposals after reading the accompanying proxy statement, please contact our proxy solicitor, [_____]:
[_____]
[_____]
Shareholders may call toll free: [_____]
Banks and Brokers may call collect: [_____]
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GENERAL INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
Q1: Why did you send me this proxy statement?
A: | The Fund sent you this proxy statement and the enclosed proxy card because the Board is soliciting your proxy to vote at the Special Meeting. The Special Meeting will be held on May 21, 2021 at [ ] a.m., Eastern Time. You will be able to participate in the Special Meeting, vote and submit your questions via live webcast by visiting [____]. |
This proxy statement summarizes the information regarding the matters to be voted upon at the Special Meeting. However, you do not need to attend the Special Meeting to vote your shares. You may simply complete, sign, and return the enclosed proxy card, or submit your vote by calling toll free at the telephone number indicated on the enclosed proxy card, or vote your shares through the Internet, as indicated on the proxy card.
As of March 8, 2021, the date for determining shareholders of the Fund (“Shareholders”) entitled to vote at the Special Meeting (the “Record Date”), there were [_____] of the Fund’s common shares of beneficial interest. If you owned shares on the Record Date, you are entitled to one vote for each whole share you owned as of that date and any adjournmentsfractional share shall be entitled to a proportionate fractional vote. The Fund began mailing this proxy statement on or postponements thereof. Your attentionabout [_____], 2021 to all Shareholders entitled to vote their shares at the Special Meeting.
Q2: What am I being asked to vote on?
A: | At the Special Meeting, Shareholders are being asked to vote for the following proposals: |
1. | To approve the New Investment Management Agreement between the Fund and Saba Capital Management, L.P.; |
2. | To remove the Fund’s fundamental investment restriction relating to investing in warrants; |
3. | To remove the Fund’s fundamental investment restriction relating to purchasing or selling equity securities, engaging in short-selling and the use of certain option arrangements; |
4. | To remove the Fund’s fundamental investment restriction relating to investing in other investment companies; |
5. | To approve a change of the Fund’s investment objective and to make the investment objective non-fundamental; |
6. | To approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies; and |
7. | To transact such other business as may properly come before the Special Meeting, or any postponement or adjournment thereof. |
Q3: What is calledthe quorum requirement for the Special Meeting?
A: | A quorum of Shareholders must be present at the Special Meeting for any business to be conducted. The presence at the Special Meeting, virtually or by proxy, of the holders of a majority of the shares |
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outstanding on the Record Date will constitute a quorum. Abstentions will be treated as shares present for quorum purposes. However, abstentions will be disregarded in determining the “votes cast” on a proposal and will not affect the outcome.
If a quorum is not present at the Special Meeting, the Shareholders who are represented may adjourn the Special Meeting until a quorum is present. The persons named as proxies will vote those proxies for such adjournment, unless marked to be voted against any proposal for which an adjournment is sought, to permit the further solicitation of proxies. On the Record Date, there were [_____] of the Fund’s shares outstanding and entitled to vote. Thus, [_____] shares must be represented by Shareholders present at the Special Meeting or by proxy to have a quorum.
Q4: What is the Adviser Transition
A: | As discussed in more detail in the enclosed Proxy Statement, the Fund’s current investment adviser, Voya Investments, LLC (“VIL”), and the Fund’s current sub-adviser, Voya Investment Management Co. LLC (“Voya IM”), have submitted their respective resignations, effective as of June 22, 2021. Thus, at meetings of the Board held on March 22, 2021 and April 1, 2021, respectively, the independent members of the Board, after careful consideration, determined to select Saba to serve as investment adviser of the Fund and to assume responsibility for providing investment management services that are now provided to the Fund by VIL and Voya IM (the “Adviser Transition”), and approve a new investment management agreement (the “New Management Agreement”) in connection with such Adviser Transition. The New Management Agreement must be approved by Shareholders to become effective |
Q5: Why am I being asked to vote on the New Management Agreement?
A: | The Investment Company Act of 1940, as amended (the “1940 Act”) requires that a new investment management agreement be approved by both a majority of an investment company’s “non-interested” trustees and “a majority of the outstanding voting securities,” as such terms are defined under the 1940 Act. Therefore, Shareholders are being asked to approve the New Management Agreement with Saba. The Board of Trustees believes that approval of the New Management Agreement will provide the benefits to the Fund discussed below. The Board of Trustees, including a majority of Non-interested Trustees (as defined in the enclosed Proxy Statement), has approved the New Management Agreement and believes it to be in the best interests of the Fund and its Shareholders. |
Q6: What are the benefits of the Adviser Transition to the accompanying Proxy Statement.Fund and its Shareholders?
A: | In evaluating the New Management Agreement, the Board of Trustees considered materials detailing Saba’s background and investment experience as a firm generally, as well as the experience of its senior management team. |
Saba is a registered investment adviser founded in 2009. Saba is a spin-out of a proprietary investing group founded by Boaz Weinstein at Deutsche Bank in 1998. Saba manages $3.2 billion across four core strategies: Credit Relative Value, Tail Hedge, SPACs and Closed-End Funds. Saba’s investors are predominantly institutions and include public and corporate pension plans, endowments and foundations, family offices, banks and insurers, bank private wealth platforms, fund of funds and certain high net worth individuals.
Upon consummation of the Adviser Transition, the Fund will be led by the senior management team of Saba, including Boaz Weinstein, Pierre Weinstein, Andrew Kellerman, Michael D’Angelo, Xavier Riera and Nitin Sapru. Boaz Weinstein will replace Dina Santoro as President of the Fund and Pierre Weinstein
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will replace Michael Bell as Chief Executive Officer. Boaz Weinstein, Pierre Weinstein (no relation to Boaz) and Paul Kazarian will serve as portfolio managers of the Fund.
The Board of Trustees discussed Saba’s qualifications and considered its philosophy of management, historical performance, and methods of operations, and considered the following potential benefits to the Fund and its Shareholders2:
The Fund may benefit from Saba’s extensive expertise in the credit space generally.
The Fund may also benefit from Saba’s sophisticated investment advisory platform and resources, including its experience analyzing alternative opportunistic investments that may provide attractive risk-adjusted returns in addition to the Fund’s core credit focus.
Saba is well capitalized and is able to attract and retain personnel necessary to provide quality investment advisory services to the Fund.
Q7: What are the conditions of the Adviser Transition?
A: | The consummation of the Adviser Transition is subject to approval of the New Management Agreement by the Fund’s Shareholders. It is expected the Adviser Transition will take place on or about June 1, 2021, but may occur earlier, but in no event later than June 22, 2021. |
Q8: How will the Adviser Transition affect the Fund’s investment objective and strategy?
A: | In connection with the Adviser Transition, and as described in the enclosed Proxy Statement, Shareholders are being asked to approve the removal of certain fundamental policies of the Fund, in order to provide the Fund with greater investment flexibility. In addition, Shareholders are being asked to approve a change to the investment objective of the Fund and to make the investment objective non-fundamental. If approved by Shareholders, subsequent to the Adviser Transition, the Fund’s investment objective will be to seek to provide investors with a high level of current income, with a secondary goal of capital appreciation. Saba has indicated that it intends to seek to achieve the Fund’s investment objective by investing in credit investments similar to those presently held by the Fund, while also opportunistically targeting certain debt investments and equity investments in market sectors, such as in the registered closed-end fund and special purpose acquisition company, or “SPAC”, spaces, where it believes it can achieve attractive risk-adjusted returns that augment the Fund’s primary credit focus. |
Q9: Will the Fund continue to be publicly traded after the Adviser Transition?
A: | Yes. The shares of the Fund will continue to be traded on the New York Stock Exchange under the symbol [BRW]. |
Q10: Will the Fund’s name change?
A: | The Board has approved the change in the Fund’s name to Saba Capital Income & Opportunities Fund, subject to and effective upon the completion of the Adviser Transition. |
Q11: Will the management fees payable to Saba under the New Management Agreement increase as a result of the Adviser Transition?
A: | No. The management fee payable under the New Management Agreement will remain at an annual rate of 1.05% of the Fund’s average daily gross asset value, minus the sum of the Fund’s accrued and unpaid |
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dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of any outstanding preferred shares).
Q12: How does the Board of Trustees recommend that I vote with respect to the proposal to approve the New Management Agreement?
A: | In evaluating the New Management Agreement, the Board of Trustees reviewed certain materials furnished by Saba. The Board of Trustees discussed the philosophy of management, historical performance, and methods of operations, and believes that the New Management Agreement is in the best interests of the Fund and its Shareholders. Accordingly, after careful consideration, the Board of Trustees unanimously recommends that you vote “FOR” the proposal to approve the New Management Agreement. |
Q13: Do any of the Fund’s trustees or officers have an interest in the approval of the New Management Agreement that is different from that of the Fund’s Shareholders generally?
A: | As described in this proxy statement under “Conflicts of Interests of Our Trustees in the Adviser Transition” beginning on page [_], two of the members of the Board of Trustees are employed by Saba, and accordingly these Trustees have conflicts of interests in connection with the vote on the New Management Agreement. As a result of such conflicts, a special committee consisting solely of Trustees who have no affiliation with Saba initially reviewed Saba’s proposal to become investment adviser to the Fund, and recommended Saba’s appointment to the full Board. |
Q14: Will the Fund bear the costs associated with the Adviser Transition and the Special Meeting?
A: | No. Saba will bear the costs associated with the board and shareholder approval process, including the costs and expenses incurred in connection with preparing and mailing the Proxy Statement and soliciting the Shareholder votes in connection with the Special Meeting. |
Q15: How do I vote by proxy and how many votes do I have?
A: | If you properly sign and date the accompanying proxy card, and the Fund receives it in time for the Special Meeting, the persons named as proxies on the proxy card will vote the shares in the manner that you specified. If you sign the proxy card, but do not make specific choices, the shares represented by such proxy will be voted as recommended by the Board of Trustees. You may also vote your shares by calling toll free or through the Internet by following the instructions set forth on the enclosed proxy card. |
If your shares are registered in the name of a bank or brokerage firm, you will receive a copy of the Proxy Statement, either by paper or electronically, and you may be eligible to vote your shares electronically via the Internet or by telephone by following the instructions set forth on your voting instruction form.
If you require assistance with voting proxy or have any questions about the special meeting, please contact our proxy solicitor, [_____], toll-free at [____].
If any other matter is presented, the shares represented andby such proxy will be voted in accordance with the best judgment of the person or persons exercising authority conferred by the proxy at the AnnualSpecial Meeting. You have one vote for each share that you own on the Record Date. The proxy card indicates the number of shares that you owned on the Record Date.
Q16: What does it mean if I receive more than one proxy card?
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A: | If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted. |
Q17: May I revoke my proxy?
A: | Yes. You may change your mind after you send in your proxy card or authorize your shares by telephone, through the Internet or at the Special Meeting by following these procedures. To revoke your proxy: |
• | deliver a written revocation notice prior to [___] a.m., Eastern Time, on [___] to our proxy tabulator, [____]., c/o [____]; indicate your revocation prior to [____] a.m., Eastern Time, on [____] by calling toll free at [____] or through the Internet website of [____] at [_____]; deliver a later-dated proxy by following the instructions on your proxy card; or |
vote virtually at the Special Meeting is extremely important. Whetheron May 21, 2021. If you hold common shares through a broker, bank or notother nominee, you plan to attendmust follow the Annual Meeting, andinstructions you receive from your broker, bank or other nominee in order to facilitate timely receiptrevoke your voting instructions.
Q18: What is the difference between holding shares as a shareholder of your vote given the potential impact of COVID-19, please voterecord and as soon as possible.a beneficial owner?
A: | Shareholders of Record. You are a shareholder of record if at the close of business on the Record Date your shares were registered directly in your name with our transfer agent, BNY Mellon Investment Servicing (US) Inc. |
Beneficial Owner. You are urged to date, sign and returna beneficial owner if at the WHITE Proxy Ballot inclose of business on the envelope provided to you, or to vote by internet or by telephone as described in this Proxy Statement, even if you plan to attend the Annual Meeting, so thatRecord Date your shares can be voted regardless of whether you attend the Annual Meeting. Voting now willwere held by a bank, brokerage firm or other nominee and not limitin your right to change your vote or to attend the Annual Meeting; if you should be present at the Annual Meeting and desire to vote, you may withdraw your proxy at such time. Only the latest validly executed Proxy Ballotname. Being a beneficial owner means that you timely submit will be counted. If your shares are held in “street name.” As the name of a broker,beneficial owner, you have the right to direct your bank, brokerage firm or other holder of record, follownominee how to vote your shares by following the voting instructions your bank, brokerage firm or other nominee provides. If you received from the holder of record in orderdo not provide your bank, brokerage firm or other nominee with instructions on how to vote your shares.
Q19: What will happen if I do not vote my shares?
A: | Shareholders of Record. If you are the shareholder of record of your shares and you do not vote by proxy card, via telephone or the Internet or virtually at the Special Meeting, your shares will not be voted at the Special Meeting. |
Beneficial Owners. If you are the beneficial owner of your shares, your broker or nominee may vote your shares only on those proposals on which it has discretion to vote. “Broker non-votes” represent votes that could have been cast on a particular matter by a brokerage firm, as a shareholder of record, but that were not cast because the brokerage firm lacked discretionary voting authority on the matter and did not receive voting instructions from the beneficial owner of the shares. Under the rules of the New York Stock Exchange (“NYSE”), your brokerage firm or other nominee does not have discretion to vote your shares on non-routine matters such as Proposals 1, 2, 3, 4, 5 and 6. Accordingly, there will be no broker non-votes with respect to Proposals 1, 2, 3, 4, 5 and 6.
Q20: What is the vote required for each proposal?
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Proposal | Vote Required | Broker Discretionary Voting Allowed? | Effect of Abstentions | |||
Proposal 1 — To approve the New Investment Management Agreement between the Fund and Saba Capital Management, L.P.; | Affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting.* | No | Abstentions will have the effect of a vote against this proposal. | |||
Proposal 2 — To remove the Fund’s fundamental investment restriction relating to investing in warrants; | Affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting. | No | Abstentions will have the effect of a vote against this proposal. | |||
Proposal 3 — To remove the Fund’s fundamental investment restriction relating to purchasing or selling equity securities, engaging in short-selling and the use of certain option arrangements; | Affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting. | No | Abstentions will have the effect of a vote against this proposal. | |||
Proposal 4 — To remove the Fund’s fundamental investment restriction relating to investing in other investment companies; | Affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting. | No | Abstentions will have the effect of a vote against this proposal. | |||
Proposal 5 — To approve a change of the investment objective and to make the investment objective non-fundamental; | Affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting. | No | Abstentions will have the effect of a vote against this proposal. | |||
Proposal 6 — To approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies. | Affirmative vote of the holders of a majority of the votes cast at the Special Meeting. | No | Abstentions will have the effect of a vote against this proposal. |
* | For purposes of this proposal, consistent with the 1940 Act, “a majority of the outstanding common shares is the lesser of: (i) 67% or more of our common shares present at the Special Meeting if the holders of more than 50% of our outstanding common shares are present or represented by proxy, or (ii) more than 50% of our outstanding common shares. |
Since banks, brokerage firms or other nominees do not have discretion to vote on Proposals 1, 2, 3, 4, 5 or 6, if you do not provide voting instructions to your bank, brokerage firm or other nominee, your shares will not be voted at the Special Meeting and will not be counted as present for purposes of meeting the quorum requirement.
Q21: What if I do not specify how my shares are to be voted?
A: | Shareholders of Record. If you are a shareholder of record and you submit a proxy, but you do not provide voting instructions, your shares will be voted as follows: |
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• | Proposal 1 — FOR the approval of the New Investment Management Agreement between the Fund and Saba Capital Management, LP; |
• | Proposal 2 — FOR the removal of the Fund’s fundamental investment restriction relating to investing in warrants; |
• | Proposal 3 — FOR the removal of the Fund’s fundamental investment restriction relating to purchasing or selling equity securities, engaging in short-selling and the use of certain option arrangements; |
• | Proposal 4 — FOR the removal of the Fund’s fundamental investment restriction relating to investing in other investment companies; |
• | Proposal 5 — FOR the approval of changing the investment objective and making the investment objective non-fundamental; |
• | Proposal 6 — FOR the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies; and |
In the discretion of the named proxies regarding any other matters properly presented for a vote at the Special Meeting.
Beneficial Owners. If you are a beneficial owner and you do not provide the bank, brokerage firm or other nominee that holds your shares with voting instructions, the bank, brokerage firm or other nominee will determine if it has the discretionary authority to vote on the particular matter. Under the NYSE’s rules, banks, brokerage firms and other nominees do not have discretion to vote on non-routine matters such as Proposals 1, 2, 3, 4, 5 or 6. Accordingly, if you do not provide voting instructions to your bank, brokerage firm or other nominee, your bank, brokerage firm or other nominee will not vote your shares on Proposals 1, 2, 3, 4, 5 or 6 and your shares will not be counted as present for purposes of meeting the quorum requirement.
Q22: What are abstentions and broker non-votes?
A: | An abstention represents action by a shareholder to refrain from voting “for” or “against” a proposal. “Broker non-votes” represent votes that could have been cast on a particular matter by a brokerage firm, as a shareholder of record, but that were not cast because the brokerage firm (i) lacked discretionary voting authority on the matter and did not receive voting instructions from the beneficial owner of the shares, or (ii) had discretionary voting authority but nevertheless refrained from voting on the matter. Since brokerage firms do not have discretion to vote on non-routine matters such as Proposals 1, 2, 3, 4, 5 or 6 (and consequently there will be no broker non-votes with respect to Proposals 1, 2, 3, 4, 5 or 6), if you do not provide voting instructions to your brokerage firm, your shares will not be voted at the Special Meeting and will not be counted as present for purposes of meeting the quorum requirement. |
Q23: What will happen if Proposal 1 is not approved
A: | If the New Management Agreement is not approved by Shareholders, the Board will consider such other actions, including the approval of an investment management agreement with a firm other than Saba, as it determines to be in the best interests of the Fund and Shareholders. The Board may also determine to approve an interim investment management agreement to enable Saba to serve as investment adviser of the Fund following the resignation of VIL. However, an interim agreement may remain in effect for a period of not more than 150 days, and a new investment management agreement must be approved by the Board and by Shareholders for Saba to continue to serve as adviser to the Fund after expiration of the term of the interim agreement. |
Q24: What will happen if Proposals 2, 3, 4, or 5 are not approved?
A: | If Proposals 2, 3, or 4 are not approved, the relevant investment restriction will remain unchanged. If Proposal 5 is not approved, the investment objective will remain unchanged and will remain fundamental. |
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Q25: How do I find out the results of the voting at the Special Meeting?
A: | Preliminary voting results will be announced at the Special Meeting. Final voting results will be included in the semi-annual report of the Fund for the period ended August 31, 2021, which will be sent to Shareholders on or before October 30, 2021. |
Q26: Who should I call if I have any questions or need assistance voting your shares, please contact Georgeson LLC, the Fund’s proxy solicitor, at 1-877-278-4775.
A: | If you have any questions about the Special Meeting, voting or your ownership of the Fund’s common shares, please contact [_____]: |
[Date]
[____]
Shareholders may call toll free: [_____]
Banks and date the WHITE Proxy Ballot. When shares are held jointly, each shareholder should sign. When signing as attorney, executor, guardian, administrator, trustee, officer of a corporation or other entity or in another representative capacity, please give your full title under your signature.
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VOYA PRIME RATE TRUST
Scottsdale, AZ 85258-20341-800-992-0180
[____]
PROXY STATEMENT
Special Meeting of ShareholdersScheduled for [ ]
This Proxy Statement and Notice of Annual Meeting of Shareholders areavailable at: www.proxy-direct.com/voy-31357
We encourage you to vote your shares, either by voting virtually at the Special Meeting or by granting a proxy (i.e., authorizing someone to vote your shares). If you properly sign and at any adjournmentsdate the accompanying proxy card, or postponements thereof, and it provides you with information you should review before providingotherwise provide voting instructions, either via the Internet or by telephone, and the Fund receives it in time for the Special Meeting, the persons named as proxies will vote the shares registered directly in your name in the manner that you specified. If you give no instructions on the proxy card, the shares covered by the proxy card will be voted FOR the matters listed in the accompanying Notice of AnnualSpecial Meeting of Shareholders. The words “you” and “shareholder”Shareholders.
If your shares are usedregistered in thisthe name of a bank or brokerage firm, you will receive a copy of the Proxy Statement, either by paper or electronically, and you may be eligible to refer tovote your shares electronically via the personInternet or entity that hasby telephone by following the instructions set forth on your voting rights or is beinginstruction form.
Purpose of Meeting
At the Special Meeting, you will be asked to provide voting instructions in connection withvote on the shares.
1. | To approve the New Investment Management Agreement between the Fund and Saba Capital Management, L.P. (Proposal 1); |
2. | To remove the Fund’s fundamental investment restriction relating to investing in warrants (Proposal 2); |
3. | To remove the Fund’s fundamental investment restriction relating to purchasing or selling equity securities, engaging in short-selling and the use of certain option arrangements (Proposal 3); |
4. | To remove the Fund’s fundamental investment restriction relating to investing in other investment companies (Proposal 4); |
5. | To approve a change of the investment objective and to make the investment objective non-fundamental (Proposal 5); |
6. | To approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies (Proposal 6); and |
7. | To transact such other business as may properly come before the Special Meeting, or any postponement or adjournment thereof. |
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Record Date and Voting Securities
You may vote your shares, virtually or by proxy, at the Annual Meeting?
Quorum Required
A quorum must be present at the Special Meeting for any business to be conducted. The presence at the Special Meeting, virtually or by proxy, of the holders of a majority of the shares outstanding on the Record Date will constitute a quorum. Abstentions will be treated as shares present for quorum purposes. Since banks, brokerage firms or other nominees do not have discretion to vote at the Annual Meetingon non-routine matters such as Proposals 1, 2, 3, 4, 5 or any adjournments6, if you do not provide voting instructions to your bank, brokerage firm or postponements thereof.
If instructionsa quorum is not present at the Special Meeting, the Shareholders who are not given inrepresented at the WHITE Proxy Ballot, properly executed WHITE Proxy BallotsSpecial Meeting may adjourn the Special Meeting until a quorum is present. The persons named as proxies will vote those proxies for such adjournment, unless marked to be voted “FOR” against any proposal for which an adjournment is sought, to permit the electionfurther solicitation of the Board's Nomineesproxies.
Submitting Voting Instructions for Trustee, and “AGAINST” the Saba Hedge Fund Proposal.
If you hold your shares through a bank, brokerage firm or other nominee, you must follow the voting instructions you receive from your bank, brokerage firm or other nominee. If you hold shares through a bank, brokerage firm or other nominee and you want to vote virtually at the Special Meeting, you must obtain a legal proxy from the record holder of your shares and present it at the Special Meeting. If you do not vote virtually at the Special Meeting or submit voting instructions to your bank, brokerage firm or other nominee, your shares will not be voted at the Special Meeting and will not be counted as present for purposes of meeting the quorum requirement.
If your shares are registered in streetthe name of a bank or brokerage firm, you will receive a copy of the Proxy Statement, either by paper or electronically, and you may be eligible to vote your shares electronically via the Internet or by telephone by following the instructions set forth on your voting instruction form.
Authorizing a Proxy for Shares Held in Your Name
If you are a record holder of common shares you may authorize a proxy to vote on your behalf, as described on the enclosed proxy card. Authorizing your proxy will not limit your right to vote virtually at the Special Meeting. A properly completed and submitted proxy will be voted in accordance with your instructions, unless you subsequently revoke your instructions. If you authorize a proxy without indicating your voting instructions, the proxy holder will vote your shares according to the Board of Trustees’ recommendations. You may return the enclosed proxy card by mail in the enclosed, self-addressed envelope, or you may vote your shares by calling toll free or voting through the Internet by following the instructions set forth on the enclosed proxy card.
Revoking Your Proxy
If you are a Shareholder of record, you can revoke your proxy at any time before it is exercised by:
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deliver a written revocation notice prior to [___] a.m., Eastern Time, on [___], 2021 to our proxy tabulator, [_____];
• | indicate your revocation prior to [___] a.m., Eastern Time, on [____], 2021 by calling toll free at [____] or through the Internet website of [____] at [____]; |
deliver a later-dated proxy by following the instructions set forth on the enclosed proxy card;
vote virtually at the Special Meeting on [____], 2021.
If you require assistance with voting proxy or have any questions about the special meeting, please contact our proxy solicitor, [_____] toll-free at [_____].
If you hold common shares through a broker, bank or other nominee, you must follow the instructions you receive from your broker, bank or other holder of record that you must follownominee in order to revoke your voting instructions. Attending the Special Meeting does not revoke your proxy unless you also vote virtually at the Special Meeting.
Vote Required
Approval of the New Management Agreement. Approval of the New Management Agreement requires the affirmative vote of “a majority of outstanding voting securities” entitled to vote at the Special Meeting, as defined under the Investment Company Act of 1940, as amended (the “1940 Act”). Since the Fund’s only voting securities are common shares, consistent with the 1940 Act, the affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting is required to approve the New Management Agreement. For purposes of approval of the New Management Agreement, “a majority of outstanding common shares” is the lesser of: (i) 67% or more of the common shares present at the Special Meeting if the holders of more than 50% of the outstanding common shares are present or represented by proxy; or (ii) more than 50% of our outstanding common shares as of the Record Date. Abstentions will have the effect of a vote against the New Management Agreement. Since banks, brokerage firms or other nominees do not have discretion to vote on non-routine matters such as the approval of the New Management Agreement, if you do not provide voting instructions to your bank, brokerage firm or other nominee, your shares voted. To vote pursuant to the recommendation of the Board, you must follow the instructions on your WHITE voting instruction form sent to you by your broker, bank or other holder of record.
Approval of Changes to facilitate timely receiptFundamental Investment Restrictions. The approval of youreach change requires the affirmative vote givenof a majority of the potential impact of COVID-19, please voteFund’s outstanding voting securities as soon as possible. You are urged to date, sign and return the WHITE Proxy Ballotdefined in the envelope provided1940 Act. Such a majority means the affirmative vote of the holders of (a) 67% or more of the shares of the Fund present, virtually or represented by proxy, at the Meeting, if the holders of more than 50% of the outstanding shares of the Fund are so present, or (b) more than 50% of the outstanding shares of the Fund, whichever is less. Abstentions will have the effect of a vote against the changes.
Approval of Change to you,Investment Objective. The approval of the change requires the affirmative vote of a majority of the Fund’s outstanding voting securities as defined in the 1940 Act. Such a majority means the affirmative vote of the holders of (a) 67% or more of the shares of the Fund present, virtually or represented by proxy, at the Meeting, if the holders of more than 50% of the outstanding shares of the Fund are so present, or (b) more than 50% of the outstanding shares of the Fund, whichever is less. Abstentions will have the effect of a vote against the change.
Adjournment of Special Meeting. Approval of the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies, requires the affirmative vote of the holders of a majority of the votes cast at the Special Meeting. Abstentions will have the effect of a vote against this proposal.
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Additional Solicitation. If there are not enough votes to approve the New Management Agreement or to approve Proposals 2, 3, 4 or 5, a majority of the shareholders who are represented may adjourn the Special Meeting to permit the further solicitation of proxies. The persons named as proxies will vote those proxies for such adjournment, unless marked to be voted against the proposal for which an adjournment is sought, to permit the further solicitation of proxies.
Also, a shareholder vote may be taken to approve the New Management Agreement prior to any such adjournment if there are sufficient votes for approval the New Management Agreement.
Information Regarding This Solicitation
Saba will bear the costs associated with the board and shareholder approval process, including the costs and expenses incurred in connection with preparing and mailing the Proxy Statement and soliciting the shareholder votes in connection with the Special Meeting.
In addition to the solicitation of proxies by internet the use of the mail, proxies may be solicited in person and/or by telephone as describedor facsimile transmission by trustees, officers or employees of the Fund and/or officers or employees of Saba. Saba is located at 405 Lexington Ave., 58th Floor, New York, NY 10174. No additional compensation will be paid to trustees, officers or regular employees of the Fund or Saba for such services. Saba has also retained [_____] to assist in the solicitation of proxies for a fee of approximately $[ ] plus reimbursement of certain out of pocket expenses.
Any proxy given pursuant to this Proxy Statement, even if you plan to attendsolicitation may be revoked by notice from the Annual Meeting, so that your shares can be voted regardlessperson giving the proxy at any time before it is exercised. Any such notice of whether you attend the Annual Meeting. Voting now will not limit your right to change your vote or to attend the Annual Meeting; if yourevocation should be present atprovided in writing and signed by the Annual Meeting and desire to vote, you may withdraw your proxy at such time. Only the latest validly executed Proxy Ballot that you timely submit will be counted. If your shares are heldshareholder in the name of a broker, banksame manner as the proxy being revoked and delivered to the Fund’s proxy tabulator [_____], Eastern Time, on [____], 2021, or other holder of record, follow the voting instructions you received from the holder of record in order to vote your shares.
Preliminary voting results will be announced at the Special Meeting. Final voting results will be included in the semi-annual report of the Fund for the period ended August 31, 2021, which will be sent to Shareholders on or before October 30, 2021.
Appraisal Rights
Shareholders do not have any appraisal rights in connection with the Proposals.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the Record Date, the beneficial ownership of each current annual reporttrustee, the Fund’s executive officers, each person known to us to beneficially own 5% or more of the outstanding shares, and most recent semi-annual reportthe executive officers and trustees as a group.
Beneficial ownership is available, without charge, ondetermined in accordance with the Internet at www.individuals.voya.com/literaturerules of the Securities and Exchange Commission (“SEC”) and includes voting or investment power with respect to the securities. Ownership information for those persons who beneficially own 5% or more of our common shares is based upon Schedule 13G filings by contactingsuch persons with the SEC and other information obtained from such persons, if available.
Unless otherwise indicated, the Fund at:
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Name and Address of Beneficial Owner | Number of Shares Owned Beneficially(1) | Percentage of Class(2) | ||||||
Independent Trustees | ||||||||
Aditya Bindal | – | * | ||||||
Karen Caldwell | – | * | ||||||
Charles Clarvit | – | * | ||||||
Ketu Desai | – | * | ||||||
Kieran Goodwin | – | * | ||||||
Andrew Kellerman | – | * | ||||||
Neal Neilinger | – | * | ||||||
Thomas R. Bumbolow | – | * |
Name and Address of Beneficial Owner | Number of Shares Owned Beneficially(1) | Percentage of Class(2) | ||||
Current Executive Officers | ||||||
Michael Bell | * | |||||
Dina Santoro | * | |||||
Jonathan Nash | * | |||||
James M. Fink | * | |||||
Kevin M. Gleason | * | |||||
Todd Modic | * | |||||
Incoming Executive Officers | ||||||
Boaz Weinstein (3) | 27,457,299 | |||||
Pierre Weinstein | – | * | ||||
Michael D’Angelo | – | * | ||||
Treasurer- Foreside Fund Officer Services, LLC | – | * | ||||
Chief Compliance Officer- Foreside Fund Officer Services, LLC | – | * | ||||
Current Executive officers and trustees as a group | ||||||
Five Percent Owner | ||||||
Saba Capital Management, L.P. | 27,457,299 |
* Represents less than one percent.
(1) | Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Assumes no other purchases or sales of our common stock since the information most recently available to us. This assumption has been made under the rules and regulations of the SEC and does not reflect any knowledge that we have with regard to the present intent of the beneficial owners of our common stock listed in this table. |
(2) | Based on a total of [_____] shares of the Fund’s common stock issued and outstanding on the Record Date. |
(3) | Mr. Weinstein may be deemed to beneficially own the shares of the Fund held by certain investment funds and accounts managed by Saba by virtue of his management and control of Saba. |
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Set forth below is the service providers todollar range of equity securities beneficially owned by each of our Trustees as of the Fund?
Name of Trustees | Dollar Range of Equity Securities Beneficially Owned(1)(2) | |||
Independent Trustees | ||||
Aditya Bindal | None | |||
Karen Caldwell | None | |||
Charles Clarvit | None | |||
Ketu Desai | None | |||
Kieran Goodwin | None | |||
Andrew Kellerman | None | |||
Neal Neilinger | None | |||
Thomas R. Bumbolow | None |
(1) | The dollar ranges are: None, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, or Over $100,000 |
(2) | The dollar range of equity securities beneficially owned in us is based on the closing price for our common shares of $[____] on the Record Date on the New York Stock Exchange. Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act |
Information about the Fund’s Existing Service Providers
Voya Investments, LLC (“Voya Investments” or “Adviser”) serves as the Fund’s investment adviser to the Fund. Voya Investment Management Co. LLC (“Voya IM”) serves as the sub-adviser to the Fund. Voya Investments Distributor, LLC (the “Distributor”) serves as the distributor for the Fund.
The Fund’s existing service providers will be replaced effective upon completion of the Adviser Transition.
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PROPOSAL I
TO APPROVE THE NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE
FUND AND SABA CAPITAL MANAGEMENT, L.P.
Background
Voya Investments, LLC (“VIL”) currently provides investment advisory services to the Fund pursuant to the current investment management agreement, dated November 18, 2014, as amended and restated on May 1, 2015, between the Fund and VIL (the “Existing Management Agreement”). The Existing Management Agreement was last approved by the Board of Trustees, including a majority of trustees who are not “interested persons,” as such term is defined under the 1940 Act (the “Non-interested Trustees”), on November 20, 2020 and was last approved by a vote of the Shareholders on May 6, 2013.
VIL and the Fund’s current sub-adviser, Voya Investment Management Co. LLC (“Voya IM”), have submitted their respective resignations, effective as of June 22, 2021. Thus, at 1-800-992-0180.
In connection with the Adviser Transition, and as described in Proposals 2, 3, 4 and 5, Shareholders are also being asked to approve the removal of certain fundamental policies of the Fund, in order to provide the Fund with greater investment flexibility, and to approve a change to the investment objective of the Fund and to make the investment objective non-fundamental.
Following the Adviser Transition, the Fund’s name will change to Saba Capital Income & Opportunities Fund. However, you will still own the same amount and type of shares in the same Fund. The shares of the Fund will continue to be listed on the New York Stock Exchange, although the ticker symbol will change upon the change in the name of the Fund to [BRW].
VIL is contractually obligated to limit expenses of the Fund at a rate of 1.05% of the Fund’s average daily gross asset value, minus the sum of the Fund’s accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of any outstanding preferred shares), plus 0.15% of average daily net assets through July 1, 2021. The limitation does not extend to interest, taxes, investment-related costs, leverage expenses, extraordinary expenses, and Acquired Fund Fees and Expenses. The limitation is subject to possible recoupment by VIL within 36 months of the waiver or reimbursement and the amount of the recoupment is limited to the lesser of the amounts that would be recoupable under: (i) the expense cap in effect at the time of the waiver or reimbursement; or (ii) the expense cap in effect at the time of recoupment. It is expected that Saba will enter into a substantially
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similar expense limitation agreement with the Fund, to be effective upon consummation of the Adviser Transition.
Saba will bear the costs associated with the board and Shareholder approval process, including the costs and expenses incurred in connection with preparing and mailing the Proxy Statement and soliciting the Shareholder votes in connection with the Special Meeting.
There will be no changes to the Fund’s distribution policy in connection with the Adviser Transition. To the extent that the Fund has income available, it intends to continue to distribute monthly dividends to its Shareholders. The amount of the Fund’s distributions, if any, will be determined by its Board. Any distributions to the Fund’s Shareholders will be declared out of assets legally available for distribution.
To the extent Proposal 6 – Adjournment of the Special Meeting is approved by the Fund’s Shareholders, the Fund may adjourn the Special Meeting and seek additional proxies to vote on Proposal 1, as necessary. If Proposal 1 is not approved by the Fund’s Shareholders, the Board will consider such other actions, including the approval of an investment management agreement with a firm other than Saba, as it determines to be in the best interests of the Fund and Shareholders. The Board may determine to approve an interim investment management agreement to enable Saba to serve as investment adviser of the Fund following the resignation of VIL. However, an interim agreement may remain in effect for a period of not more than 150 days, and a new investment management agreement must be approved by the Board and by Shareholders for Saba to continue to serve as adviser to the Fund after expiration of the term of the interim agreement
Benefits of the Adviser Transition
In evaluating the New Management Agreement, the Board of Trustees, the Board of Trustees considered materials detailing Saba’s background and investment experience as a firm generally, as well as the experience of its senior management team.
Saba is a registered investment adviser founded in 2009. Saba is a spin-out of a proprietary investing group founded by Boaz Weinstein at Deutsche Bank in 1998. Saba manages $3.2 billion across four core strategies: Credit Relative Value, Tail Hedge, SPACs and Closed-End Funds. Saba’s investors are predominantly institutions and include public and corporate pension plans, endowments and foundations, family offices, banks and insurers, bank private wealth platforms, fund of funds and certain high net worth individuals.
Upon consummation of the Adviser Transition, the Fund will be led by the senior management team of Saba, including Boaz Weinstein, Pierre Weinstein, Andrew Kellerman, Michael D’Angelo, Xavier Riera and Nitin Sapru. Boaz Weinstein will replace Dina Santoro as President of the Fund and Pierre Weinstein will replace Michael Bell as Chief Executive Officer. Boaz Weinstein, Pierre Weinstein (no relation to Boaz) and Paul Kazarian will serve as portfolio managers of the Fund.
The Board of Trustees discussed Saba’s qualifications and considered its philosophy of management, historical performance, and methods of operations, and considered the following potential benefits to the Fund and its Shareholders:
The Fund may benefit from Saba’s extensive expertise in the credit space generally.
The Fund may also benefit from Saba’s sophisticated investment advisory platform and resources, including its experience analyzing alternative opportunistic investments that may provide attractive risk-adjusted returns in addition to the Fund’s core credit focus.
Saba is well capitalized and is able to attract and retain personnel necessary to provide quality management services to the Fund.
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Summary of the Terms of the Existing Management Agreement and New Management Agreement
A copy of the New Management Agreement is attached to this Proxy Statement as Appendix A. The following description of the terms of the New Management Agreement is only a summary of its material terms and explicitly highlights all material differences between the New Management Agreement and the Existing Management Agreement. You should refer to Appendix A for the New Management Agreement, and the description of the New Management Agreement set forth in this Proxy Statement is qualified in its entirety by reference to Appendix A.
Following approval by the Shareholders in the manner required by the 1940 Act, the New Management Agreement will be entered into on or about June 1, 2021, but may occur earlier, but in no event later than June 22, 2021, concurrent with completion of the Adviser Transition. The New Management Agreement will remain in effect for a period of two (2) years from the date it is signed, unless sooner terminated. After the initial two-year period, continuation of the New Management Agreement from year-to-year is subject to annual approval by the Board of Trustees, including at least a majority of the Non-interested Trustees.
Advisory and Other Services. Under the terms of the Existing Management Agreement, subject to the supervision of the Board of Trustees, VIL manages the Fund’s day-to-day operations of, and provides investment advisory services to the Fund, in each case in accordance with the Fund’s investment objectives, policies and restrictions. Pursuant to the Existing Management Agreement, VIL: (i) furnishes the Fund with advice and recommendations with respect to the investment of the Fund’s assets and the purchase and sale of its portfolio securities, including the taking of such other steps as may be necessary to implement such advice and recommendations, (ii) furnishes the Fund with reports, statements and other data on securities, economic conditions and other pertinent subjects which the Board of Trustees may request, (iii) permits its officers and employees to serve without compensation as Trustees of the Fund if elected to such positions and (iv) in general superintends and manages the investment of the Fund, subject to the ultimate supervision and direction to the Board of Trustees. Subject to the approval of the Board of Trustees of the Trust, VIL is authorized to enter into sub-advisory agreements with other registered investment advisers to serve as investment sub-advisers, whether or not affiliated with VIL (each, a “Sub-Adviser”). VIL has responsibility for all services furnished pursuant to any sub-advisory agreement and, among other things: (i) continually evaluates the performance of any Sub-Adviser to the Fund; and (ii) periodically makes recommendations to the Board of Trustees regarding the results of its evaluation and monitoring functions. Saba will continue to provide these services under the New Management Agreement.
The Existing Management Agreement also provides for VIL to provide certain administrative services to the Fund, or at the expense of VIL, to retain the services of a third party as its delegate to provide such administrative services. Pursuant to the New Management Agreement, Saba will provide, or arrange for the provision by a third party services provider of, such administrative services. Saba has indicated that it intends to arrange for the Fund to retain a third-party administrator and certain other third-party service providers to furnish the administrative services referenced in the New Management Agreement.
Management Fees. In consideration of the services provided by VIL to the Fund, under the Existing Management Agreement, the Fund pays VIL a management fee computed at the annual rate of 1.05% of the Fund’s average daily gross asset value, minus the sum of the Fund’s accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of any outstanding preferred shares) (“Managed Assets”). The management fees is accrued daily by the Fund and paid to the investment adviser at the end of each calendar month. The same fee will be payable by the Fund to Saba under the New Management Agreement. During the fiscal year ended February 28, 2021, the Fund paid to VIL approximately $[ ] in management fees.
VIL is contractually obligated to limit expenses of the Fund at a rate of 1.05% of the Fund’s average daily Managed Assets, plus 0.15% of average daily net assets through July 1, 2021. The limitation does not
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extend to interest, taxes, investment-related costs, leverage expenses, extraordinary expenses, and Acquired Fund Fees and Expenses. The limitation is subject to possible recoupment by VIL within 36 months of the waiver or reimbursement and the amount of the recoupment is limited to the lesser of the amounts that would be recoupable under: (i) the expense cap in effect at the time of the waiver or reimbursement; or (ii) the expense cap in effect at the time of recoupment. It is expected that Saba will enter into a substantially similar expense limitation agreement with the Fund, to be effective upon the Adviser Transition, a form of which is attached as Appendix B to this Proxy Statement (the “New Expense Limitation Agreement”).
Expenses. Under the Existing Management Agreement, VIL pays all of its expenses arising from the performance of its obligations under the Existing Management Agreement, including executive salaries and expenses of the Trustees and officers of the Fund who are employees of VIL or its shareholders. Accordingly,affiliates, except the Fund’s Chief Compliance Officer. VIL pays the fees of Voya IM. The Fund pays expenses, such as legal, audit, transfer agency and custodian out-of-pocket fees, proxy solicitation costs, and the compensation of Trustees who are not affiliated with VIL. Pursuant to the New Management Agreement, Saba will pay the following expenses: (i) the compensation of any sub-adviser retained pursuant to New Management Agreement, and (ii) the compensation of any investment advisory personnel that provide services to the Fund on behalf of Saba pursuant to the Agreement, along with the allocable portion of the following “overhead expenses” (office space, rent and utilities, furniture and fixtures, computer equipment, stationery, secretarial/managerial services, salaries, entertainment expenses, employee insurance and payroll taxes) attributable to such investment advisory personnel. Subject to application of the New Expense Limitation Agreement, the Fund will be responsible for all other costs and expenses of its operations and transactions, including:
• | The Fund’s investment-related expenses whether relating to investments that are consummated or unconsummated (e.g., brokerage commissions, due diligence costs, expenses relating to short sales, investment banking fees, sourcing or finder’s fees (which may include a base fee component and/or a performance compensation component), borrowing charges on securities sold short, custodial fees and expenses and nominee fees); |
Bank service fees, clearing and settlement charges and interest expense; Management Fees; fees and expenses incidental to the purchase and sale of interests in, and the fees and expenses of, portfolio companies in which the Trust invests;
Interest payable on debt, if any, to finance the Fund’s investments;
Expenses relating to software tools, programs or other technology utilized in managing the Fund (including, without limitation, third-party software licensing, implementation, data management and recovery services and custom development costs);
Exchange listing fees, expenses relating to proxy contests, voting, tender offers and solicitation fees and expenses;
Trading platform and seat fees; research-related expenses, including, without limitation, news and quotation equipment and services;
Fees and expenses associated with independent audits and outside legal costs;
Fees for data and software providers; other expenses related to the purchase, sale or transmittal of investments; website creation and maintenance, fees for risk management systems and service providers; legal expenses;
Other professional fees (including, without limitation, expenses of consultants and experts);
Transfer agent and custodial fees;
The costs of organizing and maintaining any subsidiaries;
Fees and expenses associated with marketing and investor relations efforts including proxy solicitations and shareholder meetings;
Costs relating to swaps (and similar agreements); tax preparation expenses; accounting expenses;
Costs of printing and mailing proxies, reports and/or notices; market data costs; administration expenses (including fees for the provision of middle-office and back-office services);
Directors’ and officers’ fees;
Fund-related insurance expenses (including, without limitation, premium payments for fidelity bonds and Directors’ and Officers’ and Errors and Omissions insurance);
Compensation and expenses of the independent members of the Board unanimouslyof Trustees of the Fund;
Organizational and offering-related expenses, including the preparation and filing of related registration statements under the Securities Act of 1933, as amended;
Filing and registration fees; corporate licensing fees, federal, state and local taxes and other governmental fees and expenses;
All regulatory expenses (including, without limitation, fees and expenses incurred in connection with ongoing compliance obligations and the preparation and filing of regulatory filings, including those required under the 1940 Act and applicable federal and state securities laws); litigation-related and indemnification expenses; withholding and transfer fees;
Trademarks;
Other expenses related to the purchase, monitoring, sale, allocation, settlement, custody, valuation, appraisal or transmittal of assets;
Extraordinary expenses, including the costs of any third party pricing or valuation services;
The allocable portion of the compensation and related overhead expenses attributable to any director, officer, partner or employee of the Manager or any affiliate thereof when and to the extent providing administrative services to the Fund; and
Other similar expenses and all other costs and expenses incurred in connection with the engagement of any third party service providers to provide administrative services to the Fund.
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Term, Continuance and Termination. The continuance and termination provisions under the New Management Agreement are substantially the same as the continuance and termination provisions under the Existing Management Agreement. Consistent with the Existing Management Agreement, unless terminated as provided therein, the New Management Agreement shall continue from year to year so long as such continuation is approved at least annually by (i) the Trustees of the Fund or by the vote of a majority of the outstanding voting securities of the Fund, and (ii) the vote of a majority of the Trustees of the Fund who are not parties to this Agreement or interested persons thereof, cast in person at a meeting called for the purpose of voting on such approval. The New Management Agreement may also be terminated at any time, without the payment of any penalty, by the action of the Board of Trustees or by a vote of a majority of the Fund’s outstanding voting securities, on 60 days’ written notice to Saba, or by Saba at any time, without the payment of any penalty, on 60 days’ written notice to the Fund. As with the Existing Management Agreement, the New Management Agreement shall terminate automatically in the event of any transfer or assignment thereof, as defined in the 1940 Act, as amended.
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Indemnification. The Existing Management Agreement provides that, in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties hereunder on the part of VIL, VIL shall not be subject to liability to the Fund, or to any Shareholder of the Fund, for any act or omission in the course of, or connected with, rendering advisory services under the agreement or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund. The New Management Agreement provides that, in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties hereunder on the part of Saba, Saba (and its officers, managers, agents, employees, partners, controlling persons, members, and any other person or entity affiliated with the Saba) shall not be subject to liability to the Fund, the members of the Board of Trustees or to any shareholder of the Fund, for any act or omission in the course of, or connected with, rendering advisory services and any other services provided from time to time by Saba or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund.
The Existing Management Agreement contains the following provision, which is not contained in the New Management Agreement: VIL agrees to reimburse the Fund for any and all costs, expenses, and counsel and Trustees’ fees reasonably incurred by the Fund in the preparation, printing and distribution of proxy statements, amendments to its Registration Statement, the holding of meetings of its Shareholders or Trustees, the conduct of factual investigations, any legal or administrative proceedings (including any applications for exemptions or determinations by the Securities and Exchange Commission) which the Fund incurs as a result of action or inaction of the investment adviser or any of its Shareholders where the action or inaction necessitating such expenditures: (1) is directly or indirectly related to any transactions or proposed transaction in the shares or control of the investment adviser or its affiliates (or litigation related to any pending or proposed future transaction in such shares or control) which shall have been undertaken without the prior, express approval of the Fund’s Trustees, or (2) is within the sole control of the investment adviser or any of its affiliates or any of their officers, trustees, employees or shareholders. The investment adviser shall not be obligated to reimburse the Fund for any expenditures related to the institution of an administrative proceeding or civil litigation by the Fund or by a Fund Shareholder seeking to recover all or a portion of the proceeds derived by any shareholder of the investment adviser or any of its affiliates from the sale of his shares of the investment adviser, or similar matters. So long as this Agreement is in effect, the investment adviser shall pay to the Fund the amount due for expenses within thirty (30) days after a bill or statement has been received by the Fund therefor. This provision shall not be deemed to be a waiver of any claim the Fund may have or may assert against the investment adviser or others or costs, expenses, or damages heretofore incurred by the Fund for costs, expenses, or damages the Fund may hereafter incur which are not reimbursable to it hereunder.
The New Management Agreement also provides that the Fund shall indemnify Saba (and its officers, managers, agents, employees, partners, controlling persons, members, and any other person or entity affiliated with Saba) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Fund or its security holders) arising out of or otherwise based upon the performance of any of Saba’s duties or obligations under the agreement or otherwise as an investment adviser of the Fund. Nothing contained in this indemnification provision shall protect or be deemed to protect the Indemnified Parties against or entitle or be deemed to entitle the Indemnified Parties to indemnification in respect of, any liability to the Fund or its security holders to which the Indemnified Parties would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of the Manager’s duties or by reason of the reckless disregard of Saba’s duties and obligations under the New Management Agreement.
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Board Consideration of the Approval of the New Management Agreement
At an executive session held on November 20, 2020 and subsequent to a meeting of the Board held on November 20, 2020, the Board formed a Special Planning Committee (the “SPC”) to, among other things, review and make recommendations regarding the Fund including, conducting a search for a new investment manager to replace the then current manager and its affiliated sub-adviser. After an extensive process, the SPC recommended to the Board, including all of the Non-interested Trustees, that they consider approving the New Management Agreement. At a special meeting of the Board held on March 22, 2021, the Board, including all of the Non-interested Trustees, determined to select Saba as the new investment adviser to the Fund, and at a subsequent special meeting of the Board held on April 1, 2021, considered and approved the New Management Agreement in the form attached hereto as Appendix A. In determining to approve the New Management Agreement, the Board discussed and considered materials which had been distributed to them in advance of the meeting and prepared by Saba, including responses to a questionnaire provided by the Fund’s independent counsel with respect to certain matters that counsel believed relevant to the approval of the New Management Agreement under Section 15 of the 1940 Act. In addition, the Board met with representatives from Saba and had the opportunity to ask them questions.
Matters considered by the Board in connection with its approval of the New Management Agreement included, among others, the following:
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of services proposed to be provided to the Fund under the New Management Agreement. The Board discussed the prior experience of Saba with respect to managing certain private investment funds and separately managed accounts and, with respect to an ETF, serving as the sub-adviser, each such investment product with investment strategies similar to the strategy proposed by Saba for the Fund. The Board discussed the written information provided by Saba and the information presented orally at the Meeting by Saba, including information with respect to its anticipated profitability, compliance program, insurance arrangements, personnel and portfolio management, risk management policies, brokerage allocation and soft dollar practices. The Board concluded that, overall, they were satisfied with the nature, extent and quality of services expected to be provided to the Fund by Saba under the proposed New Management Agreement.
Performance. In considering whether to approve the New Management Agreement, the Board reviewed the investment performance over the past year, three-year, five-year and since-inception periods of two of Saba’s accounts having a similar investment strategy as the strategy proposed for the Fund, and an example provided by Saba using a combination of the two portfolios, which Saba believed more accurately reflects the proposed investment strategy for the Fund. The Board expressed their belief that given Saba’s historical reported returns for other investment products that they advise and, based on the estimated higher Sharpe ratio for the combined portfolio, they anticipated that Saba should be able to provide the Fund and its shareholders with superior risk-adjusted returns. The Board also noted the experience of the principals of Saba in managing securities portfolios, as well as their longstanding experience in seeking out opportunities in the market that have attractive risk reward characteristics.
Fees and Expenses. In reviewing the anticipated fees and expenses for the Fund, the Board noted that the proposed management fee would remain the same as the current management fee payable under the Fund’s investment management agreement with the current manager which included fees paid to the manager’s affiliated sub-adviser for day to day management of the Fund’s portfolio. The Board also noted that Saba proposed entering into an expense limitation agreement with the Fund such that the expense limitation currently in place would remain unchanged. The Board considered that the proposed management fee was comparable to fees paid by other funds in the Fund’s Peer Group, a group consisting of the Fund and ten other bank loan funds, as identified by Broadridge Financial Solutions, Inc., an independent third party data provider that provided the Board in November, 2020 with such comparative data, and that it would be among the lowest total fees that Saba receives across its platform for providing
25
similar investment management services. The Board separately determined that the proposed management fee payable to Saba was not unreasonable in light of the nature, extent and quality of the services that Saba is expected to provide. Based on the factors above, the Board concluded that the management fee was not unreasonable.
Profitability. Saba provided the Board with a summary and analysis of the Saba’s anticipated costs and pre-tax profitability with respect to the management of the Fund for the first twelve month and first twenty-four month periods. The Board was satisfied with Saba’s estimates regarding the level of profitability that it was seeking from managing the Fund and that the projections were sufficient and appropriate to provide the necessary advisory and management services to the Fund. The Board concluded that the Saba’s projected profitability from its relationship with the Fund, after taking into account a reasonable allocation of costs, was not excessive.
Economies of Scale. The Board considered whether Saba would realize economies of scale with respect to the management services provided to the Fund. The Board noted that the Fund, as a closed-end fund, generally does not issue new shares and is less likely to realize economies of scale from additional share purchases. The Board considered that Saba believed that there could be economies of scale realized if the Fund did grow in size and there was an opportunity for Saba to push certain third-party service provider fees down and negotiate for certain lower fees in the service contracts with these third parties. The Board also considered the extent to which economies of scale realized by Saba could be shared with the Fund through fee waivers and expense reimbursements.
Other Benefits. The Board considered the character and amount of other direct and incidental benefits to be received by Saba and its affiliates from their association with the Fund. The Board considered that Saba anticipated no other sources of income or benefit in connection with managing the Fund and did not expect to market the Fund to its existing private clients or use soft dollars to any notable extent.
Conclusion. The Board, having requested and received such information from Saba as it believed reasonably necessary to evaluate the terms of the New Management Agreement, and having been advised by its Independent Counsel that the Board had appropriately considered and weighed all relevant factors, determined that approval of the New Management Agreement was in the best interests of the Fund and its shareholders. In considering the approval of the New Management Agreement, the Board considered a variety of factors, including those discussed above, and also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the closed-end fund industry). The Board did not identify any one factor as determinative, and different Board members may have given different weight to different individual factors and related conclusions.
After these deliberations on April 1, 2021, the Board, including a majority of the Non-interested Trustees, approved the New Management Agreement between Saba and the Fund as in the best interests of the Fund and its Shareholders. The Board of Trustees then directed that the New Management Agreement be submitted to the Fund’s Shareholders for approval with the Board of Trustees’ recommendation that Shareholders vote to approve the New Management Agreement.
Information Regarding Saba
Saba is a registered investment adviser founded in 2009. Saba is a spin-out of a proprietary investing group founded by Boaz Weinstein at Deutsche Bank in 1998. Saba manages $3.2 billion across four core strategies: Credit Relative Value, Tail Hedge, SPACs and Closed-End Funds. Saba’s investors are predominantly institutions and include public and corporate pension plans, endowments and foundations, family offices, banks and insurers, bank private wealth platforms, fund of funds and certain high net worth individuals. Additional information about Saba is set forth in Saba’s Form ADV.
The following chart sets forth the name, address and principal occupation of the senior professionals of Saba:
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Name* | Principal Occupation | |
Boaz Weinstein | Founder and Chief Investment Officer | |
Pierre Weinstein (no relation to Boaz) | Partner and Portfolio Manager | |
Xavier Riera | Partner and Portfolio Manager | |
Michael D’Angelo | Partner, General Counsel and Chief Operating Officer | |
Andrew Kellerman | Partner, President and Head of BD and IR | |
Nitin Sapru | Partner and Chief Financial Officer | |
Paul Kazarian | Managing Director and Portfolio Manager |
*The address of each individual listed is 405 Lexington Ave., 58th Floor, New York, NY 10174.
Following the Adviser Transition, Boaz Weinstein, Pierre Weinstein (no relation to Boaz) and Paul Kazarian will serve as the Fund’s portfolio managers and will have sole investment and dispositive control over all of portfolio Fund investments held by the Fund as of the Adviser Transition and over all other new investments.
Boaz Weinstein is the founder and Chief Investment Officer of Saba. Mr. Weinstein founded Saba in 2009 as a lift-out of Saba Principal Strategies. At Saba, Mr. Weinstein leads a team of 30 professionals, with the senior investment team having worked together for fifteen years. Prior to founding Saba, Mr. Weinstein was Co-Head of Global Credit Trading at Deutsche Bank. In that role he was responsible for co-managing a group of approximately 650 professionals and was a member of the Global Markets Executive Committee. Throughout his career at Deutsche Bank, Mr. Weinstein had dual responsibility for proprietary trading and market making. In proprietary trading, he founded Saba Principal Strategies to specialize in credit and capital structure investing. As a market-maker, he focused on credit default swaps, investment grade bonds, and high yield bonds. Mr. Weinstein worked at Deutsche Bank for eleven years, the last eight as Managing Director, a title he received at age 27. Mr. Weinstein graduated from the University of Michigan, Ann Arbor, with a BA in Philosophy.
Pierre Weinstein joined Saba at launch in April 2009. Prior to Saba, Mr. Weinstein was a Portfolio Manager at Saba Principal Strategies, the proprietary credit trading group at Deutsche Bank since January 2005, where he managed the equity derivatives, international convertible bond and SPAC arbitrage strategies. Mr. Weinstein started his investment career at Société Générale in Paris in 1998 as an equity derivatives market maker and had various roles until 2004 including a position as a convertible bond proprietary trader in New York. Mr. Weinstein holds a Ms in Engineering from École Centrale Lyon and a Ms in Finance from École HEC in Paris.
Paul Kazarian joined Saba in March 2013 and is responsible for Exchange Traded products, including ETF arb and Closed-End Funds. Prior to Saba, Mr. Kazarian was a Director at RBC Capital Markets in the Global Arbitrage and Trading Group from 2007-2013. While there, Mr. Kazarian was responsible for the development and management of the Fixed Income ETF Group and also responsible for overseeing other ETF and index strategies. Prior to RBC, Mr. Kazarian worked as a technology analyst at Merrill Lynch from 2006-2007. Mr. Kazarian holds a BA in Political Science from Bates College.
Principal Executive Offices
The principal executive office of Saba is 405 Lexington Ave, Suite 58, New York, NY 10174. Upon the consummation of the Adviser Transition, the principal executive office of each of the Fund and Saba will also be 405 Lexington Ave, Suite 58, New York, NY 10174.
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Required Vote
Approval of this proposal requires the affirmative vote of “a majority of outstanding voting securities” entitled to vote at the Special Meeting, as defined under the 1940 Act. Since the Fund’s only voting securities are common shares, consistent with the 1940 Act, the affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting is required to approve the New Management Agreement. For purposes of approval of the New Management Agreement, “a majority of outstanding common shares” is the lesser of: (i) 67% or more of the common shares present at the Special Meeting if the holders of more than 50% of the outstanding common shares are present or represented by proxy; or (ii) more than 50% of the Fund’s outstanding common shares as of the Record Date. Abstentions will have the effect of a vote against this proposal. Since banks, brokerage firms or other nominees do not have discretion to vote on this proposal, if you do not provide voting instructions to your bank, brokerage firm or other nominee, your shares will not be voted at the Special Meeting and will not be counted as present for purposes of meeting the quorum requirement.
Conflicts of Interests of Our Trustees and Officers in the Adviser Transition
Two members of the Board of Trustees, Andrew Kellerman and Aditya Bindal, are employed by Saba and have conflicts of interests in connection with the vote on the New Management Agreement. As a result of such conflicts, a special committee consisting solely of Trustees who have no affiliation with Saba initially reviewed Saba’s proposal to become investment adviser to the Fund, and recommended Saba’s appointment to the full Board. There are no other conflicts of interest.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
THE NEW MANAGEMENT AGREEMENT BETWEEN THE FUND AND SABA
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PROPOSAL II
TO REMOVE THE FUND’S FUNDAMENTAL INVESTMENT RESTRICTION RELATING TO
INVESTING IN WARRANTS
The Fund has adopted the following investment restriction as a fundamental policy, which can only be changed by a vote of the Fund’s shareholders:
The Fund will not invest in marketable warrants other than those acquired in conjunction with Senior Loans and such warrants will not constitute more than 5% of assets.
Although the Fund does not currently have any current intention to purchase warrants in excess of 5% of its net assets, the Board recommends that you returnFund shareholders approve removing the above investment related restriction to provide the Fund with maximum flexibility in the event of future changes to its investment strategy. In addition, there is no federal requirement that the Fund have a fundamental investment restriction regarding warrants.
At a meeting held on [ ], 2021, the Board of Trustees (including a majority of the WHITENon-interested proxy cardTrustees) voted unanimously to recommend that the fundamental investment restriction regarding warrants be removed.
Required Vote
Approval of this proposal requires the affirmative vote of “a majority of outstanding voting securities” entitled to vote at the Special Meeting, as defined under the 1940 Act. Since the Fund’s only voting securities are common shares, consistent with the 1940 Act, the affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting is required to approve this proposal. For purposes of approval, “a majority of outstanding common shares” is the lesser of: (i) 67% or more of the common shares present at the Special Meeting if the holders of more than 50% of the outstanding common shares are present or represented by proxy; or (ii) more than 50% of the Fund’s outstanding common shares as of the Record Date. Abstentions will have the effect of a vote against this proposal. Since banks, brokerage firms or other nominees do not have discretion to vote on this proposal, if you do not provide voting instructions to your bank, brokerage firm or other nominee, your shares will not be voted at the Special Meeting and will not be counted as present for purposes of meeting the quorum requirement.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
REMOVING A FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
WARRANTS
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PROPOSAL III
TO REMOVE THE FUND’S FUNDAMENTAL INVESTMENT RESTRICTION RELATING TO PURCHASING OR SELLING EQUITY SECURITIES, ENGAGING IN SHORT-SELLING AND
THE USE OF CERTAIN OPTION ARRANGEMENTS
The Fund has adopted the following investment restriction as a fundamental policy, which can only be changed by a vote “AGAINST” Proposal Two.
The Board’s Statement in OppositionFund will not purchase or sell equity securities (except that the Fund may, incidental to the Saba Hedgepurchase or ownership of an interest in a Senior Loan, or as part of a borrower reorganization, acquire, sell and exercise warrants and/or acquire or sell other equity securities), real estate, real estate mortgage loans, commodities, commodity futures contracts, or oil or gas exploration or development programs; or sell short, purchase or sell straddles, spreads, or combinations thereof, or write put or call options.
The Board recommends that Fund Proposal
The Fund will not purchase or sell real estate, real estate mortgage loans, commodities, commodity futures contracts, or oil or gas exploration or development programs.
At a meeting held on [ ], 2021, the Board of Trustees (including a numbermajority of important considerations, including those summarized below:
Required Vote
Approval of this proposal requires the affirmative vote of “a majority of outstanding voting securities” entitled to vote at the Special Meeting, as defined under the 1940 Act. Since the Fund’s only voting securities are common shares, consistent with the 1940 Act, the affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting is required to approve this proposal. For purposes of approval, “a majority of outstanding common shares” is the lesser of: (i) 67% or more of the common shares present at the Special Meeting if the holders of more than 50% of the outstanding common shares are present or represented by proxy; or (ii) more than 50% of the Fund’s outstanding common shares as of the Record Date. Abstentions will have the effect of a vote against this proposal. Since banks, brokerage firms or other nominees do not have discretion to vote on this proposal, if you do not provide voting instructions to your bank, brokerage firm or other nominee, your shares will not be voted at the Special Meeting and will not be counted as present for purposes of meeting the quorum requirement.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
REMOVING A FUNDAMENTAL INVESTMENT RESTRICTION REGARDING PURCHASING
OR SELLING EQUITY SECURITIES, ENGAGING IN SHORT-SELLING AND THE USE OF CERTAIN OPTION ARRANGEMENTS.
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PROPOSAL IV
TO REMOVE THE FUND’S FUNDAMENTAL INVESTMENT RESTRICTION RELATING TO INVESTING IN OTHER INVESTMENT COMPANIES
The Fund has adopted the following investment restriction as a fundamental policy, which can only be changed by a vote of the Fund’s shareholders:
The Fund will not purchase shares of other investment companies, except in connection with a merger, consolidation, acquisition or reorganization.
In view of Saba’s intent to seek to have the Fund invest at least a portion of its portfolio in registered closed-end investment companies, the Board recommends that Fund shareholders approve removing the above investment related restriction to provide the Fund with the flexibility to fully implement Saba’s proposed investment objective and strategies subsequent to the Adviser Transition. In addition, there is no federal requirement that the Fund have a fundamental investment restriction regarding investments in other investment companies.
Notably, in the event the foregoing investment restriction is removed, the Fund will remain subject to limitations imposed under the 1940 Act with respect to its ownership of other investment companies. In particular, pursuant to Section 12(d)(1) under the 1940 Act, at the time the Fund acquires a share of any other registered investment company, the Fund may not hold more than 3% of the outstanding voting equity of that registered investment company, the Fund’s investments in that registered investment company may not exceed 5% of its total assets, and its aggregate investments in other registered investment companies may not exceed 10% of its total assets.
At a meeting held on [ ], 2021, the Board of Trustees (including a majority of the Non-interested Trustees) voted unanimously to recommend that the fundamental investment restriction regarding investments in other investment companies be removed.
Required Vote
Approval of this proposal requires the affirmative vote of “a majority of outstanding voting securities” entitled to vote at the Special Meeting, as defined under the 1940 Act. Since the Fund’s only voting securities are common shares, consistent with the 1940 Act, the affirmative vote of a majority of the outstanding common shares entitled to vote at the Special Meeting is required to approve this proposal. For purposes of approval, “a majority of outstanding common shares” is the lesser of: (i) 67% or more of the common shares present at the Special Meeting if the holders of more than 50% of the outstanding common shares are present or represented by proxy; or (ii) more than 50% of the Fund’s outstanding common shares as of the Record Date. Abstentions will have the effect of a vote against this proposal. Since banks, brokerage firms or other nominees do not have discretion to vote on this proposal, if you do not provide voting instructions to your bank, brokerage firm or other nominee, your shares will not be voted at the Special Meeting and will not be counted as present for purposes of meeting the quorum requirement.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
REMOVING A FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
INVESTMENTS IN OTHER INVESTMENT COMPANIES
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PROPOSAL V
TO APPROVE A CHANGE TO THE INVESTMENT OBJECTIVE AND TO MAKE THE
INVESTMENT OBJECTIVE NON-FUNDAMENTAL
The current investment objective of the Fund is that it seeks to provide investors with as high a level of current income as is consistent with the preservation of capital. The investment objective is fundamental and may not be changed without a majority vote of the shareholders of the Fund.
The Fund (after feedback from the proposed investment adviser (Saba)) is proposing that the Fund’s investment objective be amended from the objective as stated above to indicate that the Fund “seeks to provide investors with a high level of current income, with a secondary goal of capital appreciation” and to change its investment objective to a non-fundamental policy that may be changed by the Board without shareholder approval upon 60 days’ prior written notice to shareholders.
Current Fundamental Investment Objective | Proposed Non-Fundamental Investment Objective | |
The Fund | The Fund | |
The Board noted that the proposed new investment objective is, as indicted by Saba, is more consistent with the investment strategies that have been approved by the Board, which are described more fully after this section.
At a meeting held on [ ], 2021, the Board of Trustees (including a majority of the Non-interested Trustees) voted unanimously to recommend that that the Fund change its investment objective and to make the investment objective non-fundamental.
Required Vote
Approval of this proposal requires the affirmative vote of “a majority of outstanding voting securities” entitled to vote at the annual meeting. If elected, those individuals would replaceSpecial Meeting, as defined under the entire existing Board. The entire slate proposed by the Saba Hedge Fund would be made up of nominees chosen by Saba who might be subject to its influence.
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voting instructions to your bank, brokerage firm or other nominee, your shares will not be voted at the Special Meeting and will not be counted as present for purposes of meeting the quorum requirement.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
CHANGING THE INVESTMENT OBJECTIVE AND MAKING THE INVESTMENT
OBJECTIVE NON-FUNDAMENTAL
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PROPOSAL VI
ADJOURNMENT OF THE SPECIAL MEETING
Shareholders may be asked to consider and act upon one or closemore adjournments of the Special Meeting, if necessary or appropriate, to net asset value, particularlysolicit additional proxies in favor of any or all of the current market,other proposals set forth in this proxy statement.
If a quorum is not present at the Special Meeting, the Shareholders may be asked to vote on the proposal to adjourn the Special Meeting to solicit additional proxies. If a quorum is present at the Special Meeting, but there are not sufficient votes at the time of the Special Meeting to approve the proposals, the Shareholders may also be asked to vote on the proposal to approve the adjournment of the Special Meeting to permit further solicitation of proxies in favor of the best interestsother proposals.
If the adjournment proposal is submitted for a vote at the Special Meeting, and if the Shareholders vote to approve the adjournment proposal, the meeting will be adjourned to enable the Board of shareholders, including forTrustees to solicit additional proxies in favor of the reasons described below:
The Board of which there are many. Any undertaking to conduct a large tender offer at or close to net asset value could benefitTrustees believes that, if the Saba Hedge Fund and other tendering shareholders, but would pose an unacceptable risk to shareholders who desire to remain in the Fund. For example, in order to raise the cash to pay tendering shareholders, the Fund would have to sell portfolio investments. Consistent with its stated investment objective and strategies, the Fund is leveraged, and the reduction in the Fund’s size due to the tender offer would similarly result in a reduction in the amountnumber of the Fund’s leverage. Thus, the Fund would have to sell not only enough investments to pay tendering shareholders, but also investments previously acquired with the amountcommon shares voting in favor of leverage the Fund would need to pay back due to its smaller size. The Fund invests almost exclusively in senior loans traded in private markets. A forced sale of that number of loans could very well result in the Fund selling its loans in a “fire sale” scenario that would drive down the value it is able to realize in such sales. In turn, this would likely drive down the Fund’s net asset value during the course of, and in the period immediately after, the tender offer to the detriment of all shareholders. This risk would be particularly acute in lightany of the fact thatproposals presented at the market would be aware that the Fund must sell those investments to meet its obligations in the
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
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OTHER BUSINESS
The Board of Trustees knows of no other things: (i) providing oversightbusiness to be presented for action at the Special Meeting. If any matters do come before the Special Meeting on which action can properly be taken, it is intended that the proxies shall vote in accordance with respect to compliancethe judgment of the person or persons exercising the authority conferred by the fundsproxy at the Special Meeting. The submission of a proposal does not guarantee its inclusion in the Voya family of fundsFund’s proxy statement or presentation at the Special Meeting unless certain securities law requirements are met.
AVAILABLE INFORMATION
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL REPORT AND THE MOST RECENT QUARTERLY REPORT SUCCEEDING THE ANNUAL REPORT, IF ANY, TO ANY SHAREHOLDER UPON REQUEST. REQUESTS SHOULD BE DIRECTED TO:
[____]
[____]
Shareholders may call toll free: [_____]
Banks and their service providersBrokers may call collect: [_____]
We are required to file with applicable laws, regulations,or submit to the SEC annual, quarterly and internal policiescurrent periodic reports, proxy statements and procedures affectingother information meeting the operationsinformational requirements of the funds; (ii) receivingExchange Act. The SEC maintains an Internet site that contains reports, of evidence of possible material violations of applicable U.S. federal or state securities lawsproxy and breaches of fiduciary duty arising under U.S. federal or state laws; (iii) coordinating activities between the Boardinformation statements and the Chief Compliance Officer (“CCO”) of the funds; (iv) facilitatingother information flow among Board members and the CCO between Board meetings; (v) workingfiled electronically by us with the CCOSEC which are available on the SEC’s website at http://www.sec.gov. Copies of these reports, proxy and managementinformation statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing to identify the typesSEC’s Public Reference Section, Washington, D.C. 20549. This information will also be available free of reportscharge by contacting us at [_____] or by telephone at [_____] or on our website at [____].
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund expects that the 2022 Annual Meeting of Shareholders will be held in [____] 2022, but the exact date, time, and location of such meeting have yet to be submitted by the CCOdetermined. A shareholder who intends to the Compliance Committee and the Board; (vi) making recommendations regarding the role, performance, compensation, and oversight of the CCO; (vii) overseeing the cybersecurity practices of the funds and their key service providers; (viii) overseeing management’s administration
35
For any proposal that wouldis not be includedsubmitted for inclusion in next year’s proxy statement (as described in the Fund’s proxy materials orpreceding paragraph) but is instead sought to nominate a person or persons as a Trusteebe presented directly at the 2021 annual meeting2022 Annual Meeting of Shareholders, SEC rules permit management to vote proxies in its discretion if (a) the Fund receives notice of the Fund must ensure thatproposal before the proposal or nomination is delivered toclose of business on [___], 2022 and advises shareholders in next year’s proxy statement about the Fund’s principal executive offices no earlier than [ ], 2021 and no later than [ ], 2021 and includes the information specified in the Fund’s declaration of trust and bylaws. However, if the annual meeting is not scheduled to be held within 30 days before or after the first anniversary datenature of the annual meeting formatter and how management intends to vote on such matter, or (b) does not receive notice of the preceding year (such annual meeting date outside such period, an “Other Annual Meeting Date”), notice by shareholders, to be timely, must be delivered to the Fund’s principal executive offices by the later of (i) the date 90 daysproposal prior to the Otherclose of business on [___], 2022.
Notices of intention to present proposals at the 2022 Annual Meeting Dateof Shareholders should be addressed to Corporate Secretary, Voya Prime Rate Trust, 405 Lexington Ave, Suite 58, New York, NY 10174. The Fund reserves the right to reject, rule out of order, or (ii) the 10th day following the date that the Other Annual Meeting Date is first publicly announced or disclosed
You are cordially invited to participate in the services described above sinceSpecial Meeting. Whether or not you plan to attend the date on which the Audit Committee adopted its current pre-approval procedures.
By: Order of the Board of Trustees | |
Andrew Kellerman
Aggregate Compensation from the Fund (fiscal year ended February 29, 2020) | Total Compensation from the Fund and Complex Paid to Trustees1 | ||
Name of Trustee | |||
Colleen D. Baldwin | $ | 2,940.73 | $360,000.00 |
John V. Boyer2 | $ | 3,513.12 | $430,000.00 |
Patricia W. Chadwick3 | $ | 2,940.73 | $360,000.00 |
Martin J. Gavin | $ | 2,940.73 | $360,000.00 |
Russell H. Jones4 | $ | 2,940.73 | $360,000.00 |
Joseph E. Obermeyer | $ | 2,940.73 | $360,000.00 |
Sheryl K. Pressler5 | $ | 3,226.93 | $395,000.00 |
Christopher P. Sullivan | $ | 2,940.73 | $360,000.00 |
Roger B. Vincent4,6 | $ | 2,695.41 | $330,000.00 |
Fund | Audit Fees1 | Audit-Related Fees2 | Tax Fees3 | All Other Fees4 | ||||
20205 | 20196 | 20205 | 20196 | 20205 | 20196 | 20205 | 20196 | |
PPR | $62,300 | $73,000 | $0 | $8,100 | $0 | $8,665 | $0 | $0 |
Aggregate Non-Audit Fees | ||
Registrant/Investment Adviser | 20201 | 20192 |
Voya Prime Rate Trust | $0 | $16,765 |
Voya Investments, LLC3 | $10,639,517 | $82,050 |
New York, New York
[___], 2021
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PRIVACY NOTICE
The attributesFund has adopted a policy concerning investor privacy. To review the privacy policy, contact a Shareholder Services Representative at 1-800-336-3436, obtain a policy over the Internet at www.voyainvestments.com, or see the privacy promise that accompanies any Prospectus obtained by mail.
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APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT
SABA CAPITAL INCOME & OPPORTUNITIES FUND
AGREEMENT dated May [ _ ], 2021, between Saba Capital Income & Opportunities Fund (the “Trust”), a Massachusetts business trust and experience required for identification as an audit committee financial expertSaba Capital Management, L.P. (the “Manager”), a limited partnership formed and existing under this Charter will be identical to, and are qualified in their entirety by, those set out in the ruleslaws of the Securities and Exchange Commission (“SEC”) in Form N-CSR. The identificationState of Delaware (the “Agreement”).
WHEREAS, the Trust is a Committee memberclosed-end management investment company, registered as an audit committee financial expert does not impose on the member any duties, obligations, or liability that are greater than the duties, obligations, and liability imposed on Committee members in general.
WHEREAS, the Manager is registered as an investment adviser under the Investment Advisers Act of 1940, and is engaged in the business of supplying investment advice and investment management and certain other services, as an independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and services pursuant to the terms and provisions of this Agreement, and the Manager is willing to furnish said advice and services.
NOW, THEREFORE, in consideration of the covenants and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound hereby, mutually agree as follows:
1. Employment of Manager.
The Trust hereby employs the Manager and the Manager hereby accepts such employment, to render investment advice and investment management services with respect to the assets of the Trust (“Advisory Services”), and to provide or arrange for the provision of administrative services as the Manager may deem reasonably necessary from time to time for the ordinary operation of the Trust (“Administrative Services”), subject to the supervision and direction of the Board of Trustees of the Trust (the “Trustees”).
The Manager shall, designate, by a majority vote, four or more Directorsas part of its duties hereunder (i) furnish the Trust with advice and recommendations with respect to the investment of the Trust’s assets and the purchase and sale of its portfolio securities, including the taking of such other steps as may be necessary to implement such advice and recommendations, (ii) furnish the Trust with reports, statements and other data on securities, economic conditions and other pertinent subjects which the Board of Trustees may reasonably request, (iii) permit, with its written consent, its officers and employees to serve without compensation as Trustees of the Trust if elected to such positions and (iv) in general superintend and manage the investment of the Trust, subject to the ultimate supervision and direction to the Board of Trustees.
Subject to the approval of the Board of Trustees, the Manager is authorized to enter into sub-advisory agreements with other registered investment advisers to serve as Committee members and shall designate one such member as Chairperson ofinvestment sub-advisers, whether or not affiliated with the Committee. There shall be no limit on the number of annual terms thatManager (each, a Board member can serve as a Committee member or as Chairperson of the Committee.“Sub-Adviser”).
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2. Reasonable Best Judgment. The Manager shall use its reasonable best judgment and efforts in rendering the Advisory Services as contemplated by this Agreement.
3. Exclusivity. The Manager shall, for all purposes herein, be deemed to be an independent contractor, and shall, unless otherwise expressly provided and authorized, have no authority to act for or represent the Trust in any way, or in any way be deemed an agent for the Trust. It is expressly understood and agreed that term is definedthe Advisory Services to be rendered by the 1940 Act;
4. Reasonable Best Efforts. The Manager agrees to use its reasonable best efforts in the furnishing of Independent Board Memberssuch advice and as the Committee deems appropriate, to make annual recommendations to the Board regardingTrust, in the size, membershippreparation of reports and chairpersonsinformation, in the management of the Trust’s assets, and in the provision of Advisory Services, all pursuant to this Agreement, and for this purpose the Manager shall, at its own expense, maintain such committees;
5. Statements and Reports. The Trust will from time to time furnish to the Manager detailed statements of the investments and assets of the Trust and information as to its investment objectives and needs, and will make available to the Manager such financial reports, proxy statements, legal and other information relating to its investments as may be in the possession of the Trust or available to it and such other information as the Manager may reasonably request.
6. Expenses.
(a) In consideration for the Management Fee, the Manager will provide the Trust with certain operational and managerial services. The Manager shall be responsible for (i) the compensation of any Sub-Adviser retained pursuant to this Agreement, and (ii) the compensation of any investment advisory personnel that provide services to the Trust on behalf of the Manager pursuant to this Agreement, along with the allocable portion of the following “overhead expenses” (office space, rent and utilities, furniture and fixtures, computer equipment, stationery, secretarial/managerial services, salaries, entertainment expenses, employee insurance and payroll taxes) attributable to such investment advisory personnel.
(b) Other than the expenses expressly borne by the Board Chairperson.
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quotation equipment and services; fees and expenses associated with independent audits and outside legal costs; fees for Board membership, based on its researchdata and software providers; other expenses related to the purchase, sale or transmittal of investments; website creation and maintenance, fees for risk management systems and service providers; legal expenses; other professional fees (including, without limitation, expenses of consultants and experts); transfer agent and custodial fees; the costs of organizing and maintaining any subsidiaries; costs relating to swaps (and similar agreements); tax preparation expenses; accounting expenses; fees and expenses associated with marketing and investor relations efforts including proxy solicitations and shareholder meetings; costs of printing and mailing proxies, reports and/or notices; market data costs; administration expenses (including fees for the provision of middle-office and back-office services); directors’ and officers’ fees); Trust-related insurance expenses (including, without limitation, premium payments for fidelity bonds and Directors’ and Officers’ and Errors and Omissions insurance); compensation and expenses of the people suggested to it or identified by it as potential candidates. Potential candidate names may be accepted from Boardindependent members Fund shareholders, legal counsel to the Independent Board Members or such other sources as the Committee deems appropriate. If the Committee becomes aware of more than one potential candidate, it shall attempt to rank such candidates in terms of overall suitability for Board membership.
(c) To the extent the Manager incurs or bears any costs or expenses expressly borne by the Trust pursuant to Section 6(b) above, the Trust shall promptly reimburse the Manager for such costs and agreeexpenses on no less frequently than a quarterly basis.
7. Delegation.
(a) The Manager may delegate the performance of certain Advisory Services to appropriate background checks;
(b) Certain Administrative Services may be furnished by the disposition to act independently from management, but effectively within a Board composed of numerous members;
(c) The Manager shall not be liable to the Trust for any service delegated to a third party service provider.
8. Oversight of Sub-Advisers. In the event that the Manager wishes to select others to render Advisory Services, the Manager shall analyze, select and recommend for consideration and approval by the Board of Trustees investment advisory firms (however organized) to provide investment advice to the Trust, and, at a timethe expense of the Manager, engage (which engagement may also be by the Trust) any such investment advisory firm to render investment advice and location convenient to those Committee membersmanage the investments of the Trust and the composition the Trust’s portfolio of securities and investments, including cash, and the purchase, retention and disposition thereof, or any offering thereof, in order to discussaccordance with the candidate’s qualifications;Trust’s investment objective or objectives and
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(a) Periodically monitor and evaluate the performance of the Committee Chairperson. The Committee chairperson shall: (1) schedule meetingsSub-Advisers with respect to take placethe investment objectives and policies of the Trust, including without limitation, perform periodic detailed analysis and review of the Sub-Adviser’s investment performance in respect of the Trust and in respect of other accounts managed by the Sub-Adviser with similar investment strategies;
(b) Prepare and present periodic reports to the Board of Trustees regarding the investment performance of the Sub-Adviser and other information regarding the Sub-Adviser, at such times and frequency as he or she deems appropriate; (2) establish the agenda for eachin such meeting, with such input and assistance from management and other Committee members as the Chairperson deems appropriate; (3) serve as chairperson of such meetings; and (4) perform such other dutiesforms as the Board of Trustees may reasonably request;
(c) Review and consider any changes in the personnel of the Sub-Adviser responsible for performing the Sub-Adviser’s obligations and make appropriate reports to the Board of Trustees;
(d) Review and consider any changes in the ownership or Committee deem appropriate.senior management of the Sub- Adviser and make appropriate reports to the Board of Trustees;
(e) Perform periodic in-person or telephonic diligence meetings with representatives of the Sub-Adviser;
(f) Supervise Sub-Advisers with respect to the services that such Sub-Advisers provide under each Sub-Adviser’s Sub-Advisory Agreement;
(g) Assist the Board of Trustees and management of the Trust in developing and reviewing information with respect to the initial approval of the Sub-Adviser Agreement with the Sub- Adviser and annual consideration of the agreement thereafter;
(h) Monitor the Sub-Advisers for compliance with the investment objective or objectives, policies and restrictions of the Trust, the 1940 Act, Subchapter M of the Internal Revenue Code, and if applicable, regulations under such provisions, and other applicable law;
(i) If appropriate, analyze and recommend for consideration by the Board of Trustees termination of a contract with a Sub-Adviser under which the Sub-Adviser provides investment advisory services to the Trust;
(j) Identify potential successors to or replacements of the Sub-Adviser or potential additional Sub-Advisers, perform appropriate due diligence, and develop and present to the Board of Trustees a recommendation as to any such successor, replacement, or additional Sub-Adviser;
(k) Designate and compensate from its own resources such personnel as the Manager may consider necessary or appropriate to the performance of its services hereunder; and
(l) Perform such other review and reporting functions as the Board of Trustees shall reasonably request consistent with this Agreement and applicable law.
9. Compensation.
(a) The Chairperson can delegateTrust agrees to onepay to the Manager, and the Manager agrees to accept, as full compensation for all Advisory Services furnished or more other Committee members oneprovided to the Trust and as full reimbursement for all expenses assumed by the Manager, a management fee equal to the amount specified for the Trust on Schedule A.
(b) The management fees shall be accrued daily by the Trust and paid to the Manager at the end of each calendar month.
10. Prohibition on Short Positions. The Manager agrees that neither it nor any of its officers or moreemployees shall take any short position in the capital stock of the Trust. This prohibition shall not
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prevent the purchase of such shares by any of the officers and directors or bona fide employees of the Manager or any trust, pension, profit-sharing or other benefit plan for such persons or affiliates thereof, at a price not less than the net asset value thereof at the time of purchase, as allowed pursuant to rules promulgated under the 1940 Act.
11. Actions in Contravention of Organizational Documents. Nothing herein contained shall be deemed to require the Trust to take any action contrary to the Declaration of Trust or By- Laws of the Trust, or any applicable statute or regulation, or to relieve or deprive the Trustees of the Trust of its responsibility for and control of the conduct of the affairs of the Trust.
12. Limitation of Liability of the Manager; Indemnification.
(a) In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties hereunder on the part of the Manager, the Manager (and its officers, managers, agents, employees, partners, controlling persons, members, agents and any other person or entity affiliated with the Manage) shall not be subject to liability to the Trust, the members of the Board of Trustees or to any shareholder of the Trust, for any act or omission in the course of, or connected with, rendering Advisory Services and any other services provided from time to time by the Manager or for any losses that may be sustained in the purchase, holding or sale of any security by the Trust.
(b) No provision of this Agreement shall be construed to protect any director or officer of the Trust, or of the Manager, from liability in violation of Section 17(i) of the 1940 Act.
(c) The Trust shall indemnify the Manager (and its officers, managers, agents, employees, partners, controlling persons, members, agents and any other person or entity affiliated with the Manager) (collectively, the “Indemnified Parties”) and hold them harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Indemnified Parties in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Trust or its security holders) arising out of or otherwise based upon the performance of any of the Manager’s duties or obligations under this Agreement or otherwise as hean investment adviser of the Trust. Notwithstanding the preceding sentence of this Paragraph 12 to the contrary, nothing contained herein shall protect or she deems appropriate.
13. Term and Continuation. This Agreement shall become effective on the date first written above (the “Effective Date”), subject to the condition that the Board of Trustees, including a majority of those Trustees who are not parties to this Agreement or interested persons (as defined under the 1940 Act) of either the Trust or the Manager, and a majority of the outstanding voting securities of the Trust, shall have approved this Agreement. Unless terminated as provided herein, the Agreement shall continue in full force and effect for two years following the Effective Date, and shall continue from year to year thereafter so long as such continuation is approved at least annually by either (i) the Board of Trustees, including a majority of those Trustees who are not parties to this Agreement or interested persons (as defined under the 1940 Act) of either the Trust or the Manager, or (ii) the affirmative vote of a majority of the outstanding voting securities of the Trust.
14. Termination.
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(a) This Agreement may be terminated at any time, without payment of any penalty, by the Board of Trustees of the Trust or by the affirmative vote of a majority of the outstanding voting securities of the Trust, upon sixty (60) days written notice to the Manager, and by the Manager upon sixty (60) days written notice to the Trust.
(b) This Agreement shall terminate automatically in the event of any transfer or assignment thereof, as defined in the 1940 Act.
15. Use of Name. It is understood that the name “Saba Capital Management, L.P.” or any trademark, trade name, service mark, or logo, or any variation of such trademark, service mark, or logo of the Manager or its affiliates, including but not limited to the mark “Saba®” (collectively, the “Saba Marks”) is the valuable property of the Manager and its affiliates, and that the Trust has the right to use such Saba Marks only so long as this Agreement or any subsequent agreement with the Manager in replacement of this Agreement shall continue with respect to such Trust. Upon termination of this Agreement without its replacement by a subsequent agreement, the Trust shall, as soon as is reasonably possible, discontinue all use of the Saba Marks and shall promptly amend its Declaration of Trust to change its name (if such Saba Marks are included therein).
18. Applicable Law.
(a) If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule, or otherwise, the remainder of this Agreement shall not be affected thereby.
(b) The Committeeterm “majority of the outstanding voting securities” of the Trust shall have the meaning as set forth in the 1940 Act.
(c) This Agreement shall be governed by the laws of the State of New York applicable to contracts formed and to be performed entirely within the State of New York, without regard to the conflicts of law principles thereof, to the extent such principles would require or permit the application of the laws of another jurisdiction; provided, that nothing herein shall be construed in a manner inconsistent with the 1940 Act, the Investment Advisors Act of 1940, as amended, or any rules or orders of the SEC thereunder.
19. Limitation of Liability for Claims. The Manager is hereby expressly put on notice of the limitation of liability as set forth in the Trust’s Declaration of Trust and agrees that the obligations assumed by the Trust pursuant to this Agreement shall be limited in all cases to the Trust and its assets, and the Manager shall not seek satisfaction of any such obligation from the shareholders of the Trust or from any trustee, officer, employee or agent of the Trust.
20. Excess Brokerage Commissions. The Manager is hereby authorized, to retain the servicesfullest extent now or hereafter permitted by law, to cause the Trust to pay a member of outside service providers (sucha national securities exchange, broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission another member of such exchange, broker or dealer would have charged for effecting that transaction, if the Manager determines in good faith, taking into account such factors as executive search firms, consultantsprice (including the applicable brokerage commission or legal counsel) to assist it in performingdealer spread), size of order, difficulty of execution, and operational facilities of the foregoing duties,firm and the firm’s risk and skill in positioning blocks of securities, that such amount of commission is reasonable costsin relation to the value of the brokerage and/or research services provided by such service providersmember, broker or dealer, viewed in terms of either that particular transaction or its overall responsibilities with respect to the Trust’s portfolio, and constitutes the best net results for the Trust.
21. Responsibility of Dual Directors, Officers and/or Employees. If any person who is a manager, partner, officer or employee of the Manager or its affiliates is or becomes a director, officer, partner and/or employee of the Trust and acts as such in any business of the Trust, then such manager, partner, officer and/or employee of the Manager or its affiliates shall be bornedeemed to be acting in such capacity solely for the Trust, and not as a manager, partner, officer or employee
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of the Manager or its affiliates or under the control or direction of the Manager, even if paid by the Funds.
22. Amendment of Agreement. This Agreement may be amended only by written agreement of the Manager and the Trust and only in accordance with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.
23. Proxy Voting. The Manager shall be responsible for voting any proxies solicited by an issuer of securities held by the Trust in the best interest of the Trust and in accordance with the Manager’s proxy voting policies and procedures, as any such proxy voting policies and procedures may be amended from time to time. The Manager’s proxy voting policies and procedures, and any amendment thereto will be subject to Board of Trustee’s approval. The Trust has been provided with a copy of the Manager’s proxy voting policies and procedures and has been informed as to how it can obtain further information from the Manager regarding proxy voting activities undertaken on February 2005,behalf of the Trust. In accordance with its provisions of managerial services to the Trust hereunder, the Manager shall be responsible for reporting the Trust’s proxy voting activities, as last amendedrequired, through periodic filings on May 23, 2019.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
EASY VOTING OPTIONS:
VOTE ON THE INTERNET
Log on to:
www.proxy-direct.com or scan the QR code
Follow the on-screen instructions
available 24 hours
VOTE BY TELEPHONE
Call 1-800-337-3503
Follow the recorded instructions
available 24 hours
VOTE BY MAIL
Vote, sign and date your
White Proxy Ballot and return it in the
postage-paid envelope
THANK YOU FOR VOTING
SABA CAPITAL INCOME & OPPORTUNITIES FUND | ||
By: |
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SABA CAPITAL MANAGEMENT, L.P. | ||
By: | ||
Name: | ||
Title: |
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SCHEDULE A
with respect to the
INVESTMENT MANAGEMENT AGREEMENT
between
SABA CAPITAL INCOME & OPPORTUNITIES FUND
and
SABA CAPITAL MANAGEMENT, L.P.
Series | Annual Management Fee (as a percentage of Managed Assets*)
| |
| 1.05% |
* | “Managed Assets” shall mean the Trust’s average daily gross asset value, minus the sum of the Trust’s accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Trust and the liquidation preference of any outstanding preferred shares). |
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APPENDIX B
EXPENSE LIMITATION AGREEMENT
TO BE INSERTED
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF
VOYA PRIME RATE TRUST
FOR THE SPECIAL MEETING OF SHAREHOLDERS
[___], 2021
The undersigned hereby appoints [•], [•], or [•], in any capacity, with full power of substitution as proxy or proxies of the undersigned, to vote all sharesShareholder of Voya Prime Rate Trust (the "Fund"“Fund”) acknowledges receipt of the Notice of Special Meeting of Shareholders and hereby appoints [____] and [_____], and each of them, and each with full power of substitution, to act as attorneys and proxies for the undersigned to vote all the common shares of the Fund which the undersigned is entitled to vote at the AnnualSpecial Meeting of ShareholdersShareholders. They will be able to participate in the Special Meeting, vote and submit questions via live webcast by visiting [____]. Prior to the Special Meeting they will be able to vote electronically at [____].
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED BELOW; where no choice is specified, it will be voted FOR Proposals 1, 2, 3, 4, 5 and 6, and in the discretion of the Fund to be held [•], 2020 at [•] (local time), at [•], and any adjournment(s) or postponement(s) thereof. The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting and the accompanying Proxy Statement, the terms of each of which are incorporated by reference, and revokes any Proxy Ballot heretofore givenproxies with respect to such Annual Meeting.other business as may properly come before the Special Meeting or any postponement or adjournment thereof.
THIS PROXY BALLOT, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREINPlease vote, sign and date this proxy on the reverse side and return it promptly in the enclosed envelope.
SPECIAL MEETING OF SHAREHOLDERS
VOYA PRIME RATE TRUST
[____], 2021
VOTE BY THE UNDERSIGNED SHAREHOLDER. IF THIS PROXY BALLOT IS EXECUTED BUT NO INSTRUCTION IS GIVEN WITH RESPECT TO THE PROPOSALS, THIS PROXY BALLOT WILL BE VOTED "FOR" THE ELECTIONINTERNET — [____]
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF EACH OF THE BOARD'S NOMINEES AND "AGAINST" PROPOSAL 2, IF PROPERLY PRESENTED AT THE MEETING.FUTURE SHAREHOLDER COMMUNICATIONS
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY BE PRESENTED AT THE ANNUAL MEETING OR ANY ADJOURNMENTS, POSTPONEMENTS OR DELAYS THEREOF.
VOTE VIA THE INTERNET: www.proxy-direct.com
VOTE VIA THE TELEPHONE: 1 - 80 0 - 33 7 - 350 3
VPR_31357_042020
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
Important Notice RegardingIf you would like to reduce the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be Held on [•], 2020.
The Proxy Statement for this meeting is available at: https://www.proxy-direct.com/voy-31357
NOTICE REGARDING POTENTIAL IMPACT OF COVID-19 ON ANNUAL MEETING: As part of our effort to maintain a safe and heathy environment at the Annual Meeting,costs incurred by Voya Prime Rate Trust in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Board of Trustees are actively monitoringInternet. To sign up for electronic delivery, please follow the health, transportationinstructions above to vote using the Internet and, other logistical issues raised bywhen prompted, indicate that you agree to receive or access shareholder communications electronically in future years.
VOTE BY PHONE — [____]
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the spread of coronavirus disease 2019 ("COVID-19")day before the cut-off date or meeting date. Have your proxy card in hand when you call and its potential impact on our Annual Meeting. IN LIGHT OF THE POTENTIAL DISRUPTIONS, YOU ARE URGED TOthen follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage paid envelope we have provided or return it to Voya Prime Rate Trust, [____].
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PLEASE DATE, SIGN AND RETURN THE WHITEMAIL YOUR PROXY BALLOT CARD
IN THE ENVELOPE PROVIDED TO YOU, OR TO VOTE BY INTERNET OR TELEPHONE AS DESCRIBED ON THIS PROXY BALLOT, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, SO THAT YOUR SHARES CAN BE VOTED REGARDLESS OF WHETHER OR NOT YOU ATTEND THE MEETING IN PERSON. As a result of the COVID-19 pandemic, governmental restrictions may limit our ability, or we may determine it is imprudent, to permit shareholders to attend our meeting in person.SOON AS POSSIBLE
Please detach at perforation before mailing.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE: XDetach and Mail in the Envelope Provided
AProposals THE BOARD OF TRUSTEES RECOMMENDS VOTING "FOR" EACH OF THE BOARD'S NOMINEES:
1.To elect eight nominees, each of whom is a current Trustee of the Fund, to the Board of Trustees (the "Board") of the Fund:
01. | Colleen D. Baldwin | 02. | John V. Boyer | 03. | Patricia W. Chadwick | 04. | Martin J. Gavin |
05. | Joseph E. Obermeyer | 06. | Sheryl K. Pressler | 07. | Dina Santoro | 08. | Christopher P. Sullivan |
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark the box "FOR ALL EXCEPT" and write the nominee's number on the line provided below.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "AGAINST" PROPOSAL 2:FOR PROPOSALS 1, 2, 3, 4, 5 AND 6.
2.If properly presented at the Annual Meeting, to vote on a shareholder's precatory proposal relating to a tender offer.
1. To approve the New Investment Management Agreement between the Fund and Saba Capital Management, L.P. in connection with the Adviser Transition as defined in the Proxy Statement. | FOR | AGAINST | ABSTAIN | |||
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5. To approve a change of the investment objective and to make the investment objective non-fundamental; | ☐ | ☐ | ☐ | |||
6. To approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies. | ☐ | ☐ | ☐ |
FOR AGAINST ABSTAINTo transact such other business as may properly come before the Special Meeting or any postponement or adjournment thereof.
BAuthorized Signatures ─ This section must be completed for your vote to be counted. ─ Sign and Date Below
Note:IMPORTANT: Please sign your names exactly as your name(s) appear(s) on this White Proxy Ballot,shown hereon and date it. When shares are held jointly,your proxy in the blank provided. For joint accounts, each shareholderjoint owner should sign. When signing as attorney, executor, guardian, administrator, trustee officer of a corporation or other entity or in another representative capacity,guardian, please give your full title under your signature.as such. If the signer is a corporation or partnership, please sign in full corporate or partnership name by a duly authorized officer or partner.
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