Form N-2/A SPECIAL OPPORTUNITIES

December 8, 2021 3:04 PM EST

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As filed with the Securities and Exchange Commission on December 8, 2021

1933 Act File No.
333-257169
 
 
1940 Act File No.
811-07528
 
 
       

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-2
Check appropriate box or boxes

[X]
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X]
Pre-Effective Amendment No. __1_
[ ]
Post-Effective Amendment No. ___
and/or
[X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]
Amendment No.  1

Special Opportunities Fund, Inc.
Registrant Exact Name as Specified in Charter


615 East Michigan Street Milwaukee, WI 53202
Address of Principal Executive Offices (Number, Street, City, State, Zip Code)

1-877-607-0414
Registrant’s Telephone Number, including Area Code
 
 
    Andrew Dakos, Bulldog Investors, LLP, Park 80 West, 250 Pehle Avenue, Suite 708, Saddle Brook, NJ 07663
Name and Address (Number, Street, City, State, Zip Code) of Agent for Service

Copies of Communications to:

Thomas R. Westle, Esquire
Blank Rome LLP
1271 Avenue of the Americas
New York, New York 10020
Approximate Date of Commencement of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement.

[  ]
Check box if the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans.

[  ]
Check box if any securities being registered on this Form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933 (“Securities Act”), other than securities offered in connection with a dividend reinvestment plan.
 
[  ]
Check box if this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment thereto.
 
[  ]
Check box if this Form is a registration statement pursuant to General Instruction B or a post-effective amendment thereto that will become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act.
 
[  ]
Check box if this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act.

It is proposed that this filing will become effective (check appropriate box):

[   ]
when declared effective pursuant to section 8(c) of the Securities Act.

If appropriate, check the following box:
 
[   ]
This [post-effective] amendment designates a new effective date for a previously filed [post-effective amendment] [registration statement].
 
[   ]
This Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: __________.
 
[   ]
This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: __________.
 
[   ]
This Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: __________.

Check each box that appropriately characterizes the Registrant:
 
[X]
Registered Closed-End Fund (closed-end company that is registered under the Investment Company Act of 1940 (“Investment Company Act”)).
 
[   ]
Business Development Company (closed-end company that intends or has elected to be regulated as a business development company under the Investment Company Act).
 
[   ]
Interval Fund (Registered Closed-End Fund or a Business Development Company that makes periodic repurchase offers under Rule 23c-3 under the Investment Company Act).
 
[X]
A.2 Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form).
 
[   ]
Well-Known Seasoned Issuer (as defined by Rule 405 under the Securities Act).
 
[   ]
Emerging Growth Company (as defined by Rule 12b-2 under the Securities Exchange Act of 1934 (“Exchange Act”)).
 
[   ]
If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act.
 
[   ]
New Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months preceding this filing).
 

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

 
Title of Securities Being
Registered
Amount Being
Registered
Proposed Maximum
Offering Price Per Unit
Proposed Maximum Aggregate
Offering Price(1)
Amount of Registration Fee
Rights to Purchase Convertible Preferred Stock(2)
 
$-
$-
$-
Convertible Preferred Stock
4,042,593
$25.00
$101,064,825
$11,026.00
Shares of common stock issuable upon conversion of Convertible Preferred Stock(3)
4,929,942
$-
 $-
 $-
Total
   
$101,064,825
$11,026.00

(1) Estimated solely for the purpose of calculating fee as required by Rule 457(o) under the Securities Act of 1933. The calculation of the amount takes into account full subscription of the Over-Allotment Shares (as defined herein).
 
(2) Evidencing the rights to subscribe for shares of convertible preferred stock of the Registrant being registered herewith.  Pursuant to Rule 457(g) of the Securities Act of 1933, no separate registration fee is required for the rights because the rights are being registered in the same registration statement as the common stock of the Registrant underlying the rights.
 
   (3) Pursuant to Rule 457(i) of the Securities Act of 1933, no separate registration fee is required for the common stock because no additional consideration is to be received in connection with the conversion of the preferred stock.
 
 
Pursuant to Rule 473 under the Securities Act of 1933, as amended, the Registrant hereby amends the Registration Statement to delay its effective date until the Registrant shall file a further amendment that specifically states that the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

PRELIMINARY PROSPECTUS—SUBJECT TO COMPLETION
 

 
Rights to Purchase up to 2,542,593 Shares of
Convertible Preferred Stock at $25.00 per Share

Special Opportunities Fund, Inc.
 
We are distributing at no charge to holders of our common stock as of [●], 2021 (the “Record Date”) transferable rights to purchase up to an aggregate of 2,542,593 shares of 2.75% convertible preferred stock, Series C, par value $0.001 per share (“Convertible Preferred Stock”).  The shares of Convertible Preferred Stock will be convertible into shares of our common stock at a conversion rate equivalent to a conversion price of $20.50 per share of common stock (which is a ratio of 1.2195 shares of common stock for each share of Convertible Preferred Stock held), subject to adjustment upon the occurrence of certain events.  We expect the total purchase price of Convertible Preferred Stock in this rights offering to be $63,564,825 assuming full participation.
 
You will receive one transferable right (each whole right, a “Subscription Right” or “Right”) for each 5 shares of our common stock you own on the Record Date (the “Basic Subscription Right”).  The number of Subscription Rights issued to each Record Date stockholder will be rounded up to the nearest whole number.  Each Subscription Right will entitle holders (each, a “Rights Holder”) to purchase one share of Convertible Preferred Stock at a subscription price of $25.00 per share. We will not issue fractional shares upon the exercise of your Basic Subscription Right or Over Subscription Privilege (as defined below).  This offering to purchase Convertible Preferred Stock will expire at 5:00 p.m., New York City time, on [●], 2021, unless we decide to extend it to some later date (the “Expiration Date”).  You should carefully consider whether to exercise or sell any or all of your Subscription Rights.  Unless our Board of Directors cancels or terminates the offering, all exercises of Subscription Rights are irrevocable.  As a result of the terms of this offer, stockholders who do not fully exercise their Rights will own, upon completion of this offer and following any conversion(s) of the Convertible Preferred Stock into common stock of the Fund, a smaller proportional interest in the Fund than they owned prior to the offer.
 
If you elect to purchase the maximum amount of our Convertible Preferred Stock that you are entitled to pursuant to your Basic Subscription Right, you will also be entitled to subscribe, subject to allotment, to purchase additional shares of our Convertible Preferred Stock, if any, that are not purchased by other Rights Holders pursuant to their Basic Subscription Right (the “Over-Subscription Privilege”).  If you do not fully subscribe for your Basic Subscription Right, your ownership interest in the Fund and, following any conversion(s) of the Convertible Preferred Stock, the net asset value of your shares may be diluted.  See “Risk Factors – Dilution of Ownership.”  Additionally, if there are not enough unsubscribed shares of Convertible Preferred Stock to honor all Over-Subscription Privilege requests, we may, in our sole discretion, issue up to 1,500,000 additional shares of Convertible Preferred Stock for a total of 4,042,593 shares of Convertible Preferred Stock to honor the Over-Subscription Privilege requests (the “Over-Allotment Privilege”).
 
The Rights are transferable and are expected to be admitted for trading through the New York Stock Exchange (the “NYSE”).  We intend to file an application to list our Convertible Preferred Stock on the NYSE under the symbol “SPE PR-C,” but we cannot assure you that the Convertible Preferred Stock will be listed for trading or that a liquid market for our Rights or our Convertible Preferred Stock will develop.  Shares of our common stock have traded on the NYSE under the symbol “SPE” since April 21, 2010. New shares of common stock issued upon conversion of the Convertible Preferred Stock will also be listed under the symbol “SPE.” The Fund intends to periodically update the Fund’s website to provide (i) the diluted net asset value of the Fund’s common stock, (ii) the number of shares of common stock outstanding, and (iii) the number of shares of Convertible Preferred Stock outstanding.
 
Pursuant to its current distribution policy, the Fund currently makes monthly distributions to common stockholders at an annual rate of 8%, as of July 2021, based on the net asset value of the Fund’s common stock as of the close of business on the last business day of the previous year.
 
Special Opportunities Fund, Inc. is registered under the Investment Company Act of 1940, as amended, as a closed-end, diversified management investment company.  Our investment objective is total return.
 
An investment in the Fund involves risks.  See “Risk Factors” beginning on page 13.

For more information, please contact InvestorCom LLC (the "Information Agent") toll free at (877) 972-0090 or by email at info@investor-com.com.
 
 
Subscription Price
Sales Load
Proceeds to the Fund(1)
Per Share
$25.00
None
$25.00
Total
$101,064,825
None
$101,064,825
____________________________
 
(1)
Proceeds to the Fund are before deduction of expenses incurred by the Fund in connection with the offering, which are estimated to be $150,626.  Funds received prior to the Expiration Date will be deposited in a segregated account pending allocation and distribution of shares of Convertible Preferred Stock.  Interest, if any, on subscription monies will be paid to the Fund regardless of whether shares of Convertible Preferred Stock are issued by the Fund; interest will not be used as credit toward the purchase of shares of Convertible Preferred Stock.  If all Over-Allotment Shares are sold in addition to the Basic Subscription Rights, the gross proceeds to the Fund are estimated to be $101,064,825 million.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
The date of this Prospectus is [●], 2021.
 
Investment Adviser.  Bulldog Investors, LLP (the “Adviser”) acts as the Fund's investment adviser.  See “Management of the Fund.”  The Adviser's address is Park 80 West, 250 Pehle Avenue, Suite 708, Saddle Brook, New Jersey 07663.

This Prospectus sets forth concisely the information about the Fund that you should know before deciding whether to invest in the Fund.  The Fund files annual and semi-annual stockholder reports, proxy statements and other information with the SEC. You can obtain this information or any information regarding the Fund filed with the SEC from the SEC’s web site (http://www.sec.gov) or by calling 1-877-607-0414 or by writing to the Fund c/o U.S. Bancorp 615 East Michigan Street, Milwaukee, WI 53202.  The Fund’s website address is www.specialopportunitiesfundinc.com and includes all stockholder reports and proxy statements filed with the SEC.
 
The Fund’s shares do not represent a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any governmental agency.
 
You should rely only on the information contained in this Prospectus.  We have not authorized any other person to provide you with different information.  If anyone provides you with different or inconsistent information, you should not rely on it.  This Prospectus is not an offer to sell or issue, or a solicitation of an offer to buy or accept, any securities in any jurisdiction where it is unlawful to make such an offer or solicitation.

TABLE OF CONTENTS
 

 
Prospectus Summary
1
The Offering
3
Fees and Expenses
7
Financial Highlights
8
Risk Factors
12
Convertible Preferred Stock Rights Offering
22
Material United States Federal Income Tax Consequences
30
Use of Proceeds
36
Price Range of Common Stock
36
Distributions
36
About the Fund
37
Management
40
Investment Advisory Agreement
49
Administration Agreement
52
Control Persons and Principal Stockholders
52
Determination of Net Asset Value
53
Description of our Capital Stock
53
Limitation on Liability of Directors and Officers; Indemnification and Advancement of Expenses...
57
Provisions of the Maryland General Corporation Law and our Charter and Bylaws
58
Regulation
58
Share Repurchases
59
Custodian, Transfer and Dividend Paying Agent and Registrar
59
Brokerage Allocation and Other Practices
60
Legal Matters
60
Experts
60
Available Information
60
Forward-Looking Statements
60
Financial Statements
61

Prospectus Summary
 
This summary highlights some of the information in this Prospectus.  It may not contain all of the information that you may want to consider.  You should read carefully the more detailed information set forth under “Risk Factors” and the other information included in this Prospectus.  The terms “we,” “us,” the “Fund” and “our” refer to Special Opportunities Fund, Inc.  The “Adviser” or the “investment adviser” refers to Bulldog Investors, LLP.
 
General
 
The Fund was incorporated in Maryland on February 13, 1993 and commenced investment operations on June 7, 1993.  In 2009, a new Board of Directors (the “Board”) was elected, the Fund’s investment adviser was replaced and the Fund’s principal investment objective was changed from providing tax free income to providing total return.  The Fund is registered under the Investment Company Act of 1940, as amended (together with the rules promulgated thereunder, the “1940 Act”), as a closed–end, diversified management investment company.  Our common stock is listed and trades on the NYSE under the trading symbol “SPE.”
 
Our Investment Objective and Strategy
 
Our investment objective is total return. Our investment objective is not fundamental and may be changed by the Board with 60 days’ notice to stockholders.  We seek to achieve our investment objective by investing primarily in other closed-end investment companies and other private and publicly-issued U.S. and foreign securities that our Adviser believes have opportunities for appreciation.  The Fund may employ strategies designed to capture price movements generated by anticipated corporate events such as investing in companies involved in special situations, including, but not limited to, mergers, acquisitions, asset sales, spin-offs, balance sheet restructuring, bankruptcy, liquidations, self-tender offers, converting from a closed-end to open-end management investment company and other situations.
 
Our Adviser
 
Our investment adviser is Bulldog Investors, LLP, a limited liability partnership organized under the laws of Delaware.  Bulldog Investors, LLP is an investment adviser registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).  Under our Investment Advisory Agreement, we pay the Adviser a monthly fee at an annual rate of 1.00% of the value of our average weekly total assets.  As of November 30, 2021, the aggregate assets under management by the Adviser, including the Fund, were approximately $455 million.  See “Investment Advisory Agreement.”
 
Distribution Policy
 
On March 4, 2019, the Fund received authorization from the SEC that permits the Fund to distribute long-term capital gains to stockholders more than once per year.  Accordingly, on April 1, 2019, the Fund announced its Board formally approved the implementation of a Managed Distribution Plan (“MDP”) to make monthly cash distributions to stockholders.  In January 2020, the Fund began making monthly distributions to common stockholders at an annual rate of 7%, based on the net asset value of the Fund’s common stock as of close of business on the last business day of the previous year.  In July 2021, the Fund began making monthly distributions to common stockholders at an annual rate of 8%, based on the net asset value of the Fund’s common stock as of close of business on the last business day of the previous year.
 
The Fund’s Board may amend or terminate the MDP at any time without prior notice to stockholders. No stockholder should assume that there will be a distribution.
 
Rights Offering of Convertible Preferred Stock
 
Each of our stockholders as of the Record Date shall receive, at no cost, one transferable right (each whole right, a “Subscription Right” or “Right”) to purchase one share of Convertible Preferred Stock for each 5 shares of our common stock such stockholder owns as of the Record Date (the “Basic Subscription Right”). We will not issue fractional shares of our Convertible Preferred Stock upon the exercise of any Rights.  The number of Rights issued to Record Date stockholders will be rounded up to the nearest whole number of Rights.  We intend to offer shares of Convertible Preferred Stock to Rights Holders for $25.00 per share (the “Subscription Price”).  The offer to purchase Convertible Preferred Stock will expire at 5:00 p.m., New York City time, on [●], 2021 unless we decide to extend it to some later date (the “Expiration Date”).
1

If you elect to purchase the maximum amount of our Convertible Preferred Stock that you are entitled to purchase pursuant to your Basic Subscription Right, you will also be entitled, pursuant to an Over-Subscription Privilege, subject to allotment, to purchase additional shares of our Convertible Preferred Stock, if any, that are not purchased by other Rights Holders pursuant to their Basic Subscription Right.  See “Convertible Preferred Stock Rights Offering – Over-Subscription Privilege and Over-Allotment Privilege.”  If you do not fully subscribe for your Basic Subscription Right, your ownership interest in the Fund and, following any conversion(s) of the Convertible Preferred Stock, the net asset value of your shares may be diluted.  See “Risk Factors – Dilution of Ownership.”  If sufficient additional shares are not available to honor all requests under the Over-Subscription Privilege, we may, in our discretion, issue up to 1,500,000 additional shares of Convertible Preferred Stock for a total of 4,042,593 shares of Convertible Preferred Stock (the “Over-Allotment Shares”) to honor Over-Subscription Privilege requests, with such shares subject to the same terms and conditions of this offering (the “Over-Allotment Privilege”).  See “Convertible Preferred Stock Rights Offering – Over-Subscription Privilege and Over-Allotment Privilege.”
 
The dividend rate of our Convertible Preferred Stock will be 2.75% of the Subscription Price per share of Convertible Preferred Stock.  Dividends on our Convertible Preferred Stock will accumulate without interest from the date of original issuance of the Convertible Preferred Stock and will be payable quarterly in arrears on the last calendar day of March, June, September and December (each, a “Quarterly Dividend Payment Date”), commencing on the last calendar day of the first March, June, September or December following the date of Expiration Date. The first dividend declared and payable will be pro-rated from the date of original issuance of the Convertible Preferred Stock. The final dividend payable as of the date of the redemption of the Convertible Preferred Stock will be pro-rated from the last Quarterly Dividend Payment Date.
 
Sale of Rights
 
The Rights are transferable until the Expiration Date and are expected to be admitted for trading on the NYSE. Although no assurance can be given that a market for the Rights will develop, trading in the Rights will begin three Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date, such period to be no less than 20 days.
 
Stockholders are urged to obtain a recent trading price for the Rights on the NYSE from their broker, bank, financial advisor or the financial press.
 
How to Subscribe
 
 
 
Deliver a completed Subscription Certificate (enclosed) and payment to the Subscribing Agent at the address below (Attn: Reorg Dept.) so that it is received by the Expiration Date (we recommend using an insured courier), or

 
 
Instruct your broker, dealer, trust company, custodian bank or other nominee to act for you by instructing DTC to exercise Rights with payment to the account of the Subscribing Agent by the Expiration Date.
 

Information Agent
 
InvestorCom LLC is the Information Agent for the offering and can be reached toll free at (877) 972-0090 or by email at info@investor-com.com.
2

Subscribing Agent
 
American Stock Transfer & Trust Company, LLC (the “Subscribing Agent”), 6201 15th Avenue, Brooklyn, NY 11219, is the Subscribing Agent for the offering.

Important Dates to Remember
 
 
 
 
Record Date
  
[●], 2021
Subscription Period
  
[●], 2021- [●], 2021*
Expiration Date/ Deadline to Purchase Convertible Preferred Stock†
  
[●], 2021*

 *
 
Unless the offering is extended.

The Offering
 
Rights to be Issued by Us 
2,542,593 transferable rights exercisable for shares of Convertible Preferred Stock.

Description of Convertible Preferred Stock
The Board presently intends that, except as otherwise indicated in this Prospectus and except as otherwise required by applicable law or the Fund’s Articles of Incorporation, Articles Supplementary or bylaws, holders of Convertible Preferred Stock will have equal voting rights with holders of our common stock (one vote per share) and shall generally vote together with such holders of common stock as a single class (unless otherwise required by the 1940 Act).

Purpose of the Offering/Use of Proceeds
The Board of the Fund has determined that it would be in the best interests of the Fund and our stockholders to increase the assets of the Fund so that we may be in a better position to take advantage of investment opportunities that exist or may arise. Such opportunities may include, among other things, acquiring securities yielding greater than 2.75% or that are expected to return more than 2.75% per annum including units and shares of special purpose acquisition companies (“SPACs”), acquiring shares of closed-end funds at a discount to their net asset value, or repurchasing shares of the Fund’s common stock at a discount to their net asset value.  This offering seeks to reward existing stockholders by giving them the opportunity to purchase a unique security of the Fund without incurring any commission or charge.  The distribution of the Rights, which themselves may have intrinsic value, will also give non-participating stockholders the potential of receiving a cash payment upon the sale for their Rights, which may be viewed as partial compensation for the possible dilution of their interests in the Fund as a result of the offer.  Proceeds will be invested in accordance with the Fund’s investment objectives and policies as stated herein.  See “Business of the Fund.”

Basic Subscription Right 
Each of our stockholders as of the Record Date shall receive, at no cost, one transferable right (each whole right, a “Subscription Right” or “Right”) to purchase one share of Convertible Preferred Stock for each 5 shares of our common stock such stockholder owns as of the Record Date (the “Basic Subscription Right”).  We will not issue fractional shares of our Convertible Preferred Stock upon the exercise of Rights.  The number of Rights issued to Record Date stockholders will be rounded up to the nearest whole number of Rights.  We intend to offer shares of Convertible Preferred Stock to Rights Holders for $25.00 per share.
3

Over-Subscription Privilege
If you elect to purchase the maximum amount of our Convertible Preferred Stock that you are entitled to purchase pursuant to your Basic Subscription Right, you will also be entitled to subscribe, subject to allotment, to purchase additional shares of our Convertible Preferred Stock, if any, that are not purchased by other Rights Holders pursuant to their Basic Subscription Right.  See “Convertible Preferred Stock Rights Offering – Over-Subscription Privilege and Over-Allotment Privilege.”  If you do not fully subscribe for your Basic Subscription Right, your ownership interest in the Fund and, following any conversion(s) of the Convertible Preferred Stock, the net asset value of your shares may be diluted. See “Risk Factors – Dilution of Ownership.”
 
Over-Allotment Privilege
If sufficient additional shares are not available to honor all requests under the Over-Subscription Privilege, we may, in our discretion, issue up to 1,500,000 additional shares of Convertible Preferred Stock for a total of 4,042,593 shares of Convertible Preferred Stock to honor Over-Subscription Privilege requests, with such shares subject to the same terms and conditions of this offering.  See “Convertible Preferred Stock Rights Offering – Over-Subscription Privilege and Over-Allotment Privilege.”
 
Expiration Date 
5:00 p.m., New York City time, on [●], 2021 unless we decide to extend it to some later date.

Issuance of Convertible Preferred Stock
If you purchase shares of Convertible Preferred Stock through the offering, we will issue a Direct Registration System book-entry statement representing the shares of Convertible Preferred Stock to you or DTC on your behalf promptly after completion of the offering and after pro rata allocations and adjustments have been completed.

Liquidation Preference 
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Fund, the holders of Convertible Preferred Stock will be entitled to receive preferential liquidating distribution at face value (i.e., $25.00 per share), before any distribution of assets is made to the holders of our common stock.  After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets by the Fund.  See “Convertible Preferred Stock Rights Offering – Description of Convertible Preferred Stock.”

Voting Rights 
So long as the Fund is subject to the 1940 Act, the holders of any Convertible Preferred Stock, voting separately as a single class, shall have the right to elect two Directors at all times.  The remaining Directors shall be elected by holders of common stock and the holders of the Convertible Preferred Stock, voting together as a single class.  The foregoing right to elect two Directors shall be unaffected by any default by the Fund in the payment of dividends to holders of the Convertible Preferred Stock, subject to any additional rights afforded to such holders in the event of such a default under the 1940 Act, including Section 18 thereof.  In addition to any approval by stockholders that might otherwise be required, the approval of the holders of two-thirds of any outstanding Convertible Preferred Stock, voting separately as a class, would be required to (1) create a new series of senior equity security or (2) adopt any charter or bylaw amendment that would materially affect existing terms of the Convertible Preferred Stock.  The approval of the holders of a majority of any outstanding Convertible Preferred Stock, voting separately as a class, would be required to (1) adopt any plan of reorganization that would adversely affect the Convertible Preferred Stock, (2) create any pari passu security (a security interest with equal rights), (3) increase the amount of authorized shares of outstanding Convertible Preferred Stock or (4) or take any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, changes in the Fund’s subclassification as a closed-end investment company or changes in its fundamental investment restrictions.  As a result of these voting rights, the Fund’s ability to take any such actions may be impeded to the extent that there is any Convertible Preferred Stock outstanding.  The Board presently intends that, except as otherwise indicated in this Prospectus and except as otherwise required by applicable law or the Fund’s Articles of Incorporation, Articles Supplementary or bylaws, Holders of Convertible Preferred Stock will have equal voting rights with holders of our common stock (one vote per share) and shall generally vote together with such holders of common stock as a single class (unless otherwise required by the 1940 Act).  See “Convertible Preferred Stock Rights Offering – Description of Convertible Preferred Stock.”
4

Risk Factors 
See “Risk Factors” beginning on page 13 and the other information included in this Prospectus for a discussion of risks that you should carefully consider about us and about this offering. The principal risks related to this offering are Absence of Existing Public Market, Decline in Trading Price, Value versus Subscription Price, No Revocation, Termination of Offering, Rejection of Exercise of Subscription Rights, Discount to Net Asset Value, Dilution of Ownership, Required Redemption or Conversion, and Leveraging. See “Risks Related to This Offering” beginning on page 13 for more information about these risks.

Transferability of the Rights 
Your Rights are transferable until the Expiration Date and are expected to be admitted for trading on the NYSE.  Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE will begin three Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date.

Termination of the Offering 
The Board may decide to terminate this offering at any time, on or before the Expiration Date.  If we terminate the offering, our only obligation to you will be to return any payment, without interest.

Distribution Arrangements 
We do not intend to engage a dealer manager for the offering.  Our officers and Directors may solicit the exercise of Rights by our stockholders. This offering is not contingent on any number of Rights being exercised. We will pay all expenses incurred in connection with this offering.

Listing 
It is the Fund’s intention to list the Convertible Preferred Stock for trading on the NYSE under the symbol “SPE PR- C” prior to the issuance of the Convertible Preferred Stock.

Trading 
We cannot assure you that the Rights or the Convertible Preferred Stock will develop any liquidity in the secondary market.  In addition, we cannot predict how the issuance of the Rights or the Convertible Preferred Stock will affect the market price of our common stock.

Material United States Federal Income Tax Consequences
The receipt and election to purchase Convertible Preferred Stock are intended to be nontaxable events.  If you sell the Convertible Preferred Stock after purchasing it, you will recognize gain or loss.  You should obtain specific tax advice from your personal tax advisor.  See “Material United States Federal Income Tax Consequences —Taxation of Stockholders” below.

5

Management Arrangements 
Bulldog Investors, LLP serves as our investment adviser.  U.S. Bancorp Fund Services, LLC (“Administrator”) serves as our administrator.  For a description of Bulldog Investors, LLP or the Administrator and our contractual arrangements with these companies, see “Investment Advisory Agreement” and “Administration Agreement.”

Information Agent 
InvestorCom LLC

Subscribing Agent 
American Stock Transfer & Trust Company, LLC

Dilution 
As a result of the terms of this offer, stockholders who do not fully exercise their Rights will own, upon completion of this offer and following any conversion(s) of the Convertible Preferred Stock into common stock of the Fund, a smaller proportional interest in the Fund than they owned prior to the offer. The following examples illustrate the impact of the offer depending upon whether the common stock is trading at a premium or a discount to its NAV.  See “Risk Factors – Dilution of Ownership.”

Example #1 – Stock Price Trading at 5% Discount to NAV (Dilutive to NAV)
 
NAV
Per Share
 
Stock
Price
 
Conversion
Price
 
New NAV
Per Share
 
Percentage
Dilution
Dollar Amt
Per Share
Dilution
$22.00
$20.90
$20.50
$21.58
-1.9%
$(0.42)


Example #2 – Stock Price Trading at 5% Premium to NAV (Dilutive to NAV)
 
NAV
Per Share
 
Stock
Price
 
Conversion
Price
 
New NAV
Per Share
 
Percentage
Dilution
Dollar Amt
Per Share
Dilution
$22.00
$23.10
$20.50
$21.58
-1.9%
$(0.42)

Shares issued and outstanding before the Offering
12,712,964 shares of common stock as of September 30, 2021.

Shares outstanding after completion of the Offering
Assuming that all 2,542,593 shares of Convertible Preferred Stock in the offering are subscribed for, we will have 2,542,593 shares of Convertible Preferred Stock outstanding (up to 4,042,592 shares with full exercise of the Over-Allotment Privilege), which will be convertible into 3,100,692 shares of our common stock immediately after the rights offering (up to 4,929,942 shares with full exercise of the Over-Allotment Privilege).  Assuming full conversion of the Convertible Preferred Stock, there would be 15,813,656 shares of our common stock issued and outstanding (17,642,906 shares of our common stock issued and outstanding with full exercise of the Over-Allotment Privilege).
 
Notice of NAV Decline 
The Fund has, as required by the SEC's registration form, undertaken to suspend the offer until it amends this Prospectus if, subsequent to the effective date of this Prospectus, the Fund's NAV declines more than 10% from its NAV as of that date.  If that occurs, the Fund will notify you of the decline and permit you to revoke your exercise of your Rights.  Rights Holders will have their payment for shares returned to them if they opt to revoke the exercise of their Rights.
 
6

Fees and Expenses
 
The following table shows the costs and expenses associated with an investment in the Fund, expressed as a percentage of the Fund’s net assets as of September 30, 2021.
 
Stockholder Transaction Expenses
 
Sales load
None
Annual Expenses (as a percentage of net assets attributable to common stock)
 
Management fees
1.00%
Other expenses (1)
0.52%
Acquired Fund fees and expenses (2)
2.06%
Dividends on Preferred Shares (3)
1.31%
Total Annual Expenses
4.89%
Example (4)
 
The following example illustrates the hypothetical expenses that you would pay on a $10,000 investment in common stock, assuming (i) annual expenses of 4.89% of net assets attributable to common stock and (ii) a 5% annual return:
 
 
1 Year
3 Years
5 Years
10 Years
You would pay the following expenses on a
$10,000 investment, assuming a 5% annual return
$489
$1,454
$2,423
$4,860
____________________________
 
(1)
“Other Expenses” include, among other expenses, administration and fund accounting fees.

(2)
The Fund invests in other closed-end investment companies and ETFs (collectively, the “Acquired Funds”).  The Fund’s stockholders indirectly bear a pro rata portion of the fees and expenses of the Acquired Funds in which the Fund invests.  The fees charged by underlying business development companies are included in this calculation.

(3)
Dividends on Preferred Shares represent the distributions that would be made assuming full participation in this offering resulting in the issuance of approximately $101,064,825 million of convertible preferred stock with a fixed dividend rate of 2.75%.  There can be no guarantee that any shares of preferred stock will be issued.

(4)
The example assumes that the estimated “Other Expenses” set forth in the Annual Expenses table remain the same each year and that all dividends and distributions are reinvested at NAV.  Actual expenses may be greater or less than those assumed.  Moreover, the Fund’s actual rate of return will vary and may be greater or less than the hypothetical 5% annual return.

 
The purpose of the above table is to help a holder of common stock understand the fees and expenses that such holder would bear directly or indirectly.  The example should not be considered a representation of actual future expenses.  Actual expenses may be higher or lower than those shown.
 
We will not pay any broker or dealer, commercial bank, trust company or other person any solicitation fee for any Convertible Preferred Stock purchased pursuant to this offering.  No such broker, dealer, commercial bank, trust company or other person has been authorized to act as our agent for purposes of this offering.
7

Financial Highlights

Set forth below is per share operating performance data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data for each year indicated.  This information has been derived from the financial statements and market price data for the Fund's common stock.  The financial highlights were audited by Tait, Weller & Baker LLP, an independent registered public accounting firm except for the six months ended June 30, 2021.  The financial statements and notes thereto, together with the report of independent registered public accounting firm, have been incorporated by reference in the SAI and are available without charge by calling 1-877-607-0414 or by writing to the Fund c/o U.S. Bancorp 615 East Michigan Street, Milwaukee, WI 53202.  

Selected data for a share of common stock outstanding throughout each period is presented below:
   
For the six months ended June 30, 2021 (Unaudited)
   
For the year ended December 31, 2020
   
For the year ended
December 31, 2019
   
For the year ended
December 31, 2018
   
For the year ended December 31, 2017
   
For the year ended December 31, 2016
   
For the year ended December 31, 2015
   
For the year ended December 31, 2014
 
Net asset value, beginning of year
 
$
16.13
   
$
16.06
   
$
13.78
   
$
16.70
   
$
15.56
   
$
15.11
   
$
16.94
   
$
18.70
 
Net investment income (loss)(1)
   
0.58
(7) 
   
0.59
     
0.31
     
(0.18
)
   
0.44
     
0.63
     
0.41
     
0.22
 
Net realized and unrealized gains (losses) from investment activities
   
3.13
(7) 
   
0.84
     
3.13
     
(1.06
)
   
2.26
     
0.64
     
(1.09
)
   
1.02
 
Total from investment operations
   
3.71
     
1.43
     
3.44
     
(1.24
)
   
2.70
     
1.27
     
(0.68
)
   
1.24
 
Anti-dilutive effect of common share repurchase program
   
-
     
-
     
-
     
-
     
0.00(5
)
   
0.07
     
0.08
     
-
 
Dilutive effect of conversions of preferred shares to common shares
   
(1.94
)
   
-
     
-
     
-
     
-
     
-
     
-
     
(1.44
)
Dilutive effect of reinvestment of distributions by common shareholders
   
-
     
-
     
-
     
-
     
-
     
-
     
(0.04
)
   
(0.08
)
Common share equivalent of dividends and
 distributions paid to preferred
shareholders from:
                                                               
    Net investment income
   
(0.10
)
   
(0.21
)
   
(0.05
)
   
(0.08
)
   
(0.10
)
   
(0.06
)
   
-
     
-
 
Net realized gains from investment activities
   
-
     
(0.02
)
   
(0.18
)
   
(0.15
)
   
(0.13
)
   
(0.02
)
   
-
     
-
 
Dividends and distributions paid to common shareholders from:
                                                               
Net investment income
   
(0.56
)(7)
   
(0.65
)
   
(0.20
)
   
(0.26
)
   
(0.33
)
   
(0.58
)
   
(0.35
)
   
(0.19
)
Net realized gains from investment activities
   
-
     
(0.48
)
   
(0.73
)
   
(1.15
)
   
(1.00
)
   
(0.23
)
   
(0.84
)
   
(1.29
)
Return of Capital
   
-
     
-
     
-
     
(0.04
)
   
-
     
-
     
-
     
-
 
Total dividends and distributions paid to
common shareholders
   
(0.56
)
   
(1.13
)
   
(0.93
)
   
(1.45
)
   
(1.33
)
   
(0.81
)
   
(1.19
)
   
(1.48
)
Net asset value, end of period
 
$
17.24
   
$
16.13
   
$
16.06
   
$
13.78
   
$
16.70
   
$
15.56
   
$
15.11
   
$
16.94
 
Market value, end of period
 
$
15.17
   
$
14.08
   
$
14.73
   
$
11.84
   
$
14.88
   
$
13.65
   
$
13.20
   
$
15.37
 
Total net asset value return(2)(6)
   
10.37
%
   
9.24
%
   
23.72
%
   
-8.79
%
   
15.93
%
   
8.45
%
   
-3.47
%
   
-1.01
%
Total market price return(3)
   
11.91
%
   
5.00
%
   
32.93
%
   
-10.55
%
   
18.71
%
   
9.51
%
   
-6.13
%
   
-3.59
%
Ratio to average net assets attributable to
common shares:
                                                               
Total expenses, net of fee waivers by
investment advisor and administrator
including interest, dividends on short positions, and tax expense(4)
   
1.71
%
   
2.13
%
   
1.99
%
   
1.92
%
   
1.92
%
   
1.75
%
   
1.50
%
   
1.42
%
8

   
 
 
For the six months ended June 30, 2021 (Unaudited)
 
 
 
For the year ended December 31, 2020
For the year ended
December 31, 2019
For the year ended
December 31, 2018
For the year ended December 31, 2017
For the year ended December 31, 2016
For the year ended December 31, 2015
 
 
 
For the year ended December 31, 2014
Total expenses, before fee waivers by
investment advisor and administrator
including interest, dividends on short positions, and tax expense(4)
   
1.71
%
   
2.13
%
   
1.99
%
   
1.92
%
   
1.92
%
   
1.75
%
   
1.50
%
   
1.51
%
Total expenses, net of fee waivers by
investment advisor and administrator
excluding interest expense and dividends on short positions(1)
   
1.71
%
   
2.13
%
   
1.99
%
   
1.92
%
   
1.92
%
   
1.75
%
   
1.50
%
   
1.40
%
Ratio to net investment income to average net assets before waiver(1)
   
3.22
%
   
1.96
%
   
2.01
%
   
0.27
%
   
2.45
%
   
3.61
%
   
2.40
%
   
1.18
%
Ratio to net investment income to average net assets after waiver
   
3.22
%
   
1.96
%
   
2.01
%
   
0.27
%
   
2.45
%
   
3.61
%
   
2.40
%
   
1.27
%
Supplemental data:
                                                               
Net assets applicable to common shareholders,
end of period (000’s)
 
$
203,924
   
$
137,129
   
$
136,504
   
$
117,173
   
$
141,946
   
$
132,367
   
$
151,426
   
$
172,203
 
Portfolio turnover(6)
   
44
%
   
85
%
   
75
%
   
66
%
   
59
%
   
49
%
   
48
%
   
59
%
Preferred Stock:
                                                               
Liquidation value of preferred stock (000’s)
 
$
12,826
   
$
55,599
   
$
55,599
   
$
55,599
   
$
55,599
   
$
55,599
     
N/A
     
N/A
 
Total Shares Outstanding
   
513,036
     
2,223,976
     
2,223,976
     
2,223,976
     
2,223,976
     
2,223,976
     
N/A
     
N/A
 
Asset coverage per share of preferred shares, end of period
 
$
422
   
$
87
   
$
86
   
$
78
   
$
89
   
$
85
     
N/A
     
N/A
 
                                                                 

 Continued
   
For the year ended
December 31, 2013
   
For the year ended
December 31, 2012
   
For the year ended
December 31, 2011
 
Net asset value, beginning of year
 
$
17.22
   
$
16.01
   
$
16.42
 
Net investment income (loss)
   
0.92
     
0.34
     
0.22
 
Net realized and unrealized gains (losses) from investment activities
   
3.00
     
1.92
     
(0.10
)
Total from investment operations
 
$
17.22
   
$
16.01
   
$
16.42
 
Anti-dilutive effect of common share      repurchase program
   
-
     
-
     
-
 
Dilutive effect of conversions of preferred shares to common shares
   
0.00
     
-
     
-
 
Dilutive effect of reinvestment of distributions by common shareholders
   
(0.07
)
   
(0.03
)
   
-
 
Common share equivalent of dividends and
 distributions paid to preferred
shareholders from:
                       
    Net investment income
   
(0.16
)
   
(0.07
)
   
-
 
Dividends and distributions paid to common shareholders from:
                       
Net investment income
   
(1.10
)
   
(0.23
)
   
(0.26
)
Net realized gains from investment activities
   
(1.11
)
   
(0.72
)
   
(0.27
)
Total dividends and distributions paid to
common shareholders
   
(2.11
)
   
(0.95
)
   
(0.53
)
Net asset value, end of period
 
$
18.70
   
$
17.22
   
$
16.01
 
Market value, end of period
 
$
17.45
   
$
15.01
   
$
14.50
 
Total net asset value return(3)
   
21.98
%
   
13.72
%
   
0.85
%
Total market price return(4)
   
31.27
%
   
10.05
%
   
1.89
%
Ratio to average net assets attributable to
common shares:
                       
Total expenses, net of fee waivers by
investment advisor and administrator
including interest, dividends on short positions, and tax expense
   
2.66
%
   
2.54
%
   
1.51
%
Total expenses, before fee waivers by
investment advisor and administrator
including interest, dividends on short positions, and tax expense
   
2.66
%
   
2.54
%
   
1.51
%
Total expenses, net of fee waivers by
investment advisor and administrator
excluding interest expense and dividends on short positions
   
1.83
%
   
1.82
%
   
1.51
%
Ratio to net investment income to average net assets before waiver
   
5.66
%
   
2.41
%
   
1.32
%
Ratio to net investment income to average net assets after waiver
   
5.66
%
   
2.41
%
   
1.32
%
Supplemental data:
                       
Net assets applicable to common shareholders,
end of period (000’s)
 
$
132,074
   
$
117,259
   
$
106,864
 
Portfolio turnover
   
58
%
   
62
%
   
55
%
Preferred Stock:
                       
Liquidation value of preferred stock (000’s)
 
$
37,424
   
$
37,454
     
N/A
 
Total Shares Outstanding
   
748,486
     
749,086
     
N/A
 
Asset coverage per share of preferred shares, end of period
 
$
226
   
$
207
     
N/A
 
                         
9

1 Recognition of net investment income by the Fund is affected by the timing and declaration of dividends by the underlying investment companies in which the Fund invests.  . 
2 Total net asset value return is calculated assuming a $10,000 purchase of common stock at the current net asset value on the first day of each period reported and a sale at the current net asset value on the last day of each period reported, and assuming reinvestment of dividends and other distributions at the net asset value on the payable date for dividends and other distributions payable through December 31, 2009 and reinvested at the NAV on the ex-dividend date for dividends and other distributions payable after December 31, 2009.  Total investment return based on net asset value is hypothetical as investors cannot purchase or sell Fund shares at net asset value but only at market prices. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund dividends and other distributions, if any, or the sale of Fund shares.
3 Total net asset value return is calculated assuming a $10,000 purchase of common stock at the current net asset value on the first day of each period reported and a sale at the current net asset value on the last day of each period reported, and assuming reinvestment of dividends and other distributions at the net asset value on the payable date for dividends and other distributions payable through December 31, 2009 and reinvested at the NAV on the ex-dividend date for dividends and other distributions payable after December 31, 2009.  Total investment return based on net asset value is hypothetical as investors cannot purchase or sell Fund shares at net asset value but only at market prices. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund dividends and other distributions, if any, or the sale of Fund shares.
4 Does not include expenses of the investment companies in which the Fund invests.
5 Less than 0.5 cents per share.
6 Not annualized for period less than one year.
7 Per share amount calculated using average shares outstanding.

Senior Securities Table
10

(1)
(2)
(3)
   
Year
Total Amount
Outstanding
Exclusive of
Treasury Securities
Asset Coverage
Per Unit
 
 
 
 
Involuntary
Liquidating
Preference Per Unit
 
 
Average Market Value
Per Unit
(Exclude Bank Loans)
2016
 $55,599,400
 $85
$25
$25.54
2017
 $55,599,400
 $89
$25
$25.57
2018
 $55,599,400
 $78
$25
$25.57
2019
 $55,599,400
 $86
$25
$25.52
2020
 $55,599,400
 $87
$25
$25.49
2021*
 $12,825,900
 $422
$25
$28.42

*For the six month period ended June 30, 2021.
11

Risk Factors
 
An investment in the Fund involves risks.  You should carefully consider these risk factors, together with all of the other information included in this Prospectus.  If any of the following adverse events and circumstances described in the risk factors occurs, our business, financial condition and results of operations could be materially adversely affected, and our NAV and the trading price of our common stock and the Convertible Preferred Stock could decline.
 
RISKS RELATED TO THIS OFFERING
 
Absence of Existing Public Market:  There is no existing market for the Rights or the Convertible Preferred Stock. There can be no assurance that an active and liquid trading market for the Rights or the Convertible Preferred Stock will develop or that quotation of the Rights or the Convertible Preferred Stock will be available on the NYSE. With respect to the listing of the Convertible Preferred Stock, NYSE approval will be conditioned on there being at least 400 holders thereof and at least $4 million in market value of the securities.  Therefore, the listing of the Convertible Preferred Stock on the NYSE will depend upon the number of Rights Holders that exercise their Rights, and it will not be possible until after the offering has been completed to determine whether the Convertible Preferred Stock will be listed on the NYSE.  In addition, if listed, the continued listing of the Convertible Preferred Stock on the NYSE will depend upon the Convertible Preferred Stock continuing to meet the NYSE’s continued listing standards.  Future trading prices of the Convertible Preferred Stock, if any, will depend on many factors including, among other things, prevailing interest rates, the operating results and financial condition of the Fund, and the market for similar securities.  As a result, we cannot provide you with any assurance about the price at which you will be able to sell the Convertible Preferred Stock, or about whether you will be able to sell the Convertible Preferred Stock at all.
 
Decline in Trading Price:  The public trading price for the Rights and our Convertible Preferred Stock cannot yet be determined as there is currently no market for the Rights or the Convertible Preferred Stock.  After you purchase Convertible Preferred Stock, and if a market is established for the Convertible Preferred Stock, the public trading price of our Convertible Preferred Stock may decline.  If our trading price declines below the Subscription Price, you will suffer an immediate unrealized loss.
 
Value versus Subscription Price:  The Subscription Price was not determined based on established criteria for valuation, such as expected future performance, cash flows or financial condition.  You should not rely on the Subscription Price to bear a relationship to those criteria or to be a guaranty of the value of the Fund or of our Convertible Preferred Stock.  The Board believes that the value of the conversion right of the Convertible Preferred Stock is not a predominant factor in the value of the Convertible Preferred Stock as of the date of its issuance.  The conversion right is a secondary attribute which is included to enhance the terms upon which the Fund is able to issue the Convertible Preferred Stock.
 
No Revocation:  Once you elect to purchase Convertible Preferred Stock, you may not revoke the election, even if you later learn information about us that you consider to be unfavorable.
 
Termination of Offering:  Our Board may terminate the offering at any time.  If we decide to terminate the offering, we have no obligation to you except to return, without interest, your subscription payments.
 
Rejection of Exercise of Subscription Rights:  Rights Holders who desire to purchase shares of Convertible Preferred Stock in the offering must act promptly to ensure that all required forms and payments are actually received by the Subscribing Agent before the Expiration Date of the offering, unless extended.  If you are a beneficial owner of shares of common stock, you must act promptly to ensure that your broker, custodian bank or other nominee acts for you and that all required forms and payments are actually received by the Subscribing Agent before the Expiration Date.  We will not be responsible if your broker, custodian or nominee fails to ensure that all required forms and payments are actually received by the Subscribing Agent before the Expiration Date.  If you fail to complete and sign the required subscription forms, send an incorrect payment amount or otherwise fail to follow the subscription procedures that apply to your exercise in the offering, the Subscribing Agent may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment received.  Neither we nor our Subscribing Agent undertakes to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payments.  We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.
12

Discount to Net Asset Value: The Fund’s shares of common stock have historically traded on the NYSE at a discount to the Fund’s net asset value (“NAV”) per share.  There is no assurance that this offering of Convertible Preferred Stock will have any effect on the discount to NAV experienced by the Fund.
 
Dilution of Ownership: As a result of the terms of this offer, stockholders who do not fully exercise their Rights will own, upon completion of this offer and following any conversion(s) of the Convertible Preferred Stock into common stock of the Fund, a smaller proportional interest in the Fund than they owned prior to the offer. The following examples illustrate the impact of the offer depending upon whether the common stock is trading at a premium or a discount to its NAV.
 
Example #1 – Stock Price Trading at 5% Discount to NAV (Dilutive to NAV)
NAV
Per Share
Stock
Price
Conversion
Price
New NAV Per Share
Percentage
Dilution
Dollar Amt Per Share Dilution
$22.00
$20.90
$20.50
$21.58
-1.9%
$(0.42)

 
Example #2 – Stock Price Trading at 5% Premium to NAV (Dilutive to NAV)
NAV
Per Share
Stock
Price
Conversion
Price
New NAV
Per Share
Percentage
Dilution
Dollar Amt Per Share Dilution
$22.00
$23.10
$20.50
$21.58
-1.9%
$(0.42)

 Required Redemption or Conversion: At any time following the second anniversary of the Expiration Date, the Board may, in its sole discretion, redeem all or any part of the then outstanding shares of Convertible Preferred Stock at $25.00 per share.  Under such circumstances, the Fund would provide no less than 30 days’ nor more than 90 days’ notice to the holders of Convertible Preferred Stock that, unless such shares have been converted by a certain date, the shares would be redeemed.  If the market price of our common stock is equal to or greater than $23.75 per share, the Board may, in its sole discretion, require holders of the Convertible Preferred Stock to convert all or any part of their shares into shares of common stock at a conversion rate equivalent to a conversion price of $20.50 per share of common stock (which is a ratio of 1.2195 shares of common stock for each share of Convertible Preferred Stock held), subject to adjustment upon the occurrence of certain events.  In connection with such redemption or conversion you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock to the date of redemption or conversion, as applicable, but after such redemption or conversion you would no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.  In addition to the foregoing, all outstanding shares of Convertible Preferred Stock as of [●], 2026 (five years from the Expiration Date) will be mandatorily redeemed at a price of $25.00 per share of Convertible Preferred Stock held on such date plus any accrued dividends.
 
Leveraging:  By issuing the Convertible Preferred Stock, the Fund will be using financial leverage for investment purposes.  The Fund’s leveraged capital structure creates special risks not associated with unleveraged funds having similar investment objectives and policies.  These include the possibility of greater loss and the likelihood of higher volatility of the NAV of the Fund and the asset coverage.  Such volatility may increase the likelihood of the Fund’s having to sell investments in order to meet dividend payments on the Convertible Preferred Stock, or to redeem Convertible Preferred Stock, when it may be disadvantageous to do so.  Also, when the Fund is using leverage, a decline in NAV could affect the ability of the Fund to make common stock distribution payments, and such a failure to make distributions could result in the Fund’s ceasing to qualify as a regulated investment company under the Code.
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RISKS RELATED TO THE FUND’S INVESTMENTS
 
Other Closed-End Investment Company Securities:  The Fund invests in the securities of other closed-end investment companies.  Investing in other closed-end investment companies involves substantially the same risks as investing directly in the underlying instruments, but the total return on such investments at the investment company level may be reduced by the operating expenses and fees of such other closed-end investment companies, including advisory fees.  There can be no assurance that the investment objective of any investment company in which the Fund invests will be achieved.  Closed-end investment companies are subject to the risks of investing in the underlying securities.  The Fund, as a holder of the securities of another closed-end investment company, will bear its pro rata portion of the closed-end investment company’s expenses, including advisory fees.  These expenses are in addition to the direct expenses of the Fund’s own operations.  To the extent the Fund invests a portion of its assets in investment company securities, those assets will be subject to the risks of the purchased investment company’s portfolio securities, and a stockholder in the Fund will bear not only his proportionate share of the expenses of the Fund, but also, indirectly, the expenses of the purchased investment company.  The market price of a closed-end investment company fluctuates and may be either higher or lower than the NAV of such closed-end investment company.
 
In accordance with Section 12(d)(1)(F) of the 1940 Act, the Fund will be limited by provisions of the 1940 Act that limit the amount the Fund, together with its affiliated persons, can invest in other investment companies to 3% of any other investment company’s total outstanding stock.  As a result, the Fund may hold a smaller position in a closed-end investment company than if it were not subject to this restriction.

In September, 2010, members of the staff of the Division of Investment Management (the “Staff”) informed the Fund that they had concerns that the Fund might not be in compliance with the exemptive conditions of Section 12(d)(1)(F) of the 1940 Act because the Fund and certain private partnerships might be deemed to be under common control.  The Staff members based their concerns on certain public disclosures regarding the ownership and control of the Adviser by certain individuals who also own and control other entities that serve as the general partners and investment advisers to certain private investment partnerships that are excluded from the definition of an investment company by Section 3(c)(1) of the 1940 Act.  The Staff cited the SEC’s conclusion in In the Matter of Steadman Security Corp. (Exchange Act Release No. 13695; Investment Company Act Release No. 9830; Investment Advisers Act Release No. 593) (June 29, 1977), that “the investment adviser almost always controls the fund” in support of its position.  The Board, including all of the Independent Directors, and the Adviser reviewed the matter with their respective counsel and determined that they disagreed with the Staff’s position.  In December, 2010, the Adviser and the Fund filed a joint request for a declaratory order from the SEC that the Adviser does not control the Fund which, if granted, would resolve the Section 12(d)(l)(F) compliance issue raised by the Staff.  In March 2011, the Board and the Adviser made a determination that the joint request for a declaratory order should be deemed to have been temporarily granted under the provisions of Section 2(a)(9) of the 1940 Act because more than 60 days had elapsed since the date the request was filed with the SEC.  The Staff has advised the Board and the Adviser that they disagree with such determination.  In June, 2011, the Fund and the Adviser submitted a letter to the Staff requesting that they re-evaluate the Staff’s position regarding whether the Adviser should be deemed to control the Fund based on the recent decision by the U.S. Supreme Court in Janus Capital Group v. First Derivative Traders.  In Janus, the Court ruled that despite the “unique close relationship” between the fund and the adviser, the adviser did not control the fund.  Although the position is not free from doubt, the Fund and the Adviser and their respective counsel believe that the Fund is in compliance with the exemptive conditions of Section 12(d)(l)(F) of the 1940 Act.

On October 11, 2012, the Staff forwarded to the Fund an SEC Release “that discusses the manner in which the [SEC] envisioned a fund holding company relying on Section 12(d)(1)(F) … would comply with the pass-through voting requirements.”  On November 5, 2012, the Fund submitted a revised application in which it stated that it does not intend to adopt the procedure set forth in the Release because it is impractical and not cost effective and because the Release offered no reason for the SEC’s position. On August 8, 2013, the SEC issued a Release setting forth its proposed order that the Fund’s voting procedure does not satisfy Section 12(d)(1)(F) of the 1940 Act. On August 28, 2013, the Fund submitted a request that the SEC hold a hearing prior to issuing the proposed order, and on September 9, 2013, the Fund requested that, in the event the SEC elects not to hold such a hearing, a stay be issued foreclosing any enforcement action pending the outcome of an appeal of the proposed order to the US Court of Appeals. On August 15, 2014, the SEC issued an order:  (1) denying the Fund’s request for a hearing; and (2) declining to grant a stay because no enforcement action is currently pending on this matter.  In such order, the Commission stated:  “[t]o the extent that SPE and its shareholders believe that SPE should be permitted to invest in the underlying funds in excess of the limits in Section 12(d)(1)(A) of the 1940 Act subject to conditions different from those set forth in Section 12(d)(1)(F), SPE may seek an exemptive order pursuant to Sections 6(c) and 12(d)(1)(J) of the 1940 Act.”  On October 1, 2014, the Fund submitted an application for an exemptive order to enable it to invest in other registered funds in excess of the limits set forth in Section 12(d)(1)(A) without always mirror voting or using the method of pass-through voting that the SEC believes is required to comply with Section 12(d)(1)(F) of the Investment Company Act. On January 29, 2015, the SEC Staff responded to the Fund’s application and indicated that, in order to receive the requested relief, the Fund must amend its application and agree to certain additional conditions, to which the Fund and the Adviser object.  In a conference call with the Adviser and Fund counsel on February 10, 2015, the Staff agreed to consider the Fund’s and Adviser’s objections to the proposed conditions and to provide the parties with a written explanation for its determination that the Fund’s proposed conditions are inadequate.
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In accordance with Section 12(d)(1)(F) of the 1940 Act, for each closed-end fund for which the Fund receives a proxy, the Fund has voted and will continue to vote its shares of such closed-end fund in the same proportion as the vote of all other shareholders of such closed-end fund, unless the Adviser deems it appropriate to seek instructions from Fund stockholders with regard to such vote. In such circumstances, the Fund will vote such proxies proportionally based upon the total number of shares owned by those stockholders that provide instructions. Fund stockholders may obtain forms to provide such proxy voting instructions on the Fund’s website.
 
Special Purpose Acquisition Companies.  The Fund may invest in units, stock, warrants, and other securities of special purpose acquisition companies or similar special purpose entities that pool funds to seek potential acquisition opportunities (“SPACs”).  Unless and until an acquisition meeting the SPAC’s requirements is completed, a SPAC generally deposits substantially all of the cash raised in its IPO (less a specified amount to cover operating expenses) in a bank trust account which is generally invested in U.S. Government securities, money market securities and cash. If an acquisition that meets the requirements for the SPAC is not completed within a pre-established period of time, the invested funds are returned to the entity’s shareholders.  In addition, just prior to completion of an acquisition, shareholders of the SPAC can redeem their shares for a pro rata share of the value of the trust account.  Because SPACs have no operating history or ongoing business other than seeking acquisitions, the value of their securities can vary on the perceived likelihood of management to identify and complete a profitable acquisition.  However, until a SPAC is liquidated or completes an acquisition, its common stock is unlikely to fall substantially below the per share value of the trust account.  Nonetheless, SPAC shares are subject to secondary market risk and may decline in value if sold prior to deal completion or trust liquidation.  If an acquisition is completed, the former SPAC’s shares and other securities will take on the same risks as an equivalent investment in the acquired company.  Some SPACs may pursue acquisitions only within certain industries or regions, which may increase the volatility of their prices.
 
Short sales.  The Fund is authorized to make short sales.  The Fund effects a short sale by borrowing and selling a security it does not own in anticipation of a decline in the value of the security or to hedge against the decline of a security the Fund owns.  Short sales carry risks of loss if the price of the security sold short increases after the short sale. Although the Fund’s gain is limited to the price at which it sold the security short, its potential loss is unlimited due to the lack of an upper limit on the price to which an instrument can rise.  Purchasing securities to close out the short position can itself cause the price of the securities to rise further, thereby exacerbating a possible loss.  As collateral for its short positions, the Fund is required under the 1940 Act to maintain segregated assets consisting of cash, cash equivalents, or liquid securities.  The amount of segregated assets is required to be adjusted daily to the extent additional collateral is required based on the change in fair value of the securities sold short.
 
When a cash dividend is declared on a security in which the Fund holds a short position, the Fund incurs the obligation to pay an amount equal to that dividend to the lender of the shorted security.  Depending on arrangements made with the broker-dealer from which it borrowed the security regarding payment over of any payments received by the Fund on such security, the Fund may not receive any payments (including interest) on its collateral deposited with such broker-dealer.  The requirements of the 1940 Act and Internal Revenue Code of 1986, as amended (the “Code”) provide that the Fund not make a short sale if, after giving effect to such sale, the market value of all securities sold short by the Fund exceeds 30% of the value of its managed assets.
15

Common Stocks.  The Fund invests in common stocks.  Common stocks represent an ownership interest in a company.  The Fund may also invest in securities that can be exercised for or converted into common stocks (such as convertible preferred stock).  Common stocks and similar equity securities are more volatile and riskier than some other forms of investment.  Therefore, the value of your investment in the Fund may sometimes decrease instead of increase.  Common stock prices fluctuate for many reasons, including adverse events such as unfavorable earnings reports, changes in investors’ perceptions of the financial condition of an issuer, the general condition of the relevant stock market or when political or economic events affecting the issuers occur.  In addition, common stock prices may be sensitive to rising interest rates, as the costs of capital rise and borrowing costs increase for issuers.  Because convertible securities can be converted into equity securities, their values will normally increase or decrease as the values of the underlying equity securities increase or decrease.  The common stocks in which the Fund invests are structurally subordinated to preferred securities, bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and assets and, therefore, will be subject to greater risk than the preferred securities or debt instruments of such issuers.
 
Exchange-Traded Funds.  The Fund may invest in exchange-traded funds, which are investment companies that, in general, aim to track or replicate a desired index, such as a sector, market or global segment.  ETFs are passively or, to a lesser extent, actively managed and their shares are traded on a national exchange.  ETFs do not sell individual shares directly to investors and only issue their shares in large blocks known as “creation units.”  The investor purchasing a creation unit may sell the individual shares on a secondary market.  Therefore, the liquidity of ETFs depends on the adequacy of the secondary market.  There can be no assurance that an ETF’s investment objective will be achieved, as ETFs based on an index may not replicate and maintain exactly the composition and relative weightings of securities in the index. ETFs are subject to the risks of investing in the underlying securities.  The Fund, as a holder of the securities of the ETF, will bear its pro rata portion of the ETF’s expenses, including advisory fees.  These expenses are in addition to the direct expenses of the Fund’s own operations.
 
Fixed Income Securities, including Non-Investment Grade Securities. The Fund may invest in fixed income securities, also referred to as debt securities.  Fixed income securities are subject to credit risk and market risk.  Credit risk is the risk of the issuer’s inability to meet its principal and interest payment obligations.  Market risk is the risk of price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity.  There is no limitation on the maturities or duration of fixed income securities in which the Fund invests. Securities having longer maturities generally involve greater risk of fluctuations in value resulting from changes in interest rates.  The Fund’s credit quality policy with respect to investments in fixed income securities does not require the Fund to dispose of any debt securities owned in the event that such security’s rating declines to below investment grade, commonly referred to as “junk bonds.”  Although lower quality debt typically pays a higher yield, such investments involve substantial risk of loss.  Junk bonds are considered predominantly speculative with respect to the issuer’s ability to pay interest and principal and are susceptible to default or decline in market value due to adverse economic and business developments.  The market values for junk bonds tend to be very volatile and those securities are less liquid than investment grade debt securities.  Moreover, junk bonds pose a greater risk that exercise of any of their redemption or call provisions in a declining market may result in their replacement by lower-yielding bonds.  In addition, bonds in the lowest two investment grade categories, despite being of higher credit rating than junk bonds, have speculative characteristics with respect to the issuer’s ability to pay interest and principal and their susceptibility to default or decline in market value.
 
Corporate Bonds, Government Debt Securities and Other Debt Securities:  The Fund may invest in corporate bonds, debentures and other debt securities.  Debt securities in which the Fund may invest may pay fixed or variable rates of interest.  Bonds and other debt securities generally are issued by corporations and other issuers to borrow money from investors.  The issuer pays the investor a fixed or variable rate of interest and normally must repay the amount borrowed on or before maturity.  Certain debt securities are “perpetual” in that they have no maturity date.
 
The Fund may invest in government debt securities, including those of emerging market issuers or of other non-U.S. issuers.  These securities may be U.S. dollar-denominated or non-U.S. dollar-denominated and include: (a) debt obligations issued or guaranteed by foreign national, provincial, state, municipal or other governments with taxing authority or by their agencies or instrumentalities; and (b) debt obligations of supranational entities.  Government debt securities include debt securities issued or guaranteed by governments, government agencies or instrumentalities and political subdivisions; debt securities issued by government owned, controlled or sponsored entities; interests in entities organized and operated for the purpose of restructuring the investment characteristics issued by the above noted issuers; or debt securities issued by supranational entities such as the World Bank or the European Union.  The Fund may also invest in securities denominated in currencies of emerging market countries.  Emerging market debt securities generally are rated in the lower rating categories of recognized credit rating agencies or are unrated and considered to be of comparable quality to lower rated debt securities.  A non-U.S. issuer of debt or the non-U.S. governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited resources in the event of a default.  Some of these risks do not apply to issuers in large, more developed countries.  These risks are more pronounced in investments in issuers in emerging markets or if the Fund invests significantly in one country.
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Small and Medium Cap Company Risk:  Compared to investment companies that focus only on large capitalization companies, the Fund’s share price may be more volatile because it also invests in small and medium capitalization companies.  Compared to large companies, small and medium capitalization companies are more likely to have (i) more limited product lines or markets and less mature businesses, (ii) fewer capital resources, (iii) more limited management depth and (iv) shorter operating histories.  Further, compared to large cap stocks, the securities of small and medium capitalization companies are more likely to experience sharper swings in market values, be harder to sell at times and at prices that the Fund’s investment adviser believes appropriate, and offer greater potential for gains and losses.
 
Foreign Securities:  The Fund may invest in foreign securities, including direct investments in securities of foreign issuers that are traded on a U.S. securities exchange or over the counter and investments in depository receipts (such as American Depositary Receipts (“ADRs”)), ETFs and other closed-end investment companies that represent indirect interests in securities of foreign issuers.  The Fund is not limited in the amount of assets it may invest in such foreign securities.  These investments involve certain risks not generally associated with investments in the securities of U.S. issuers, including the risk of fluctuations in foreign currency exchange rates, unreliable and untimely information about the issuers and political and economic instability.  These risks could result in the Fund’s investment adviser misjudging the value of certain securities or in a significant loss in the value of those securities.
 
The value of foreign securities is affected by changes in currency rates, foreign tax laws (including withholding and confiscatory taxes), government policies (in this country or abroad), relations between nations and trading, settlement, custodial and other operational risks.  In addition, the costs of investing abroad are generally higher than in the United States, and foreign securities markets may be less liquid, more volatile and less subject to governmental supervision than markets in the U.S.  As an alternative to holding foreign traded securities, the Fund may invest in dollar-denominated securities of foreign companies that trade on U.S. exchanges or in the U.S. over-the-counter market (including depositary receipts as described below, which evidence ownership in underlying foreign securities, and ETFs as described below).
 
Because foreign companies are not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to U.S. companies, there may be less publicly available information about a foreign company than about a domestic company.  Volume and liquidity in most foreign debt markets is less than in the United States and securities of some foreign companies are less liquid and more volatile than securities of comparable U.S. companies.  There is generally less government supervision and regulation of securities exchanges, broker dealers and listed companies than in the United States.  Mail service between the United States and foreign countries may be slower or less reliable than within the United States, thus increasing the risk of delayed settlements of portfolio transactions or loss of certificates for portfolio securities.  Payment for securities before delivery may be required.  In addition, with respect to certain foreign countries, including those with emerging markets, there is the possibility of expropriation or confiscatory taxation, political or social instability, or diplomatic developments which could affect investments in those countries.  For example, prior governmental approval for foreign investments may be required in some emerging market countries, and the extent of foreign investment may be subject to limitation in other emerging countries.  Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position.  Foreign securities markets, while growing in volume and sophistication, are generally not as developed as those in the United States, and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of comparable U.S. companies.
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The Fund may purchase ADRs, international depositary receipts (“IDRs”) and global depository receipts (“GDRs”) which are certificates evidencing ownership of shares of foreign issuers and are alternatives to purchasing directly the underlying foreign securities in their national markets and currencies.  However, such depository receipts continue to be subject to many of the risks associated with investing directly in foreign securities.  These risks include foreign exchange risk as well as the political and economic risks associated with the underlying issuer’s country. ADRs, EDRs and GDRs may be sponsored or unsponsored.  Unsponsored receipts are established without the participation of the issuer.  Unsponsored receipts may involve higher expenses, they may not pass-through voting or other stockholder rights, and they may be less liquid.  Less information is normally available on unsponsored receipts.
 
Dividends paid on foreign securities may not qualify for the reduced federal income tax rates applicable to qualified dividends under the Code.  As a result, there can be no assurance as to what portion of the Fund’s distributions attributable to foreign securities will be designated as qualified dividend income.
 
Emerging Market Securities:  The Fund may invest up to 5% of its net assets in emerging market securities, although through its investments in ETFs, other investment companies or depository receipts that invest in emerging market securities, up to 20% of the Fund’s assets may be invested indirectly in issuers located in emerging markets.  The risks of foreign investments described above apply to an even greater extent to investments in emerging markets.  The securities markets of emerging countries are generally smaller, less developed, less liquid, and more volatile than the securities markets of the United States and developed foreign markets.  Disclosure and regulatory standards in many respects are less stringent than in the United States and developed foreign markets.  There also may be a lower level of monitoring and regulation of securities markets in emerging market countries and the activities of investors in such markets and enforcement of existing regulations has been extremely limited.  Many emerging countries have experienced substantial, and in some periods extremely high, rates of inflation for many years.  Inflation and rapid fluctuations in inflation rates have had and may continue to have very negative effects on the economies and securities markets of certain emerging countries.  Economies in emerging markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values, and other protectionist measures imposed or negotiated by the countries with which they trade.  The economies of these countries also have been and may continue to be adversely affected by economic conditions in the countries in which they trade.  The economies of countries with emerging markets may also be predominantly based on only a few industries or dependent on revenues from particular commodities.  In addition, custodial services and other costs relating to investment in foreign markets may be more expensive in emerging markets than in many developed foreign markets, which could reduce the Fund’s income from such securities.  In many cases, governments of emerging countries continue to exercise significant control over their economies, and government actions relative to the economy, as well as economic developments generally, may affect the Fund’s investments in those countries.  In addition, there is a heightened possibility of expropriation or confiscatory taxation, imposition of withholding taxes on interest payments, or other similar developments that could affect investments in those countries.  There can be no assurance that adverse political changes will not cause the Fund to suffer a loss of any or all of its investments.  Dividends paid by issuers in emerging market countries will generally not qualify for the reduced federal income tax rates applicable to qualified dividends under the Code.
 
Preferred Stocks:  The Fund may invest in preferred stocks.  Preferred stock, like common stock, represents an equity ownership in an issuer.  Generally, preferred stock has a priority of claim over common stock in dividend payments and upon liquidation of the issuer. Unlike common stock, preferred stock does not usually have voting rights.  Preferred stock in some instances is convertible into common stock.  Although they are equity securities, preferred stocks have characteristics of both debt and common stock.  Like debt, their promised income is contractually fixed.  Like common stock, they do not have rights to precipitate bankruptcy proceedings or collection activities in the event of missed payments.  Other equity characteristics are their subordinated position in an issuer’s capital structure and that their quality and value are heavily dependent on the profitability of the issuer rather than on any legal claims to specific assets or cash flows.
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Investment in preferred stocks carries risks, including credit risk, deferral risk, redemption risk, limited voting rights, risk of subordination and lack of liquidity.  Fully taxable or hybrid preferred securities typically contain provisions that allow an issuer, at its discretion, to defer distributions for up to 20 consecutive quarters.  Distributions on preferred stock must be declared by the board of directors and may be subject to deferral, and thus they may not be automatically payable.  Income payments on preferred stocks may be cumulative, causing dividends and distributions to accrue even if not declared by the company’s board or otherwise made payable, or they may be non-cumulative, so that skipped dividends and distributions do not continue to accrue.  There is no assurance that dividends on preferred stocks in which the Fund invests will be declared or otherwise made payable.  The Fund may invest in non-cumulative preferred stock, although the Fund’s investment adviser would consider, among other factors, their non-cumulative nature in making any decision to purchase or sell such securities.
 
Shares of preferred stock have a liquidation value that generally equals the original purchase price at the date of issuance.  The market values of preferred stock may be affected by favorable and unfavorable changes impacting the issuers’ industries or sectors, including companies in the utilities and financial services sectors, which are prominent issuers of preferred stock.  They may also be affected by actual and anticipated changes or ambiguities in the tax status of the security and by actual and anticipated changes or ambiguities in tax laws, such as changes in corporate and individual income tax rates, and in the dividends received deduction for corporate taxpayers or the lower rates applicable to certain dividends.
 
Because the claim on an issuer’s earnings represented by preferred stock may become onerous when interest rates fall below the rate payable on the stock or for other reasons, the issuer may redeem preferred stock, generally after an initial period of call protection in which the stock is not redeemable.  Thus, in declining interest rate environments in particular, the Fund’s holdings of higher dividend paying preferred stocks may be reduced and the Fund may be unable to acquire securities paying comparable rates with the redemption proceeds.  In the event of a redemption, the Fund may not be able to reinvest the proceeds at comparable rates of return.
 
Convertible Securities.  The Fund may invest in convertible securities.  Convertible securities include fixed income securities that may be exchanged or converted into a predetermined number of shares of the issuer’s underlying common stock at the option of the holder during a specified period.  Convertible securities may take the form of convertible preferred stock, convertible bonds or debentures, units consisting of “usable” bonds and warrants or a combination of the features of several of these securities.  The investment characteristics of each convertible security vary widely, which allows convertible securities to be employed for a variety of investment strategies.  The Fund will exchange or convert convertible securities into shares of underlying common stock when, in the opinion of the Fund’s investment adviser, the investment characteristics of the underlying common shares will assist the Fund in achieving its investment objective.  The Fund may also elect to hold or trade convertible securities. In selecting convertible securities, the Fund’s investment adviser evaluates the investment characteristics of the convertible security as a fixed income instrument, and the investment potential of the underlying equity security for capital appreciation.  In evaluating these matters with respect to a particular convertible security, the Fund’s investment adviser considers numerous factors, including the economic and political outlook, the value of the security relative to other investment alternatives, trends in the determinants of the issuer’s profits, and the issuer’s management capability and practices.
 
The value of a convertible security, including, for example, a warrant, is a function of its “investment value” (determined by its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a conversion privilege) and its “conversion value” (the security’s worth, at market value, if converted into the underlying common stock).  The investment value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline.  The credit standing of the issuer and other factors may also have an effect on the convertible security’s investment value.  The conversion value of a convertible security is determined by the market price of the underlying common stock.  If the conversion value is low relative to the investment value, the price of the convertible security is governed principally by its investment value.  Generally, the conversion value decreases as the convertible security approaches maturity.  To the extent the market price of the underlying common stock approaches or exceeds the conversion price, the price of the convertible security will be increasingly influenced by its conversion value.  A convertible security generally will sell at a premium over its conversion value by the extent to which investors place value on the right to acquire the underlying common stock while holding a fixed income security.  A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument.  If a convertible security held by the Fund is called for redemption, the Fund will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party.  Any of these actions could have an adverse effect on the Fund’s ability to achieve its investment objective.
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Real Estate Investment Trusts.  The Fund may invest in real estate investment trusts (“REITs”).  REITs are financial vehicles that pool investors’ capital to purchase or finance real estate.  Investments in REITs will subject the Fund to various risks. REIT share prices may decline because of adverse developments affecting the real estate industry and real property values.  In general, real estate values can be affected by a variety of factors, including supply and demand for properties, the economic health of the country or of different regions, and the strength of specific industries that rent properties. REITs often invest in highly leveraged properties.  Returns from REITs, which typically are small or medium capitalization stocks, may trail returns from the overall stock market.  In addition, changes in interest rates may hurt real estate values or make REIT shares less attractive than other income-producing investments. REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation.
 
Qualification as a REIT under the Code in any particular year is a complex analysis that depends on a number of factors.  There can be no assurance that the entities in which the Fund invests with the expectation that they will be taxed as a REIT will qualify as a REIT.  An entity that fails to qualify as a REIT would be subject to a corporate level tax, would not be entitled to a deduction for dividends paid to its stockholders and would not pass through to its stockholders the character of income earned by the entity. If the Fund were to invest in an entity that failed to qualify as a REIT, such failure could significantly reduce the Fund’s yield on that investment.
 
REITs can be classified as equity REITs, mortgage REITs and hybrid REITs.  Equity REITs invest primarily in real property and earn rental income from leasing those properties. They may also realize gains or losses from the sale of properties.  Equity REITs will be affected by conditions in the real estate rental market and by changes in the value of the properties they own.  Mortgage REITs invest primarily in mortgages and similar real estate interests and receive interest payments from the owners of the mortgaged properties.  Mortgage REITs will be affected by changes in creditworthiness of borrowers and changes in interest rates.  Hybrid REITs invest both in real property and in mortgages.  Equity and mortgage REITs are dependent upon management skills, may not be diversified and are subject to the risks of financing projects.
 
Dividends paid by REITs will not generally qualify for the reduced U.S. federal income tax rates applicable to qualified dividends under the Code. To the extent the Fund invests in REITs, the Fund may designate dividends it pays to stockholders as “Section 199A dividends” so that such stockholder may be eligible for a 20% deduction with respect to such dividends. See “Material United States Federal Income Tax Consequences —Taxation of Stockholders” below.
 
The Fund’s investments in REITs may include an additional risk to stockholders.  Some or all of a REIT’s annual distributions to its investors may constitute a non-taxable return of capital.  Any such return of capital will generally reduce the Fund’s basis in the REIT investment, but not below zero.  To the extent the distributions from a particular REIT exceed the Fund’s basis in such REIT, the Fund will generally recognize gain.  In part because REIT distributions often include a nontaxable return of capital, trust distributions to stockholders may also include a nontaxable return of capital.  Stockholders that receive such a distribution will also reduce their tax basis in their common stock of the Fund, but not below zero.  To the extent the distribution exceeds a stockholder’s basis in the Fund’s common stock such stockholder will generally recognize a capital gain.
 
The Fund does not have any investment restrictions with respect to investments in REITs other than its concentration policy which limits its investments in REITs to no more than 25% of its assets.
 
Issuer Risk:  The value of an issuer’s securities that are held in the Fund’s portfolio may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods and services.
 
Foreign Currency Risk:  Although the Fund will report its NAV and pay expenses and distributions in U.S. dollars, the Fund may invest in foreign securities denominated or quoted in currencies other than the U.S. dollar.  Therefore, changes in foreign currency exchange rates will affect the U.S. dollar value of the Fund’s investment securities and NAV.  For example, even if the securities prices are unchanged on their primary foreign stock exchange, the Fund’s NAV may change because of a change in the rate of exchange between the U.S. dollar and the trading currency of that primary foreign stock exchange.  Certain currencies are more volatile than those of other countries and Fund investments related to those countries may be more affected.  Generally, if a foreign currency depreciates against the dollar (i.e., if the dollar strengthens), the value of the existing investment in the securities denominated in that currency will decline.  When a given currency appreciates against the dollar (i.e., if the dollar weakens), the value of the existing investment in the securities denominated in that currency will rise.  Certain foreign countries may impose restrictions on the ability of foreign securities issuers to make payments of principal and interest to investors located outside of the country, due to a blockage of foreign currency exchanges or otherwise.
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Defensive Positions:  During periods of adverse market or economic conditions, the Fund may temporarily invest all or a substantial portion of its net assets in cash or cash equivalents.  The Fund would not be pursuing its investment objective in these circumstances and could miss favorable market developments.
 
Risk Characteristics of Options and Futures:  Options and futures transactions can be highly volatile investments. Successful hedging strategies require the anticipation of future movements in securities prices, interest rates and other economic factors.  When a fund uses futures contracts and options as hedging devices, the prices of the securities subject to the futures contracts and options may not correlate with the prices of the securities in a portfolio.  This may cause the futures and options to react to market changes differently than the portfolio securities. Even if expectations about the market and economic factors are correct, a hedge could be unsuccessful if changes in the value of the portfolio securities do not correspond to changes in the value of the futures contracts.  The ability to establish and close out futures contracts and options on futures contracts positions depends on the availability of a secondary market.  If these positions cannot be closed out due to disruptions in the market or lack of liquidity, losses may be sustained on the futures contract or option.  In addition, the Fund’s use of options and futures may have the effect of reducing gains made by virtue of increases in value of the Fund’s common stock holdings.

Securities Lending Risk:  Securities lending is subject to the risk that loaned securities may not be available to the Fund on a timely basis and the Fund may, therefore, lose the opportunity to sell the securities at a desirable price.  Any loss in the market price of securities loaned by the Fund that occurs during the term of the loan would be borne by the Fund and would adversely affect the Fund’s performance.  Also, there may be delays in recovery, or no recovery, of securities loaned or even a loss of rights in the collateral should the borrower of the securities fail financially while the loan is outstanding.  The Fund would not have the right to vote any securities having voting rights during the existence of the loan.
 
Discount Risk: Historically, our shares, as well as those of other closed-end investment companies, have frequently traded at a discount to their NAV.  Any premium or discount to NAV often fluctuates over time.  See “Price Range of Common Stock.”
 
Recent Market Events Risk:  U.S. and international markets have experienced significant periods of volatility in recent years due to a number of economic, political and global macro factors including the impact of the novel coronavirus (COVID-19) as a global pandemic; which has resulted in related public health issues, growth concerns in the U.S. and overseas, temporary and permanent layoffs in the private sector, rising unemployment claims, and reduced consumer spending, all of which may lead to a substantial economic downturn or recession in the U.S. and global economies. The recovery from the effects of COVID-19 is uncertain and may last for an extended period of time. These developments as well as other events, could result in further market volatility and negatively affect financial asset prices, the liquidity of certain securities and the normal operations of securities exchanges and other markets. As a result, the risk environment remains elevated. The Fund’s investment adviser will monitor developments and seek to manage the Fund in a manner consistent with achieving the Fund’s investment objective, but there can be no assurance that it will be successful in doing so.
 
Illiquid Securities Risk.  The Fund may invest in illiquid securities. Illiquid securities may offer a higher yield than securities which are more readily marketable, but they may not always be marketable on advantageous terms. The sale of illiquid securities often requires more time and may result in higher brokerage charges or dealer discounts than does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. A security traded in the U.S. that is not registered under the Securities Act will not be considered illiquid if Fund management determines that an adequate investment trading market exists for that security. However, there can be no assurance that a liquid market will exist for any security at a particular time. Restricted securities for which no market exists and other illiquid investments are valued at fair value as determined in accordance with procedures approved and periodically reviewed by the Board. The Fund does not consider its investments in SPACs to be illiquid because they are publicly traded securities.
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Unregistered Fund Risk.  The Fund may invest in hedge funds and other pooled vehicles that are not registered as investment companies under the 1940 Act. Investments in unregistered funds do not have the benefit of the protections afforded by the 1940 Act to investors in registered investment companies. Investments in hedge funds and other unregistered vehicles are often illiquid, their marketability may be restricted and the realization of investments from them may take considerable time and/or be costly, in particular because they may have restrictions that allow redemptions only at specific infrequent dates with considerable notice periods and apply lock-ups and/or redemption fees. In addition, the strategies of such funds may be narrowly focused on a particular market, security type or activity, and would be exposed to greater risk of loss if the investment thesis underlying the focus does not occur as anticipated.
 
Other Risks: In addition to the risks detailed above, the Fund may have investments in auction rate preferred securities, business development companies, special purpose acquisition vehicles, liquidation claims, warrants and rights.  All of these other investments can subject the Fund to various risks.  Any of these investments could have an adverse effect on the Fund’s ability to achieve its investment objective.
 
Convertible Preferred Stock Rights Offering
 
Purpose of Offering/Use of Proceeds
 
The Board of the Fund has determined that it would be in the best interests of the Fund and our stockholders to increase the assets of the Fund so that we may be in a better position to take advantage of investment opportunities that exist or may arise. Such opportunities may include, among other things, acquiring securities yielding greater than 2.75% or that are expected to return more than 2.75% per annum including units and shares of special purpose acquisition companies (“SPACs”), acquiring shares of closed-end funds at a discount to their net asset value, or repurchasing shares of the Fund’s common stock at a discount to their net asset value. This offering seeks to reward existing stockholders by giving them the opportunity to purchase a unique security of the Fund without incurring any commission or charge.  The distribution of the Rights, which themselves may have intrinsic value, will also give non-participating stockholders the potential of receiving a cash payment upon the sale for their Rights, which may be viewed as partial compensation for the possible dilution of their interests in the Fund as a result of the offer.  Proceeds will be invested in accordance with the Fund’s investment objectives and policies as stated herein. See “Business of the Fund.”
 
Basic Subscription Right
 
Each of our stockholders as of the Record Date shall receive, at no cost, one transferable right (each whole right, a “Subscription Right” or “Right”) to purchase one share of Convertible Preferred Stock for each 5 shares of our common stock such stockholder owns as of the Record Date (the “Basic Subscription Right”).  We will not issue fractional shares of our Convertible Preferred Stock upon the exercise of Rights.  The number of Rights issued to Record Date stockholders will be rounded up to the nearest whole number of Rights.  We intend to offer shares of Convertible Preferred Stock to Rights Holders for a price equal to $25.00 per share (the “Subscription Price”).  The offer to purchase Convertible Preferred Stock will expire at 5:00 p.m., New York City time, on [●], 2021, unless we decide to extend it to some later date (the “Expiration Date”).
 
The Fund announced this offering after the close of trading on the NYSE on [●], 2021.  The NAV per share of our common stock at the close of business on [●], 2021 (the last trading date on which the Fund publicly reported its NAV prior to the announcement) was $[●], and the last reported sales price of a share of our common stock on the NYSE on such date was $[●].
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All questions as to the validity, form, eligibility (including time of receipt), payment and acceptance for payment of any Convertible Preferred Stock will be determined by us, in our sole discretion, which determination shall be final and binding.  We reserve the absolute right to reject any and all requests for participation in this offering and to issue a lower number of shares of Convertible Preferred Stock, with our only obligation being to return any excess payment without interest.  We shall be under no duty to give notification of any defects or irregularities in any request for participation in this offering, nor shall we incur any liability for failure to give any such notification.
 
Over-Subscription Privilege and Over-Allotment Privilege
 
If you elect to purchase the maximum amount of our Convertible Preferred Stock that you are entitled to purchase pursuant to your Basic Subscription Right, you will also be entitled, pursuant to the Over-Subscription Privilege, subject to allotment, to purchase additional shares of our Convertible Preferred Stock, if any, that are not purchased by other Rights Holders pursuant to their Basic Subscription Right.  If sufficient shares of our Convertible Preferred Stock are available, we will seek to honor Over-Subscription Privilege requests in full.
 
Banks, brokers, trustees and other nominee holders of Rights will be required to certify to the Subscribing Agent, before any Over-Subscription Privilege may be exercised with respect to any particular beneficial Rights Holder, as to the aggregate number of Subscription Rights exercised and the number of Convertible Preferred Stock subscribed for pursuant to the Over-Subscription Privilege by such beneficial Rights Holder and that such beneficial Rights Holders’ Basic Subscription Right was exercised in full.  A Nominee Holder Certification form will be distributed to banks, brokers, trustees and other nominee holders with the Subscription Certificate.
 
If sufficient additional shares are not available to honor all requests under the Over-Subscription Privilege, we may, in our discretion, issue up to 1,500,000 additional shares of Convertible Preferred Stock for a total of 4,042,593 shares of Convertible Preferred Stock to honor Over-Subscription Privilege requests, with such shares subject to the same terms and conditions of this offering.
 
Transferability of Rights
 
The Rights are evidenced by Subscription Certificates and are transferable until the Expiration Date and are expected to be admitted for trading through NYSE.  Although no assurance can be given that a market for the Rights will develop, trading in the Rights on NYSE will begin three Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date, such period to be no less than 20 days.
 
Stockholders are urged to obtain a recent trading price for the Rights on the NYSE from their broker, bank, financial advisor or the financial press.
 
Description of Convertible Preferred Stock
 
The Convertible Preferred Stock is a new class of our capital stock designated by the Board specifically for issuance pursuant to this offering.  See “Description of our Capital Stock.”
 
 (a) Liquidation Preference:  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Fund, the holders of Convertible Preferred Stock will be entitled to receive preferential liquidating distribution at face value (i.e., $25.00 per share) before any distribution of assets is made to the holders of our common stock.  After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets by the Fund.

 (b) Dividends:  The holders of Convertible Preferred Stock will be entitled to receive dividends at the rate of 2.75% of the Subscription Price per year.  Dividends on our Convertible Preferred Stock will accumulate without interest from the date of original issuance of the Convertible Preferred Stock and will be payable quarterly in arrears on the last calendar day of March, June, September and December (each, a “Quarterly Dividend Payment Date”), commencing on the last calendar day of the first March, June, September or December following the date of Expiration Date.  The first dividend declared and payable will be pro-rated from the date of original issuance of the Convertible Preferred Stock. The final dividend payable as of the date of the redemption of the Convertible Preferred Stock will be pro-rated from the last Quarterly Dividend Payment Date.
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 (c) Voting Rights:  So long as the Fund is subject to the 1940 Act, the holders of any Convertible Preferred Stock, voting separately as a single class, shall have the right to elect two Directors at all times.  The remaining Directors shall be elected by holders of common stock and the holders of the Convertible Preferred Stock, voting together as a single class.  The foregoing right to elect two Directors shall be unaffected by any default by the Fund in the payment of dividends to holders of the Convertible Preferred Stock, subject to any additional rights afforded to such holders in the event of such a default under the 1940 Act, including Section 18 thereof.  In addition to any approval by stockholders that might otherwise be required, the approval of the holders of two-thirds of any outstanding Convertible Preferred Stock, voting separately as a class, would be required to (1) create any senior equity security or (2) adopt any charter or bylaw amendment that would materially affect existing terms of the Convertible Preferred Stock.  The approval of the holders of a majority of any outstanding Convertible Preferred Stock, voting separately as a class, would be required to (1) adopt any plan of reorganization that would adversely affect the Convertible Preferred Stock, (2) create any pari passu security, (3) increase the amount of authorized shares of Convertible Preferred Stock or (4), take any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, changes in the Fund’s subclassification as a closed-end investment company or changes in its fundamental investment restrictions.  As a result of these voting rights, the Fund’s ability to take any such actions may be impeded to the extent that there is any Convertible Preferred Stock outstanding.  The Board presently intends that, except as otherwise indicated in this Prospectus and except as otherwise required by applicable law or the Fund’s Articles of Incorporation, Articles Supplementary or bylaws, holders of Convertible Preferred Stock will have equal voting rights with holders of our common stock (one vote per share) and shall generally vote together with such holders of common stock as a single class (unless otherwise required by the 1940 Act).
 
(d) Conversion Right of Holders:  Shares of the Convertible Preferred Stock are convertible at any time.  Until the mandatory redemption date set forth in (g) below, holders of Convertible Preferred Stock may present their shares for conversion, in whole or in part, after the issuance thereof into shares of common stock at a conversion rate equivalent to a conversion price of $20.50 per share of common stock (which is a ratio of 1.2195 shares of common stock for each share of Convertible Preferred Stock held).  The conversion price (and resulting conversion ratio) will be adjusted for any distributions made to or on behalf of common stockholders.  Following any such conversion, shares of common stock shall be issued as soon as reasonably practicable.  The Board believes that the value of the conversion right of the Convertible Preferred Stock is not a predominant factor in the market value of the Convertible Preferred Stock as of the date of its issuance.  The conversion right is a secondary attribute which is included to enhance the terms upon which the Fund is able to issue the Convertible Preferred Stock.  In connection with such conversion you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock to the date of conversion, but after conversion you would no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.

(e) Optional Redemption:  Until the mandatory redemption date set forth in (g) below, at any time following the second anniversary of the Expiration Date, the Board may, in its sole discretion, redeem all or any part of the then outstanding shares of Convertible Preferred Stock at $25.00 per share.  Under such circumstances, the Fund shall provide no less than 30 days’ nor more than 90 days’ notice to the holders of Convertible Preferred Stock that, unless such shares have been converted by a certain date, the shares will be redeemed.  In connection with such redemption, you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock as of the date of redemption, but after the redemption, you shall no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.
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(f) Mandatory Conversion: If, at any time from and after the date of issuance of the Convertible Preferred Stock, the market price of the common stock is equal to or greater than $23.75 per share (as adjusted for dividends or other distributions made to or on behalf of holders of the common stock), the Board may, in its sole discretion, require the holders of the Convertible Preferred Stock to convert all or any part of their shares into shares of common stock at a conversion rate equivalent to a conversion price of $20.50 per share of common stock (which is a ratio of 1.2195 shares of common stock for each share of Convertible Preferred Stock held), subject to adjustment upon the occurrence of certain events. The conversion price (and resulting conversion ratio) will be adjusted for any dividends or other distributions made to or on behalf of common stockholders.  Notice of such mandatory conversion shall be provided by the Fund in accordance with its Articles of Incorporation.  In connection with such conversion you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock to the date of conversion, but after conversion you would no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.

(g) Mandatory Redemption:  We will redeem all outstanding shares of Convertible Preferred Stock as of [●], 2021 (five years from the Expiration Date) at a price of $25.00 per share of Convertible Preferred Stock held on such date.  Notice of such mandatory redemption shall be provided by the Fund in accordance with its Articles of Incorporation.

Description of Common Stock
 
All shares of our common stock have equal rights as to earnings, assets, dividends and voting privileges and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable.  Distributions may be paid to the holders of our common stock if, as and when authorized by our Board and declared by us out of funds legally available for such distributions.  Shares of our common stock have no preemptive, conversion or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract.  In the event of our liquidation, dissolution or winding up, each share would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities.  Each of our shares of common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of Directors.  Except as provided with respect to any other class or series of stock, the holders of the Fund’s common stock will possess exclusive voting power.  There is no cumulative voting in the election of Directors, which means that holders of a majority of the outstanding shares of common stock will elect all of our Directors, and holders of less than a majority of such shares will be unable to elect any Director.

Asset Coverage
 
Immediately following the issuance of the Convertible Preferred Stock to purchasing Rights Holders and so long as the Fund is subject to the 1940 Act, (i) the Fund shall have an asset coverage of at least 200 percent, (ii) the Fund will be prohibited from declaring any dividend (except a dividend payable in our common stock) or any other distribution upon our common stock, unless the Convertible Preferred Stock has, at the time of any such declaration, an asset coverage of at least 200 percent after deducting the amount of such dividend or distribution, as the case may be, (iii) holders of Convertible Preferred Stock will be entitled, voting as a class, to the voting rights outlined in (b) above, and (iv) holders of Convertible Preferred Stock will have the liquidation preference outlined in (a) above.
 
No Fractional Shares
 
We will not issue fractional shares of our Convertible Preferred Stock upon the exercise of Rights.  The number of Rights issued to Record Date stockholders will be rounded up to the nearest whole number of Rights.
 
Expiration Date of the Offering
 
You may elect to purchase Convertible Preferred Stock pursuant to your Basic Subscription Right and/or Over Subscription Privilege and/or Over Allotment Privilege at any time before 5:00 p.m., New York City time, on [●], 2021 (the “Expiration Date”).  The Board reserves the right to extend the date upon which the Rights expire.  If you do not elect to purchase Convertible Preferred Stock pursuant to your Rights before the time they expire, then your Rights will be null and void.  We will not be obligated to honor your election to purchase Convertible Preferred Stock if we receive the documents relating to your purchase of Convertible Preferred Stock or collect your payment after the time they expire, regardless of when you transmitted the documents. See “Receipt of Payment” below.
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Any extension of this offering will be followed as promptly as practicable by announcement thereof, and in no event later than 9:00 a.m., New York City time, on the next Business Day following the previously scheduled Expiration Date.  Without limiting the manner in which the Fund may choose to make such announcement, the Fund will not, unless otherwise required by law, have any obligation to publish, advertise or otherwise communicate any such announcement other than by making a release to the Dow Jones News Service or such other means of announcement as the Fund deems appropriate.
 
Although we have no present intention to do so, we may, in the future and in our discretion, choose to make additional offerings from time to time for a number of shares and on terms which may or may not be similar to this offer. Any such future offering will be made in accordance with the 1940 Act.
 
Distribution Arrangements
 
We do not intend to engage a dealer manager for the offer.  Our officers and Directors may solicit the exercise of Rights by our stockholders.  This offering is not contingent on any number of Rights being exercised, and we will pay all expenses incurred in connection with the offer.
 
Election to Purchase Convertible Preferred Stock
 
You may elect to purchase Convertible Preferred Stock by delivering the following to the Subscribing Agent at or before the Expiration Date:
 
your properly completed and signed Subscription Certificate, with any required signature guarantees, evidencing those rights with any other supplemental documentation, or your properly completed Beneficial Owner Election Form instructing your broker, dealer, custodian bank or other nominee to act on your behalf through DTC; and

your payment in full of the Subscription Price for each share of our Convertible Preferred Stock that you choose to subscribe for under your Basic Subscription Right or your Over-Subscription Privilege.

Method of Payment
 
Your payment of the Subscription Price must be made by either:
 
check or bank draft drawn upon a U.S. bank, payable to: “Special Opportunities Fund, Inc.”; or

wire transfer of immediately available funds to the account maintained by the Subscribing Agent for such purpose at: JPMorgan Chase Bank, 55 Water Street, New York, New York 10005, ABA #021000021, Account # 530-354616 American Stock Transfer, LLC FBO Special Opportunities Fund, Inc.

If you hold our common stock through a nominee holder, you will need to have your broker, custodian bank or other nominee act for you.  To indicate your decision with respect to your Rights, you should send a Beneficial Owner Election Form to your broker, dealer, custodian bank or other nominee instructing them to exercise the Rights and make payment through DTC by the Expiration Date.

Receipt of Payment

Your payment of the Subscription Price will be deemed to have been received by us only upon:
 
clearance of any uncertified check;

receipt by us of any certified check or bank draft drawn upon a U.S. bank; or

receipt of collected funds in our account designated above.
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Clearance of Uncertified Checks

You should note that funds paid by uncertified personal checks may take 5 Business Days or more to clear.  If you wish to pay the Subscription Price by an uncertified personal check, we recommend that you make payment at least 10 days in advance of the Expiration Date to ensure that your payment is received and clears by that time.  If your check does not clear before the Expiration Date, you will not receive any shares of Convertible Preferred Stock, and our only obligation will be to return your subscription payment, without interest.  It is safer to use a certified or cashier’s check or wire transfer of funds to avoid missing the opportunity to purchase Convertible Preferred Stock.
 
Delivery of Subscription Materials and Payment

You should deliver the Subscription Certificate and payment of the Subscription Price, as well as any other subscription documentation as follows:
 
By Hand or Overnight Delivery:
American Stock Transfer & Trust Company, LLC
Operations Center
Attn:  Reorganization Department
6201 15th Avenue
Brooklyn, New York 11219

Information

If you have any questions about the offering or wish to request another copy of a document, please contact the Information Agent, InvestorCom LLC, toll free at (877) 972-0090 or by email at info@investor-com.com.

Calculation of Convertible Preferred Stock Purchased

If you do not indicate the number of shares of Convertible Preferred Stock being subscribed for, or do not forward full payment of the aggregate Subscription Price for the number of shares of Convertible Preferred Stock that you indicate are subscribed for, then you will be deemed to have purchased the maximum number of shares of the Convertible Preferred Stock that may be purchased for the payment that you delivered to our Subscribing Agent.
 
Funds Will Be Held by our Subscribing Agent until Shares of Convertible Preferred Stock Are Issued

Our Subscribing Agent will hold your payment in a segregated account with other payments received from Rights Holders until we issue to you your shares of our Convertible Preferred Stock.  You will not be entitled to any interest on such payment.
 
Notice to Nominee Holders

If you are a broker, a trustee or a depositary for securities who holds shares of our common stock for the account of others as of the Record Date, you should notify the respective beneficial owners of the shares about the rights offering as soon as possible to find out their intentions.  You should obtain instructions from the beneficial owner with respect to the rights by using the instructions that we have provided to you for your distribution to beneficial owners.  If the beneficial owner so instructs, you should complete the appropriate Subscription Certificate and submit them to our Subscribing Agent with the proper payment.
 
Notice to Beneficial Owners Whose Shares are Held by a Broker or Nominee

If you are a beneficial owner of shares of our common stock or rights that you hold through a nominee holder, we will ask your broker, custodian bank or other nominee to notify you of this offering.  If you wish to purchase Convertible Preferred Stock, you will need to have your broker, custodian bank or other nominee act for you.  To indicate your decision with respect to your rights, you should complete and return to your broker, custodian bank or other nominee the Beneficial Holder Election Form.  You should receive this form from your broker, custodian bank or other nominee with the other rights offering materials.  We suggest that you contact your broker or other nominee to be sure that they are sending you the election form without delay.  If you are giving instructions to your nominee, you should act promptly to allow a sufficient amount of time to ensure that the nominee can act to follow your instructions in time.
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Notice of NAV Decline
 
The Fund, as required by the SEC’s registration form, will suspend this offering until it amends this Prospectus if, subsequent to the date of this Prospectus, the Fund’s NAV declines more than 10% from its NAV as of that date.  Accordingly, the Expiration Date would be extended and the Fund would notify Rights Holders of the decline and permit Rights Holders to revoke their exercise of Rights.

Mailing of Confirmation

On a date within eight (8) Business Days following the Expiration Date (“Confirmation Date”), the Subscribing Agent will send to each exercising Rights Holder (or, if shares of common stock are held by a nominee, to such nominee) a confirmation showing (i) the number of shares of Convertible Preferred Stock purchased pursuant to the Basic Subscription Right; (ii) the number of shares, if any, acquired pursuant to the Over-Subscription Privilege; and (iii) the per share and total Subscription Price for the shares.  All payments by an exercising Rights Holder must be in U.S. dollars by check drawn on or wire transfer from a bank or branch located in the United States and payable to “Special Opportunities Fund, Inc.
 
Determinations Regarding the Election to Purchase Convertible Preferred Stock

We will decide all questions concerning the timeliness, validity, form and eligibility of your election to purchase Convertible Preferred Stock.  Our decisions will be final and binding.  We, in our sole discretion, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine.  We may reject the election to purchase Convertible Preferred Stock because of any defect or irregularity.  Your election will not be deemed to have been received or accepted until all irregularities have been waived by us or cured by you within such time as we decide, in our sole discretion.
 
Neither we nor our Subscribing Agent will be under any duty to notify you of a defect or irregularity.  We will not be liable for failing to give you any such notice.  We reserve the right to reject your election to purchase Convertible Preferred Stock if your election is not in accordance with the terms of the offering or in proper form.  We will also not accept your election to purchase Convertible Preferred Stock if our issuance of shares of our Convertible Preferred Stock upon your election could be deemed unlawful or materially burdensome.
 
Termination
 
We may terminate this offering at any time prior to the Expiration Date.  If we terminate the offering, our only obligation to you will be to return your subscription payment to you, without interest.
 
Effects of this Offer on the Fund Adviser
 
Our investment adviser will benefit from this offer because the investment management fee we pay to the investment adviser is based on our total net assets.  See “Investment Advisory Agreement.”  It is not possible to state precisely the amount of additional compensation the investment adviser will receive as a result of this offer because it is not known how many shares of Convertible Preferred Stock will be subscribed for.  However, assuming (i) all Rights are exercised and (ii) the average value of our total net assets remains between $205 million and $225 million, and after giving effect to expenses related to this offer, the investment adviser would receive additional annualized advisory fees of $862,500.  Messrs. Andrew Dakos and Phillip Goldstein are members of our Board, but are also officers and owners of our investment adviser and may benefit from this offering by virtue of this affiliation.  The other Directors were aware of the potential benefit to the Adviser (and indirectly to Messrs. Goldstein and Dakos), but nevertheless concluded that the offering was in the best interest of the Fund's stockholders.  This offering was approved by a unanimous vote of the full Board and separately by those Directors who are not affiliated with the investment adviser.
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Board Considerations in Approving the Offering.
 
At a meeting held on June 15, 2021, the Board considered the approval of the offering.  In considering whether or not to approve the offering, the Board relied on materials and information prepared and presented by the Fund's management at such meeting and discussions at that time.  Based on such materials and their deliberations at this meeting, the Board determined that it would be in the best interests of the Fund and its stockholders to conduct the offering in order to increase the assets of the Fund available for current and future investment opportunities, while providing existing stockholders an opportunity to purchase additional shares of the Fund without incurring any commission or transaction charges.  In making its determination, the Board considered the investment opportunities available to the Fund, the ability of the Adviser to invest the proceeds of the offering in accordance with such opportunities and the value of accessing such additional proceeds at favorable terms (i.e., an annual rate of 2.75% of the Subscription Price) in light of the relative illiquidity of the current credit market.  Initially, the Fund’s expenses will increase due to dividend expenses. However, as a result of the conversion of the Convertible Preferred Stock to common stock, the Board noted that increasing Fund assets is expected to be lower the Fund's expenses as a proportion of net assets because the Fund's fixed costs would be spread over a larger asset base.  While the Board acknowledged that there can be no assurance that increasing the size of the Fund would result in lowering the Fund's expense ratio, the Board considered this an appealing potential.
 
In designating the Rights as transferable, rather than non-transferable, the Board considered that the distribution of the Rights may themselves have intrinsic value, which may be viewed as partial compensation for the possible dilution of non-participating stockholders’ interest by potentially receiving a cash payment upon the sale for their Rights.  Furthermore, because the Rights are transferable, the offering may increase the number of stockholders, which could increase the level of market interest in and visibility of the Fund overall and potentially enhance the trading liquidity of the Fund’s shares on the NYSE.
 
On September 14, 2021, the Board approved the final terms of the Offering. After considering all of the characteristics, terms and conditions of the Convertible Preferred Stock, the Board believes that the value of the conversion right of the Convertible Preferred Stock is not a predominant factor in the market value of the Convertible Preferred Stock as of the date of its issuance.  The Board further believes that the conversion right is a secondary attribute which is included to enhance the terms upon which the Fund is able to issue the Convertible Preferred Stock.
 
There can be no assurance that the Fund or its stockholders will achieve any of the foregoing objectives or benefits through the offering.
 
The Fund may, in the future and at its discretion, choose to make additional rights offerings from time to time for shares of its Common or Convertible Preferred Stock and on terms which may or may not be similar to the offering.  Any such future rights offerings will be made in accordance with the 1940 Act.  Under the laws of Maryland, the state in which the Fund is incorporated, under certain circumstances, the Board is authorized to approve rights offerings without obtaining stockholder approval.  The Staff of the SEC has interpreted the 1940 Act as not requiring stockholder approval of a rights offering at a price below the then current NAV so long as certain conditions are met, including a good faith determination by the fund's Board that such offering would result in a net benefit to the Fund's existing stockholders.  The Board reserves the right to terminate at any time, in its sole discretion, prior to the Expiration Date.
 
No Recommendations to Holders
 
WE MAKE NO RECOMMENDATION TO ANY PERSON TO PARTICIPATE IN THIS OFFERING, AND WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. POTENTIAL HOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE REGISTRATION STATEMENT, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER OR NOT TO PARTICIPATE IN THIS OFFERING.
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Material United States Federal Income Tax Consequences
 
The following discussion is a summary of certain material U.S. federal income tax consequences to a typical “U.S. holder” (defined below) that receives Rights pursuant to this offering and that either (i) exercises such Rights, (ii) allows such Rights to expire, or (iii) sells, exchanges, redeems or otherwise disposes of such Rights.
 
This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code,” applicable current, temporary and proposed Treasury regulations promulgated thereunder, which we refer to as the “Treasury Regulations,” the legislative history of the Code and publicly available administrative and judicial interpretations thereof, all as in effect of the date of this Prospectus and all of which are subject to change, possibly with retroactive effect, or to different interpretations.  In addition, the administrative interpretations and practices of the Internal Revenue Service include its practices and policies as expressed in private letter rulings which are not binding on the Internal Revenue Service, except with respect to the particular taxpayers who requested and received these rulings.  This discussion is included for general information purposes only and does not purport to be a complete technical analysis or listing of all potential tax considerations that may be relevant to U.S. holders in light of their particular circumstances.  This discussion does not address any state, local or foreign tax consequences or any non-income tax consequences (such as estate or gift tax consequences).  This discussion applies only to U.S. holders that hold shares of our common stock as capital assets and that will hold the Rights distributed pursuant to this offering as capital assets (and, in the event such Rights are exercised, will hold newly acquired shares of our Convertible Preferred Stock as capital assets), in each case, within the meaning of Section 1221 of the Code.  This discussion also assumes that all holders of such securities are the beneficial owners and are not acting as agents or nominees.  This discussion also does not address the United States federal income tax consequences to a U.S. holder that is one of our affiliates or that is subject to special rules under the Code, including but not limited to:
 
A financial institution, insurance company, or regulated investment company;

Persons who are subject to alternative minimum tax;

A tax-exempt organization, retirement plan, or mutual fund;

A dealer, broker, or trader in securities;

Non-U.S. holders (as defined below);

An entity treated as a partnership for U.S. federal income tax purposes;

A stockholder that owns its shares of our common stock indirectly through an entity treated as a partnership for United States federal income tax purposes, or a trust or estate;

Persons deemed to sell their shares of common stock under the constructive sale provisions of the Code;

A stockholder that holds its shares of our common stock as part of a hedge, appreciated financial position, straddle or conversion transaction; or

A stockholder that acquired our common stock pursuant to the exercise of compensatory stock options or otherwise as compensation.

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We will not seek a ruling from the Internal Revenue Service, or the “IRS,” with respect to the rights offering. The IRS could take positions concerning the tax consequences of this offering that are different from those described in this discussion, and, if litigated, a court could sustain any such positions taken by the IRS.
 
For purposes of this discussion, the term “U.S. holder” means a holder of shares of our common stock that, for U.S. federal income tax purposes, is:
 
A citizen or resident of the U.S.;

A corporation or other entity treated as a corporation for U.S. federal income tax purposes created or organized in the U.S. or under U.S. laws or the laws of any state or political subdivision thereof;

An estate the income of which is subject to U.S. federal income taxation regardless of its source; or

A trust (i) if, in general, a court within the U.S. is able to exercise primary jurisdiction over its administration and one or more U.S. persons have authority to control all of its substantial decisions or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

A “non-U.S. holder” is a holder other than a U.S. holder.  If a holder of our common stock is a non-U.S. holder, the tax consequences of the rights offering to such holder will depend upon a variety of factors, including whether such person conducts a trade or business in the U.S.  Non-U.S. holders are urged to consult their own tax advisors regarding the tax consequences associated with the rights offering.
 
Holders of our common stock are urged to consult their own tax advisors regarding the specific tax consequences associated with the Rights offering, including the applicability and effect of any state, local, foreign, or other tax laws as well as changes in applicable tax laws.
 
Distribution of Rights
 
We believe that pursuant to Section 305 of the Code and the Treasury Regulations issued thereunder, a U.S. holder that receives Rights pursuant to this offering should not be required to recognize taxable income for U.S. federal income tax purposes upon the receipt of such Rights.
 
We intend to report this offering accordingly.  However, if our intended treatment of the Rights were challenged by the IRS and if such challenge were ultimately upheld, the U.S. federal income tax consequences to a U.S. holder that receives Rights pursuant to this offering may differ from the consequences described herein, and it is possible that a U.S. holder’s receipt of Rights or a portion thereof pursuant to this offering may be taxable.
 
Basis and Holding Period of Rights
 
If, in accordance with Section 307 of the Code, the fair market value of the Rights which we distribute to U.S. holder is less than 15% of the fair market value of such U.S. holder’s shares of our common stock with respect to which such Rights were distributed, such U.S. holder’s basis in the Rights distributed generally will be zero.  A U.S. holder may elect, however, to allocate its basis in our common stock between such common stock and the Rights received in proportion to the fair market value of such common stock and such Rights. This election may be made pursuant to Section 307 of the Code and the Treasury Regulations thereunder and will be irrevocable once made.
 
If the fair market value of the Rights which we distribute to a U.S. holder is 15% or more of the fair market value of such U.S. holder’s shares of our common stock with respect to which such Rights were distributed, such U.S. holder will be required to allocate its basis between such common stock and such Rights in proportion to their relative fair market values.
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In either case, a U.S. holder’s holding period for the Rights that we distribute will include the holding period of such U.S. holder’s shares of our common stock with respect to which such Rights were distributed.
 
Exercise of Rights; Basis and Holding Period of Convertible Preferred Stock
 
A U.S. holder will not recognize gain or loss upon the exercise of the Rights.  A U.S. holder’s basis in our Convertible Preferred Stock acquired through exercise of the Rights generally will equal the sum of (i) the Subscription Price paid by such U.S. holder to acquire such stock and (ii) such U.S. holder’s basis, if any, in the Rights exercised.  A U.S. holder’s holding period in shares of our Convertible Preferred Stock acquired through the exercise of Rights will begin on the day such U.S. holder exercises the Rights.
 
Dividends Paid on Convertible Preferred Stock
 
Dividends paid on the Convertible Preferred Stock will be taxable to the holders of such stock, except to the extent they are treated as a return of capital.  The description below of distributions on our common stock will generally apply to distributions on the Convertible Preferred Stock, too.
 
Sale, Exchange, Redemption or Conversion of Convertible Preferred Stock
 
Upon the sale, exchange, redemption or other disposition of the Convertible Preferred Stock acquired upon the exercise of Rights, except for a conversion into shares of our common stock, a U.S. holder generally will recognize gain or loss equal to the difference between the amount realized and such U.S. holder’s basis in such Convertible Preferred Stock.  Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if a U.S. holder’s holding period exceeds one year at the time of the sale, exchange or other disposition.  The deductibility of capital losses is subject to limitations.
 
However, the conversion of the Convertible Preferred Stock into shares of our common stock, whether done at the option of the holder or the Fund, will not be a taxable transaction.  In such case, the holder will take a tax basis and holding period in the shares of common stock received equal to the tax basis and holding period which it had in the Convertible Preferred Stock surrendered.
 
Expiration of Rights
 
If a U.S. holder receives Rights pursuant to this offering, and such U.S. holder’s basis in our common stock is not allocated between such common stock and the Rights received and such U.S. holder’s Rights expire unexercised, then such U.S. holder will not recognize taxable loss upon expiration of the Rights.  In addition, such U.S. holder’s basis in its shares of our common stock will not be affected by this offering or such U.S. holder’s decision to allow its Rights to expire and will remain the same as before this offering.
 
If a U.S. holder receives Rights pursuant to this offering, and such U.S. holder’s basis in our common stock is allocated between such common stock and the Rights received and such U.S. holder’s Rights expire unexercised, then such U.S. holder will not recognize a taxable loss upon the expiration of the Rights equal to the basis that was allocated to the Rights.  Such U.S. holder’s basis in its shares of our common stock will not be reduced by the amount of basis allocated to the Rights (i.e., upon the lapse of any Right received pursuant to this offering, any portion of the U.S. holder’s tax basis in such U.S. holders shares that would have been allocated to such Right if such Right had been sold or exercised rather than allowed to expire shall continue to be included in the U.S. holder’s tax basis in such U.S. holder’s shares).
 
Backup Withholding
 
A U.S. holder that sells, exchanges, redeems or otherwise disposes of shares of our Convertible Preferred Stock acquired upon the exercise of Rights or that sells, exchanges or otherwise disposes of Rights may be subject to backup withholding on the proceeds received, unless such U.S. holder:
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Is a corporation or other exempt recipient and, when required, establishes this exemption; or

Provides a correct taxpayer identification number, certifies that it is not currently subject to backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

Backup withholding is not an additional tax.  Any amount withheld under the backup withholding rules will generally be creditable against the United States federal income tax liability of a U.S. holder if appropriate information is provided to the IRS.  If a U.S. holder does not provide the appropriate party with the correct taxpayer identification number or any other proper document or certification required by the IRS (generally a Form W-9 in the case of a U.S. holder), such U.S. holder may be subject to penalties imposed by the IRS.
 
Taxation as a Regulated Investment Company
 
The Fund elects to be treated and intends to qualify each year for taxation as a regulated investment company (a “RIC”) under Subchapter M of the Code. In order for the Fund to qualify as a RIC, it must meet income and asset diversification tests each year.  If the Fund so qualifies and satisfies certain distribution requirements, the Fund (but not its stockholders) will not be subject to federal income tax to the extent it distributes its investment company taxable income and net capital gains (the excess of net long-term capital gains over net short-term capital loss) in a timely manner to its stockholders in the form of dividends or capital gain distributions.  The Code imposes a 4% nondeductible excise tax on RICs, such as the Fund, to the extent they do not meet certain distribution requirements by the end of each calendar year.  The Fund anticipates meeting these distribution requirements.
 
Distributions
 
The Fund intends to make distributions of substantially all investment company taxable income after payment of the Fund’s operating expenses.  Distributions of the Fund’s investment company taxable income (including short-term capital gains) will generally be treated as ordinary income to the extent of the Fund’s current and accumulated earnings and profits.  Distributions of the Fund’s net capital gains (“capital gain dividends”), if any, are taxable to stockholders as long-term capital gains, regardless of the length of time shares have been held by stockholders.  Distributions, if any, in excess of the Fund’s earnings and profits will first reduce the adjusted tax basis of a holder’s shares and, after that basis has been reduced to zero, will constitute capital gains to the stockholder of the Fund (assuming the shares are held as a capital asset).  See below for a summary of the maximum tax rates applicable to capital gains (including capital gain dividends) for individuals and other non-corporate taxpayers.  A corporation that owns Fund shares generally will not be entitled to the dividends received deduction with respect to all of the dividends it receives from the Fund.  However, Fund dividend payments that are attributable to qualifying dividends received by the Fund from certain domestic corporations may be designated by the Fund as being eligible for the dividends received deduction.  There can be no assurance as to what portion of Fund dividend payments may be classified as qualifying dividends.  The determination of the character for U.S. federal income tax purposes of any distribution from the Fund (i.e., ordinary income dividends, capital gains dividends, qualifying dividends, return of capital distributions) will be made as of the end of the Fund’s taxable year.  The Fund will provide stockholders with a written notice designating the amount of any capital gain distributions or other distributions.
 
The Fund may elect to retain its net capital gain or a portion thereof for investment and be taxed at corporate rates on the amount retained.  In such case, it may designate the retained amount as undistributed capital gains in a notice to its stockholders who will be treated as if each received a distribution of his pro rata share of such gain, with the result that each stockholder will (i) be required to report his pro rata share of such gain on his tax return as long-term capital gain, (ii) receive a refundable tax credit for his pro rata share of tax paid by the Fund on the gain, and (iii) increase the tax basis for his shares by an amount equal to the deemed distribution less the tax credit.
 
Under current law, certain income distributions paid by the Fund to individual and other non-corporate taxpayers may be taxed at rates equal to those applicable to net long-term capital gains (generally, 20%).  This tax treatment applies only if certain holding period and other requirements are satisfied by the stockholder of the Fund with respect to its shares of the Fund, and the dividends are attributable to qualified dividends received by the Fund itself.  For this purpose, “qualified dividends” means dividends received by the Fund from certain United States corporations and certain qualifying foreign corporations, provided that the Fund satisfies certain holding period and other requirements in respect of the stock of such corporations. In the case of securities lending transactions, payments in lieu of dividends are not qualified dividends.  Dividends received by the Fund from REITs generally are not expected to qualify for treatment as qualified dividend income.  To the extent the Fund invests in REITs, the Fund may designate dividends it pays to its Stockholders as “Section 199A dividends” so that such Stockholder may be eligible for a 20% deduction with respect to such dividends.   The amount of Section 199A dividends that the Fund may pay and report to its Stockholders is limited to the excess of the ordinary REIT dividends, other than capital gain dividends and portions of REIT dividends designated as qualified dividend income that the Fund receives from REITs for a taxable year over the Fund’s expenses allocable to such dividends.  As additional special rules apply to determine whether a distribution will be a qualified dividend, investors should consult their tax advisors.
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The Fund may invest in other RICs.  In general, the Code taxes a RIC which satisfies certain requirements as a pass-through entity by permitting a qualifying RIC to deduct dividends paid to its stockholders in computing the RIC’s taxable income.  A qualifying RIC is also generally permitted to pass through the character of certain types of its income when it makes distributions.  For example, a RIC may distribute ordinary dividends to its stockholders, capital gain dividends, or other types of dividends which effectively pass through the character of the RIC’s income to its stockholders, including the Fund.
 
Sales of Fund Shares
 
Selling stockholders of the Fund will generally recognize gain or loss in an amount equal to the difference between the stockholder’s adjusted tax basis in the shares sold and the amount received.  If the shares are held as a capital asset, the gain or loss will be a capital gain or loss.  Under current law, the maximum tax rate applicable to net capital gains recognized by individuals and other non-corporate taxpayers is (i) the same as the maximum ordinary income tax rate for gains recognized on the sale of capital assets held for one year or less or (ii) generally, 20% for gains recognized on the sale of capital assets held for more than one year (as well as certain capital gain dividends).  Any loss on a disposition of shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends received with respect to those shares.  The use of capital losses is subject to limitations.  For purposes of determining whether shares have been held for six months or less, the holding period is suspended for any periods during which the stockholder’s risk of loss is diminished as a result of holding one or more other positions in substantially similar or related property, or through certain options or short sales.  Any loss realized on a sale or exchange of shares will be disallowed to the extent those shares are replaced by other substantially identical shares within a period of 61 days beginning 30 days before and ending 30 days after the date of disposition of the shares.  In that event, the basis of the replacement shares will be adjusted to reflect the disallowed loss.
 
Medicare Tax of 3.8%
 
An additional 3.8% “Medicare Tax” will be imposed on the “net investment income” of U.S. holders that are individuals and on the “undistributed net investment income” of certain trusts and estates that are U.S. holders to the extent such U.S. holder’s “modified gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate of trust) exceeds certain specified amounts.  The tax is generally levied on income from interest, dividends, royalties, rents, and capital gains, but there are some exclusions and taxpayers should consult their tax advisors about the more precise definition of “net investment income” as it pertains to their particular situations.
 
Other Considerations
 
An investor should be aware that, if shares are purchased shortly before the record date for any taxable dividend (including a capital gain dividend), the purchase price likely will reflect the value of the dividend and the investor then would receive a taxable distribution likely to reduce the trading value of such shares, in effect resulting in a taxable return of some of the purchase price.  Taxable distributions to individuals and certain other non-corporate stockholders of the Fund, including those who have not provided their correct taxpayer identification number and other required certifications, may be subject to “backup” federal income tax withholding currently equal to 24%.
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An investor should also be aware that the benefits of the reduced tax rate applicable to long-term capital gains and qualified dividend income may be affected by the application of the alternative minimum tax to individual stockholders.
 
THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSIDERATIONS RELATING TO THIS OFFERING AND IS NOT TAX ADVICE.  THEREFORE, HOLDERS OF OUR COMMON STOCK ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THIS OFFERING, INCLUDING THE APPLICABILITY OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
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Use of Proceeds
 
The maximum proceeds of the offering before deduction of the expenses associated with this offering, which are estimated to be $150,626, are estimated to be $101,064,825 million.  The Board intends to use approximately one-third of the net proceeds raised in this offering to fund a self-tender offer for shares of the Fund’s common stock if the offering is fully subscribed and if, within the 30-day period commencing on day following the expiration date, the closing market price for such shares is less than 94% of their net asset value for three consecutive days.  The remaining proceeds will be invested in accordance with the Fund’s investment objective and policies as stated herein.  The Adviser expects to have such net proceeds invested accordingly in approximately 30 days, but reserves the right to extend such investment period to as long as six months.  Investment opportunities that may arise from an increase in the assets of the Fund as a result of this Offering include, among other things, acquiring securities yielding greater than 2.75%, acquiring shares of closed-end funds at a discount to net asset value, or repurchasing shares of the Fund’s common stock at a discount to net asset value.

Price Range of Common Stock
 
Our common stock is traded on the NYSE under the symbol “SPE.”  The following table lists the high and low closing sales prices for our common stock, and the closing sales price as a percentage of NAV:

 
Closing Sales Price
   
Premium/
(Discount)
of High Sales
Premium/
(Discount)
of Low Sales
Declared
Dividends
 
High
Low
NAV on
High Sales
Price
NAV on
Low Sales
Price
Price to NAV
Price to NAV
Year ended December 31, 2021
         
First
$14.97
$13.86
$17.94
$16.27
-16.56%
-14.81%
$0.282
Second
$15.51
$14.41
$18.34
$17.20
-15.43%
-16.22%
$0.282
Third
$16.02
$15.02
$16.93
$16.65
-5.38%
-9.79%
$0.3225
Year ended December 31, 2020
         
First
$14.96
$7.88
$16.41
$8.48
-8.84%
-7.08%
$0.282
Second
$11.53
$8.69
$13.28
$9.90
-13.18%
-12.22%
$0.282
Third
$13.07
$11.37
$14.14
$13.03
-7.57%
-12.74%
$0.282
Fourth
$14.11
$11.42
$15.93
$12.92
-11.42%
-11.61%
$0.282
Year ended December 31, 2019
         
First
$13.44
$12.02
$15.25
$13.70
-11.87%
-12.26%
$0.228
Second
$13.75
$13.13
$15.50
$14.96
-11.29%
-12.23%
$0.228
Third
$14.25
$13.60
$15.61
$15.24
-8.71%
-10.76%
$0.228
Fourth
$14.82
$13.95
$16.19
$15.48
-8.46%
-9.88%
$0.47969

Distributions
 
On March 4, 2019, the Fund received authorization from the SEC that permits the Fund to distribute long-term capital gains to stockholders more than once per year.  Accordingly, on April 1, 2019, the Fund announced that its Board formally approved the implementation of a Managed Distribution Plan (“MDP”) to make monthly cash distributions to stockholders.  In January 2020, the Fund began making monthly distributions to common stockholders at an annual rate of 7%, based on the net asset value of the Fund’s common stock as of close of business on the last business day of the previous year.  In July 2021, the Fund began making monthly distributions to common stockholders at an annual rate of 8%, based on the net asset value of the Fund’s common stock as of close of business on the last business day of the previous year.
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The Fund’s Board may amend or terminate the MDP at any time without prior notice to stockholders. No stockholder should assume that there will be distributions.
 
About the Fund
 
The Fund was incorporated in Maryland on February 13, 1993 and commenced investment operations on June 7, 1993.  We are registered under the Investment Company Act of 1940, as amended (together with the rules promulgated thereunder, the “1940 Act”), as a closed–end, diversified management investment company.  Our common stock is listed and trades on the NYSE under the trading symbol “SPE.”
 
From its inception in 1993 until 2009, the Fund operated under the name Paine Weber Insured Municipal Income Fund Inc. (1993-1996) or Insured Municipal Income Fund Inc. (1996-2009) and invested exclusively in tax free securities.  After a proxy contest that ended on August 12, 2009, a new Board was elected to manage the Fund.  The Fund’s former investment adviser, UBS Global Asset Management (Americas) Inc. then resigned effective October 18, 2009.  The newly elected Board voted to (1) replace UBS with our current Adviser, Bulldog Investors, LLP, and (2) change the Fund’s principal investment objective from one of providing tax free income to one of providing total return.  These changes were subsequently approved by stockholders.  The name of the Fund was also changed to Special Opportunities Fund, Inc. to conform to its new objective.
 
In September 2009, the Board commenced a program to conduct an orderly sale of all of the Fund’s portfolio securities in order to fund a self-tender offer for the Fund’s common stock.  The purpose of the self-tender offer was to fulfill a commitment made during the proxy contest to afford stockholders an opportunity to realize the intrinsic value of their shares.  Only after the tender offer was completed did the Adviser begin to invest the Fund’s remaining assets in accordance with its new investment objective and policies.  The Adviser voluntarily waived its management fees until the tender was completed on January 22, 2010.  All of the shares that were tendered were accepted for payment at a price of $14.18 per share (99.5% of the NAV per common stock of $14.25).
 
The Fund previously conducted a rights offering that expired July 23, 2012 and included similar terms and conditions as this offering, except that it involved a different class of preferred stock than the Convertible Preferred Stock.  Pursuant to such offering, the Fund issued 748,486 shares of convertible preferred stock at a subscription price of $50.00 per share, for a total offering of $37,424,300.  The last shares of such preferred stock were converted into common stock on or about February 21, 2014.
 
In addition, the Fund previously conducted a rights offering that expired August 26, 2016 and included similar terms and conditions as this offering, except that it involved a different class of preferred stock than the Convertible Preferred Stock.  Pursuant to such offering, the Fund issued 2,223,976 shares of convertible preferred stock at a subscription price of $25.00 per share, for a total offering of $55,599,400. The last shares of such preferred stock were converted into common stock on or about July 9, 2021.
 
Our investment objective is total return.  Our investment objective is not fundamental and may be changed by the Board with 60 days’ notice to stockholders.  To achieve our objective, the Fund invests primarily in securities the Adviser believes have opportunities for appreciation.  The Fund employs strategies designed to capture price movements generated by anticipated corporate events such as investing in companies involved in special situations, including, but not limited to, mergers, acquisitions, asset sales, spin-offs, balance sheet restructuring, bankruptcy, liquidations and other situations.  In addition, the Fund employs strategies designed to invest in the debt, equity, or trade claims of companies in financial distress.  Such securities typically trade at substantial discounts to par value and may be attractive to investors when managers perceive a turnaround will materialize.  Furthermore, the Fund invests both long and short in related securities or other instruments in an effort to take advantage of perceived discrepancies in the market prices for such securities, including long and short positions in securities involved in an announced merger deal.  Securities which the Adviser identifies include other closed-end investment companies with opportunities for appreciation, including funds that trade at a market price discount from their NAV.  In addition to the foregoing, the Adviser seeks out other opportunities in the market that have attractive risk reward characteristics for the Fund.
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The Fund intends its investment portfolio, under normal market conditions, to consist principally of investments in other closed-end investment companies, SPACS and the securities of large, mid and small-capitalization companies, including direct and indirect investments in the securities of foreign companies.  Equity securities in which the Fund may invest include common and preferred stocks, convertible securities, warrants and other securities having the characteristics of common stocks, such as ADRs and IDRs, other closed-end investment companies and ETFs. The Fund may, however, invest a portion of its assets in debt securities or other investment opportunities when the Fund’s investment adviser believes that it is appropriate to do so to earn current income.  For example, when interest rates are high in comparison to anticipated returns on equity investments, the Fund’s investment adviser may determine to invest in debt securities.  Debt securities in which the Fund may invest include bank, corporate or government bonds, notes, and debentures that the Fund’s investment adviser determines are suitable investments for the Fund.  Such determination may be made regardless of the maturity, duration or rating of any such debt security.
 
The Fund may, from time to time, engage in short sales of securities for investment or for hedging purposes.  Short sales are transactions in which the Fund sells a security it does not own.  To complete the transaction, the Fund must borrow the security to make delivery to the buyer.  The Fund is then obligated to replace the security borrowed by purchasing the security at the market price at the time of replacement.  The Fund may sell short individual stocks, baskets of individual stocks and ETFs that the Fund expects to underperform other stocks which the Fund holds.  For hedging purposes, the Fund may purchase or sell short future contracts on global equity indexes.
 
The Fund may invest, without limitation, in the securities of other Acquired Funds, provided that, in accordance with Section 12(d)(1)(F) of the 1940 Act, the Fund will limit such investment so that it does not represent more than 3% of the voting stock of the acquired investment company of which such shares are purchased.
 
In accordance with Section 12(d)(1)(F) of the 1940 Act, for each closed-end fund for which the Fund receives a proxy, the Fund has voted and will continue to vote its shares of such closed-end fund in the same proportion as the vote of all other shareholders of such closed-end fund, unless the Adviser deems it appropriate to seek instructions from Fund stockholders with regard to such vote. In such circumstances, the Fund will vote such proxies proportionally based upon the total number of shares owned by those stockholders that provide instructions. Fund stockholders may obtain forms to provide such proxy voting instructions on the Fund’s website.

The ETFs and other closed-end investment companies in which the Fund invests may invest in common stocks, and may invest in fixed income securities.  As a stockholder in any investment company, the Fund will bear its ratable share of the investment company’s expenses and would remain subject to payment of the Fund's advisory and administrative fees with respect to the assets so invested.
 
The Fund's management utilizes a balanced approach, including “value” and “growth” investing by seeking out companies at reasonable prices, without regard to sector or industry, which demonstrate favorable long-term growth characteristics.  Valuation and growth characteristics may be considered for purposes of selecting potential investment securities.  In general, valuation analysis is used to determine the inherent value of the company by analyzing financial information such as a company's price to book, price to sales, return on equity, and return on assets ratios; and growth analysis is used to determine a company's potential for long-term dividends and earnings growth due to market-oriented factors such as growing market share, the launch of new products or services, the strength of its management and market demand.  Fluctuations in these characteristics may trigger trading decisions to be made by the Fund’s investment adviser with respect to the Fund’s portfolio.
 
Generally, securities will be purchased or sold by the Fund on national securities exchanges and in the over-the-counter market.  From time to time, securities may be purchased or sold in private transactions, including securities that are not publicly traded or that are otherwise illiquid.
 
The Fund may, from time to time, take temporary defensive positions that are inconsistent with the Fund’s principal investment strategies in attempting to respond to adverse market, economic, political or other conditions.  During such times, the Fund may temporarily invest up to 100% of its assets in cash or cash equivalents, including money market instruments, prime commercial paper, repurchase agreements, Treasury bills and other short-term obligations of the U.S. Government, its agencies or instrumentalities.  In these and in other cases, the Fund may not achieve its investment objective.
38

The Fund’s investment adviser may invest the Fund’s cash balances in any investments it deems appropriate, subject to the restrictions set forth in below under “Fundamental Investment Restrictions” and as permitted under the 1940 Act, including investments in repurchase agreements, money market funds, additional repurchase agreements, U.S. Treasury and U.S. agency securities, municipal bonds and bank accounts.  Any income earned from such investments will ordinarily be reinvested by the Fund in accordance with its investment program.  Many of the considerations entering into the Fund’s investment adviser’s recommendations and the portfolio manager’s decisions are subjective.
 
Fundamental Investment Restrictions
 
The following fundamental investment limitations cannot be changed without the affirmative vote of the lesser of (a) more than 50% of the outstanding shares of the Fund or (b) 67% or more of such shares present at a stockholders’ meeting if more than 50% of the outstanding shares are represented at the meeting in person or by proxy.  If a percentage restriction is adhered to at the time of an investment or transaction, a later increase or decrease in percentage resulting from a change in values of portfolio securities or the amount of total assets will not be considered a violation of any of the following limitations or of any of the Fund’s investment policies.  The Fund may not:
 
(1) issue senior securities (including borrowing money from banks and other entities and thorough reverse repurchase agreements), except (a) the Fund may borrow in an amount not in excess of 33 1/3% of total assets (including the amount of senior securities issued, but reduced by any liabilities and indebtedness not constituting senior securities), (b) the Fund may issue preferred stock having a liquidation preference in an amount which, combined with the amount of any liabilities or indebtedness constituting senior securities, is not in excess of 50% of its total assets (computed as provided in clause (a) above) and (c) the Fund may borrow up to an additional 5% of its total assets (not including the amount borrowed) for temporary or emergency purposes;
 
The following interpretation applies to, but is not a part of, fundamental limitation (1):
 
Each state (including the District of Columbia and Puerto Rico), territory and possession of the United States, each political subdivision, agency, instrumentality and authority thereof, and each multi-state agency of which a state is a member is a separate “issuer.”  When the assets and revenues of an agency authority, instrumentality or other political subdivision are separate from the government creating the subdivision and the security is backed only by the assets and revenues of the subdivision, such subdivision would be deemed to be the sole issuer.  Similarly, in the case of an Industrial Development Bond or Private Activity Bond, if that bond is backed only by the assets and revenues of the non-governmental user, then that non-governmental user would be deemed to be the sole issuer.  However, if the creating government or another entity guarantees a security, then to the extent that the value of all securities issued or guaranteed by that government or entity and owned by the Fund exceeds 10% of the Fund's total assets, the guarantee would be considered a separate security and would be treated as issued by that government or entity.  This restriction does not limit the percentage of the Fund’s assets that may be invested in Municipal Obligations insured by any given insurer.
 
(2) purchase any security if, as a result of that purchase, 25% or more of the Fund’s total assets would be invested in securities of issuers having their principal business activities in the same industry, except that this limitation does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or to municipal securities.
 
(3) make loans, except through loans of portfolio securities or through repurchase agreements, provided that for purposes of this restriction, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investment in government obligations, commercial paper, certificates of deposit, bankers’ acceptances or similar instruments will not be considered the making of a loan.
39

(4) engage in the business of underwriting securities of other issuers, except to the extent that the Fund might be considered an underwriter under the federal securities laws in connection with its disposition of portfolio securities.
 
(5) purchase or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported by interests in real estate are not subject to this limitation, and except that the Fund may exercise rights under agreements relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner.
 
(6) purchase or sell physical commodities unless acquired as a result of owning securities or other instruments, but the Fund may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments.
 
The Fund has no intention to file a voluntary application for relief under federal bankruptcy law or any similar application under state law for so long as the Fund is solvent and does not foresee becoming insolvent.
 
Legal Proceedings

Although we may, from time to time, be involved in litigation arising out of our operations in the normal course of business, we are not currently a party to any pending material legal proceedings.

 Management
 
Our business and affairs are managed under the direction of our Board.  The Board currently consists of six members, four of whom are not “interested persons” as that term is defined in Section 2(a)(19) of the 1940 Act.  We refer to these individuals as our Independent Directors.  Our Board elects our officers, who serve at the discretion of the Board.  The officers of the Fund are employees of our investment adviser.
 
Directors and Executive Officers
 
Our Directors and executive officers, their positions, age and principal occupation are set forth below.  The address for each Director and executive officer is c/o U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, WI  53202.  Each of our Directors is elected for a one-year term until his successor is elected and qualifies or until he resigns or is otherwise removed.
40

Name, Address and Age*
 
Position(s) Held with the Fund
 
Term of Office and Length of Time Served
Principal Occupation During the Past Five Years
Number of Portfolios in Fund Complex Overseen by Director**
Other Directorships held by Director During the Past Five Years
 
INTERESTED DIRECTORS
 
 
Andrew Dakos***
(55)
 
President as of October 2009
1 year;
Since 2009
Partner of the Adviser since 2009; Principal of the former general partner of several private investment partnerships in the Bulldog Investors group of private funds.
1
Director, Brookfield
DTLA Fund Office
Trust Investor, Inc.;
Trustee, Crossroads
Liquidating Trust
(until 2020);
Trustee, High
Income Securities
Fund; Chairman,
Swiss Helvetia
Fund, Inc.; Director,
Emergent Capital,
Inc. (until 2017).
 
 
Phillip Goldstein***
(76)
 
Chairman and Secretary as of October 2009.
1 year;
Since 2009
Partner of the Adviser since 2009; Principal of the former general partner of several private investment partnerships in the Bulldog Investors group of private funds.
 
1
Chairman, Mexico
Equity and Income
Fund, Inc.; Director,
MVC Capital, Inc.
(until 2020);
Director, Brookfield
DTLA Fund Office
Trust Investor, Inc.;
Trustee, Crossroads
Liquidating Trust
(until 2020);
Chairman, High
Income Securities
Fund; Director,
Swiss Helvetia
Fund, Inc.;
Chairman,
Emergent Capital,
Inc. (until 2017).
 
 
 
INDEPENDENT DIRECTORS
 
 
Name, Address and Age*
 
Position(s) Held with the Fund
 
Term of Office and Length of Time Served
Principal Occupation During the Past Five Years
Number of Portfolios in Fund Complex Overseen by Director**
Other Directorships held by Director During the Past Five Years
 
41

 
Marc Lunder (57)
Independent Director
1 year; Effective January 1, 2015
Managing Member of Lunder Capital LLC
1
None
 
 
Ben H. Harris
(53)
Independent Director
1 year; Since 2009
Chief Executive Officer of
Hormel Harris Investments, LLC;
Principal of NBC Bancshares, LLC;
Chief Executive Officer of Crossroads
Capital, Inc.; Administrator of
Crossroads Liquidating Trust.
1
Trustee, High Income Securities Fund.
 
 
Gerald Hellerman****
(83)
 
Independent Director.
1 year; Since 2009
Managing Director of Hellerman
Associates (a financial and
corporate consulting firm) since
1993 (which terminated activities
as of December, 31, 2013).
1
Director, Mexico
Equity and Income
Fund, Inc.;
Trustee, Fiera
Capital Series Trust;
Trustee, High
Income Securities
Fund; Director,
Swiss Helvetia
Fund, Inc.; Director,
MVC Capital, Inc.
(until 2020);
Trustee, Crossroads
Liquidating Trust
(until 2020);
Director, Emergent
Capital, Inc.
(until 2017);
Director, Ironsides
Partners Opportunity
Offshore Fund Ltd.
(until 2016).
 
 
Charles C. Walden
(77)
 
Independent Director
1 year; Since 2009
President and Owner of Sound Capital Associates, LLC (consulting firm).
1
Independent Chairman, Third Avenue Funds
(fund complex consisting of three funds and
one variable series trust) (until 2019).
 
42


 
OFFICERS
Name, Address and Age*
 
Position(s) Held with the Fund
 
Term of Office and Length of Time Served
Principal Occupation During the Past Five Years
Andrew Dakos (see biography above)
 
President as of October 2009
-
-
Rajeev Das***
(52)
Vice-President as of October  2009
1 year; Since 2009
Principal of the Adviser since 2009
Thomas Antonucci***
(50)
Chief Financial Officer and Treasurer as of January 2014
1 year; Since 2014
Director of Operations at Bulldog Investors since November 2006.
Phillip Goldstein (see biography above)
 
Chairman and Secretary as of October 2009
-
-
Stephanie Darling***
(51)
Chief Compliance Officer as of April 2020
1 year; Since 2020
General Counsel and Chief
Compliance Officer of
Bulldog Investors, LLP;
Chief Compliance Officer –
High Income Securities Fund,
Swiss Helvetia Fund, and
Mexico Equity and Income
Fund; Principal, the Law
Office of Stephanie Darling;
Editor-In-Chief, The
Investment Lawyer.
*The address for all Directors and officers is c/o Special Opportunities Fund, Inc., 615 East Michigan Street, Milwaukee, WI 53202.
** The Fund Complex is comprised of only the Fund.
*** Messrs. Dakos, Goldstein, Das and Antonucci and Ms. Darling are each considered an “interested person” of the Fund within the meaning of the 1940 Act because of their affiliation with Bulldog Investors, LLP, the Adviser, and their positions as officers of the Fund.
**** Mr. Hellerman was considered an “interested person” of the Fund within the meaning of the 1940 Act for the period prior to March 31, 2020 because he served as the Fund’s Chief Compliance Officer. Mr. Hellerman is not affiliated with Bulldog Investors, LLP.  Beginning April 1, 2020, Mr. Hellerman is no longer considered an “interested person” of the Fund.

 
The Board believes that the significance of each Director’s experience, qualifications, attributes or skills is an individual matter (meaning that experience that is important for one Director may not have the same value for another) and that these factors are best evaluated at the Board level, with no single Director, or particular factor, being indicative of the Board’s effectiveness.  The Board currently does not have a formal diversity policy in place.  The Board determined that each of the Directors is qualified to serve as a Director of the Fund based on a review of the experience, qualifications, attributes and skills of each Director.  In reaching this determination, the Board has considered a variety of criteria, including, among other things: character and integrity; ability to review critically, evaluate, question and discuss information provided, to exercise effective business judgment in protecting stockholder interests and to interact effectively with the other Directors, the Adviser, other service providers, counsel and the independent registered public accounting firm (“independent auditors”); and willingness and ability to commit the time necessary to perform the duties of a Director.  Each Director’s ability to perform his duties effectively is evidenced by his experience or achievements in the following areas: management or board experience in the investment management industry or companies in other fields, educational background and professional training; and experience as a Director of the Fund.  
43

Andrew Dakos. Mr. Dakos has been the President and a Director of SPE since 2009. He is also a Partner of the Adviser.  Mr. Dakos has over 15 years of investment management experience.  He is currently a principal of Bulldog Holdings, LLC, the owner of several entities formerly serving as general partner of certain private investment partnerships, and is a partner of Bulldog Investors, LLP, which serves as the investment adviser of the Fund and separately-managed accounts. Mr. Dakos is also a director of two other closed-end funds, and one subsidiary of a large commercial real estate company.
 
Phillip Goldstein.   Mr. Goldstein has been the Chairman of the Board and the Secretary of SPE since 2009.  He is also a Partner of the Adviser.  Mr. Goldstein has over 25 years of investment management experience.  He is currently a principal of Bulldog Holdings, LLC, the owner of several entities formerly serving as general partner of certain private investment partnerships, and is a partner of Bulldog Investors, LLP, which serves as the investment adviser of the Fund and separately-managed accounts.  Mr. Goldstein is also a director of three other closed-end funds, and one subsidiary of a large commercial real estate company.
 
Ben H. Harris.  Mr. Harris has been a Director of SPE since 2009.  He has extensive experience in the management of private and public entities, highly regulated entities and corporate restructurings.  In addition to the Funds, Mr. Harris is currently a director of ten private companies and one other closed-end fund.
 
Gerald Hellerman.  Mr. Hellerman has been a Director of SPE since 2009 and served as its Chief Compliance Officer from January 2010 to March 2020.  Mr. Hellerman has more than 40 years of financial experience, including serving as a Financial Analyst and Branch Chief at the U.S. Securities and Exchange Commission, Special Adviser to the U.S. Senate Antitrust and Monopoly Subcommittee and as Chief Financial Analyst at the Antitrust Division of the U.S. Department of Justice for 17 years.  He has served as a director of a number of public companies, including registered investment companies, and as a financial and corporate consultant during the period from 1993 to 2014.

Marc Lunder.  Mr. Lunder has been a Director of the Fund since 2015.  He has over 25 years of experience in the financial industry and as a private investor. Mr. Lunder is currently a private investor with experience evaluating public companies, private companies and investment funds.
 
Charles C. Walden.  Mr. Walden has been a Director of SPE since 2009.  He has over 40 years of experience in investments, including 30 years’ experience as a chief investment officer in the life insurance industry.  He has served on the board of directors of mutual funds for over 25 years and for over 20 years an investment committee of a healthcare system.  Mr. Walden is a Chartered Financial Analyst.
 
Specific details regarding each Director’s principal occupations during the past five years are included in the table above. The summaries set forth above as to the experience, qualifications, attributes and/or skills of the Directors do not constitute holding out the Board or any Director as having any special expertise or experience, and do not impose any greater responsibility or liability on any such person or on the Board as a whole than would otherwise be the case.
 
Board Composition and Leadership Structure
44

The Board currently consists of six individuals, two of whom are interested Directors. The Chairman of the Board, Mr. Goldstein, is an interested Director and is the Secretary of the Fund and is a principal of the Adviser.  The Board does not have a lead Independent Director.
 
The Board believes that its structure facilitates the orderly and efficient flow of information to the Directors from the Adviser and other service providers with respect to services provided to the Fund, potential conflicts of interest that could arise from these relationships and other risks that the Fund may face.  The Board further believes that its structure allows all of the Directors to participate in the full range of the Board’s oversight responsibilities.  The Board believes that the orderly and efficient flow of information and the ability to bring each Director’s talents to bear in overseeing the Fund’s operations is important, in light of the size and complexity of the Fund and the risks that the Fund faces.  Based on each Director’s experience and expertise with closed-end funds the Board believes that its leadership structure is appropriate and efficient. The Board and its committees review their structures regularly, to help ensure that they remain appropriate as the business and operations of the Fund, and the environment in which the Fund operates, changes.
 
Currently, the Board has an Audit Committee, Nominating and Corporate Governance Committee and Valuation Committee.  The responsibilities of each committee and its members are described below.

Board’s Role in Risk Oversight of the Fund
 
The Board oversees risk management for the Fund directly and, as to certain matters, through its committees.  The Board exercises its oversight in this regard primarily through requesting and receiving reports from and otherwise working with the Fund’s senior officers (including the Fund’s President, Chief Compliance Officer and Treasurer), portfolio management and other personnel of the Adviser, the Fund’s independent auditors, legal counsel and personnel from the Fund’s other service providers.  The Board has adopted, on behalf of the Fund, and periodically reviews with the assistance of the Fund’s Chief Compliance Officer, policies and procedures designed to address certain risks associated with the Fund’s activities.  In addition, the Adviser and the Fund’s other service providers also have adopted policies, processes and procedures designed to identify, assess and manage certain risks associated with the Fund’s activities, and the Board receives reports from service providers with respect to the operation of these policies, processes and procedures as required and/or as the Board deems appropriate.
 
Compensation of Directors
 
Effective January 1, 2020, the Fund pays each of its Directors who is not a director, officer or employee of the Adviser, the Administrator or any affiliate thereof an annual fee of $45,000, paid pro rata, quarterly.  As additional annual compensation, the Audit Committee Chairman and Valuation Committee Chairman will receive $5,000, and the Nominating and Corporate Governance Committee Chairman will receive $3,000.  Directors receive additional fees of $5,000 for in-person attendance at special meetings (or $500 if attended by telephone) of the board of directors and $500 for special committee meetings held in between regularly scheduled Board meetings. Effective April 1, 2020, the Fund’s Chief Compliance Officer receives annual compensation in the amount of $54,000.  In addition, the Fund reimburses the Directors and Chief Compliance Officer for travel and out-of-pocket expenses incurred in connection with the Board’s meetings and Chief Compliance Officer due diligence requirements.
 
Directors who are “interested persons” of the Adviser will not receive any compensation for their services as Directors.  The Fund does not have a bonus, profit sharing, pension or retirement plan.  No other entity affiliated with the Fund pays any compensation to the Directors.  The table below details the amount of compensation the Fund’s Directors received from the Fund during the time period from January 1, 2020 to December 31, 2020.
45

Name of Person/Position
Aggregate Compensation From the Fund
Pension or Retirement Benefits Accrued as Part of Fund Expenses
Estimated Annual Benefits Upon Retirement
Total Compensation from Fund Complex Paid to Directors*
Independent Directors
   
Marc Lunder
$48,500
None
None
$48,500
Ben H. Harris
$50,500
None
None
$50,500
Charles C. Walden
$50,500
None
None
$50,500
Gerald Hellerman**
$58,000
None
None
$58,000
Interested Directors
   
Andrew Dakos
$0
None
None
$0
Phillip Goldstein
$0
None
None
$0
*            The Fund Complex is comprised of only the Fund.
** Includes compensation received by Mr. Hellerman from the Fund during the fiscal year ended December 31, 2020 for service in his capacity as the Fund’s Chief Compliance Officer, in the amount of $12,500.  Mr. Hellerman resigned from his position as Chief Compliance Officer of the Fund as of March 31, 2020.

Management Ownership
 
To the knowledge of the Fund’s management, as of December 31, 2020, the Directors and officers of the Fund beneficially owned, as a group, less than 3% of the shares of the Fund’s common stock.  The following table sets forth the aggregate dollar range of equity securities in the Fund that is owned by each Director, nominee for Director and officer as of December 31, 2020.  The information as to beneficial ownership is based on statements furnished to the Fund by each Director, nominee for Director and principal officer:
 
Name
Position
Dollar Range of Equity
Securities in the Fund
Aggregate Dollar Range
of Equity Securities in All Funds
Overseen by Director in Family of
Investment Companies*
Ben H. Harris
Independent Director
Over $100,000
Over $100,000
Charles C. Walden
Independent Director
Over $100,000
Over $100,000
Mark Lunder
Independent Director
Over $100,000
Over $100,000
Gerald Hellerman
Independent Director
Over $100,000
Over $100,000
Andrew Dakos**
Interested Director, President
Over $100,000
Over $100,000
Phillip Goldstein**
Interested Director, Chairman and Secretary
Over $100,000
Over $100,000
Thomas Antonucci**
Chief Financial Officer and Treasurer
$0
$0
Rajeev Das**
Vice President
$25,001-$50,000
$25,001-$50,000
Stephanie Darling
Chief Compliance Officer
$0
$0
*
The Family of Investment Companies is comprised of only the Fund.
 
**
Messrs. Dakos, Goldstein, Antonucci and Das and Ms. Darling are each considered an “interested person” of the Fund within the meaning of the 1940 Act because of their affiliation with the Adviser and their positions as officers of the Fund.
 
46

Director Transactions with Fund Affiliates
 
As of December 31, 2020, neither the Independent Directors nor members of their immediate family, owned securities beneficially or of record in the Adviser or any of its affiliates.  Furthermore, over the past five years, neither the Independent Directors nor members of their immediate family have had any direct or indirect interest, the value of which exceeds $120,000, in the Adviser or any of its affiliates.  In addition, since the beginning of the last two fiscal years, neither the Independent Directors nor members of their immediate family have conducted any transactions (or series of transactions) or maintained any direct or indirect relationship in which the amount involved exceeds $120,000 and to which the Adviser or any of its affiliates was a party.
 
Additional Information about the Board
 
Board Meetings and Committees.
 
Each present Director has attended more than 75% of the meetings of the Board held since his respective election as Director.  During the year ended December 31, 2020 the Board met 4 times.
 
Audit Committee.  The Board has established an Audit Committee that acts pursuant to a written charter (the “Audit Committee Charter”) and whose responsibilities are generally: (i) to oversee the accounting and financial reporting processes of the Fund and its internal control over financial reporting and, as the Audit Committee deems appropriate, to inquire into the internal control over financial reporting of certain third-party providers; (ii) to oversee the quality and integrity of the Fund’s financial statements and the independent audit thereof; (iii) to oversee, or, as appropriate, assist Board oversight of, the Fund’s compliance with legal and regulatory requirements that relate to the Fund’s accounting and financial reporting, internal control over financial reporting and independent audits; (iv) to approve prior to appointment the engagement of the Fund’s independent auditors and, in connection therewith, to review and evaluate the qualifications, independence and performance of the Fund’s independent auditors and the full Board; and (v) to act as liaison between the Fund’s independent auditors and the full Board.  A copy of the Audit Committee Charter was filed as Exhibit C to the Fund’s proxy statement filed with the SEC on November 19, 2009.
 
Although the Audit Committee is expected to take a detached and questioning approach to the matters that come before it, the review of the Fund’s financial statements by the Audit Committee is not an audit, nor does the Audit Committee’s review substitute for the responsibilities of the Fund’s management for preparing, or the independent auditors for auditing, the financial statements.  Members of the Audit Committee are not full-time employees of the Fund and, in serving on the Audit Committee, are not, and do not hold themselves out to be, acting as accountants or auditors.  As such, it is not the duty or responsibility of the Audit Committee or its members to conduct “field work” or other types of auditing or accounting reviews.  In discharging their duties, the members of the Audit Committee are entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by: (1) one or more officers of the Fund whom such Director reasonably believes to be reliable and competent in the matters presented; (2) legal counsel, public accountants, or other persons as to matters the Director reasonably believes are within the person’s professional or expert competence; or (3) a Board committee of which the Director is not a member.
 
The Audit Committee currently consists of Messrs. Lunder, Harris and Walden.  None of the members of the Audit Committee has any relationship to the Fund that may interfere with the exercise of his independence from management of the Fund, and each is independent as defined under the listing standards of the NYSE applicable to closed-end funds.  Mr. Walden is the Chairman of the Audit Committee.  For the year ended December 31, 2020, the Board’s Audit Committee met 3 times and each member of the Audit Committee has attended 100% of the meetings of the Audit Committee held since his election as Director.
 
Nominating and Corporate Governance Committee.  The Board has also established a Nominating and Corporate Governance Committee that acts pursuant to a written charter (the “Nominating and Corporate Governance Committee Charter”).  The Nominating and Corporate Governance Committee is responsible for, among other things, identifying and selecting qualified individuals to become Board members and members of Board committees and developing, adopting and periodically monitoring and updating the Fund’s corporate governance principles and policies.  A copy of the Nominating and Corporate Governance Committee Charter was filed as Exhibit D to the Fund’s proxy statement filed with the SEC on November 19, 2009.
47

The Nominating and Corporate Governance Committee currently consists of Messrs. Lunder, Harris and Walden.  Mr. Lunder is the Chairman of the Nominating and Corporate Governance Committee. None of the members is an “interested person” for purposes of the 1940 Act, and each is independent as defined under listing standards of the NYSE applicable to closed-end funds.  The Board’s Nominating and Corporate Governance Committee met one time during the fiscal year ended December 31, 2020.
 
In nominating candidates, the Nominating and Corporate Governance Committee believes that no specific qualifications or disqualifications are controlling or paramount, or that there are no specific qualities or skills necessary for each candidate to possess. In identifying and evaluating nominees for Director, the Nominating and Corporate Governance Committee takes into consideration such factors as it deems appropriate.  These factors may include: (i) whether or not the person is an “interested person” as defined in the 1940 Act, meets the independence and experience requirements of the NYSE applicable to closed-end funds and is otherwise qualified under applicable laws and regulations to serve as a member of the Board; (ii) whether or not the person has any relationships that might impair his or her independence, such as any business, financial or family relationships with Fund management, the investment advisor and/or sub-advisors of the Fund, Fund service providers or their affiliates; (iii) whether or not the person is willing to serve, and willing and able to commit the time necessary for the performance of the duties of a Board member; (iv) the person’s judgment, skill, diversity and experience with investment companies and other organizations of comparable purpose, complexity and size and subject to similar legal restrictions and oversight; (v) the interplay of the candidate’s experience with the experience of other Board members; and (vi) the extent to which the candidate would be a desirable addition to the Board and any committees thereof.
 
The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders if a vacancy occurs. In order to recommend a nominee, a stockholder should send a letter to the chairperson of the Nominating and Corporate Governance Committee, care of the Administrator, 615 East Michigan Street, Milwaukee, WI 53202, and indicate on the envelope “Nominating and Corporate Governance Committee.”  The stockholder’s letter should state the nominee’s name and should include the nominee’s résumé or curriculum vitae, and must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected by stockholders.  Stockholders can send other communications to the Board, care of the Administrator, 615 East Michigan Street, Milwaukee, WI 53202.
 
Valuation Committee. The Board has also established a Valuation Committee. Its primary purpose is to oversee the implementation and operation of the Fund's security valuation procedures, applicable to the Fund’s portfolio assets.  The Valuation Committee’s duties and responsibilities generally are: (i) on an annual basis to evaluate the effectiveness of the Fund’s security valuation procedures and make recommendations for amendments thereto to the full Board as necessary and appropriate, (ii) to review and approve quarterly the valuations provided by the Adviser and fund accountant for valuing portfolio securities for which market quotations are not readily available, (iii) to review all quarterly reports and other interim reports (this review shall include a review and discussion of an updated fair valuation summary with appropriate levels of representatives of the Adviser’s management),  (iv) to review such other matters as may be appropriately delegated to the Valuation Committee by the Board, and (v) to report its activities to the Board on a regular basis and make such recommendations with respect to the above and other matters as the Valuation Committee may deem necessary and appropriate.
 
The Chairman of the Valuation Committee shall have the following duties and power: (i) to review a memorandum from the Adviser describing each initial fair value pricing of a portfolio security and determine whether the memorandum should be forwarded to the members of the Valuation Committee at such time or provided to the Valuation Committee members at the next quarterly meeting of the Valuation Committee or the Board and (ii) to review a memorandum from the Adviser if the Adviser has revised the fair value of any of the securities due to new information or changes in assumptions regarding the security, reliable public market quotations, actual trade prices or other information which becomes available subsequent to the initial determination of fair value.  If the Chairman determines that such fair valuation(s) require the involvement of the Valuation Committee, a special meeting of the Valuation Committee shall be called as soon as practicable to discuss such fair valuation(s).
48

The Valuation Committee currently consists of Messrs. Lunder, Harris and Walden. Mr. Harris serves as the Chairman of the Valuation Committee. The Valuation Committee of the Fund met four times during the fiscal year ended December 31, 2020. The Board adopted the revised Valuation Committee Charter as of March 19, 2015.
 
Investment Advisory Agreement
 
Management Services
 
Pursuant to an Investment Advisory Agreement, the Adviser provides overall investment management services for the Fund, and in connection therewith (i) supervises the Fund’s investment program, including advising and consulting with the Board regarding the Fund’s overall investment strategy; (ii) makes, in consultation with the Board, investment strategy decisions for the Fund; (iii) manages the investing and reinvesting of the Fund’s assets; (iv) places purchase and sale orders on behalf of the Fund; (v) advises the Fund with respect to all matters relating to the Fund’s use of leveraging techniques; and (vi) provides or procures the provision of research and statistical data to the Fund in relation to investing and other matters within the scope of the investment objective and limitations of the Fund.
 
 The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to us are not impaired.
 

Portfolio Managers
 
The Portfolio Manager of the Fund is Bulldog Investors, LLP.  Phillip Goldstein, Andrew Dakos, and Rajeev Das are the individuals responsible for the day-to-day management of the Fund’s portfolio.  The business experience of Messrs. Goldstein, Dakos, and Das during the past 5 years is as follows:

Phillip Goldstein: Partner in Bulldog Investors, LLP and its predecessors since its inception in October 2009. Mr. Goldstein also is a member of Bulldog Holdings, LLC, the owner of several entities that previously served as the general partner of several private investment partnerships in the Bulldog Investors group of funds, and an owner of Kimball & Winthrop, LLC, the managing general partner of Bulldog Investors General Partnership, since 2012.  He is a director/trustee of the following closed-end funds: Mexico Equity and Income Fund since 2000, Swiss Helvetia Fund, Inc. since 2018 and High Income Securities Fund since 2018.  He also is a director of Brookfield DTLA Fund Office Trust Investor, a subsidiary of a large commercial real estate company, since 2017. He served as a director of Emergent Capital, Inc. (f/k/a Imperial Holdings, Inc.), a specialty finance company, from 2012-2017; a director of MVC Capital, Inc., a business development company, from 2012-2020; and a trustee of Crossroads Liquidating Trust (f/k/a Crossroads Capital, Inc., a business development company), from 2016-2020.  Mr. Goldstein may buy and sell securities for the Fund’s portfolio without limitation.

Andrew Dakos: Partner in Bulldog Investors, LLP and its predecessors since its inception in October 2009. Mr. Dakos also is a member of Bulldog Holdings, LLC, the owner of several entities that previously served as the general partner of several private investment partnerships in the Bulldog Investors group of funds, and an owner of Kimball & Winthrop, LLC, the managing general partner of Bulldog Investors General Partnership, since 2012.  He has served as a director/trustee of Emergent Capital, Inc. (f/k/a Imperial Holdings, Inc.), a specialty finance company, from 2012-2017, Crossroads Liquidating Trust (f/k/a Crossroads Capital, Inc., a business development company), from 2015-2020, High Income Securities Fund, a closed-end fund, since 2018, Swiss Helvetia Fund, Inc., a closed-end fund, since 2017, and Brookfield DTLA Fund Office Trust Investor, a subsidiary of a large commercial real estate company, since 2017.  Mr. Dakos may buy and sell securities for the Fund’s portfolio without limitation.

Rajeev Das:  Head Trader of Bulldog Investors, LLP and its predecessors since its inception in October 2009.  Since 2004, Mr. Das has been a Principal of certain entities that previously served as the general partner of the private investment partnerships in the Bulldog Investors group of investment funds.  He has been a director/trustee of the following closed-end funds: The Mexico Equity and Income Fund, Inc., since 2001; and High Income Securities Fund, since 2018.  Mr. Das provides investment research and analysis.  Mr. Das buys and sells securities for the Fund’s portfolio under the supervision of Mr. Goldstein and Mr. Dakos.
49

The following table shows the number of other accounts managed by each member of the Group and the total assets in the accounts managed within various categories as of December 31, 2020.
50

     
ADVISORY FEE BASED
ON PERFORMANCE

TYPE OF
ACCOUNTS
NUMBER OF
ACCOUNTS
TOTAL ASSETS
($ IN MILLIONS)
NUMBER OF
ACCOUNTS
TOTAL
ASSETS
($ IN MILLIONS)
PHILLIP GOLDSTEIN
       
Registered Investment
  Companies
1
 
0
 
Other Pooled Investments
8
 
2
$33.75
Other Accounts
262
 
2
$2.79
         
ANDREW DAKOS
       
Registered Investment
  Companies
1
 
0
 
Other Pooled Investments
8
 
2
$33.75
Other Accounts
262
 
2
$2.79
         
RAJEEV DAS
       
Registered Investment
  Companies
1
 
0
 
Other Pooled Investments
8
 
2
$33.75
Other Accounts
262
 
2
$2.79
 
Certain conflicts of interest may arise in connection with the Portfolio Manager’s management of the Fund’s portfolio and the portfolios of other accounts managed by the investment advisor.  For example, certain inherent conflicts of interest exist in connection with managing accounts that pay a performance-based fee or allocation alongside an account that does not.  These conflicts may include an incentive to favor such accounts over the Fund because the investment advisor can potentially receive greater fees from accounts paying a performance-based fee than from the Fund.  As a result, the investment advisor may have an incentive to direct its best investment ideas to, or allocate or sequence trades in favor of, such accounts.  In addition, in cases where the investment strategies are the same or very similar, various factors (including, but not limited to, tax considerations, amount of available cash, and risk tolerance) may result in substantially different portfolios in such accounts. Material conflicts of interest could arise in the allocation of investment opportunities between the Fund and the other pooled investment vehicles and other accounts managed by Bulldog Investors, LLP.  In order to address these conflicts of interest, Bulldog Investors, LLP has adopted a Trade Allocation Policy which recognizes the importance of trade allocation decisions and attempts to achieve an equitable balancing of competing client interests.  The Policy establishes certain procedures to be followed in connection with placing and allocating trades for client accounts.
 
Compensation for Messrs. Goldstein, Dakos and Das is comprised solely of net income generated by the Fund’s investment adviser.
 
As of December 31, 2020, Mr. Goldstein beneficially owns 114,747 shares of common stock of the Fund; Mr. Dakos beneficially owns 10,890 shares of common stock of the Fund; and Mr. Das owns 3,096 shares common stock of the Fund.
 
Organization of the Investment Adviser
 
Bulldog Investors, LLP is a Delaware limited liability partnership formed on August 27, 2009 for the purpose of providing investment advisory and management services to investment companies.  Its partners are Phillip Goldstein and Andrew Dakos, each a member of our Board.  Its principal office is located at Park 80 West, 250 Pehle Avenue, Suite 708, Saddle Brook, New Jersey 07663.  The Adviser is registered with the SEC under the Advisers Act, as amended.
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Management Fees
 
We pay the Adviser a monthly fee at an annual rate of 1.00% of the value of our average weekly total assets, including any assets attributable to leverage, for the investment management and research services provided.  For the fiscal year ended December 31, 2020, the Fund paid the Adviser $1,720,950 in management fees.
 
Payment of Expenses
 
The Investment Advisory Agreement provides that we will be responsible for all of our expenses and liabilities, except that the Adviser is responsible for the expense in connection with maintaining a staff within its organization to furnish the above services to us.    
 
Duration and Termination
 
The Investment Advisory Agreement was approved by our Board on September 24, 2009, and by our stockholders on December 10, 2009 for an initial term of two years.  It has remained in effect from year to year thereafter as approved annually by our Board or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our Directors who are not interested persons.  As of December 31, 2020, the Board voted to continue the agreement.  The Investment Advisory Agreement will automatically terminate in the event of its assignment.  The Investment Advisory Agreement may be terminated by either party or by a vote of the holders of a majority of the outstanding voting securities of the Fund, without penalty upon not more than 60 days’ written notice.
 
Factors in Approving the Investment Advisory Agreement
 
The Fund’s Board, including the Directors who are not interested persons of any party to the Investment Advisory Agreement or its affiliates, approved the continuation of the Investment Advisory Agreement at a meeting of the Board held on September 10, 2020, with legal counsel in attendance.  A discussion regarding the Board's basis for approving the Investment Advisory Agreement is set forth in the Fund's Annual Report to Stockholders dated December 31, 2020.
 
Administration Agreement
 
U.S. Bancorp Fund Services LLC serves as our administrator pursuant to an Administration Agreement dated October 18, 2009.  Pursuant to the Administration Agreement, the Administrator provides us general fund management services, compliance oversight, financial reporting oversight and tax reporting.  For the fiscal year ended December 31, 2020, the Fund paid the Administrator $106,741.
 
Control Persons and Principal Stockholders
 
The following table sets forth certain ownership information with respect to our common stock for those persons who directly or indirectly own, control or hold with the power to vote, 5% or more of our outstanding common stock or preferred stock and all officers and Directors, as a group.
 
   
Immediately
prior to this
offering
Name and address
Type of
ownership
Shares owned
Percentage**
       
Relative Value Partners Group, LLC
 
Beneficial Owner
1,855,512***
21.82%
Sit Investment Associates, Inc.
Beneficial Owner
                455,533***
5.36%
       
       
All officers and Directors as a group (1)
Record and beneficial
*
*
       
______________________________
*
All of the officers and Directors as a group hold less than 3% of the Fund’s shares of common stock as of December 31, 2020.
**
Percentage of class is based on the number of shares of common stock of the Fund outstanding as of December 31, 2020.
***   As reported to the SEC on Schedule 13G on February 12, 2021.

(1)
The address for all officers and Directors is c/o US Bancorp Fund Services, LLC, 615 East Michigan Street, 2nd Floor, Milwaukee, WI  53202.
52

Outstanding Securities
 
The following table sets forth certain information regarding our authorized shares and shares outstanding as of May 31, 2021.
 
(1)
Title of Class
 
(2)
Amount Authorized
 
(3)
Amount Issued and Outstanding
 
Common Stock
199,995,800
9,263,989
 
 
Determination of Net Asset Value
 
The NAV per share of our outstanding shares of common stock is determined weekly, by dividing the value of total assets minus liabilities by the total number of shares outstanding at the date as of which such determination is made.  The NAV is calculated weekly at the close of regular trading on the NYSE (generally 4:00 p.m., Eastern time).
 
All securities for which market quotations are readily available are valued at the composite closing price at the valuation time, or, if no sales price is available at that time, at the composite bid quotation as of valuation time. U.S. and foreign debt securities including short-term debt instruments having a maturity of 60 days or less shall be valued at the price supplied by a pricing service.  Money market mutual funds, demand notes and repurchase agreements are valued at cost. If cost does not represent current market value (as determined in good faith by, or under the supervision of, the Board of Directors), the securities will be priced at fair value.  Securities for which market values are not readily ascertainable are carried at fair value as determined in good faith by, or under the supervision of, the Board of Directors.  It is possible that the estimated value may differ significantly from the amount that might ultimately be realized in the near term, and the difference could be material.
 
Description of our Capital Stock
 
Our authorized capital stock consists of 199,995,800 shares of common stock, par value $0.001 per share.  As of June 9, 2021, we have 9,271,464 shares of common stock issued and outstanding.  As of the date of this Prospectus, 4,042,593 shares of the Fund’s capital stock have been classified by the Board as 2.75% Convertible Preferred Stock, par value $0.001 per share.
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Our common stock trades on the NYSE under the symbol “SPE.”  We intend to file an application to list our Convertible Preferred Stock on the NYSE under the symbol “SPE PR- C.”  No stock has been authorized for issuance under any equity compensation plans.  Under Maryland law, our stockholders generally are not personally liable for our debts or obligations.
 
As permitted by the Maryland General Corporation Law, our charter provides that the Board, without any action by our stockholders, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Fund has authority to issue.  In addition, our charter provides that the Board, by majority vote, may reclassify any unissued shares of our capital stock into one or more additional or other classes or series of stock with such designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and qualifications as determined by the Board.  As discussed below, our Board has designated a new class of Convertible Preferred Stock created specifically for issuance pursuant to this offering.
 
Common Stock
 
All shares of our common stock have equal rights as to earnings, assets, dividends and voting privileges and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable.  Distributions may be paid to the holders of our common stock if, as and when authorized by our Board and declared by us out of funds legally available for such distributions.  Shares of our common stock have no preemptive, conversion or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract.  In the event of our liquidation, dissolution or winding up, each share would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities.  Each of our shares of common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of Directors.  Except as provided with respect to any other class or series of stock, the holders of the Fund’s common stock will possess exclusive voting power.  There is no cumulative voting in the election of Directors, which means that holders of a majority of the outstanding shares of common stock will elect all of our Directors, and holders of less than a majority of such shares will be unable to elect any Director.
 
Convertible Preferred Stock
 
The Convertible Preferred Stock is a new class of our capital stock designated by the Board specifically for issuance pursuant to this offering.  The following is a brief description of the terms of the 2.75% Convertible Preferred Stock. This description does not purport to be complete and is qualified by reference to the Fund’s Charter, including the provisions of the Articles Supplementary establishing the 2.75% Convertible Preferred Stock. For complete terms of the 2.75% Convertible Preferred Stock including definitions of terms used in this Prospectus, please refer to the actual terms of the 2.75% Convertible Preferred Stock, which are set forth in the Articles Supplementary.
 
(a) Liquidation Preference:  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Fund, the holders of Convertible Preferred Stock will be entitled to receive preferential liquidating distribution at face value (i.e., $25.00 per share) before any distribution of assets is made to the holders of our common stock.  After payment of the full amount of the liquidating distribution to which they are entitled, the holders of shares of Convertible Preferred Stock will not be entitled to any further participation in any distribution of assets by the Fund.

 (b) Dividends:  The holders of Convertible Preferred Stock will be entitled to receive dividends at the rate of 2.75% of the Subscription Price per year.  Dividends on our Convertible Preferred Stock will accumulate without interest from the date of original issuance of the Convertible Preferred Stock and will be payable quarterly in arrears on the last calendar day of March, June, September and December (each, a “Quarterly Dividend Payment Date”), commencing on the last calendar day of the first March, June, September or December following the date of Expiration Date.  The first dividend declared and payable will be pro-rated from the date of original issuance of the Convertible Preferred Stock. The final dividend payable as of the date of the redemption of the Convertible Preferred Stock will be pro-rated from the last Quarterly Dividend Payment Date.
54

 (c) Voting Rights:  So long as the Fund is subject to the 1940 Act, the holders of any Convertible Preferred Stock, voting separately as a single class, shall have the right to elect two Directors at all times.  The remaining Directors shall be elected by holders of common stock and the holders of the Convertible Preferred Stock, voting together as a single class.  The foregoing right to elect two Directors shall be unaffected by any default by the Fund in the payment of dividends to holders of the Convertible Preferred Stock, subject to any additional rights afforded to such holders in the event of such a default under the 1940 Act, including Section 18 thereof. In addition to any approval by stockholders that might otherwise be required, the approval of the holders of two-thirds of any outstanding Convertible Preferred Stock, voting separately as a class, would be required to (1) create any senior equity security or (2) adopt any charter or bylaw amendment that would materially affect existing terms of the Convertible Preferred Stock.  The approval of the holders of a majority of any outstanding Convertible Preferred Stock, voting separately as a class, would be required to (1) adopt any plan of reorganization that would adversely affect the Convertible Preferred Stock, (2) create any pari passu security, (3) increase the amount of authorized shares of Convertible Preferred Stock or (4) take any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, changes in the Fund’s subclassification as a closed-end investment company or changes in its fundamental investment restrictions.  As a result of these voting rights, the Fund’s ability to take any such actions may be impeded to the extent that there is any Convertible Preferred Stock outstanding.  The Board presently intends that, except as otherwise indicated in this Prospectus and except as otherwise required by applicable law or the Fund’s Articles of Incorporation, Articles Supplementary or bylaws, holders of Convertible Preferred Stock will have equal voting rights with holders of our common stock (one vote per share) and shall generally vote together with such holders of common stock as a single class (unless otherwise required by the 1940 Act).
 
(d) Conversion Right of Holders:  Shares of the Convertible Preferred Stock are convertible at any time.  Until the mandatory redemption date set forth in (g) below, holders of Convertible Preferred Stock may present their shares for conversion, in whole or in part, after the issuance thereof into shares of common stock at a conversion rate equivalent to a conversion price of $20.50 per share of common stock (which is a ratio of 1.2195 shares of common stock for each share of Convertible Preferred Stock held).  The conversion price (and resulting conversion ratio) will be adjusted for any distributions made to or on behalf of common stockholders.  Following any such conversion, shares of common stock shall be issued as soon as reasonably practicable.  The Board believes that the value of the conversion right of the Convertible Preferred Stock is not a predominant factor in the market value of the Convertible Preferred Stock as of the date of its issuance.  The conversion right is a secondary attribute which is included to enhance the terms upon which the Fund is able to issue the Convertible Preferred Stock. In connection with such conversion you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock to the date of conversion, but after conversion you would no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.

(e) Optional Redemption:  Until the mandatory redemption date set forth in (g) below, at any time following the second anniversary of the Expiration Date, the Board may, in its sole discretion, redeem all or any part of the then outstanding shares of Convertible Preferred Stock at $25.00 per share.  Under such circumstances, the Fund shall provide no less than 30 days’ nor more than 90 days’ notice to the holders of Convertible Preferred Stock that, unless such shares have been converted by a certain date, the shares will be redeemed.  In connection with such redemption, you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock as of the date of redemption, but after the redemption, you shall no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.

(f) Mandatory Conversion: If, at any time from and after the date of issuance of the Convertible Preferred Stock, the market price of the common stock is equal to or greater than $23.75 per share (as adjusted for dividends or other distributions made to or on behalf of holders of the common stock), the Board may, in its sole discretion, require the holders of the Convertible Preferred Stock to convert all or any part of their shares into shares of common stock at a conversion rate equivalent to a conversion price of $20.50 per share of common stock (which is a ratio of 1.2195 shares of common stock for each share of Convertible Preferred Stock held), subject to adjustment upon the occurrence of certain events. The conversion price (and resulting conversion ratio) will be adjusted for any dividends or other distributions made to or on behalf of common stockholders. Notice of such mandatory conversion shall be provided by the Fund in accordance with its Articles of Incorporation. In connection with such conversion you would receive payment for all declared and unpaid dividends on your shares of Convertible Preferred Stock to the date of conversion, but after conversion you would no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Convertible Preferred Stock.
55

(g) Mandatory Redemption:  We will redeem all outstanding shares of Convertible Preferred Stock as of [●], 2026 (five years from the Expiration Date) at a price of $25.00 per share of Convertible Preferred Stock held on such date. Notice of such mandatory redemption shall be provided by the Fund in accordance with its Articles of Incorporation.

Immediately following the issuance of the Convertible Preferred Stock, and so long as the Fund is subject to the 1940 Act, (i) the Fund shall have an asset coverage of at least 200 percent, (ii) the Fund will be prohibited from declaring any dividend (except a dividend payable in our common stock) or any other distribution upon our common stock, unless the Convertible Preferred Stock has at the time of any such declaration an asset coverage of at least 200 percent after deducting the amount of such dividend or distribution, as the case may be, (iii) holders of Convertible Preferred Stock will be entitled, voting as a class, to the voting rights outlined in (c) above, and (iv) holders of Convertible Preferred Stock will have the liquidation preference outlined in (a) above.
 
Effects of Leverage
 
The holders of the Fund’s Convertible Preferred Stock will be entitled to the dividend rate of 2.75% of the Subscription Price.  Any return earned in excess of the stated dividend rate would directly benefit holders of our common stock; however, any shortfall from the stated rate would negatively affect our common stockholders.  The following table is designed to assist you in understanding the effects of the existing leverage on the common stock of the Fund.  The table assumes that 4,042,593 shares of 2.75% Convertible Preferred Stock are issued and outstanding. The assumed returns appearing in the table are hypothetical and actual returns may be greater or less than those appearing in the table.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assumed on portfolio (net of expenses)
 
 
-10
%
     
-5%
     
0%
     
5%
   
10%
   
Corresponding return to Common Stockholders
 
 
-16.80
%
     
-9.35%
     
-1.90%
     
5.55%
   
13.00%
   
     
The following factors associated with leveraging could increase the investment risk and volatility of the price of our common stock:
     
 
• 
leveraging exaggerates any increase or decrease in the NAV of the common stock;
 
   
 
• 
the dividend requirements on the Convertible Preferred Stock may exceed the income from the portfolio securities purchased with the proceeds from the issuance of preferred shares;
 
   
 
• 
a decline in NAV results if the investment performance of the additional securities purchased fails to cover their cost to the Fund (including any dividend requirements of preferred shares);
 
   
 
• 
a decline in NAV could affect the ability of the Fund to make common stock dividend payments;
 
   
 
• 
a failure to pay dividends or make distributions on its common stock could result in the Fund’s ceasing to qualify as a regulated investment company under the Code; and
 
   
 
• 
if the asset coverage for the Fund’s preferred shares declines to less than two hundred percent (as a result of market fluctuations or otherwise), the Fund may be required to sell a portion of its investments when it may be disadvantageous to do so.
 
Pursuant to Section 18 of the 1940 Act, it is unlawful for the Fund, as a registered closed-end investment company, to issue any class of senior security, or to sell any senior security that it issues, unless it can satisfy certain “asset coverage” ratios.  The asset coverage ratio with respect to a senior security representing indebtedness means the ratio of the value of the Fund’s total assets (less all liabilities and indebtedness not represented by senior securities) to the aggregate amount of the Fund’s senior securities representing indebtedness.  The asset coverage ratio with respect to a senior security representing stock means the ratio of the value of the Fund’s total assets (less all liabilities and indebtedness not represented by senior securities) to the aggregate amount of the Fund’s senior securities representing indebtedness plus the aggregate liquidation preference of the Fund’s outstanding preferred shares.
56

If, as is the case with the Fund, a registered investment company’s senior securities are equity securities, such securities must have an asset coverage ratio of at least 200% immediately following its issuance.  If a registered investment company’s senior securities represent indebtedness, such indebtedness must have an asset coverage ratio of at least 300% immediately after their issuance.  Subject to certain exceptions, during any period following issuance that the Fund fails to satisfy these asset coverage ratios, it will, among other things, be prohibited from declaring any dividend or declaring any other distribution in respect of its common stock except a dividend payable in common stock issued by the Fund.  A registered investment company may, to the extent permitted by the 1940 Act, segregate assets or “cover” transactions in order to avoid the creation of a class of senior security.
 
Any rating received by the Fund on its Convertible Preferred Stock, or on any other senior security that it may issue, is an assessment by the applicable rating agency of the capacity of the Fund to satisfy its obligations on its senior securities.  However, the rating does not eliminate or mitigate the risks associated with investing in the Fund’s Convertible Preferred Stock. In addition, should a rating on the Convertible Preferred Stock be lowered or withdrawn by the relevant rating agency, there may be an adverse effect on the market value of the Fund’s Convertible Preferred Stock and the Fund may also be required to redeem all or part of its outstanding Convertible Preferred Stock.  If the Fund were required to redeem its Convertible Preferred Stock (in whole or part) as a result of the change in or withdrawal of the rating, the common stock of the Fund would lose the benefits associated with a leveraged capital structure.
 
Limitation on Liability of Directors and Officers; Indemnification and Advancement of Expenses
 
Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its Directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment and which is material to the cause of action.  Our charter contains such a provision which eliminates Directors’ and officers’ liability to the maximum extent permitted by Maryland law, subject to the requirements of the 1940 Act.
 
Our bylaws obligate us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any Director, officer, employees or agent of the Fund against any judgments, fines, settlements or expenses.
 
Maryland law requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity.  Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.  However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses.  In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.
57

Provisions of the Maryland General Corporation Law and our Charter and Bylaws
 
The Maryland General Corporation Law and our charter and bylaws contain provisions that could make it more difficult for a potential acquiror to acquire us by means of a tender offer, proxy contest or otherwise.  These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our Board.  We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.
 
Action by Stockholders
 
The Maryland General Corporation Law provides that stockholder action can be taken only at an annual or special meeting of stockholders or by unanimous written consent in lieu of a meeting.  These provisions, combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.
 
Ability of Stockholders to call a Special Meeting of Stockholders
 
Our bylaws only allow our stockholders to call a Special Meeting of Stockholders if such request is made to the Secretary of the Fund in writing signed by stockholders having at least 50% of the issued and outstanding shares of voting stock.
 
Regulation
 
We intend to continue to be regulated as a registered management investment company under the 1940 Act and as a registered investment company under Subchapter M of the Internal Revenue Code.  The 1940 Act contains prohibitions and restrictions relating to transactions between registered investment companies and their affiliates (including any investment advisers or sub-advisers), principal underwriters and affiliates of those affiliates or underwriters and requires that a majority of the directors be persons other than “interested persons,” as that term is defined in the 1940 Act.
 
Code of Ethics
 
The Fund and the Adviser have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions.  Personnel subject to each code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such investments are made pursuant to the code’s requirements.  For information on how to obtain a copy of each code of ethics, see “Available Information.”
 
Proxy Voting Policies and Procedures
 
The Fund’s Board has delegated the responsibility to vote the proxies of securities held by the Fund to the Adviser.  The Adviser has adopted a Proxy Voting Policy which, in compliance with Rule 206(4)-6 under the Adviser Act, is reasonably designed to ensure Bulldog Investors, LLP votes in the Fund’s best interest.  The following summarizes the Adviser’s proxy voting policy and procedure and guidelines.
 
Proxy Voting Policies
 
The Adviser believes that the right to vote on issues submitted to shareholder vote, such as election of directors and important matters affecting a company’s structure and operations, can impact the value of its investments.  The Adviser generally analyzes the proxy statements of issuers of stock owned by the Fund and votes proxies on behalf of the Fund.  The Adviser’s decisions with respect to proxy issues are made in light of the anticipated impact of the issue on the value of the investment. Proxies are voted solely in the interests of the Fund.
58

Proxy Voting Procedures
 
In evaluating proxy statements, the Adviser relies upon its own fundamental research, and information presented by company management and others.  The Adviser does not delegate its proxy voting responsibility to a third-party proxy voting service.
 
Proxy Voting Guidelines
 
With respect to proxies of closed-end investment companies held by the Fund, in order to comply with Section 12(d) of the Investment Company Act of 1940, the Adviser will “mirror vote” all such proxies received by the Fund, unless the Adviser deems it appropriate to seek instructions from Fund shareholders with regard to such vote.  In such circumstances, the Adviser will vote such proxies proportionally based upon the total number of shares owned by those shareholders that provide instructions.  The Adviser will post such instructions on the Fund’s website and will send an email indicating that it is seeking instructions to those Fund shareholders who have requested to receive such information.  In each semi-annual report to Fund shareholders, they are solicited to request to receive such information.
 
Monitoring and Resolving Conflicts of Interest
 
When reviewing proxy statements and related research materials, the Adviser will consider whether any business or other relationships between a portfolio manager, the Adviser and a portfolio company could influence a vote on such proxy matter.  With respect to personal conflicts of interest, the Adviser’s Code of Ethics requires all partners to avoid activities, perquisites, gifts, or receipt of investment opportunities that could interfere with the ability to act objectively and effectively in the best interests of the Adviser and the Fund, and restricts their ability to engage in certain outside business activities.  Portfolio managers with a personal conflict of interest regarding a particular proxy vote must recuse themselves and not participate in the voting decisions with respect to that proxy.
 
Share Repurchases
 
Stockholders of a closed-end management investment company generally do not have the right to cause it to repurchase its shares.  Generally, a closed-end management company may repurchase its shares under the 1940 Act:  (1) on a securities exchange or such other open market as may be designated by the SEC (provided that it has, in any such case, informed holders of the class of stock involved within the preceding six months of its intention to repurchase such stock), (2) by a tender offer open to all holders of the class of shares involved or (3) as otherwise permitted by the SEC.  If the Fund intends to repurchase its shares other than on a securities exchange, in the open market or by making a tender offer, a rule adopted by the SEC under the 1940 Act provides that the closed-end fund must meet certain conditions regarding the distribution of our net income, the identity of the seller, the price paid, any brokerage commissions, prior notice to holders of the class of shares involved of an intention to purchase such shares and that the purchase is not being made in a manner or on a basis which discriminates unfairly against the other holders of such class.
 
While we are not required to repurchase our shares, we have done so in the past and may continue to do so if the Board believes that such repurchase is in our best interests and of our stockholders.
 

Custodian, Transfer and Dividend Paying Agent and Registrar
 
Our portfolio securities are held under a custody agreement by U.S. Bank, N.A.  The address of the custodian is 1555 North RiverCenter Drive, Suite 302, Milwaukee, WI 53212.  Our assets are held under bank custodianship in compliance with the 1940 Act. American Stock Transfer & Trust Company, LLC acts as our transfer agent, dividend paying agent and registrar (as well as Subscribing Agent in connection with this offering).  The principal business address of the transfer agent is 6201 15th Avenue, Brooklyn, NY 11219.
59

Brokerage Allocation and Other Practices
 
Subject to the supervision of the Directors, decisions to buy and sell securities for the Fund are made by the Adviser.  The Adviser is authorized by the Directors to allocate the orders placed by them on behalf of the Fund to brokers and dealers who may, but need not, provide research or statistical material or other services to the Fund or the Adviser for the Fund’s use.  Such allocation is to be in such amounts and proportions as the Adviser may determine.
 
The Adviser may employ such brokers and dealers as may, in the judgment of the Adviser, obtain the best results taking into account such factors as price, including dealer spread, the size, type and difficulty of the transaction involved, the firm's general execution and operational facilities and the firm's risk in positioning the securities involved.  In addition, the Adviser may select broker-dealers for portfolio transactions who provide services over and above simple trade execution.  For example, with respect to certain complex or difficult trades, the Adviser will utilize the services of a broker-dealer with the proven capability to effect such trades, and in such case, the Adviser may be willing to pay higher commission rates than those of other execution-only type desks.  When, in the view of the Adviser, execution is the only criteria relevant to a particular investment, competitive commission rates will be a priority.
 
Brokers or dealers executing a portfolio transaction on behalf of the Fund may receive a commission in excess of the amount of commission another broker or dealer would have charged for executing the transaction if the Adviser determines in good faith that such commission is reasonable in relation to the value of brokerage, research and other services provided to the Adviser’s clients, including the Fund.
 
In allocating portfolio brokerage, the Adviser may select brokers or dealers who also provide brokerage, research and other services to other accounts over which the Adviser exercises investment discretion.  Some of the services received as the result of the Fund’s transactions may primarily benefit accounts other than the Fund’s, while services received as the result of portfolio transactions effected on behalf of those other accounts may primarily benefit the Fund.
 
Legal Matters
 
Legal matters regarding the securities offered by this Prospectus and of the Fund in general will be passed upon for the Fund by Blank Rome LLP, New York, New York.
 
Experts
 
The financial statements included in this Prospectus and in the Registration Statement have been audited by Tait, Weller & Baker LLP, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
 
Available Information
 
We will file with or submit to the SEC reports, proxy statements and other information meeting the informational requirements of the 1940 Act and the Exchange Act.  You may inspect and copy these reports, proxy statements and other information at the Public Reference Room of the SEC at 100 F St. NE, Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for information on the operation of the Public Reference Room. Our SEC filings are also available to the public on the SEC’s Internet website at http://www.sec.gov and can be inspected at the offices of the NYSE, 20 Broad Street, New York, NY 10005.  Copies of these reports, proxy and information 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 the SEC’s Public Reference Section, 100 F St. NE, Washington, D.C. 20549-0102 and are also available on the Fund’s website at  http://www.specialopportunitiesfundinc.com.
60

Forward-Looking Statements
 
This Prospectus contains forward-looking statements, within the meaning of the Act, that involve risks and uncertainties.  We use words such as “anticipates,” “believes,” “expects,” “objectives,” “future,” “intends,” “will,” “may,” “should,” and similar expressions to identify forward-looking statements.  Our actual results could differ materially from those projected in the forward-looking statements because of various risks and uncertainties, including the factors set forth in “Risk Factors” and elsewhere in this Prospectus.
 
We have based the forward-looking statements included in this Prospectus on information available to us on the date of this Prospectus, and we assume no obligation to update any such forward-looking statements.  Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports, if any, that we in the future may file with the SEC, including an annual or semi-annual report on Form N-CSR.
 
Financial Statements
 
The financial statements included in the Fund’s Annual Report for the year ended December 31, 2019 and December 31, 2020, filed with the Securities and Exchange Commission on March 9, 2020 (File No. 811-07528) and on March 8, 2021 (File No. 811-07528), respectively, and the unaudited financial statements included in the Fund’s Semi-Annual Report for the six month period ended June 30, 2021, filed with the Securities and Exchange Commission on September 2, 2021 (File No. 811-07528), are herein incorporated by reference.
 
61

 Not Part of the Prospectus
SPECIAL OPPORTUNITIES FUND
PRIVACY NOTICE
 
FACTS
WHAT DOES SPECIAL OPPORTUNITIES FUND INC. (THE “FUND”) DO WITH YOUR PERSONAL INFORMATION?
Why?
Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information.  Please read this notice carefully to understand what we do.
What?
The types of personal information we may collect and share may include:
 Social Security number
 account balances
 account transactions
 transaction history
 wire transfer instructions
 checking account information
When you are no longer our customer, we continue to share your information as described in this notice.
How?
All financial companies need to share customers’ personal information to run their everyday business.  In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons the Fund chooses to share; and whether you can limit this sharing.
 
Reasons we can share your personal information
Does the Fund share?
Can you limit this sharing?
For our everyday business purposes –
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
Yes
No
For our marketing purposes –
to offer our products and services to you
No
We don’t share
For joint marketing with other financial companies
No
We don’t share
For our affiliates’ everyday business purposes – information about your transactions and experiences
Yes
No
For our affiliates’ everyday business purposes – information about your creditworthiness
No
We don’t share
For our affiliates to market to you
No
We don’t share
For nonaffiliates to market to you
No
We don’t share

 
Questions?
Call (877) 607-0414

Page 2
What we do
Who is providing this notice?
Funds advised by Bulldog Investors, LLP.  A complete list is included below.
How does the Fund protect my personal information?
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law.  These measures include computer safeguards and secured files and buildings.
How does the Fund collect my personal information?
We collect your personal information, for example, when you
 open an account or respond to an offer
 provide account information
 give us your contact information
 make a wire transfer
 tell us where to send money
We also may collect your information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?
Federal law gives you the right to limit only
 sharing for affiliates’ everyday business purposes – information about your creditworthiness
 affiliates from using your information to market to you
 sharing for nonaffiliates to market to you
State laws and individual companies may give you additional rights to limit sharing.
Definitions
Affiliates
Companies related by common ownership or control.  They can be financial and nonfinancial companies.
 Our affiliates include: Bulldog Investors, LLP
 
Nonaffiliates
Companies not related by common ownership or control.  They can be financial and nonfinancial companies.
 The Fund doesn’t share with nonaffiliates so they can market to you.
Joint marketing
A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
 The Fund doesn’t jointly market.
List of funds providing this notice
Special Opportunities Fund, Inc.
 

PART C

OTHER INFORMATION
 
Item 25. Financial Statements and Exhibits
 
(1)           Financial Statements (included in Part B)
Portfolio Composition as of December 31, 2020 and December 31, 2019 (unaudited)*
Portfolio of Investments as of December 31, 2020 and December 31, 2019*
Statement of Assets and Liabilities as of December 31, 2020 and December 31, 2019*
Statement of Operations for the year ended December 31, 2020 and the year ended December 31, 2019*
Statement of Cash Flows for the year ended December 31, 2020 and the year ended December 30, 2019*
Statement of Changes in Net Assets for the year ended December 31, 2020 and for the years ended December 31, 2019*
Financial Highlights for the year ended December 31, 2020 and for the years ended December 31, 2019*
Notes to Financial Statements*
Report of Independent Registered Public Accounting Firm*
Portfolio Composition as of June 30, 2021 (unaudited)**
Portfolio of Investments as of June 30, 2021 (unaudited)**
Statement of Assets and Liabilities as of June 30, 2021 (unaudited)**
Statement of Operations for the six months ended June 30, 2021 (unaudited)**
Statement of Cash Flows for the six months ended June 30, 2021 (unaudited)**
Statement of Changes in Net Assets for the six months ended June 30, 2021 (unaudited)**
Financial Highlights for the six months ended June 30, 2021 (unaudited)**
Notes to Financial Statements (unaudited)**

* Incorporated by reference from the Fund’s Annual Report on Form N-CSR for the year ended December 31, 2020, filed on March 8, 2021 (File No. 811-07528) and the Fund’s Annual Report on Form N-CSR for the year ended December 31, 2019, filed on March 9, 2020 (File No. 811-07528).

** Incorporated by reference from the Fund’s Semi-Annual Report on Form N-CSR for the six months ended June 30, 2021, filed on September 2, 2021 (File No. 811-07528).
 
(2)  
Exhibits
 
 
(a)(i)
(a)(ii)
(a)(iii)
(b)(i)
(c)
Not applicable
(d)
(e)
Not applicable
(f)
Not applicable
(g)
(h)
Not applicable
(i)
Not applicable
(j)
(k)(i)
(k)(ii)
(k)(iii)
(k)(iv)
(l)

(m)
Not applicable
(n)
(o)
Not applicable
(p)
Not applicable
(q)
Not applicable
(r)(i)
(r)(ii)
(s)
(t)
 
(1)

(2)
 
(3)
   
(4)
   
(5)
   
(6)
   
(7)

Item 26. Marketing Arrangements
 
Not applicable.
 
 
Item 27. Other Expenses of Issuance and Distribution
 
The approximate expenses in connection with the offering are as follows:
 
Subscription Agent’s and Information Agent’s Fees and
  Expenses
$35,000
Auditing Fees and Expenses
$2,000
Legal Fees and Expenses
$75,000
NYSE Listing Fees
$25,000
Printing, Typesetting, and Edgar Fees
$10,000
Miscellaneous
$2,000
 
 
 
$149,000

 
Item 28. Persons Controlled by or Under Common Control With Registrant
 
In September, 2010, members of the staff of the Division of Investment Management (the “Staff”) informed the Fund that they had concerns that the Fund might not be in compliance with the exemptive conditions of Section 12(d)(1)(F) of the 1940 Act because the Fund and certain private partnerships might be deemed to be under common control.  The Staff members based their concerns on certain public disclosures regarding the ownership and control of the Adviser by certain individuals who also own and control other entities that serve as the general partners and investment advisers to certain private investment partnerships that are excluded from the definition of an investment company by Section 3(c)(1) of the 1940 Act.  The Staff cited the SEC’s conclusion in In the Matter of Steadman Security Corp. (Exchange Act Release No. 13695; Investment Company Act Release No. 9830; Investment Advisers Act Release No. 593) (June 29, 1977), that “the investment adviser almost always controls the fund” in support of its position.  The Board, including all of the Independent Directors, and the Adviser reviewed the matter with their respective counsel and determined that they disagreed with the Staff’s position. In December 2010, the Adviser and the Fund filed a joint request for a declaratory order from the SEC that the Adviser does not control the Fund.  In March 2011, the Board and the Adviser made a determination that the joint request for a declaratory order should be deemed to have been temporarily granted under the provisions of Section 2(a)(9) of the 1940 Act because more than 60 days had elapsed since the date the request was filed with the SEC.  The Staff has advised the Board and the Adviser that they disagree with such determination.  In June, 2011, the Fund and the Adviser submitted a letter to the Staff requesting that they re-evaluate the Staff’s position regarding whether the Adviser should be deemed to control the Fund based on the recent decision by the U.S. Supreme Court in Janus Capital Group v. First Derivative Traders.  In Janus, the Court ruled that despite the “unique close relationship” between the fund and the adviser, the adviser did not control the fund. Although the position is not free from doubt, the Fund and the Adviser and their respective counsel believe that the Fund is in compliance with the exemptive conditions of Section 12(d)(l)(F) of the 1940 Act. On October 11, 2012, the Staff forwarded to the Fund an SEC Release “that discusses the manner in which the [SEC] envisioned a fund holding company relying on Section 12(d)(1)(F) … would comply with the pass-through voting requirements.”  On November 5, 2012, the Fund submitted a revised application in which it stated that it does not intend to adopt the procedure set forth in the Release because it is impractical and not cost effective and because the Release offered no reason for the SEC’s position. On August 8, 2013, the SEC issued a Release setting forth its proposed order that the Fund’s voting procedure does not satisfy Section 12(d)(1)(F) of the 1940 Act. On August 28, 2013, the Fund submitted a request that the SEC hold a hearing prior to issuing the proposed order, and on September 9, 2013, the Fund requested that, in the event the SEC elects not to hold such a hearing, a stay be issued foreclosing any enforcement action pending the outcome of an appeal of the proposed order to the US Court of Appeals. On August 15, 2014, the SEC issued an order:  (1) denying the Fund’s request for a hearing; and (2) declining to grant a stay because no enforcement action is currently pending on this matter.  In such order, the Commission stated:  “[t]o the extent that SPE and its shareholders believe that SPE should be permitted to invest in the underlying funds in excess of the limits in Section 12(d)(1)(A) of the 1940 Act subject to conditions different from those set forth in Section 12(d)(1)(F), SPE may seek an exemptive order pursuant to Sections 6(c) and 12(d)(1)(J) of the 1940 Act.”  On October 1, 2014, the Fund submitted an application for an exemptive order to enable it to invest in other registered funds in excess of the limits set forth in Section 12(d)(1)(A) without always mirror voting or using the method of pass-through voting that the SEC believes is required to comply with Section 12(d)(1)(F) of the Investment Company Act. On January 29, 2015, the SEC Staff responded to the Fund’s application and indicated that, in order to receive the requested relief, the Fund must amend its application and agree to certain additional conditions, to which the Fund and the Adviser object.  In a conference call with the Adviser and Fund counsel on February 10, 2015, the Staff agreed to consider the Fund’s and Adviser’s objections to the proposed conditions and to provide the parties with a written explanation for its determination that the Fund’s proposed conditions are inadequate.  In accordance with Section 12(d)(1)(F) of the 1940 Act, for each closed-end fund for which the Fund receives a proxy, the Fund has voted and will continue to vote its shares of such closed-end fund in the same proportion as the vote of all other shareholders of such closed-end fund, unless the Adviser deems it appropriate to seek instructions from Fund stockholders with regard to such vote. In such circumstances, the Fund will vote such proxies proportionally based upon the total number of shares owned by those stockholders that provide instructions. Fund stockholders may obtain forms to provide such proxy voting instructions on the Fund’s website.

 Item 29. Number of Holders of Securities
 
Set forth below is the number of record holders as of September 30, 2021, of each class of securities of the Registrant:
 
Title of Class
 
Number of Record Holders
 
Common Stock, par value $0.001
 
6,541
 

Item 30. Indemnification
 
Section 2-418 of the Maryland General Corporation Law and the Registrant’s By-laws (incorporated by reference as an Exhibit 2(b) to this Registration Statement) provide for indemnification of directors and officers of the Registrant, and employees and agents of the Registrant as determined by the Board.  The Investment Management Agreement (incorporated by reference as Exhibit 2(g) to this Registration Statement) provides for indemnification of the Fund’s investment adviser.  The Registrant’s directors and officers are insured under a standard investment company errors and omissions insurance policy covering loss incurred by reason of negligent errors and omissions committed in their official capacities.
 
Item 31. Business and Other Connections of Investment Adviser
 
A description of any other business, profession, vocation, or employment of a substantial nature in which the investment adviser, and each director, executive officer or partner of the investment adviser is or has been during the past two fiscal years, engaged in for his or her own account or in the capacity of director, officer, employee, partner or trustee, is set forth in this Registration Statement in the section entitled “Management.”
 
Item 32. Location of Accounts and Records
 
The books and records required to be maintained by Section 31(a) of the 1940 Act, are in the possession and custody of the Registrant’s administrator, U.S. Bancorp Fund Services, LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202.
 
Item 33. Management Services
 
Not applicable.
 
Item 34. Undertakings
 
 
1.
The Registrant undertakes to suspend the offering of its Rights until the prospectus is amended if (1) subsequent to the effective date of this registration statement, the NAV declines more than ten percent from its NAV as of the effective date of the registration statement or (2) the NAV increases to an amount greater than its net proceeds as stated in the prospectus.
 
 
2.
Not applicable.
  
 
3.
Not applicable.
 
 
4.
The Registrant undertakes that:
 
 
(a)
for the purpose of determining any liability under the Act, as amended, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant under Rule 424(b)(1) under the 1933 Act shall be deemed to be part of this registration statement as of the time it was declared effective; and
 
 
(b)
for the purpose of determining any liability under the Act, as amended, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
 
5.
Not applicable.
 
 
6.
Insofar as indemnification for liability arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 
7.
The Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, any prospectus or Statement of Additional Information.

SIGNATURES
 
Pursuant to requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, and the State of New York, on the 8th day of December, 2021.
 
 
SPECIAL OPPORTUNITIES FUND, INC.
 
 
 
 
 
 
 
By:
/s/ Andrew Dakos 
 
 
Name: Andrew Dakos
Title: President (Principal Executive Officer)


Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
 
 
Signature
 
Title
 
Date
 
 
 
 
 
 
 
/s/ Andrew Dakos
 
President  (Principal Executive Officer)
 
December 8, 2021
 
Andrew Dakos
 
 
 
 
 
 
 
 
 
 
 
/s/ Thomas Antonucci
 
Chief Financial Officer (Principal Financial Officer
 
December 8, 2021
 
Thomas Antonucci
 
and Principal Accounting Officer)
   
           
 
/s/ Andrew Dakos
 
Director
 
December 8, 2021
 
Andrew Dakos
 
 
 
 
 
 
 
 
 
 
 
*
 
Director
 
December 8, 2021
 
Phillip Goldstein
 
 
 
 
 
 
 
 
 
 
 
*
 
Director
 
December 8, 2021
 
Ben Harris
 
 
 
 
 
 
 
 
 
 
 
*
 
Director
 
December 8, 2021
 
Charles Walden
 
 
 
 
 
 
 
 
 
 
 
*
 
Director
 
December 8, 2021
 
Gerald Hellerman
 
 
 
 
 
 
 
 
 
 
 
*
 
Director
 
December 8, 2021
 
Marc Lunder
 
 
 
 
   
 
 
 
 


 *By:      /s/ Andrew Dakos
Andrew Dakos
Attorney-in-Fact
 

 
INDEX TO EXHIBITS
 
 

 
Exhibit No.
Description
(a)(iii)
Articles Supplementary
(d)
Form of Transferable Subscription Rights Certificate
(k)(i)
Transfer Agent Servicing Agreement
(k)(iii)
Information Agent Agreement
(k)(iv)
Subscribing Agent Agreement
(l)
Opinion and Consent of Counsel
(n)
Consent of Independent Auditor






SPECIAL OPPORTUNITIES FUND, INC.
 
ARTICLES SUPPLEMENTARY
ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF
THE SERIES C SHARES OF CONVERTIBLE PREFERRED STOCK

Special Opportunities Fund, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland as follows:
 
FIRST: Pursuant to the authority expressly vested in the Board of Directors of the Corporation (the “Board”) by Article Sixth of its Articles of Incorporation, as supplemented (which as hereafter amended, restated and supplemented from time to time, is together with these Articles Supplementary, the “Charter”) and Section 2-208 of the Maryland General Corporation Law (“MGCL”), the Board has duly adopted resolutions reclassifying authorized but unissued shares of common stock, par value $0.001 per share, of the Corporation (the “Common Stock”) into 5,000,000 shares of preferred stock, par value $0.001 per share, of the Corporation.
 
SECOND:                      The designations, preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, terms and conditions of redemption and other provisions of the shares of preferred stock referenced in Article FIRST are as follows:
 
(1) Designation; Number of Shares.  A series of preferred stock, designated as “2.75% Convertible Preferred Stock, Series C”, par value $0.001 per share, is hereby established.  The number of shares constituting such series shall be 5,000,000 (the “Series C Preferred Stock”).
 
(2) Voting Rights.  For so long as the Corporation is subject to the Investment Company Act of 1940, as amended (the “1940 Act”), the holders of Series C Preferred Stock, voting separately as a single class, shall have the right to elect two (2) members of the Board at any annual or special meeting of stockholders or by a written consent in lieu of a meeting undertaken by the holders of at least a majority of the outstanding shares of Series C Preferred Stock. Any director elected by the holders of Series C Preferred Stock may be removed at any time with or without cause by and only by the vote of the holders of a majority of the shares of Series C Preferred Stock then outstanding at any annual or special meeting of the stockholders of the Corporation, or by a written consent in lieu of a meeting undertaken by the holders of at least a majority of the outstanding shares of Series C Preferred Stock, and any vacancy occurring by reason of such removal or by reason of death, resignation or inability to serve of any director so elected, shall be filled by and only by a vote of the holders of a majority of the Series C Preferred Stock then outstanding at any annual or special meeting of the stockholders of the Corporation or by a written consent in lieu of a meeting undertaken by the holders of at least a majority of the outstanding shares of Series C Preferred Stock.  Any director so elected under this paragraph shall serve until his or her successor is duly elected and qualified or his or her earlier death, resignation or removal as provided herein.  The foregoing right to elect two directors shall be unaffected by any default by the Corporation in the payment of dividends to holders of Series C Preferred Stock, subject to any additional rights afforded such holders in the event of such a default under the 1940 Act, including Section 18 thereof.  In addition to any approval by stockholders that might otherwise be required, the approval of the holders of two-thirds of any outstanding Series C Preferred Stock, voting separately as a class, shall be required to (i) create any senior equity security or (ii) adopt any charter or bylaw amendment that would materially affect existing terms of the Series C Preferred Stock.   The approval of the holders of a majority of any outstanding Series C Preferred Stock, voting separately as a class, shall be required to, among other actions, (i) adopt any plan of reorganization that would adversely affect the Series C Preferred Stock, (ii) create any pari passu security, (iii) increase the amount of authorized shares of Series C Preferred Stock, or (iv) take any action requiring a vote of security holders under Section 13(a) of the 1940 Act, including, among other things, changes in the Corporation’s subclassification as a closed-end investment company or changes in its fundamental investment restrictions.





(3) Dividends.
 
(a)
The holders of Series C Preferred Stock shall be entitled to receive, when, as and if authorized by the Board and declared by the Corporation, out of funds legally available therefor, cumulative cash dividends at the annual rate of 2.75% per share (computed on the basis of a 360-day year consisting of twelve 30-day months) of the initial liquidation preference of $25.00 per share on the Series C Preferred Stock and no more, payable quarterly on March 31, June 30, September 30 and December 31 in each year (each, a “Dividend Payment Date”), commencing as of the last Business Day of the first full calendar quarter immediately following the issuance of this Series C Preferred Stock (or if any such day is not a Business Day (as defined below), then on the next succeeding Business Day), to holders of record of Series C Preferred Stock as they appear on the stock register of the Corporation at the close of business on the date designated by the Board for the payment of dividends, in preference to dividends on shares of Common Stock and any other stock of the Corporation ranking junior to the Series C Preferred Stock in payment of dividends.  “Business Day” means a day on which the New York Stock Exchange is open for trading and which is not a Saturday, Sunday or other day on which banks in the New York, New York are authorized or obligated by law to close.

(b)
Dividends on shares of Series C Preferred Stock shall accumulate from the date on which the first such shares of Series C Preferred Stock are originally issued (“Date of Original Issue”).  Each period beginning on and including a Dividend Payment Date (or the Date of Original Issue, in the case of the first dividend period after issuance of such shares) and ending on but excluding the next succeeding Dividend Payment Date is referred to herein as a “Dividend Period”.  Dividends on account of arrears for any past Dividend Period may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date.

(c)
For so long as shares of Series C Preferred Stock are outstanding, the Corporation shall not declare, pay or set apart for payment any dividend or other distribution (other than a dividend or distribution paid in shares of, or options, warrants or rights to subscribe for or purchase, Common Stock or other shares of capital stock, if any, ranking junior to the Series C Preferred Stock as to dividends) with respect to Common Stock or any other shares of the Corporation ranking junior to or on a parity with the Series C Preferred Stock as to dividends, unless (i) immediately after such transaction the Corporation would have asset coverage of at least 200% after deducting the amount of such dividend or distribution, as the case may be, (ii) full cumulative dividends on the Series C Preferred Stock due on or prior to the date of the transaction have been declared and paid and (iii) the Corporation has redeemed the full number of shares of Series C Preferred Stock required to be redeemed by any provision for mandatory redemption contained in these Articles Supplementary.
2

(4) Liquidation Rights.

(a)
Upon the dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders of shares of Series C Preferred Stock shall be entitled to receive and to be paid out of the assets of the Corporation (or the proceeds thereof) available for distribution to its stockholders after satisfaction of claims of creditors of the Corporation, but before any distribution or payment shall be made in respect of Common Stock, an amount equal to the liquidation preference with respect to such shares.  The liquidation preference for the Series C Preferred Stock shall be $25.00 per share, plus an amount equal to all accumulated dividends thereon (whether or not earned or declared but without interest) to the date payment of such distribution is made in full or a sum sufficient for the payment thereof is set apart with the Dividend Disbursing Agent (as defined below).  In determining whether a distribution (other than upon voluntary or involuntary liquidation), by dividend, redemption or otherwise, is permitted under the MGCL, amounts that would be needed, if the Corporation were to be dissolved at the time of distribution, to satisfy the liquidation preference of the Series C Preferred Stock will not be added to the Corporation’s total liabilities.  “Dividend Disbursing Agent” means American Stock Transfer & Trust Company, LLC, unless and until another entity appointed by a resolution of the Board enters into an agreement with the Corporation to serve as Dividend Disbursing Agent.

(b)
If, upon any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the assets of the Corporation available for distribution among the holders of all preferred stock of the Corporation, including the Series C Preferred Stock, then outstanding shall be insufficient to permit the payment in full to the holders thereof of the amounts to which they are entitled, then the available assets shall be distributed among such holders ratably in any distribution of assets according to the respective amounts which would be payable on all the shares if all amounts thereon were paid in full.

(c)
Upon the dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, until payment in full is made to the holders of Series C Preferred Stock of the liquidation distribution to which they are entitled, (i) no dividend or other distribution shall be made to the holders of Common Stock or any other class of shares of capital stock of the Corporation ranking junior to the Series C Preferred Stock upon dissolution, liquidation or winding up and (ii) no purchase, redemption or other acquisition for any consideration by the Corporation shall be made in respect of the Common Stock or any other class of shares of capital stock of the Corporation ranking junior to the Series C Preferred Stock upon dissolution, liquidation or winding up.

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(d)
After payment to the holders of preferred stock of the full preferential amounts provided for in this Section 4, the holders of preferred stock as such shall have no right or claim to any of the remaining assets of the Corporation.

(e)
Subject to the rights of the holders of shares of any series or class or classes of stock ranking on a parity with the Series C Preferred Stock with respect to the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Corporation, after payment shall have been made in full to the holders of the Series C Preferred Stock as provided in Section 4(a), but not prior thereto, any other series or class or classes of stock ranking junior to the Series C Preferred Stock with respect to the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Corporation shall, subject to any respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series C Preferred Stock shall not be entitled to share therein.

(5) Optional and Mandatory Redemption by the Corporation.
 
(a)
Until the mandatory redemption date set forth below in Section 5(b), at any time following the second anniversary of the expiration of the offer to purchase the Series C Preferred Stock, the Board may, in its sole discretion, redeem all or any part of the then outstanding shares of Series C Preferred Stock at $25.00 per share.  Under such circumstances, the Corporation shall provide no less than 30 days nor more than 90 days notice to the holders of Series C Preferred Stock that, unless such shares have been converted in accordance with Section 6 by a certain date, the shares will be redeemed.  In connection with such redemption, holders would receive payment for all declared and unpaid dividends on the shares of Series C Preferred Stock as of the date of redemption, but after the redemption, holders shall no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Series C Preferred Stock.

(b)
On the fifth (5th) anniversary of the Date of Original Issue, in accordance with the notice procedures set forth below, the Corporation shall, to the extent permitted by the 1940 Act and the MGCL, redeem all but not less than all outstanding shares of Series C Preferred Stock at a redemption price per share payable in cash equal to $25.00 together with accumulated dividends thereon to the date fixed for redemption.

(c)
Notice of any redemption pursuant to this Section shall be sent by or on behalf of the Corporation at least 30 days and not more than 90 days before the date fixed for redemption, by first class mail, postage prepaid, to all holders of record of Series C Preferred Stock at their last addresses as they shall appear on the books of the Corporation; provided, however, that no failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series C Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective.  In addition to any information required by law, such notice shall state: (i) the redemption date, (ii) the redemption price, (iii) the procedures that the holders must follow to redeem such shares, and (iv) that dividends on the shares to be redeemed will cease to accumulate on the redemption date.

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(d)
If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been set aside by the Corporation, separate and apart from its other funds, for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date, dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption, without interest. Any funds unclaimed at the end of twelve (12) months  from the redemption date shall, to the extent permitted by law, be released to the Corporation, after which time the holders of the shares so called for redemption shall look only to the Corporation for payment of the redemption price of such shares.

(e)
The Corporation shall set aside sufficient funds to redeem all the shares of the Series C Preferred Stock in accordance with this Section 5 in order to terminate the rights of the holders of the Series C Preferred Stock in advance of the redemption date. To the extent that any redemption for which notice has been provided is not made by reason of the absence of legally available funds therefor in accordance with hereby and applicable law, such redemption shall be made as soon as practicable to the extent such funds become available.

(f)
In case of any redemption of only part of the shares of Series C Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or by lot. Subject to the provisions hereof, the Corporation shall have full power and authority to prescribe the terms and conditions upon which shares of Series C Preferred Stock shall be redeemed from time to time. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.

(6) Conversion Rights.
 
(a)
Right to Convert by Holders.  Until the mandatory redemption date set forth in Section 5 and subject to the adjustments contemplated by Section 7 hereof, shares of Series C Preferred Stock may be presented for conversion, in whole or in part, at any time after the issuance thereof until the close of business on the last trading day prior to the date fixed for redemption of such shares or the liquidation, dissolution or winding up of the Corporation, by the holder thereof, without the payment of any additional consideration, into shares of Common Stock.  Any such exercise shall be made in accordance with Section 6(c) and shares of such Common Stock shall be issued at such time as set forth in Section 6(d). Each share of Series C Preferred Stock initially shall be convertible into shares of Common Stock at a conversion rate equivalent to a conversion price of $20.50 per share of Common Stock (which is a ratio of 1.2195 shares of Common Stock for each share of Series C Preferred Stock held).  The conversion right is a secondary attribute which is included to enhance the terms upon which the Corporation is able to issue the Series C Preferred Stock. Upon conversion, any accumulated dividends shall, in the Corporation’s discretion, be payable in the form of either shares of Common Stock (valued at the closing price of the Common Stock on the Business Day prior to the date of conversion) or cash, but after the conversion, holders shall no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of this Series C Preferred Stock.
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(b)
Mandatory Conversion.  If, at any time from and after the Date of Original Issue, the market price of the Common Stock is equal to or greater than $23.75 per share (as adjusted for dividends or other distributions made to or on behalf of the holders of the Common Stock), the Board may, at its option, require the holders of Series C Preferred Stock to convert all or any part of their shares of Series C Preferred Stock into shares of Common Stock at a conversion rate equivalent to a conversion price of $20.50 per share of Common Stock (which is a ratio of 1.2195 shares of Common Stock for each share of Series C Preferred Stock, subject to adjustment upon the occurrence of certain events (a “Mandatory Conversion”).  The Corporation may exercise its right to require conversion under this Section 6(b) by delivering within not more than ten (10) trading days following the date on which the market price of the Common Stock is equal to or greater than $23.75 per share (as adjusted for dividends or other distributions made to or on behalf of the holders of the Common Stock) a written notice thereof to all, but not less than all, of the holders of Series C Preferred Stock and the Corporation’s transfer agent (the “Mandatory Conversion Notice” and the date all of the holders received such notice is referred to as the “Mandatory Conversion Notice Date”).  The Mandatory Conversion Notice shall state (i) the trading day selected for the Mandatory Conversion in accordance herewith (the “Mandatory Conversion Date”), and (ii) the number of shares of Common Stock to be issued to the holder on the Mandatory Conversion Date.  The mechanics of conversion set forth in Section 6(b) shall apply to any Mandatory Conversion as if the Corporation and the transfer agent had received from the holder on the Mandatory Conversion Date a Conversion Notice (as defined below).  In connection with such Mandatory Conversion, holders would receive payment for all declared and unpaid dividends on the shares of Series C Preferred Stock as of the Mandatory Conversion Date, but after the Mandatory Conversion, holders shall no longer be entitled to the dividends, liquidation preference or other rights attributable to holders of the Series C Preferred Stock.

(c)
Exercise of Right to Convert.    The right to convert shares of Series C Preferred Stock into shares of Common Stock may be exercised by the holder of Series C Preferred Stock only by delivering a written notice to convert to the Corporation’s transfer agent stating that the holder elects to convert all or a stated number of shares of the Series C Preferred Stock into shares of Common Stock and identifying the name or names (with address and social security or taxpayer identification number) in which the shares of Common Stock issuable upon such conversion shall be issued (each, a “Conversion Notice”).  Notwithstanding the foregoing, the Conversion Notice shall comply with the applicable procedures of Depository Trust Company (“DTC”).
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(d)
Issuance of Shares. As soon as reasonably practicable following the next Dividend Payment Date, the Corporation shall issue and deliver, or cause to be issued and delivered, to the holder the number of duly authorized and issued, fully paid and nonassessable shares of Common Stock to which the holder of shares of Series C Preferred Stock so converted shall be entitled in accordance with the procedures of DTC applicable to stock represented by a global stock certificate.

(e)
Effect of Conversion.

(i) Any conversion of shares of the Series C Preferred Stock made pursuant to Section 6(a) shall be deemed to have been made at the close of business on the date the Corporation receives the Conversion Notice, and the rights of the holder thereof with respect to the shares of Series C Preferred Stock being converted shall cease, except that the holder thereof shall thereafter have and retain (A) the right to receive shares of Common Stock in respect of the converted shares of Series C Preferred Stock in accordance with Section 6(d) and (B) the right to vote such shares of Series C Preferred Stock in connection with any matters submitted to a vote of the stockholders or to receive distributions with respect to such shares of Series C Preferred Stock, in either case as to which the applicable record date established by the Board for determining stockholders entitled to vote on such matter or entitled to receive distributions, as the case may be, shall occur prior to the date on which such holder shall have delivered the Conversion Notice to the Corporation.  The Person(s) (as defined below) entitled to receive the shares of Common Stock upon the conversion of the shares of Series C Preferred Stock shall be treated for all purposes as having become the record holder of such shares of Common Stock as of the close of business on the date such shares are converted.  “Person” shall mean any individual, corporation, partnership, limited liability company, limited liability partnership, trust, unincorporated association or other entity.

(f)
No Fractional Shares.  No fractional shares or scrip representing fractional shares shall be issued upon conversion of any shares of Series C Preferred Stock into Common Stock.  If any fractional share of Common Stock would be issuable upon the conversion of any share or shares of Series C Preferred Stock but for the provisions of the first sentence of this Section 6(f), the Corporation, in lieu of delivering such fractional share, shall pay to the holder of the shares of Series C Preferred Stock surrendered for conversion an amount in cash equal to the current market price of such fractional share.

(7) Adjustments to the Conversion Rate.  In the event the Corporation shall make or declare, or fix a record date for the determination of holders of shares of Common Stock entitled to receive, a dividend or other distribution payable in cash or Common Stock or authorize any split or reverse split of the Common Stock, the Conversion Rate shall be adjusted accordingly.  In addition, the Board of Directors may determine, in its sole discretion, it to be in the best interests of the Corporation to adjust the Conversion Rate in other instances.
7

(8) Reports of Adjustments.  Upon any adjustment of the Conversion Rate, the Corporation shall give written notice thereof to each holder of shares of Series C Preferred Stock, which notice shall state the adjusted Conversion Rate and setting forth in reasonable detail the facts requiring such adjustment and the method upon which such adjustment was made, and the effective date of such adjustment.

(9) Previously Designated Series of Preferred Stock. All previously designated series of preferred stock having been converted or redeemed by the Corporation are no longer outstanding.  Accordingly, all such previously designated series of preferred stock are hereby terminated.

(10) Notices.  Whenever (i) the Corporation shall declare any dividend upon the shares of its capital stock payable in cash or stock or other securities or make any other distribution to the holders of shares of its capital stock, (ii) the Corporation shall offer for subscription to the holders of the shares of its capital stock any additional shares of stock of any class or other rights, (iii) there shall be any capital reorganization or reclassification of the capital
stock of the Corporation, or a consolidation or merger of the Corporation with or into, or a sale of all or substantially all its assets to, another entity or entities, or (iv) there shall be a liquidation, dissolution or winding up of the Corporation, then, in each such event, the Corporation shall give, by first class mail, postage prepaid, addressed to each holder of shares of Series C Preferred Stock at the address of such holder as shown on the books of the Corporation, a notice stating (A) in the case of any dividend or distribution referred to in clause (i) above, the date on which the books of the Corporation shall close or a record shall be taken for determining stockholders entitled to receive such dividend or distribution and (B) in the case of any reorganization, reclassification, consolidation, merger, share exchange, sale or liquidation, dissolution or winding up of the Corporation, the date on which the books of the Corporation shall close or a record shall be taken for determining stockholders entitled to vote upon such transaction and the date, if any is to be fixed, on which the holders of shares of Common Stock shall be entitled to exchange such shares for securities or other property in connection with any such transaction.

(11) Stock to be Reserved.  The Corporation will at all times reserve and keep available out of its authorized Common Stock, free from preemptive rights, solely for the purpose of issuance upon the conversion of the shares of Series C Preferred Stock as herein provided, such number of shares of Common Stock as shall then be issuable upon the conversion of all outstanding shares of Series C Preferred Stock.

(12) No Reissuance of Converted Shares.  Each share of Series C Preferred Stock converted by the holder thereof into shares of Common Stock as provided herein shall be canceled and retired and shall not be reissued.

(13) Closing of Books.  The Corporation will at no time close its transfer books against the transfer of any shares of Series C Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of the shares of Series C Preferred Stock in any manner which interferes with the timely conversion of the shares of Series C Preferred Stock, except as may otherwise be required to comply with applicable securities laws.
8

(14) Rank.  The shares of the Series C Preferred Stock shall rank prior to all shares of any other class or series of capital stock of the Corporation, unless such other class or series by its terms ranks senior to the shares of Series C Preferred Stock, with respect to voting powers, preferences and relative, participating, optional and other special rights of the shares of such series and the qualifications, limitations and restrictions thereof, including, without limitation, with respect to the payment of dividends and the distribution of assets, whether upon liquidation or otherwise.

THIRD: The Series C Preferred Stock has been classified and designated by the Board under the authority contained in the Charter.
 
FOURTH:                          These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.
 
FIFTH:  These Articles Supplementary shall be effective at the time the State Department of Assessments and Taxation of Maryland accepts these Articles Supplementary for record.
 
SIXTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
 
 

 
[SIGNATURE PAGE FOLLOWS]
9

 
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its President and attested to by its Secretary on this 30th day of September, 2021.
 
 
SPECIAL OPPORTUNITIES FUND, INC.


By: /s/ Andrew Dakos

Name:
Andrew Dakos

Title:
President

ATTEST:


By: /s/ Phillip Goldstein
Name:  Phillip Goldstein
Title:    Secretary



10








RIGHTS CERTIFICATE #:                                                                                                                                                                                                                                                                                NUMBER OF RIGHTS 
 



THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE COMPANY'S PROSPECTUS
DATED DECEMBER __, 2021 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE.   COPIES OF
THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM INVESTOR LLC, THE INFORMATION AGENT.

 
Special Opportunities Fund, Inc.
Incorporated under the laws of the State of Maryland
 
TRANSFERABLE SUBSCRIPTION RIGHTS CERTIFICATE
 
Evidencing Transferable Subscription Rights to Purchase Shares of 2.75% Convertible Preferred Stock, Series C, par value $0.001 per share of Special Opportunities Fund, Inc.
 
Subscription Price:      $25.00 per Share
 
THE SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT EXERCISED PRIOR TO 5:00 P.M., EASTERN STANDARD TIME,
 
ON JANUARY __, 2021, UNLESS EXTENDED BY THE COMPANY




 
                      REGISTERED
                                OWNER:

 
THIS CERTIFIES THAT the registered owner whose name is inscribed hereon is the owner of the number of transferable subscription rights (“Rights”) set forth above. Each whole Right entitles the holder thereof to subscribe for and purchase one share of 2.75% convertible preferred stock, Series C, par value $0.001 per share (“Convertible Preferred Stock”) of Special Opportunities Fund, Inc., a Maryland corporation, at a subscription price  of $25.00  per  share  (the  “Basic  Subscription  Privilege”),  pursuant  to  a  rights  offering  (the “Rights Offering”), on the terms and subject to the conditions set forth in the Prospectus and the “Instructions as to Use of Special Opportunities Fund, Inc. Rights Certificates” accompanying this Subscription Rights Certificate.   If any shares of Convertible Preferred Stock available for purchase in the Rights Offering are not purchased by other holders of Rights pursuant to the exer cise of their Basic Subscription Privilege, any Rights holder that exercises its Basic Subscription Privilege in full may subscribe for a number of additional shares pursuant to the terms and conditions of the Rights Offering, subject to proration, as described in the Prospectus (the “Over-Subscription Privilege”).   The Rights  represented by this Subscription Rights Certificate may be exercised by completing Form 1 and any other appropriate forms on the reverse side hereof and by retuning the full payment of the subscription price for each share of Convertible Preferred Stock in accordance with the “Instructions as to Use of Special Opportunities Fund, Inc. Rights Certificates” that accompany this Subscription Rights Certificate.
 
This Subscription Rights Certificate is not valid unless countersigned by the subscription agent and registered by the registrar. Witness the seal of Special Opportunities Fund, Inc. and the signatures of its duly authorized officers.

 
Dated: 
                                                       _________________________________                                                       _________________________________
                                                               President                                                                                                          Secretary                                                                                                               







 

     


 

 
DELIVERY OPTIONS FOR SUBSCRIPTION RIGHTS CERTIFICATE
 
 Delivery other than in the manner or to the addresses listed below will not constitute valid delivery.

If delivering by mail:
American Stock Transfer & Trust Company, LLC
Attn: Reorganization Department
P.O. Box 2042
Brooklyn, New York 10272-2042
If delivering by hand or overnight courier:
American Stock Transfer & Trust Company, LLC
Operations Center
Attn: Reorganization Department
6201 15th Avenue
Brooklyn, New York 11219
        
  PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY.

 
FORM 1-EXERCISE OF SUBSCRIPTION RIGHTS
 
To subscribe for shares pursuant to your Basic Subscription Right, please complete lines (a) and (c) and sign under Form 4 below.  To subscribe for shares pursuant to your Over-Subscription Privilege, please also complete line (b) and sign under Form 4 below.  To the extent you subscribe for more Shares than you are entitled under either the Basic Subscription Right or the Over-Subscription Privilege, you will be deemed to have elected to purchase the maximum number of shares for which you are entitled to subscribe under the Basic Subscription Right or Over-Subscription Privilege.
 
(a) EXERCISE OF BASIC SUBSCRIPTION RIGHT:
 
I apply for ______________ shares x $ 25.00 =   $_______________
 
(no. of new shares)    (subscription price) (amount enclosed)
 
(b) EXERCISE OF OVER-SUBSCRIPTION PRIVILEGE:
 
If you have exercised your Basic Subscription Right in full and wish to subscribe for additional shares for which you are otherwise entitled to subscribe pursuant to your Over-Subscription Privilege:
 
I apply for ______________ shares x $ 25.00 =   $_______________
 
(no. of new shares)  (subscription price) (amount enclosed)
 
(c) Total Amount of Payment Enclosed   =   $__________________
 
METHOD OF PAYMENT (CHECK ONE)
 

Check or bank draft drawn upon a U.S. Bank payable to “Special Opportunities Fund, Inc.”
 

Wire transfer of immediately available funds directly to the account maintained by American Stock Transfer & Trust Company, LLC, as Subscribing Agent, for purposes of accepting subscriptions in this Rights Offering at JPMorgan Chase Bank, 55 Water Street, New York, New York 10005, ABA #021000021, Account # 530-354616 American Stock Transfer, LLC FBO Special Opportunities Fund, Inc., with reference to the rights holder's name.
 
FORM  2-TRANSFER  TO  DESIGNATED  TRANSFEREE
 
To transfer your subscription rights to another person, complete this Form 2 and have your signature guaranteed under Form 5.
 
For value received ______________ of the subscription rights represented by this Subscription Rights Certificate are assigned to:
 
________________________________________________________________
 
________________________________________________________________
 
Social Security # __________________________________________________
 
Signature(s): ______________________________________________________
 
IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse of this Subscription Rights Certificate in every particular, without alteration or enlargement, or any other change whatsoever.
 
FORM 3-DELIVERY TO DIFFERENT ADDRESS
 
If you wish for the Common Stock underlying your subscription rights, a
certificate representing unexercised subscription rights or the proceeds of any sale of subscription rights to be delivered to an address different from that shown on the face of this Subscription Rights Certificate, please enter the alternate address below, sign under Form 4 and have your signature guaranteed under Form 5.
 
________________________________________________________________
 
________________________________________________________________
 
________________________________________________________________

 
FORM 4-SIGNATURE
 
TO SUBSCRIBE: I acknowledge that I have received the Prospectus for this Rights Offering and I hereby irrevocably subscribe for the number of shares indicated above on the terms and conditions specified in the Prospectus.  By signing below I confirm that (1) after giving effect to the exercise of my Rights, I will not beneficially own, as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, more than 14.99% of the Company’s outstanding shares of Common Stock (calculated immediately upon the closing of the rights offering, as described in the Prospectus) and (2), if I already beneficially own, as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, in excess of 14.99% of the Company’s outstanding shares of Common Stock I will not, via the exercise of the Rights, increase my proportionate interest in the Company’s Common Stock (with respect to (1) or (2), any such excess shares, the “Excess Shares”).  With respect to any such Excess Shares, I hereby (1) irrevocably appoint and constitute the Company, each of its authorized officers and their designees, and each of them, with full power of substitution, as my proxy and attorney in fact with full authority to vote and act by written consent with respect to any such Excess Shares on any matter submitted to shareholders for a vote or action by written consent, in the discretion of such proxy, to the same extent I would have the power to vote or act by written consent and (2) grant the Company a right for 90 days from the closing of the rights offering to repurchase such Excess Shares at the lesser of the $25.00 per share subscription price and the closing price of the Company’s Common Stock on the New York Stock Exchange on the trading day immediately prior to the date on which notice is sent to the holder of the Company’s intent to exercise such right, which notice must be sent prior to the expiration of such 90 day period.  I agree to cooperate with the Company and provide to the Company any and all information requested by the Company in connection with the exercise of the rights granted in the previous sentence.
 
Signature(s): ______________________________________________________
 
IMPORTANT: The signature(s) must correspond with the name(s) as printed on the reverse of this Subscription Rights Certificate in every particular, without alteration or enlargement, or any other change whatsoever.
 
FORM 5-SIGNATURE GUARANTEE
 
This form must be completed if you have completed any portion of Forms 2 or 3.
 
Signature Guaranteed: _______________________________________________
(Name of Bank or Firm)
 
By:_______________________________________________________________
 (Signature of Officer)
 
IMPORTANT:  The signature(s) should be guaranteed by an eligible guarantor institution (bank, stock broker, savings & loan association or credit union) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.

FOR INSTRUCTIONS ON THE USE OF SPECIAL OPPORTUNITIES FUND, INC. RIGHTS CERTIFICATES, CONSULT INVESTORCOM LLC, THE INFORMATION AGENT, AT (877) 972-0090.




EXECUTION VERSION

 

TRANSFER AGENCY AND REGISTRAR SERVICES AGREEMENT

 
THIS TRANSFER AGENCY AND REGISTRAR SERVICES AGREEMENT (this “Agreement”), dated as of June 5, 2019 (the “Effective Date”), is entered into by and between Special Opportunities Fund, Inc., a Maryland corporation (the “Company”), and AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, a New York limited liability trust company (“AST”; together with the Company, the “Parties”; each, the “Party”).

1.
Appointment of AST as Transfer Agent and Registrar.

(a)
The Company hereby appoints AST, and AST hereby accepts such appointment, to act as sole transfer agent and registrar (the “Transfer Agent”) for the common stock of the Company and for any other securities of the Company as requested in writing by the Company from time to time (the “Shares”). AST shall perform only those duties and obligations that are specifically set forth in this Agreement, and no implied duties and obligations shall be read into this Agreement against AST.

(b)
On or immediately after the Effective Date, the Company shall deliver to AST the following: (i) forms of outstanding stock certificates of the Company (the “Stock Certificates”) approved and authorized by the board of directors of the Company (the “Board”) and certified by the corporate secretary or similar authorized officers of the Company; (ii) incumbency certificates of the officers of the Company who are authorized to (x) execute Stock Certificates and/or (y) deliver written instructions and requests on behalf of the Company to AST; (iii) copies of the organizational documents of the Company, certified by the corporate secretary or similar authorized officers of the Company; (iv) a sufficient supply of blank Stock Certificates executed by (or bearing the facsimile signature of) the officers of the Company who are authorized to execute Stock Certificates and, if required, bearing the Company’s corporate seal; (v) a schedule that lists the class of the Shares, the par value of the Shares, and the number of authorized Shares; and (vi) all documentation or information reasonably requested by AST that is required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended. The Company authorizes AST to use Stock Certificates bearing the signature of an authorized officer of the Company who at the time of use is no longer an officer.
 
(c)
The Company shall promptly advise AST in writing of any change in the capital structure of the Company, and the Company shall promptly provide AST with resolutions of the Board authorizing any recapitalization of the Shares or change in the number of issued or authorized Shares. Further, the Company shall advise AST reasonably promptly of any amendment or supplement to any information or materials provided by the Company to AST and shall provide such amendment or supplement to AST as soon as practicable.
 
(d)
The Company hereby authorizes AST to establish a program (the “DRS Sale Program”) through which a holder of one or more Shares (each, a “Shareholder”) may elect to sell any Shares held in book-entry form through the Direct Registration System. The Company shall not be charged by AST for establishing or administering the DRS Sale Program, and AST shall be entitled to charge a transaction fee as set forth on Schedule 2 to any Shareholder that elects to sell Shares through the DRS Sale Program. The Company hereby appoints AST, and AST hereby accepts such appointment, to act as the administrator of the DRS Sale Program.
 
(e)
AST may adopt as part of its records all Shareholder lists, Share ledgers, records, books, and documents which have been employed by Company or any of its agents and which are true, authentic and complete. AST agrees that all such records prepared or maintained by it relating to the Services are the property of Company and will be preserved, maintained and made available in accordance with the requirements of law. Upon the request of the Company, AST shall promptly make such records available for inspection by the Company or shall promptly surrender such records to the Company, to the extent consistent with applicable law and AST’s record retention policies and procedures.

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2.
Term. The initial term of this Agreement shall be three (3) years from the date hereof, and this Agreement shall automatically renew for additional one-year successive terms (each, a “Term”) without further action of the Parties, unless written notice is provided by either Party at least ninety (90) days prior to the end of the initial or any subsequent one-year period. The Term shall be governed by this Section, notwithstanding the cessation of active trading of the Shares.
 
3.
Fees; Expenses.

(a)
As consideration for the services listed on Schedule 1 (the “Services”), the Company shall pay to AST the fees set forth on Schedule 2 (the “Fees”). If the Company requests that AST provide additional services not contemplated hereby, the Company shall pay to AST fees for such services at AST’s reasonable and customary rates, such fees to be governed by the terms of a separate agreement to be mutually agreed to and entered into by the Parties at such time (the “Additional Service Fee”; together with the Fees, the “Service Fees”).

(b)
The Company shall reimburse AST for all reasonable and documented expenses incurred by AST (including, without limitation, reasonable and documented fees and disbursements of counsel) in connection with the Services (the “Expenses”); provided, however, that AST reserves the right to request advance payment for any out-of-pocket expenses. The Company agrees to pay all Service Fees and Expenses within thirty (30) days following receipt of an invoice from AST.

(c)
The Company agrees and acknowledges that AST may adjust the Service Fees annually, on or about each anniversary date of this Agreement, by the annual percentage of change in the latest Consumer Price Index of All Urban Consumers United States City Average, as published by the U.S. Department of Labor, Bureau of Labor Statistics, plus three percent (3%). If AST elects to adjust the Service Fee pursuant to this Section 3(c), it shall notify the Company in writing of such election [ninety (90)] days prior to the date such adjusted Service Fees will be effective. The written notice shall include an updated schedule of Service Fees (Schedule 2).

(d)
Upon termination of this Agreement for any reason, AST shall assist the Company with the transfer of records of the Company held by AST. AST shall be entitled to reasonable additional compensation and reimbursement of any Expenses for the preparation and delivery of such records to the successor agent or to the Company, and for maintaining records and/or Stock Certificates that are received after the termination of this Agreement (the “Record Transfer Services”).

4.
Representations and Warranties.

(a)
AST represents and warrants to the Company that (i) it is duly organized and validly existing and in good standing under the laws of the state of its organization; (ii) it has all requisite power and authority to enter into this Agreement and to perform the transactions contemplated hereby; (iii) the execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly authorized by all necessary action on the part of AST; and (iv) this Agreement has been duly executed and delivered and is the legally valid and binding obligation of AST, enforceable against the Company in accordance with the Agreement’s terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles (whether enforcement is sought by proceeding in equity or at law).

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(b)
The Company represents and warrants to AST that (i) it is duly organized and validly existing and in good standing under the laws of the state of its organization; (ii) it has all requisite power and authority to enter into this Agreement and to perform the transactions contemplated hereby; (iii) the execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company; and (iv) this Agreement has been duly executed and delivered and is the legally valid and binding obligation of the Company, enforceable against the Company in accordance with the Agreement’s terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles (whether enforcement is sought by proceeding in equity or at law).

(c)
All Shares issued and outstanding as of the date hereof, or to be issued during the Term, are or shall be duly authorized, validly issued, fully paid and non-assessable. All such Shares are or shall be duly registered under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(d)
Any Shares that are not registered under the Securities Act and the Exchange Act are or shall be issued or transferred in a transaction that is, or a series of transactions that are, exempt from the registration provisions under the Securities Act and the Exchange Act, and such Shares bear or shall bear the applicable restrictive legends. Upon any issuance or transfer of such Shares, the Company shall deliver to AST a legal opinion in form and substance reasonably satisfactory to AST.

5.
Reliance.
 
(a)
AST shall be entitled to assume the validity of the issuance, presentation or transfer of a Stock Certificate, the genuineness of any endorsement(s), the authority of its presenter(s), or the collection or payment of charges or taxes incident to the issuance or transfer of such Stock Certificate; provided, however, that AST may delay or decline to issue or transfer a Stock Certificate if it determines in good faith and in its sole discretion that it is in the Company’s and/or AST’s best interests to receive evidence or written assurance of the validity of the issuance, presentation or transfer of the Stock Certificate, the authority of its presenter(s) or the collection or payment of any charges or taxes relating to the issuance or transfer.

(b)
For the avoidance of doubt, AST shall not be responsible for any transfer or issuance of Shares that has not been effected by AST.

(c)
AST may rely on, and shall be protected and incur no liability in acting or refraining from acting in reliance upon: (i) any writing or other instruction, including, but not limited to, oral instruction, certificate, instrument, opinion, notice, letter, stock power, affidavit or other document or security, received from any Person (as defined below) it believes in good faith to be an authorized officer, agent or employee of the Company, unless the Company has advised AST in writing that AST must act and rely only on written instructions of certain authorized officers of the Company; (ii) any statement of fact contained in any such writing or instruction which AST in good faith believes to be accurate; (iii) other authenticity and genuineness of any signature (manual, facsimile or electronic) appearing on any writing, including, but not limited to, any certificate, instrument, opinion, notice, letter, stock power, affidavit or other document or security; and (iv) the conformity to original of any copy. AST may act and rely on the advice, opinions or instructions received from the Company’s legal counsel. In the event that the Company or its legal counsel is unavailable or does not respond to AST’s requests for legal advice, AST may seek the advice of AST’s own legal counsel (including its internal legal counsel), and AST shall be entitled to act and rely on the advice, opinion or instruction of such counsel, which shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by AST pursuant to such advice, opinion or instruction. Without limiting the foregoing, AST shall be entitled to use and rely upon any instructions of the Company without responsibility for independent verification thereof and shall not assume responsibility for the accuracy or completeness of such instructions.

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(d)
AST may rely on, and shall be protected and incur no liability in acting or refraining from acting in reliance upon: (i) any writing or other instruction believed by AST in good faith to have been furnished by or on behalf of a Shareholder, including, but not limited to, any oral instruction, certificate, instrument, opinion, notice, letter, stock power, affidavit or other document or security; (ii) any statement of fact contained in any such writing or instruction which AST in good faith believes to be accurate; (iii) the apparent authority of any Person to act on behalf of a Shareholder as having actual authority to the extent of such apparent authority; (iv) the authenticity and genuineness of any signature (manual, facsimile or electronic) appearing on any writing, including, but not limited to, any certificate, instrument, opinion, notice, letter, stock power, affidavit or other document or security; and (v) on the conformity to original of any copy. AST is authorized to reject any transfer request that fails to satisfy AST’s internal procedures relating to the transfer of Shares. Without limiting the foregoing, AST shall be entitled to use and rely upon any instructions of a Shareholder or its representatives without responsibility for independent verification thereof and shall not assume responsibility for the accuracy or completeness of such instructions.
 
(e)
AST may rely on, and shall be protected and incur no liability in acting or refraining from acting in reliance upon: (i) any information, records, documents and communication provided to AST by any former transfer agent or former registrar of the Company; (ii) any guaranty of signature by an “eligible guarantor institution” that is a member or participant in the Securities Transfer Agents Medallion Program or other comparable signature guarantee program or insurance program; or (iii) any instructions received through the Depository Trust Company’s Direct Registration System/Profile service.
 
(f)
AST shall promptly notify the Company upon receipt of a Stock Certificate that is not reflected in AST’s records. If the Company and AST are unable to account for such Stock Certificate, within sixty (60) days of such determination, the Company shall in its sole discretion (a) increase the number of issued Shares or (b) acquire and cancel a number of Shares to account for such Stock Certificate.

6.
Lost, Stolen or Destroyed Certificates. AST shall not be obligated to issue a replacement certificate for any Stock Certificate reported to have been lost, stolen or destroyed, unless AST shall have received from the applicable Shareholder: (a) an affidavit of loss; (b) an indemnity bond in form and substance reasonably satisfactory to AST; and (c) payment of all applicable processing fees; provided that, upon the Company’s written request, AST may, in its sole discretion, accept an indemnification letter from the Company in lieu of an indemnity bond.
 
7.
Unclaimed Property.

(a)
To the extent required by applicable unclaimed property laws or if requested by the Company, AST will provide, or cause to be provided, unclaimed property reporting services for unclaimed property that may be deemed abandoned or otherwise subject to unclaimed property law. Such services may include (without limitation) (i) identification of unclaimed or abandoned property, (ii) preparation of unclaimed or abandoned property reports, (iii) delivery of unclaimed or abandoned property to the applicable state unclaimed property departments, (iv) completion of required due diligence notifications, (x) responses to inquiries from Shareholders relating to unclaimed or abandoned property, and (vi) such other services as may reasonably be necessary to comply with unclaimed property laws or regulations. The Company shall assist and cooperate with AST as reasonably necessary in connection with the performance of the services described in this Section. AST shall assist the Company in responding to (x) inquiries from state unclaimed property departments regarding reports filed by or on behalf of the Company or (y) requests for the confirmation of names of owners of unclaimed or abandoned property.

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(b)
The Company acknowledges and agrees that AST may use a shareholder locating service provider (the “Locating Service Provider”) to locate and contact Shareholders (or their surviving relatives, joint tenants or heirs, as applicable) to assist them in preventing the escheatment of applicable Shares and related unclaimed or abandoned property. The Company shall not be charged by AST or the Locating Service Provider for such services. The Locating Service Provider shall inform the Shareholders that they may elect (x) to contact AST at no charge other than at AST’s applicable fees or (y) to utilize the services of the Locating Service Provider for a fee, which shall not exceed the maximum fee allowed under the applicable state’s unclaimed property rules.
 
8.
Confidentiality.

(a)
Confidential Information” means, as to the Disclosing Party (as defined below) and, if applicable, its Affiliates: (i) information concerning the business of the Disclosing Party and, if applicable, its Affiliates (including, without limitation, business, financial, technical, and other information marked or designated by such Party as “confidential” or “proprietary”, historical financial statements, financial projections and budgets, audits, tax returns and accountants’ materials, historical, current and projected sales, capital spending budgets and plans, business plans, strategic plans, marketing and advertising plans, publications, and customer agreements); (ii) information that, by the nature of the circumstances surrounding the disclosure, ought in good faith to be treated as confidential; (iii) information, including account information, relating to the shareholders of the Disclosing Party; and (iv) all notes, analyses, compilations, studies, summaries and other material prepared by the Receiving Party (as defined below), its Affiliates, employees, agents, and representatives containing or based, in whole or in part, on any or all of the foregoing; provided that Confidential Information shall not include any information that (x) is or becomes (through no improper action or inaction of the Receiving Party) generally available to the public; (y) was rightfully disclosed to the Receiving Party by a third party without a breach of any confidentiality obligations hereunder; or (z) was independently developed by the Receiving Party without reference to or use of any Confidential Information.
 
(b)
Affiliates” means, as to a specified Person, another Person that directly, or indirectly, controls or is controlled or is under common control with the specified Person; “Person” means any corporation, limited liability company, partnership or other legal entity; and “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “controlled” shall have corresponding meanings.

(c)
Each Party (the “Receiving Party”) acknowledges that it may acquire or have access to Confidential Information of the other Party (the “Disclosing Party”) in connection with the Services or this Agreement. The Receiving Party shall not disclose Confidential Information to any other Person, and shall not use Confidential Information for any purposes other than in connection with the performance of its obligations under this Agreement; provided that the Receiving Party shall be permitted to disclose Confidential Information (i) pursuant to the order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, or otherwise as required by applicable law or compulsory legal process based on the advice of counsel (in which case the Receiving Party agrees, to the extent practicable and not prohibited by applicable law, to inform the Disclosing Party promptly thereof prior to disclosure; provided, however, that this clause shall not require AST to notify the Company of its receipt of any subpoena, summons, or other legal process relating to wage garnishment, tax levy or domestic matter proceedings filed against or by a Shareholder; or (ii) upon the demand of any regulatory authority having jurisdiction over the Receiving Party (in which case the Receiving Party agrees, to the extent practicable and not prohibited by applicable law, to inform the Disclosing Party promptly thereof prior to disclosure). The Receiving Party shall safeguard the Confidential Information to the same extent that it safeguards its own confidential information of a like nature and in any event with not less than a reasonable degree of care.

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(d)
Upon the termination of this Agreement or upon the Disclosing Party’s written request, the Receiving Party shall, at the Disclosing Party’s option, either destroy or return to the Disclosing Party any and all of the Confidential Information, written or other materials derived from the Confidential Information, and copies thereof, and shall delete and purge permanently all copies and traces of the same from any storage location and/or media to the extent reasonably or technically possible. The Receiving Party shall, within fifteen (15) days from the termination of this Agreement or such request, provide the Disclosing Party with a certificate signed by an authorized officer of the Receiving Party confirming that the Receiving Party has fulfilled its obligations under this clause. Notwithstanding the foregoing, upon notice to the Disclosing Party, the Receiving Party may keep a copy of the Confidential Information after termination of this Agreement to the extent necessary for audit and/or regulatory purposes or to the extent required under applicable law.

9.
Termination.

(a)
Either Party may terminate this Agreement if the other Party breaches any material provision herein and either the breach cannot be cured or, if the breach can be cured, it is not cured by the breaching Party within 45 days after the breaching Party’s receipt of written notice of such breach (the “Cure Period”). If the Company is the breaching Party, then, during the Cure Period, upon written notice to the Company, AST may suspend the Services without terminating the Agreement. During the period of suspension of Services, AST shall have no obligation to act as Transfer Agent, it being understood that such suspension shall not affect AST’s rights and remedies hereunder.

(b)
Either Party may terminate this Agreement, effective upon written notice to the other Party, if the other Party (i) becomes insolvent or admits its inability to pay its debts generally as they become due; (ii) becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law, which is not fully stayed within seven (7) business days or is not dismissed or vacated within forty-five (45) business days after filing; (iii) is dissolved or liquidated or takes any corporate action for such purpose; (iv) makes a general assignment for the benefit of creditors; or (v) has a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.

(c)
                            The expiration or termination of this Agreement, for any reason, shall not release either Party from any obligation or liability to the other Party, including any payment and delivery obligation, that (i) has already accrued hereunder; (ii) comes into effect due to the expiration or termination of the Agreement; or (iii) otherwise survives the expiration or termination of this Agreement. Following the termination of this Agreement, AST shall promptly invoice the Company for any outstanding Service Fees and Expenses due and owing under this Agreement, and the Company shall pay all such Service Fees and Expenses to AST in accordance with the payment terms set forth in this Agreement.

(d)
If the Company terminates this Agreement pursuant to Sections 2 or 9, then the Company shall pay to AST (i) all amounts outstanding under this Agreement as of the date of such termination and (ii) AST’s then-customary fees for Record Transfer Services. If the Company terminates this Agreement for any reason other than pursuant to Sections 2 or 9, then the Company shall pay to AST (x) all outstanding Service Fees and Expenses as of the date of such termination, (y) the Service Fees that would otherwise have accrued during the remainder of the then-current Term, and (z) AST’s then-customary fees for Record Transfer Services.

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10.
Limitations on Liability.

(a)
To the fullest extent permitted by applicable law, no Party shall be liable to any other Party on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings).
 
(b)
AST’s liability arising out of or in connection with the Services shall not exceed the aggregate amount of all Service Fees paid under this Agreement during the twelve-month period immediately prior to the date of occurrence of the circumstances giving rise to such liability.

11.
Indemnity.
 
(a)
The Company hereby agrees to indemnify and hold harmless AST and its Affiliates and its and their officers, directors, employees, advisors, agents, other representatives and controlling persons (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and expenses, joint or several, to which any such Indemnified Person may become subject arising out of or in connection with this Agreement and the Services or any claim, litigation, investigation or proceeding relating to any of the foregoing (each, a “Proceeding”), regardless of whether any such Indemnified Person is a party thereto or whether a Proceeding is brought by a third party or by the Company or any of its Affiliates, and to reimburse each such Indemnified Person upon demand for any reasonable, documented legal or other out-of-pocket expenses incurred in connection with investigating or defending any of the foregoing by one counsel to the Indemnified Persons taken as a whole and, in the case of a conflict of interest, one additional counsel to the affected Indemnified Persons taken as a whole; provided that the foregoing indemnity shall not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or related expenses to the extent they have resulted from the willful misconduct, bad faith or gross negligence of such Indemnified Person (as determined by a court of competent jurisdiction in a final and non- appealable decision).

(b)
AST agrees to notify the Company promptly of the assertion of any Proceeding against any Indemnified Person; and the Company agrees to notify AST promptly of the assertion of any Proceeding against the Company, or any of its officers, directors, employees, advisors, agents, other representatives and controlling persons in connection with the Services, in which event AST agrees to assume sole responsibility of promptly notifying any of the relevant Indemnified Persons of any such assertion. At the Company’s election, unless there is a conflict of interest, the defense of the Indemnified Persons shall be conducted by the Company’s counsel. Notwithstanding the foregoing, AST may employ separate counsel to represent it or defend AST or an Indemnified Person in such Proceeding, and the Company will pay any reasonable, documented legal or other out-of-pocket expenses of counsel if AST or such Indemnified Person reasonably determines, based on the advice of its legal counsel, that there are defenses available to AST or such Indemnified Person that are different from, or in addition to, those available to the Company, or if an actual or potential conflict of interest between AST or the Indemnified Person and the Company makes representation by the Company’s counsel not advisable; provided that, unless there is an actual or potential conflict of interest, the Company will not be required to pay the fees and expenses of more than one separate counsel for all Indemnified Persons in any jurisdiction in any single Proceeding. In any Proceeding the defense of which the Company assumes, the Indemnified Persons shall be entitled to participate in such Proceeding and retain its own counsel at such Indemnified Person’s own expense.

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(c)
The Company shall not be liable for any settlement of any Proceedings effected without its consent (which consent shall not be unreasonably withheld, conditioned or delayed), but if settled with the Company’s written consent or if there is a final judgment for the plaintiff in any such Proceedings, the Company agrees to indemnify and hold harmless each Indemnified Person from and against any and all losses, claims, damages, liabilities and expenses by reason of such settlement or judgment in accordance with clause (a) above. The Company shall not, without the prior written consent of an Indemnified Person (which consent shall not be unreasonably withheld, conditioned or delayed), effect any settlement or consent to the entry of any judgment of any pending or threatened Proceedings in respect of which indemnity could have been sought hereunder by such Indemnified Person, unless (i) such settlement includes an unconditional release of such Indemnified Person in form and substance satisfactory to such Indemnified Person from all liability on claims that are the subject matter of such Proceedings and (ii) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
 
12.
Force Majeure. AST shall not be liable for failure or delay in the performance of the Services if such failure or delay is due to causes beyond its reasonable control, including but not limited to Acts of God (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalization, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption or failure of electricity or telephone service or any other force majeure event.

13.
Notices. Any notice, report or payment required or permitted to be given or made under this Agreement by one Party to the other shall be in writing and addressed to the other Party at the following address (or at such other address as shall be given in writing by one Party to the other):
 
If to the Company:

c/o Bulldog Investors, LLC
Park 80 West
250 Pehle Avenue, Suite 708
Saddle Brook, NJ 10570
Attention: Andrew Dakos
Fax: 201-556-0097
Email: adakos@bulldoginvestors.com
 
With a copy to:

Blank Rome LLP
1271 Avenue of the Americas
New York, NY 10020
Attention: Thomas R. Westle
Fax: 212-885-5001
Email: twestle@blankrome.com

-9-
If to AST:
 
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Attention: Relationship Management

With a copy to:
 
American Stock Transfer & Trust Company, LLC
48 Wall Street, 22nd Floor
New York, New York 10005
Attention: Legal Department
Email: legalteamAST@astfinancial.com

14.
Miscellaneous.

(a)
Each Party acknowledges and agrees that (i) nothing herein shall be construed as creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between the Parties, and (ii) it waives, to the fullest extent permitted by law, any claims that it may have against the other Party for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the other Party shall have no liability (whether direct or indirect) to such Party in respect of such a fiduciary duty claim.

(b)
This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without reference to its conflicts of law rules. It is agreed that any action, suit or proceeding arising out of or based upon this Agreement shall be brought in the United States District Court for the Southern District of New York or any court of the State of New York of competent jurisdiction located in such District. Service of any process by registered mail addressed to each party at the respective address above shall be effective service of process against such party for any suit, action or proceeding brought in any such court. Each Party (i) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the Services in any New York State court or in any such Federal court; (ii) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such suit, action or proceeding in any such court; and (iii) agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. EACH PARTY IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE PERFORMANCE OF ANY SERVICE HEREUNDER.

(c)
The compensation, reimbursement, confidentiality, indemnification, jurisdiction, governing law, and waiver of jury trial provisions contained herein shall remain in full force and effect regardless of the termination of this Agreement. No amendment or waiver of any provision hereof shall be effective unless in writing and signed by the Parties and then only in the specific instance and for the specific purpose for which given. This Agreement is the only agreement between the Parties with respect to the matters contemplated hereby and sets forth the entire understanding of the Parties with respect thereto. This Agreement and the obligations hereunder of each Party shall not be assignable by such Party without the prior written consent of the other Party (such consent not to be unreasonably withheld, delayed or conditioned); provided that AST may assign this Agreement or any rights granted hereunder, in whole or in part, to (i) its Affiliates in connection with a reorganization or (ii) a Person that acquires all or substantially all of the business or assets of AST, whether by merger, acquisition, or otherwise.

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(d)
This Agreement may be executed in any number of counterparts and by different Parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or in “.pdf” or “.tif” form shall be effective as delivery of a manually executed counterpart of this Agreement. If any provision of this Agreement shall be held illegal or invalid by any court, this Agreement shall be construed and enforced as if such provision had not been contained herein and shall be deemed an agreement between the Parties to the fullest extent permitted by law.

 

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-11-
 
IN WITNESS WHEREOF, each Party has caused this Agreement to be duly executed as of the date first above written.

AMERICAN STOCK TRANSFER &
TRUST COMPANY, LLC
SPECIAL OPPORTUNITIES FUND, INC.
 
 

 
 
By:                                                           
By:                                                 
 
        Name: Michael A Nespoli
      Name:
 
        Title: Executive Director
      Title:
 


-12-

 
IN WITNESS WHE
 


 



-13-
Schedule 1
 
Services
 

 
Capitalized terms used herein and not defined have the meaning ascribed to such terms in the Agreement. Unless otherwise noted, AST will provide the following services:
 

ACCOUNT MAINTENANCE AND RECORDKEEPING
Open new accounts, consolidate and close Shareholder accounts
Annual record storage services (subject to additional fee)
Maintain all Shareholder accounts
Process address changes, including seasonal addresses
Place, maintain and remove stop transfers
Post all debit and credit certificate transactions
Perform social security solicitation
Handle shareholder and broker inquiries, including internet correspondence
Respond to requests for audit confirmations
Monthly report for all classes of securities in Microsoft Word and HTML formats (Excel format is subject to an additional fee)
 
STOCK AUDIT / CONTROL BOOK FUNCTIONS
Maintain accurate records of outstanding Shares
Respond to requests for audit confirmations
Provide web access to the total outstanding Share balances
 
CERTIFICATE AND SECURITY ISSUANCE FUNCTIONS
Process all routine transfers
Post all debit and credit certificate transactions
Issue Stock Certificates
Create book entry Direct Registration System (“DRS”) positions