|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
(Unaudited)
|
|
|
Financial Statements
|
5.
INVESTMENT TRANSACTIONS Purchases and proceeds from sales or maturities of investment securities, excluding short term investments, were $2,262,253 and $3,523,728, respectively, for the six
months ended June 30, 2021. As of June 30, 2021, for federal income tax purposes, the aggregate cost of securities was $7,992,426 and net unrealized appreciation was $3,319,828, comprised of gross unrealized appreciation of $3,833,487 and
gross unrealized depreciation of $513,659. The aggregate cost of securities for tax purposes will depend on the Fund’s investment experience during the entirety of its fiscal year and may be subject to changes based on tax regulations.
6. ILLIQUID AND RESTRICTED SECURITIES The Fund owns securities which have a limited trading market and/or certain restrictions on trading and, therefore, may be considered illiquid and/or restricted. Such securities have been valued using
fair
value pricing. Due to the inherent uncertainty of valuation, fair value pricing values may differ from the values that would have been used had a readily available and reliable market quotation for the securities existed. These differences in
valuation could be material. Illiquid and/ or restricted securities owned as of June 30, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
Date
|
|
|
Cost
|
|
|
Value
|
|
Amerivon Holdings LLC preferred shares
|
|
|
9/20/07
|
|
|
|
$497,531
|
|
|
|
$87,481
|
|
common equity units
|
|
|
9/20/07
|
|
|
|
0
|
|
|
|
0
|
|
BM Technologies, Inc.
|
|
|
1/6/21
|
|
|
|
38,903
|
|
|
|
28,718
|
|
Total
|
|
|
|
|
|
|
$536,434
|
|
|
|
$116,199
|
|
Percent of net
assets
|
|
|
|
|
|
|
5%
|
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. CREDIT
AGREEMENT The Fund entered into a revolving credit agreement and other related agreements (collectively, as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”) with The Huntington National Bank (“HNB”), the Fund’s custodian, under which HNB may make loans to the Fund in such amounts as the Fund may from time to time request. The maximum loan amount under the Credit
Agreement is the lesser of: (i) $3,000,000 or (ii) 30% of the Fund’s daily market value, which market value may be decreased by the exclusion of certain Fund assets or asset classes, as HNB may decide from time to time in its sole discretion.
The Fund pledges its securities and other assets as collateral to secure its obligations under the Credit Agreement and retains the risks and rewards of the ownership of such securities and other assets pledged.
Borrowings under the Credit Agreement bear an interest rate per annum to be applied to the principal balance outstanding, from
time to time, equal to the London Interbank Offered Rate (LIBOR) plus 1.20%. An unused fee
is charged equal to 0.125% per annum of the daily excess of the maximum loan amount over the outstanding principal balance of the loan. The Fund was charged origination fees and expenses of $5,509 upon the annual renewal of the Credit Agreement
and
such cost is amortized ratably through June 15, 2022, the maturity date of the Credit Agreement.
There were no borrowings
outstanding under the Credit Agreement as of June 30, 2021. The weighted average interest rate and average daily amount outstanding under the Credit Agreement for the six months ended June 30, 2021 were 1.76% and $237,666, respectively.
The maximum amount outstanding during the six months ended June 30, 2021 was $1,106,500.
8. REVERSE STOCK SPLIT On April 26, 2021, the Fund announced that the Fund’s Board had approved a 1-for-5 reverse stock split, which was
completed after the market closed on May 6, 2021. The Fund’s shares began trading on a split-adjusted basis with a new CUSIP
when the market opened on May 7, 2021. As a result of the reverse stock split, every five outstanding shares of common stock of the Fund were automatically converted into one share of common stock. No fractional shares were issued as a result
of the reverse stock split. The reverse stock split decreased the number of the Fund’s shares of common stock outstanding and increased the NAV per share by a proportional amount. Neither the Fund’s portfolio holdings nor the total value
of stockholders’ investments in the Fund were affected because of the reverse stock split. The reverse stock split did not impact any stockholder’s ownership percentage in the Fund or his or her voting power, except for minimal effects
resulting from the treatment of fractional shares, nor did it result in a taxable transaction, except for the impact of minimal gains or losses from the exchange of fractional shares for cash. The details of the reverse stock split are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
Net
Asset
Value Before
Reverse
Stock Split
|
|
Net
Asset
Value After
Reverse
Stock Split
|
|
|
Shares
Outstanding
Before
Reverse
Stock Split
|
|
|
Shares
Outstanding
After
Reverse
Stock Split
|
|
1-for-5
|
|
$4.58
|
|
|
$22.90
|
|
|
|
2,610,050
|
|
|
|
521,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9. CAPITAL STOCK As of June 30, 2021, there were 521,991 shares of $.01 par value common stock outstanding and 500,000,000 shares authorized. During the six months ended June 30, 2021, the Fund paid $665 in cash
for fractional shares resulting from the reverse stock split. There were no transactions in capital stock during the year ended December 31, 2020.
|
|
|
FOXBY CORP.
|
|
Semi-Annual Report 2021 14
|
|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
(Unaudited)
|
|
|
Financial Statements
|
10. SHARE
REPURCHASE PROGRAM In accordance with Section 23(c) of the Company Act, the Fund may from time to time repurchase its shares in the open market at the discretion of and upon such terms as
determined by the Board. The Fund did not repurchase any of its shares during the six months ended June 30, 2021 and year ended December 31, 2020.
11. PORTFOLIO CONCENTRATION The Fund operates as a “non-diversified” investment company under the Company Act, which means that the portion of the Fund’s assets that may be
invested in the securities of a single issuer and the amount of the outstanding voting securities of a particular issuer held by the Fund are not limited by the Company Act. The Fund, however, currently intends to continue to conduct its
operations
so as to qualify as a “regulated investment company” for purposes of the IRC, which currently requires that, at the end of each quarter of the taxable year, with respect to 50% of the Fund’s total assets, the Fund limits to 5% the
portion of its total assets invested in the securities of a single issuer. There are no such limitations with respect to the balance of the Fund’s portfolio, although no single investment can exceed 25% of a Fund’s total assets at the time
of purchase. A more concentrated portfolio may cause the Fund’s NAV to be more volatile and thus may subject shareholders to more risk.
12. CONTINGENCIES The Fund indemnifies its officers and directors from certain liabilities that might arise from the performance of their duties for the Fund. Additionally, in the normal course of business, the Fund
enters
into contracts that contain a variety of representations and warranties and which may provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as it involves future claims that may be made against the
Fund under circumstances that have not occurred.
13. RISKS AND UNCERTAINTIES
Foreign Securities Risk - Investments in the securities of foreign issuers involve special risks which include changes in foreign exchange rates and the possibility of future adverse political, tax, and economic developments
which
could adversely affect the value of such securities. Moreover, securities of foreign issuers and securities traded in foreign markets may be less liquid and their prices more volatile than those of U.S. issuers and markets. In addition,
in
certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political, or social instability, or diplomatic developments that could affect U.S. investments in the securities of issuers domiciled in those
countries.
For example, the United Kingdom (UK) withdrew from the European Union (EU) on January 31, 2020 following a June 2016 referendum referred to as “Brexit.” Although the UK and EU agreed to a
provisional trade deal in December 2020 that was later ratified by the EU Parliament and
entered into force on May 1, 2021, certain post-EU arrangements, such as those relating to the offering of cross-border financial services and sharing of cross-border data, have yet to be reached and the
EU’s willingness to grant equivalency to the UK remains uncertain. There is significant market uncertainty regarding Brexit’s ramifications, and the range of possible political, regulatory, economic and market outcomes are difficult to
predict. The uncertainty surrounding the UK’s economy, and its legal, political, and economic relationship with the remaining member states of the EU, may cause considerable disruption in securities markets, including decreased liquidity and
increased volatility, as well as currency fluctuations in the British pound’s exchange rate against the U.S. dollar.
Leverage Risk - The Fund from time to time may borrow under its Credit Agreement to increase the assets in its investment
portfolio over its net assets, a practice called leverage. Leverage borrowing creates an opportunity for increased return but, at the same time, involves special risk considerations. Leverage increases the likelihood of greater volatility of
NAV and
market price of the Fund’s shares. If the return that the Fund earns on the additional securities purchased fails to cover the interest and fees incurred on the monies borrowed, the NAV of the Fund (and the return of the Fund) would be lower
than if borrowing had not been incurred. In addition, when the Fund borrows at a variable interest rate, there is a risk that fluctuations in the interest rate may adversely affect the return to the Fund’s shareholders. Interest payments and
fees incurred in connection with such borrowings will reduce the amount of net income available for distribution to shareholders. There is no assurance that a borrowing strategy will be successful during any period in which it is employed.
Borrowing
on a secured basis results in certain additional risks. Should securities that are pledged as collateral to secure its obligations under the Credit Agreement decline in value, the Fund may be required to pledge additional assets in the form of
cash
or securities to the lender to avoid liquidation of the pledged assets. In the event of a steep drop in the value of pledged securities, it might not be possible to liquidate assets quickly enough and this could result in mandatory liquidation
of
the pledged assets in a declining market at relatively low prices. Furthermore, the Investment Manager’s ability to sell the pledged securities is limited by the terms of the Credit Agreement, which may reduce the Fund’s investment
flexibility over the pledged securities. Because the fee paid to the Investment Manager is calculated on the basis of the average weekly value of the Fund’s total assets minus the sum of the Fund’s liabilities, which liabilities exclude
debt relating to leverage, short term debt and the aggregate liquidation preference of any outstanding pre-
|
|
|
15 Semi-Annual Report 2021
|
|
FOXBY CORP.
|
|
|
|
NOTES TO FINANCIAL STATEMENTS
|
|
(Unaudited)
|
|
|
Financial Statements
|
ferred stock, the dollar amount of the management fee paid by the Fund to the Investment
Manager will be higher (and the Investment Manager will benefit to that extent) when leverage is utilized.
Cybersecurity Risk - With the increased use of technologies such as the Internet to conduct business, the Fund is
susceptible to operational, information security, and related risks. Cyber incidents affecting the Fund or its service providers may cause disruptions and impact business operations, potentially resulting in financial losses, interference with
the
Fund’s ability to calculate its NAV, impediments to trading, the inability of shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other
compensation costs, or additional related costs.
Coronavirus (COVID-19)
Pandemic - During the first quarter of 2020, the World
Health Organization declared COVID-19 to be a public health emergency. The COVID-19 pandemic has led to increased short-term market volatility and may have
adverse
long-term effects on U.S. and world economies and markets in general. The COVID-19 pandemic may adversely impact the Fund’s ability to achieve its
investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments. The
extent of the impact on the performance of the Fund and its investments will depend on future developments, including, but not limited to, the duration and spread of the COVID-19 pandemic, related
restrictions
and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
14. OTHER INFORMATION The Fund may at times raise cash for investment by issuing shares through one or more offerings, including rights offerings. Proceeds from any such offerings will be invested in accordance with the
investment objective and policies of the Fund.
|
|
|
FOXBY CORP.
|
|
Semi-Annual Report 2021 16
|
|
|
|
FINANCIAL HIGHLIGHTS
|
|
(Unaudited)
|
|
|
Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30, 2021
|
|
|
Year Ended December 31,
|
|
Per Share Operating Performance (1) (2)
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
(for a share outstanding throughout each period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
$
|
17.85
|
|
|
$
|
16.90
|
|
|
$
|
13.10
|
|
|
$
|
15.65
|
|
|
$
|
13.55
|
|
|
$
|
12.20
|
|
|
|
|
|
|
|
|
Income from investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment loss
|
|
|
(0.03
|
)
|
|
|
(0.15
|
)
|
|
|
(0.15
|
)
|
|
|
(0.10
|
)
|
|
|
(0.20
|
)
|
|
|
-
|
*
|
Net realized and unrealized gain (loss) on investments
|
|
|
4.67
|
|
|
|
1.10
|
|
|
|
4.00
|
|
|
|
(2.45
|
)
|
|
|
2.30
|
|
|
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
4.64
|
|
|
|
0.95
|
|
|
|
3.85
|
|
|
|
(2.55
|
)
|
|
|
2.10
|
|
|
|
1.40
|
|
Less distributions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
*
|
Capital gains
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.05
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Return of capital
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
*
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.05
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
22.49
|
|
|
$
|
17.85
|
|
|
$
|
16.90
|
|
|
$
|
13.10
|
|
|
$
|
15.65
|
|
|
$
|
13.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value, end of period
|
|
$
|
14.05
|
|
|
$
|
11.00
|
|
|
$
|
11.15
|
|
|
$
|
9.00
|
|
|
$
|
10.45
|
|
|
$
|
8.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Return (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Based on net asset value
|
|
|
25.99
|
%
|
|
|
5.62
|
%
|
|
|
29.59
|
%
|
|
|
(16.29
|
)%
|
|
|
15.50
|
%
|
|
|
11.69
|
%
|
|
|
|
|
|
|
|
Based on market price
|
|
|
27.73
|
%
|
|
|
(1.35
|
)%
|
|
|
24.44
|
%
|
|
|
(13.88
|
)%
|
|
|
16.76
|
%
|
|
|
13.21
|
%
|
|
|
|
|
|
|
|
Ratios/Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at end of period (000s omitted)
|
|
$
|
11,742
|
|
|
$
|
9,320
|
|
|
$
|
8,831
|
|
|
$
|
6,845
|
|
|
$
|
8,169
|
|
|
$
|
7,068
|
|
|
|
|
|
|
|
|
Ratio of total expenses to average net assets
|
|
|
2.48
|
%†
|
|
|
3.01
|
%
|
|
|
3.14
|
%
|
|
|
2.53
|
%
|
|
|
3.03
|
%
|
|
|
2.91
|
%
|
Ratio of net expenses to average net assets (4)
|
|
|
2.48
|
%†
|
|
|
3.01
|
%
|
|
|
3.14
|
%
|
|
|
2.52
|
%
|
|
|
3.03
|
%
|
|
|
2.91
|
%
|
Ratio of net investment loss to average net assets
|
|
|
(0.27
|
)%†
|
|
|
(0.94
|
)%
|
|
|
(0.88
|
)%
|
|
|
(0.56
|
)%
|
|
|
(1.31
|
)%
|
|
|
(0.07
|
)%
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
21
|
%
|
|
|
39
|
%
|
|
|
37
|
%
|
|
|
59
|
%
|
|
|
40
|
%
|
|
|
58
|
%
|
Leverage analysis, end of period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding loan balance (000s omitted)
|
|
$
|
-
|
|
|
$
|
777
|
|
|
$
|
1,865
|
|
|
$
|
941
|
|
|
$
|
2,000
|
|
|
$
|
1,255
|
|
Asset coverage per $1,000 (5)
|
|
$
|
-
|
|
|
$
|
12,988
|
|
|
$
|
5,734
|
|
|
$
|
8,275
|
|
|
$
|
5,084
|
|
|
$
|
6,632
|
|
Average commission rate paid
|
|
$
|
0.0147
|
|
|
$
|
0.0145
|
|
|
$
|
0.0170
|
|
|
$
|
0.0232
|
|
|
$
|
0.0182
|
|
|
$
|
0.0137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The per share amounts were calculated using the average number of shares outstanding during the period.
|
(2)
|
On May 6, 2021, the Fund completed a
1-for-5 reverse stock split. Prior year per share amounts have been restated to reflect the impact of the reverse stock split.
|
(3)
|
Total return on a market value basis is calculated assuming a purchase of common stock on the opening of the first
day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Fund’s dividend reinvestment plan if in
effect or, if there is no plan in effect, at the lower of the per share net asset value or the closing market price of the Fund’s shares on the dividend/distribution date. Generally, total return on a net asset value basis will be higher than
total return on a market value basis in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total return on a
net asset
value basis will be lower than total return on a market value basis in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such
periods.The
calculation does not reflect brokerage commissions, if any.
|
(4)
|
The ratio of net expenses excluding loan interest and fees from the use of leverage to average net assets was
2.37%† for the six months ended June 30, 2021 and 2.64%, 2.43%, 2.13%, 2.62%, and 2.68% for the years ended December 31, 2020, 2019, 2018, 2017,
and, 2016, respectively.
|
(5)
|
Represents the value of total assets less liabilities not represented by senior securities representing
indebtedness divided by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. For purposes of this calculation, the Credit Agreement is considered a senior security representing indebtedness.
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*
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Less than $0.005 per share.
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See notes to financial statements.
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17 Semi-Annual Report 2021
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FOXBY CORP.
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The additional information below and on the following pages is supplemental and not part of the financial statements of the Fund.
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BOARD APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT
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(Unaudited)
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Additional Information
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The renewal of the investment management agreement (“IMA”) between Foxby Corp.
(“Fund”) and the investment manager, Midas Management Corporation (“Investment Manager”), was unanimously approved by the Fund’s Board of Directors (“Board”), including all of the Fund’s directors who are not
“interested persons” of the Fund (“Independent Directors”) as defined under the Company Act at a meeting held on March 10, 2021 (“Meeting”). In considering the annual approval of the IMA , the Board considered a
number of factors, including, among other things, information that had been provided at other meetings, as well as information furnished to the Board for the Meeting. Such information included, among other things: information comparing the
management fees and total expense ratio of the Fund with a peer group of broadly comparable funds as provided by Broadridge (“Broadridge”), an independent provider of investment company data, which uses information sourced from both Lipper
and Morningstar as well as from company reports, financial reporting services, periodicals and other sources; information regarding the Fund’s investment performance on an absolute basis and in comparison to, among other things, a relevant peer
group of funds (“Peer Group”) and a benchmark index as provided by Broadridge; the economic outlook and the general investment outlook in relevant investment markets; the Investment Manager’s results and financial condition and the
overall organization of the Investment Manager; the allocation of brokerage and the benefits received by the Investment Manager as a result of brokerage allocation; the Investment Manager’s trading practices, including soft dollars; the
Investment Manager’s management of relationships with the Fund’s custodian, transfer agent, pricing agents, brokers, and other service providers; the resources devoted to the Investment Manager’s compliance efforts undertaken on
behalf of the Fund and the record of compliance with the compliance programs of the Fund, the Investment Manager, and its affiliates; the quality, nature, cost, and character of the administrative and other
non-investment management services provided by the Investment Manager and its affiliates; the terms of the IMA; the Investment Manager’s gifts and entertainment log; the reasonableness and appropriateness
of the fee paid by the Fund for the services described in the IMA and whether it was the product of arm’s length bargaining; the nature, extent, and quality of the services provided by the Investment Manager; the fiduciary duty assumed by the
Investment Manager in connection with the services rendered to the Fund and the business reputation of the Investment Manager and its financial resources; the character and amount of other incidental or
“fall-out” benefits received by the Investment Manager and its affiliates from its association with the Fund, including soft dollar benefits; the extent to which economies of scale would be realized
as the Fund grows; whether fee levels reflect these economies of scale for the benefit of Fund investors; and comparisons of the services rendered and the amounts paid
under the IMA with those under other advisory contracts, such as contracts of the same type between other investment advisers and other registered investment companies.
The Board also reviewed in detail and at length the Investment Manager’s responses to the Board’s request for certain
information related to, among other things: the Investment Manager’s general business, personnel, and operations; fees, profitability, and financial information; trading information; Fund performance; compliance and legal; and other related
matters. The Board expressed its satisfaction with the Investment Manager’s responses to its request for such information.
In considering the nature, extent, and quality of the management services provided by the Investment Manager, the Board considered the
Investment Manager’s management capabilities with respect to the types of investments held by the Fund, including information relating to the education, experience, and number of investment professionals and other personnel who provide services
under the IMA. The Board also took into account the time and attention devoted by management to the Fund. In this regard, the Board noted that the Investment Manager is responsible for, among other things, overseeing the selection of investments for
the Fund, making investment decisions for the Fund, monitoring the investment operations and composition of the Fund, and, in connection therewith, monitoring compliance with the Fund’s investment objective, policies, and restrictions, as well
as the Fund’s compliance with applicable law; monitoring brokerage selection, commissions and other trading costs, quality of execution, and other brokerage matters; and implementing the Board’s directives as they relate to the Fund.
Further, the Board considered that the Investment Manager’s responsibilities include daily monitoring of investment, operational, enterprise, legal, regulatory, and compliance risks as they relate to the Fund. The Board evaluated the level of
skill required to manage the Fund and concluded that the resources available at the Investment Manager are appropriate to effectively fulfill its duties on behalf of the Fund. The Board noted that the Investment Manager has managed the Fund for
several years. The Board indicated its belief that a long term relationship with capable, conscientious personnel is in the best interests of the Fund.
The Board received information concerning the investment philosophy and investment process applied by the Investment Manager in managing
the Fund. In this regard, Mr. Thomas Winmill, as the portfolio manager of the Fund and Chairman of the Investment Policy Committee of the Investment Manager, stated that the investment philosophy and/or investment process applied in managing
the Fund had not changed since the Board’s prior annual review of the IMA.
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FOXBY CORP.
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Semi-Annual Report 2021 18
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BOARD APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT
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(Unaudited)
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Additional Information
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The Board also considered the Investment Manager’s
in-house research capabilities as well as other resources available to the Investment Manager’s personnel, including research services that may be available to the Investment Manager as a result of
securities transactions effected for the Fund. The Board concluded that the Investment Manager’s investment process, research capabilities, and philosophy were well suited to the Fund, given the Fund’s investment objective and policies.
In its review of comparative information with respect to the Fund’s investment performance, the Board received information from
Broadridge comparing the Fund’s investment performance on an absolute basis and to that of its Peer Group and a benchmark index which were provided by Broadridge. Broadridge also provided supplemental Morningstar information which was
discussed. The Board engaged in a lengthy discussion regarding the appropriateness of the Peer Group for the Fund.
After reviewing
performance information with respect to the Fund, the Board observed that the Fund’s total return (i) outperformed its benchmark index in the two year period, but underperformed in the one, three, four, five, and ten year periods, ended
December 31, 2020, (ii) matched the median total return of its Peer Group in the two year period, but underperformed in the one, three, four, five and ten year periods, ended December 31, 2020, and (iii) underperformed the average total return
of its Peer Group in the one, two, three, four, five, and ten year periods, ended December 31, 2020. The Board discussed with personnel of the Investment Manager the factors that contributed to the Fund’s underperformance and the steps
that the Investment Manager had taken, or intended to take, to seek to improve the Fund’s short and long term performance. The Board concluded that the Fund’s performance is being addressed and noted that it would continue to monitor these
efforts and the performance of the Fund.
The Board noted that performance is only one of the factors that it deems relevant to its
consideration of the IMA and that, after considering all relevant factors, it can reach a decision to renew the IMA notwithstanding the Fund’s underperformance over certain periods.
With respect to its review of the fees payable under the IMA, the Board considered information from Broadridge comparing the Fund’s
management fee and expense ratio to those of its Peer Group. The Board observed that the Fund’s management fee based on common and leveraged assets is higher than the median in its Peer Group and its total expense ratio based on common and
leveraged assets is also higher than the median in its Peer Group, and the Board discussed the contributing factors thereof. The Board concluded that although the Fund’s management fee
and total expense ratio are within a higher range relative to its Peer Group, the
management fee and total expense ratio are reasonable in light of the quality of services received and the level of assets managed. The Board also evaluated any apparent or anticipated economies of scale in relation to the services the Investment
Manager provides to the Fund. The Board considered that the Fund is a closed end fund that does not continuously offer shares and that, without daily inflows and outflows of capital, there are limited opportunities for significant economies of scale
to be realized by the Investment Manager in managing the Fund’s assets.
The information provided assisted the Board in
concluding that the management fee paid by the Fund is within the range of those paid by comparable funds within the fund industry and is fair and reasonable in light of the quality of services received and the level of assets managed. Further, the
Board concluded that the Investment Manager’s management fee bears a reasonable relationship to the services rendered and has been the product of arm’s length bargaining.
The Board also considered information regarding the character and amount of other incidental benefits received by the Investment Manager
and its affiliates from its association with the Fund. The Board concluded that potential “fall-out” benefits that the Investment Manager and its affiliates may receive, such as increased ability to
obtain research services, appear to be fair and reasonable and may, in some cases, benefit the Fund.
The Board also considered the profitability of
the Investment Manager from its association with the Fund, including historical profitability information. In this regard, the Board considered the costs of the services provided, and the profits realized, if any, by the Investment Manager in
connection with the operation of the Fund and was satisfied that the profitability was not excessive under the circumstances. In addition, the Board considered the financial stability of the Investment Manager during its deliberations.
The Board did not consider any single factor as controlling in determining whether or not to renew the IMA. In assessing the information
provided by the Investment Manager and its affiliates, the Board also noted that it was taking into consideration the benefits to shareholders of investing in a Fund that is part of a fund complex which provides a variety of shareholder services.
Based on its consideration of the foregoing factors and conclusions, and such other factors and conclusions as it deemed relevant,
the Board, including all of the Independent Directors, concluded that the approval of the IMA, including the fee structure, is in the best interests of the Fund.
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19 Semi-Annual Report 2021
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FOXBY CORP.
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Rev. 6/2021
PRIVACY POLICY
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FACTS
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WHAT DOES FOXBY CORP. DO WITH YOUR PERSONAL
INFORMATION?
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Why?
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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.
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What?
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The
types of personal information we collect and share depend on the product or service you have with us. This information can include:
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•Social Security number
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•Transaction or loss history
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•Retirement
assets
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•Account balances
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•Account transactions
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When you are no longer our customer, we continue to share your information as described in this notice.
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How?
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All financial companies need to share customer’s 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 Foxby Corp. chooses to share; and whether you can limit this sharing.
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Reasons we can share your personal
information
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Does Foxby Corp.
share?
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Can you limit this
sharing?
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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
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Yes
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No
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For our
marketing purposes -
To offer our products and services to you
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Yes
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No
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For joint marketing with other nonaffiliated financial
companies
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No
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We don’t share
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For our
affiliates’ everyday business purposes -
Information about your transactions and experiences
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No
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We don’t share
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For our
affiliates’ everyday business purposes –
Information about your creditworthiness
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No
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We don’t share
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For our affiliates to market to you -
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Yes
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Yes
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For nonaffiliates to market to you -
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No
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We don’t share
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To Limit Sharing
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• Call Foxby Corp. at 212-785-0900; or
• Mail the form below
Please note:
If you are a new customer, we can begin sharing your information 30 days from the date we sent this notice. When you are
no longer our customer, we continue to share your information as described in this notice.
However, you can contact us at any time to limit our sharing.
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Questions?
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Call Foxby Corp. at 1-212-785-0900
or go to www.foxbycorp.com
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Mail-in Form
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Leave blank or
[If you have a joint account, your choice will apply to everyone on your account unless you mark below.
☐ Apply my choice only to me]
Mail to:
Foxby Corp.
3814 Route 44
Millbrook, NY 12545
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Mark if you want to limit:
☐ Do not allow your affiliates to use my personal information to market to
me.
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Name
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Address
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City, State, Zip
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Account #
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FOXBY CORP.
|
|
Semi-Annual Report 2021 20
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Who we are
|
Who is
providing this notice?
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Foxby Corp.
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What we do
|
How does
Foxby Corp. protect my personal information?
|
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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.
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How does Foxby Corp. collect my personal information?
|
|
We collect your personal information, for example, when you
• Open an account
• Buy securities from us
• Provide account information
• Give us your contact information
• Tell us where to send the money
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Why can’t I limit all sharing?
|
|
Federal law gives you the right to limit only
• Sharing for affiliate’s 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
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What
happens when I limit sharing for an account I hold jointly with someone else?
|
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Your choices will apply to everyone on your account -
unless you tell us otherwise
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Definitions
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Affiliates
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Companies related by common ownership or control. They can be financial and nonfinancial companies.
• Foxby Corp. shares with our affiliates.
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Nonaffiliates
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Companies not
related by common ownership or control. They can be financial and nonfinancial companies.
• Foxby Corp. does not share with nonaffiliates so they can
market their financial products or services to you.
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Joint marketing
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|
A formal
agreement between nonaffiliated financial companies that together market financial products or services to you.
• Foxby Corp. does not jointly
market.
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21 Semi-Annual Report 2021
|
|
FOXBY CORP.
|
|
|
|
GENERAL INFORMATION, POLICIES, AND UPDATES
|
|
(Unaudited)
|
|
|
Additional Information
|
Investment Strategies
In seeking its objective, the Fund exercises a flexible strategy in the selection of securities, and is not limited by the issuer’s
location, size, or market capitalization. The Fund may invest in equity and fixed income securities of new and seasoned U.S. and foreign issuers, including securities convertible into common stock, debt securities, futures, options, derivatives, and
other instruments. The Fund also may employ aggressive and speculative investment techniques, such as selling securities short and borrowing money for investment purposes, a practice known as “leveraging,” and may invest defensively in
short term, liquid, high grade securities and money market instruments. There is a risk that these transactions sometimes may reduce returns or increase volatility. In addition, derivatives, such as options and futures, can be illiquid and highly
sensitive to changes in their underlying security, interest rate or index, and as a result can be highly volatile. A small investment in certain derivatives could have a potentially large impact on the Fund’s performance. The Fund may invest in
debt securities rated below investment grade, commonly referred to as junk bonds, as well as investment grade and U.S. Government securities. Generally, investments in securities in the lower rating categories or comparable unrated securities
provide higher yields but involve greater price volatility and risk of loss of principal and interest than investments in securities with higher ratings. A potential benefit of its closed end structure, the Fund may invest without limit in illiquid
investments such as private placements and private companies.
Policies and Updates
Certain provisions in the Fund’s Charter and/or Bylaws (“Governing Documents”) could have the effect of, among other things,
depriving the owners of shares in the Fund of opportunities to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control of the Fund in a tender offer or similar transaction or bringing
litigation against the Fund and/or any director, officer, employee or affiliate thereof. The overall effect of these provisions is to, among other things, render more difficult the accomplishment of a merger or the assumption of control by a
principal shareholder. The foregoing summary is subject to the Governing Documents of the Fund, which are on file with the SEC and available on the Fund’s website www.FoxbyCorp.com.
Section 23 Notice
Pursuant to Section 23 of the Company Act, notice is hereby given that the Fund may in the future purchase its own shares in the open
market. These purchases may be made from time to time, at such times, and in such amounts, as may be deemed advantageous to the Fund, although nothing herein shall be considered a commitment to purchase such shares.
Please Note
There is no assurance that the Fund’s investment objective will be attained. Past performance is no guarantee of future results. You
should consider the investment objective, risks, and charges and expenses of the Fund carefully before investing. The Fund’s investment policies, management fees, and other matters of interest to prospective investors may be found in its
filings with the SEC, including its annual and semi-annual reports. To obtain a copy of the reports, please call us toll-free at 855-411-6432 or download them at
www.FoxbyCorp.com/literature/. Please read the reports carefully before investing.
Shares of closed end funds frequently trade at a
discount from their NAV. This characteristic is a risk separate and distinct from the risk that the Fund’s NAV has decreased in the past, and may decrease in the future, as a result of its investment activities and other events. Neither the
Investment Manager nor the Fund can predict whether shares of the Fund will trade at, below, or above NAV. The risk of holding shares of the Fund that might trade at a discount is more pronounced for investors expecting to sell their shares in a
relatively short period of time after acquiring them because, for those investors, realization of a gain or loss on their investments is likely to be more dependent upon the existence of a premium or discount than upon portfolio performance. The
shares of the Fund are designed primarily for long term investors and should not be considered a vehicle for trading purposes. The NAV of the Fund’s shares typically will fluctuate with price changes of the Fund’s portfolio securities, and
these fluctuations are likely to be greater in the case of a fund which uses leverage, as the Fund may from time to time. In the event that shares of the Fund trade at a premium to NAV, there is no assurance that any such premium will be sustained
for any period of time and will not decrease, or that the shares of the Fund will not trade at a discount to NAV thereafter. The market price for the Fund is based on supply and demand which fluctuates daily based on many factors, such as economic
conditions and global events, investor sentiment, and security-specific factors.
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FOXBY CORP.
|
|
Semi-Annual Report 2021 22
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GENERAL INFORMATION, POLICIES, AND UPDATES
|
|
(Unaudited)
|
|
|
Additional Information
|
This report, including the financial statements herein, is provided for informational
purposes only. This is not a prospectus, circular, or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report. This report shall not constitute an offer to sell or the solicitation of an offer
to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or an exemption therefrom. The
internet address for the Fund is included several times in this report as a textual reference only. The information on the website is not incorporated by reference into this report.
The Fund does not make available copies of its Statement of Additional Information because the Fund’s shares are not continuously
offered, which means that the Fund’s Statement of Additional Information has not been updated since completion of the Fund’s most recent offering and the information contained in the Fund’s Statement of Additional Information may have
become outdated.
Investment products, including shares of the Fund, are not federally or FDIC insured, are not deposits or
obligations of, or guaranteed by, any financial institution and involve investment risk, including possible loss of principal and fluctuation in value. Consult with your tax advisor or attorney regarding specific tax issues.
Cautionary Note Regarding Forward Looking Statements
Certain information presented in this report may contain “forward looking statements” within the meaning of the federal
securities laws, including the Private Securities Litigation Reform Act of 1995. Forward looking statements include, but are not limited to, statements concerning the Fund’s plans, objectives, goals, strategies, distributions and their amounts
and timing, distribution declarations, future events, future performance, prospects of its portfolio holdings, or intentions, and other information that is not historical information. Generally, forward looking statements can be identified by
terminology such as “believes,” “expects,” “estimates,” “may,” “will,” “should,” “anticipates,” “projects,” “plans,” or “intends,” or the negative of
such terms or other comparable terminology, or by discussions of strategy. All forward looking statements by the Fund involve known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Fund, which may
cause the Fund’s actual results to be materially different from those expressed or implied by such statements. These risks include, but are not limited to, equity securities risk, corporate bonds risk, credit risk, interest rate risk, leverage
and borrowing risk, additional risks of certain securities in which the Fund invests, market discount from NAV, distribution policy risk, management risk, risks related to the negative impacts from the continued spread of COVID-19 on the economy and the broader financial markets, and other risks discussed in the Fund’s filings with the SEC. All such subsequent forward looking statements, whether written or oral, by the Fund or
on its behalf, are also expressly qualified by these cautionary statements. Investors should carefully consider the risks, uncertainties, and other factors, together with all of the other information included in the Fund’s filings with the SEC,
and similar information. The Fund may also make additional forward looking statements from time to time. All forward looking statements apply only as of the date made. The Fund undertakes no obligation to publicly update or revise forward looking
statements, whether as a result of new information, future events, or otherwise. Thus you should not place undue reliance on forward looking statements.
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|
|
23 Semi-Annual Report 2021
|
|
FOXBY CORP.
|
|
|
|
GENERAL INFORMATION, POLICIES, AND UPDATES
|
|
(Unaudited)
|
|
|
Additional Information
|
|
|
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|
|
Stock Data at June 30, 2021
|
|
Market Price per Share
|
|
|
$14.05
|
|
Net Asset Value per Share
|
|
|
$22.49
|
|
Market Price Discount to Net Asset Value
|
|
|
37.5%
|
|
Stock Symbol
|
|
|
FXBY
|
|
Net Asset Value Symbol
|
|
|
XFXBX
|
|
CUSIP Number
|
|
|
351645205
|
|
Proxy Voting
The Fund’s Proxy Voting Guidelines, which describe the policies and procedures the Fund uses to determine how to vote proxies relating
to portfolio securities, as well as its proxy voting record for the most recent 12 months ended June 30, are available without charge, upon request, by calling the Fund collect at
1-212-785-0900, on the SEC’s website at www.sec.gov, and on the Fund’s website at www.Foxby-Corp.com.
Quarterly Schedule of Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Part F of
Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov. and a link thereto can be found on the Fund’s website at
www.FoxbyCorp.com.
Investment Manager
Midas Management Corporation
3814 Route 44
Millbrook,
NY 12545
1-212-785-0900
Stock Transfer Agent and Registrar
Securities Transfer Corporation
2901 N Dallas Parkway, Suite 380
Plano, TX 75093
www.stctransfer.com
1-469-633-0101
FoxbyCorp.com
Visit us on the web at www.FoxbyCorp.com. The site provides information about the Fund including press releases
and shareholder reports. For further information, please email us at info@FoxbyCorp.com.
Foxby Corp. is part of a fund complex
which includes Midas Fund, Midas Magic, and Dividend and Income Fund.
This report is for shareholder information. This is not a prospectus intended for use in the purchase or sale of Fund
shares.
NOT FDIC INSURED MAY LOSE
VALUE NOT BANK GUARANTEED
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|
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FOXBY CORP.
|
|
Semi-Annual Report 2021 24
|