Note 6. Capital stock
transactions
Under the Fund’s Charter,
dividends on Common Stock cannot be declared unless net assets, after deducting the amount of such dividends and all unpaid dividends declared on Preferred Stock, equal at least $100 per share of Preferred Stock
outstanding. The Preferred Stock is subject to redemption at the Fund’s option at any time on 30 days’ notice at $55 per share (or a total of $41,400,700 for the shares outstanding at June 30, 2020) plus
accrued dividends, and entitled in liquidation to $50 per share plus dividends accrued or in arrears, as the case may be.
Automatic Dividend Investment Plan
and Cash Purchase Plan
The Fund makes available the
Automatic Dividend Investment Plan and the Cash Purchase Plan (collectively, the Investment Plans) to any Common Stockholder with a Direct-at-Fund Account (as defined below) who wishes to purchase additional shares of
the Fund. Please refer to the Fund’s prospectus for a detailed discussion of the Investment Plans.
The Fund, in connection with its
Investment Plans, acquires and issues shares of its own Common Stock, as needed, to satisfy the requirements of the Investment Plans. A total of 27,752 shares were issued to the participants of the Cash Purchase Plan
during the period for proceeds of $676,877, a weighted average discount of 11.56% from the NAV of those shares. In addition, a total of 624,692 shares were issued at market price in distributions during the period for
proceeds of $14,776,832, a weighted average discount of 10.53% from the NAV of those shares.
For stockholder accounts
established directly with the Fund (i.e., Direct-at-Fund Accounts, which are serviced by the Servicing Agent), unless the Servicing Agent is otherwise instructed by the stockholder, distributions on the Common Stock
are paid in book shares of Common Stock which are entered in the stockholder’s account as “book credits.” Each stockholder may also elect to receive distributions 75% in shares and 25% in cash, 50%
in shares and 50% in cash, or 100% in cash. Any such election must be received by the Servicing Agent by the record date for a distribution. If the stockholder holds shares of Common Stock through a financial
intermediary (such as a broker), the stockholder should contact the financial intermediary to discuss reinvestment and distribution options, as they may be different than as described above for accounts held directly
with the Fund. A distribution is treated in the same manner for income tax purposes whether you receive it in cash or partly or entirely in shares. Elections received after a record date for a distribution will be
effective in respect of the next distribution. Shares issued to the stockholder in respect of distributions will be at a price equal to the lower of: (i) the closing sale or bid price, plus applicable commission, of
the Common Stock on the New York Stock Exchange on the ex-dividend date or (ii) the greater of NAV per share of Common Stock and 95% of the closing price of the Common Stock on the New York Stock Exchange on the
ex-dividend date (without adjustment for the exercise of Warrants remaining outstanding). The issuance of Common Stock at less than NAV per share will dilute the NAV of all Common Stock outstanding at that time.
For the six months ended June 30,
2020, the Fund purchased 321,104 shares of its Common Stock from the Cash Purchase Plan participants at a cost of $7,887,064, which represented a weighted average discount of 12.22% from the NAV of those acquired
shares.
Under the Fund’s stock
repurchase program, the Fund repurchases up to 5% of the Fund’s outstanding Common Stock during the year directly from Stockholders and in the open market, provided that, with respect to shares purchased in the
open market, the excess of the NAV of a share of Common Stock over its market price (the discount) is greater than 10%. The intent of the stock repurchase program is, among other things, to moderate the growth in the
number of shares of Common Stock outstanding, increase the NAV of the Fund’s outstanding shares, reduce the dilutive impact on stockholders who do not take capital gain distributions in additional shares, and
increase the liquidity of the Fund’s Common Stock in the marketplace. For the six months ended June 30, 2020, the Fund purchased 713,901 shares of its Common Stock in the open market at an aggregate cost of
$16,656,741, which represented a weighted average discount of 12.76% from the NAV of those acquired shares.
Shares of Common Stock repurchased
to satisfy the Plan requirements or in the open market pursuant to the Fund’s stock repurchase program are no longer outstanding.
Warrants
At June 30, 2020, the Fund reserved
194,560 shares of Common Stock for issuance upon exercise of 8,043 Warrants, each of which entitled the holder to purchase 24.19 shares of Common Stock at $0.93 per share.