As filed with the U.S. Securities and Exchange Commission on April 29, 2020
Securities Act File No. 333-219011
Investment Company Act File No. 811-10223
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM N-2
Registration Statement Under The Securities Act Of 1933 |
☒ |
Pre-Effective Amendment No. |
|
☐ |
Post-Effective Amendment No. 4 |
|
☒ |
and/or |
|
|
Registration Statement Under The Investment Company Act Of 1940 |
☒ |
Amendment No. 45 |
|
☒ |
(Check appropriate box or boxes) |
|
|
VOYA SENIOR INCOME FUND |
|
(Exact Name of Registrant Specified in Charter) |
|
|
7337 E. Doubletree Ranch Road, Suite 100 |
|
|
Scottsdale, AZ 85258 |
|
|
(Address of Principal Executive Offices) |
|
|
Registrant's Telephone Number, Including Area Code: (800) 992-0180 |
|
Huey P. Falgout, Jr. |
With copies to: |
|
Voya Investments, LLC |
Elizabeth J. Reza |
|
7337 E. Doubletree Ranch Road, Suite 100 |
Ropes & Gray LLP |
|
Scottsdale, AZ 85258 |
Prudential Tower |
|
(Name and Address of Agent for Service) |
800 Boylston Street |
|
Boston MA 02199-3600
________________________
Approximate Date of Proposed Public Offering:
As soon as practical after the effective date of this Registration Statement.
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, other than securities offered in connection with a dividend reinvestment plan, check the
following box. ☒
It is proposed that this filing will become effective (check appropriate box):
☐When declared effective pursuant to section 8 (c)
The following boxes should only be included and completed if the registrant is a registered closed-end management investment company or business development company which makes periodic repurchase offers under Rule 23c-3 under the Investment Company Act and is making this filing in accordance with Rule 486 under the Securities Act.
☐Immediately upon filing pursuant to paragraph (b)
☐60 days after filing pursuant to paragraph (a)
☐on (date), pursuant to paragraph (b)
☒on June 30, 2020, pursuant to paragraph (a)
☐This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
This registration statement incorporates a combined prospectus pursuant to Rule 429, which relates to earlier registration statements filed by the Registrant on June 28, 2017 (see File No. 333-219011), November 22, 2013 (see File No. 333-192499), June 27, 2013 (see File No. 333-189639), June 26, 2012 (see File No. 333-175174), June 28, 2011 (see File No. 333-175174), April 14, 2008 (see File No. 333-150236), June 28, 2007 (see File No. 333-144159), June 30, 2006 (see File No. 333-135548), June 29, 2005 (see File No. 333-126224), December 6, 2004 (see File No. 333-121014), June 28, 2004 (see File No. 333- 116936), February 23, 2004 (see File No. 333-113012), November 7, 2003, (see File No. 333-110317), September 22, 2003 (see File No. 333-109005), August 15, 2003 (see File No. 333-108020), July 17, 2003 (see File No. 333-107124), July 1, 2002 (see File No. 333-91662) and March 30, 2001 (see File No. 333-54910). This prospectus will also be used in connection with sales of securities registered by the Registrant under those registration statements. This registration statement and the registration statements amended hereby will be collectively referred to as the "Registration Statement."
VOYA SENIOR INCOME
FUND
(“Registrant”)
CONTENTS OF REGISTRATION
STATEMENT
This Registration
Statement consists of the following papers and documents:
* Cover Sheet
* Contents of
Registration Statement
* Explanatory
Note
* Registrant’s Class A, Class C, Class I, Class T, and
Class W Common Shares’ Prospectus dated June 30, 2020
* Registrant’s Class A, Class C, Class I, Class T, and
Class W Common Shares’ Statement of Additional Information dated June 30, 2020
* Part C
* Signature Page
EXPLANATORY NOTE
This Post-Effective
Amendment No. 4 to the Registration Statement on Form N-2 (File No. 333-219011) of Voya Senior Income Fund (the “Registrant”) is being filed pursuant to Rule 486(b) under the Securities Act of 1933, as
amended (the “Securities Act”), for the purpose of updating the disclosure in compliance with annual updating requirements to the Registrant’s Class A, Class C, Class I, Class T, and Class W Common
Shares’ Prospectus and related Statement of Additional Information, each dated June 30, 2020.
•
| Voya Senior Income Fund
|
Class/Ticker: A/XSIAX; C/XSICX; I/XSIIX; T/XSITX; W/XSIWX Common Shares
Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund's annual and semi-annual
shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Voya funds' website
(www.individuals.voya.com/literature), and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and
other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-992-0180 or by sending an e-mail
request to Voyaim_literature@voya.com.
You may elect to receive all future reports in paper free of charge. If you received this document in the mail, please follow the instructions to elect to continue receiving paper copies of your
shareholder reports. If you received this document through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you
invest directly with us, you can call 1-800-992-0180 or send an email request to Voyaim_literature@voya.com to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election
to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the Voya funds complex if you invest directly with the funds.
This Prospectus sets forth concisely the information about Voya Senior Income Fund (“Fund”) that a prospective investor ought to know before investing. You
should read it carefully before you invest and keep it for future reference. The Fund has filed with the U.S. Securities and Exchange Commission (“SEC”) a Statement of Additional Information
(“SAI”) dated June 30, 2020 containing additional information about the Fund. The SAI is incorporated by reference in its entirety into this Prospectus. You may make shareholder inquiries or obtain a free
copy of the SAI, annual shareholder report, and unaudited semi-annual shareholder report by contacting the Fund at 1-800-992-0180 or by writing to the Fund at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale,
Arizona 85258-2034. The Fund's SAI, annual shareholder report, and unaudited semi-annual shareholder report are also available free of charge on the Fund's website at www.voyainvestments.com. The Prospectus, SAI, and
other information about the Fund are also available on the SEC's website (www.sec.gov). The table of contents for the SAI appears in the back of this Prospectus.
The Fund’s investment objective is to provide investors with a high level of monthly income. Market fluctuations and general economic conditions can adversely affect the Fund. There is no
guarantee that the Fund will achieve its investment objective. Investment in the Fund involves certain risks and special considerations, including risks associated with the Fund's use of leverage. See “Risk Factors and Special Considerations” later in this Prospectus for a discussion of any factors that make an investment in the Fund speculative or high risk.
Neither the SEC nor any state securities commission has approved or disapproved these securities or determined that this Prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.
| 1
|
| 1
|
| 6
|
| 8
|
| 11
|
| 14
|
| 16
|
| 25
|
| 26
|
| 28
|
| 31
|
| 33
|
| 37
|
| 39
|
| 40
|
| 42
|
| 42
|
| 42
|
| 42
|
| 43
|
| 45
|
| 45
|
| 45
|
| 46
|
| 46
|
| 46
|
| 46
|
| 47
|
| 47
|
| 47
|
| 48
|
| 50
|
| 51
|
| 53
|
| 54
|
| 55
|
| 55
|
Voya Senior Income Fund
The following synopsis is qualified in its
entirety by reference to the more detailed information appearing elsewhere in this Prospectus.
DESCRIPTION OF THE FUND
The Fund
The Fund is a continuously-offered,
diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended, and the rules, regulations, and applicable exemptive orders thereunder (“1940 Act”).
It was organized as a Delaware statutory trust on December 14, 2000. The Fund offers five separate classes of Common Shares in this Prospectus: Class A, Class C, Class I, Class T, and Class W. See “Classes of
Shares” later in this Prospectus.
Investment Objective
To provide investors with a high level of
monthly income. There is no assurance that the Fund will achieve its investment objective. The investment objective is fundamental and may not be changed without a majority vote of the shareholders of the Fund. See
“Description of the Fund – Fundamental and Non-Fundamental Investment Policies of the Fund” later in this Prospectus.
Adviser/Sub-Adviser
Voya Investments, LLC (“Voya
Investments” or “Adviser”), an Arizona limited liability company, serves as the investment adviser to the Fund. Voya Investments has overall responsibility for the management of the Fund. Voya
Investments oversees all investment advisory and portfolio management services and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including
custodial, transfer agency, dividend disbursing, accounting, auditing, compliance and related services. Voya Investments is registered with the SEC as an investment adviser.
The Adviser is an indirect,
wholly-owned subsidiary of Voya Financial, Inc. Voya Financial, Inc. is a U.S.-based financial institution whose subsidiaries operate in the retirement, investment, and insurance industries.
Voya
Investments' principal office is located at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258. As of March 31, 2020, Voya Investments managed approximately [$] billion in assets.
The Adviser receives an annual
fee, payable monthly, in an amount equal to 0.90% of the Fund's average daily gross asset value, minus the sum of the Fund's accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities
(other than liabilities for the principal amount of any borrowings incurred, commercial paper, or notes issued by the Fund and the liquidation preference of any outstanding preferred shares) (“Managed
Assets”). This definition includes assets acquired through the Fund's use of leverage.
Voya Investment Management
Co. LLC (“Voya IM” or “Sub-Adviser”) serves as sub-adviser to the Fund. Voya IM is an affiliate of the Adviser.
See “Investment Management and Other Service
Providers - Sub-Adviser and Portfolio Managers” later in this Prospectus.
Distributions
Income dividends on Common Shares accrue and
are declared daily and paid monthly. Income dividends will be automatically reinvested in additional shares of the Fund at the Fund's net asset value (“NAV”) with no sales charge, unless a shareholder
elects to receive distributions in cash or to purchase shares of another Voya mutual fund. The Fund may make one or more annual payments from any realized capital gains.
Principal Investment
Strategies
The Fund seeks to achieve its investment
objective by investing, under normal market conditions, at least 80% of its net assets (plus borrowings for investment purposes) in U.S. dollar-denominated floating rate secured senior loans (“Senior
Loans”). The Fund will provide shareholders with at least 60 days' prior notice of any change in this investment policy. Under normal market conditions, the Fund invests at least 80% of its assets in Senior
Loans made to corporations or other business entities organized under U.S. or Canadian law and that are domiciled in the United States and in U.S. territories and possessions or Canada. These Senior Loans are
typically rated below investment-grade quality. Investments rated below investment-grade (or of similar quality if unrated) are commonly known as high-yielding, high risk investments or as “junk”
investments.
The Senior Loans in which the
Fund invests either hold the most senior position in the capital structure of the borrower, hold an equal ranking with other senior debt, or have characteristics (such as a senior position secured by liens on a
borrower's assets) that the Adviser or Sub-Adviser believes justify treatment as senior debt.
The Fund typically makes its
investments in Senior Loans by purchasing a portion of the overall loan, i.e., the Fund becomes one of a number of lenders investing in the loan. The Fund may also make its investments in Senior Loans through the use of derivative instruments such as
participations, credit-linked notes, credit default swaps, and total return swaps as long as the reference obligation for any such instrument is a Senior Loan. Investments through the use of such derivative
instruments involve counterparty risk, i.e., the risk that the party from which such instrument is purchased will not perform as agreed. The Fund seeks to minimize such counterparty risk by purchasing such investments from
large, well established and highly rated counterparties.
Other Investment Strategies and
Policies
Loans in which the Fund invests typically have
multiple interest rate reset periods at the same time, with each reset period applicable to a designated portion of the loan. The maximum duration of an interest rate reset on any loan in which the Fund
Voya Senior Income Fund
1
may invest is one year. In order to achieve
overall reset balance, the Fund will ordinarily maintain a dollar-weighted average time until the next interest rate adjustment on its loans of 90 days or less.
Although the Fund has no
restrictions on investment maturity, normally at least 80% of its portfolio will be invested in assets with remaining maturities of ten years or less.
To seek to increase the yield on
the Common Shares, the Fund may engage in lending its portfolio securities. Such lending will be fully secured by investment-grade collateral held by an independent agent.
The Fund may engage in executing
repurchase agreements and reverse repurchase agreements.
The Fund may invest up to 20% of
its total assets, measured at the time of investment, in a combination of one or more of the following types of investments: loans to borrowers organized or located in countries outside the United States and outside
U.S. territories and possessions or Canada; unsecured floating rate loans, notes and other debt instruments; floating rate subordinated loans; tranches of floating rate asset-backed securities, including structured
notes; corporate debt securities; equity securities incidental to investment in loans; and, subject to 1940 Act limitations, other investment companies such as money market funds. See “Investment Objective and
Policies” later in this Prospectus.
The Fund may invest up to 15% of
its total assets, measured at the time of investment, in investments denominated in Organization for Economic Co-operation and Development (“OECD”) currencies (including the euro), other than the U.S.
dollar. The Fund may engage in currency exchange transactions to seek to hedge, as closely as practicable, 100% of the economic impact to the Fund arising from foreign currency fluctuations. The Fund may not be
entirely successful in implementing this hedging strategy, which may result in the Fund being adversely affected by foreign currency fluctuations.
Leverage
To seek to increase the yield on the Common
Shares, the Fund employs financial leverage by borrowing money and may also issue preferred shares. The timing and terms of leverage will be determined by the Adviser or Sub-Adviser under the supervision of the Fund's
Board of Trustees (“Board”). See “Risk Factors and Special Considerations - Leverage” later in this Prospectus.
Borrowings
The Fund may borrow money in an amount
permitted under the 1940 Act, including the rules, regulations, interpretations thereunder and any exemptive or other relief provided by the SEC. The Fund's obligation to holders of its debt will be senior to its
ability to pay dividends on, or repurchase, Common Shares (and preferred shares, if any), or to pay holders of Common Shares (and preferred shares, if any) in the event of liquidation.
Preferred Shares
The Fund is authorized to issue an unlimited
number of shares of a class of preferred stock in one or more series (“Preferred Shares”). The Fund's obligations to holders of any outstanding
Preferred Shares will be senior to its ability
to pay dividends on, or repurchase, Common Shares, or to pay holders of Common Shares in the event of liquidation. Under the 1940 Act, the Fund may issue Preferred Shares so long as immediately after any issuance of
Preferred Shares the value of the Fund's total assets (less all Fund liabilities and indebtedness that is not senior indebtedness) is at least twice the amount of the Fund's senior indebtedness plus the involuntary
liquidation preference of all outstanding Preferred Shares.
The 1940 Act also requires that
the holders of any Preferred Shares of the Fund, voting as a separate class, have the right to:
•
| elect at least two trustees at all times; and
|
•
| elect a majority of the trustees at any time when dividends on any series of Preferred Shares are unpaid for two full years.
|
As of June 5,
2020 the Fund had [no] Preferred Shares outstanding. The Fund may consider issuing Preferred Shares during the current fiscal year or in the future.
Diversification
The Fund maintains a diversified investment
portfolio through an investment strategy which seeks to limit exposure to any one issuer or industry.
The Fund is diversified, as such
term is defined in the 1940 Act. A diversified fund may not, as to 75% of its total assets, invest more than 5% of its total assets in any one issuer and may not purchase more than 10% of the outstanding voting
securities of any one issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities, or other investment companies). The Fund will consider a borrower on a loan,
including a loan participation, to be the issuer of that loan. In addition, with respect to a loan under which the Fund does not have privity with the borrower or would not have a direct cause of action against the
borrower in the event of the failure of the borrower to make payment of scheduled principal or interest, the Fund will separately meet the foregoing requirements and consider each interpositioned bank (a lender from
which the Fund acquires a loan) to be an issuer of the loan. This investment strategy is a fundamental policy that may not be changed without shareholder approval. With respect to no more than 25% of its total assets,
the Fund may make investments that are not subject to the foregoing restrictions.
Concentration
In addition, a maximum of 25% of the Fund's
total assets, measured at the time of investment, may be invested in any one industry. This investment strategy is also a fundamental policy that may not be changed without shareholder approval.
Continuous Offering
The Fund continuously offers its Common Shares
for sale. Sales are made through selected broker-dealers and financial services firms which enter into agreements with Voya Investments Distributor, LLC (“Distributor”), the Fund's principal
underwriter. Common Shares are sold at a public offering price equal to
2
Voya Senior Income Fund
their NAV per share. The Fund and the
Distributor reserve the right to reject any purchase order. Please note that cash, traveler's checks, third party checks, money orders, and checks drawn on non-U.S. banks (even if payment may be effected through a
U.S. bank) generally will not be accepted for purchase of Common Shares.
Repurchase Offers
To maintain a measure of liquidity, the Fund
will offer to repurchase not less than 5% of its outstanding Common Shares on a monthly basis (“Repurchase Offers”). This is a fundamental policy that can not be changed without shareholder approval. The
Fund currently anticipates offerings to repurchase not less than 5% of its outstanding Common Shares each month. The Fund may not offer to repurchase more than 25% of its outstanding Common Shares in any calendar
quarter. Other than the Fund's monthly repurchase offers, no market for the Fund's Common Shares is expected to exist. The applicable early withdrawal charge (“EWC”) will be imposed on certain repurchased
Class A Common Shares and Class C Common Shares. See “Sales Charges” and “Repurchase Offers” later in this Prospectus for important information relating to the acceptance of Fund offers to
repurchase Common Shares.
Principal Risks
Credit Default Swaps: The Fund may enter into credit default swaps, either as a buyer or a seller of the swap. A buyer of a swap pays a fee to buy protection against
the risk that a security will default. If no default occurs, the Fund will have paid the fee, but typically will recover nothing under the swap. A seller of a swap receives payment(s) in return for an obligation to
pay the counterparty the full notional value of a security in the event of a default of the security issuer. As a seller of a swap, the Fund would effectively add leverage to its portfolio because, in addition to its
total net assets, the Fund would be subject to investment exposure on the full notional value of the swap. Credit default swaps are particularly subject to counterparty, credit, valuation, liquidity and leveraging
risks and the risk that the swap may not correlate with its underlying asset as expected. Certain standardized swaps are subject to mandatory central clearing. Central clearing is expected to reduce counterparty
credit risk and increase liquidity; however, there is no assurance that central clearing will achieve that result, and in the meantime, central clearing and related requirements expose the Fund to new kinds of costs
and risks. In addition, credit default swaps expose the Fund to the risk of improper valuation.
Credit (Loans): Prices of the Fund’s investments are likely to fall if the actual or perceived financial health of the borrowers on, or issuers of, such
investments deteriorates, whether because of broad economic or issuer-specific reasons, or if the borrower or issuer is late (or defaults) in paying interest or principal. The Fund invests a substantial portion of its
assets in below investment-grade Senior Loans and other below investment-grade assets. Below investment-grade loans commonly known as high-yielding, high risk investments or as “junk” investments involve a
greater risk that borrowers may not make timely payment of the interest and principal due on their loans and are subject
to greater levels of credit and liquidity
risks. They also involve a greater risk that the value of such loans could decline significantly. If borrowers do not make timely payments of the interest due on their loans, the yield on the Common Shares will
decrease. If borrowers do not make timely payment of the principal due on their loans, or if the value of such loans decreases, the net asset value will decrease.
Demand for Loans: An increase in demand for loans may benefit the Fund by providing increased liquidity for such loans and higher sales prices, but it may also
adversely affect the rate of interest payable on such loans and the rights provided to the Fund under the terms of the applicable loan agreement, and may increase the price of loans in the secondary market. A decrease
in the demand for loans may adversely affect the price of loans in the Fund’s portfolio, which could cause the Fund’s net asset value to decline and reduce the liquidity of the Fund’s loan
holdings.
Derivative Instruments: Derivative instruments are subject to a number of risks, including the risk of changes in the market price of the underlying securities, credit
risk with respect to the counterparty, risk of loss due to changes in market interest rates and liquidity and volatility risk. The amounts required to purchase certain derivatives may be small relative to the
magnitude of exposure assumed by the Fund. Therefore, the purchase of certain derivatives may have an economic leveraging effect on the Fund and exaggerate any increase or decrease in the net asset value. Derivatives
may not perform as expected, so the Fund may not realize the intended benefits. When used for hedging purposes, the change in value of a derivative may not correlate as expected with the currency, security or other
risk being hedged. When used as an alternative or substitute for direct cash investment, the return provided by the derivative may not provide the same return as direct cash investment. In addition, given their
complexity, derivatives expose the Fund to the risk of improper valuation.
Interest Rate: Changes in short-term market interest rates will directly affect the yield on Common Shares. If short-term market interest rates fall, the
yield on Common Shares will also fall. To the extent that the interest rate spreads on loans in the Fund’s portfolio experience a general decline, the yield on the Common Shares will fall and the value of the
Fund’s assets may decrease, which will cause the Fund’s net asset value to decrease. Conversely, when short-term market interest rates rise, because of the lag between changes in such short-term rates and
the resetting of the floating rates on assets in the Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. In the case of inverse securities, the interest rate paid by such
securities generally will decrease when the market rate of interest to which the inverse security is indexed increases. With respect to investments in fixed rate instruments, a rise in market interest rates generally
causes values of such instruments to fall. The values of fixed rate instruments with longer maturities or duration are more sensitive to changes in market interest rates.
Voya Senior Income Fund
3
As of the date of this
Prospectus, market interest rates in the United States are at or near historic lows, which may increase the Fund’s exposure to risks associated with rising market interest rates. Rising market interest rates
could have unpredictable effects on the markets and may expose fixed-income and related markets to heightened volatility, which could reduce liquidity for certain investments, adversely affect values, and increase
costs. If dealer capacity in fixed-income and related markets is insufficient for market conditions, it may further inhibit liquidity and increase volatility in the fixed-income and related markets. Further, recent
and potential changes in government policy may affect interest rates.
Leverage: The use of leverage through borrowings or the issuance of Preferred Shares can adversely affect the yield on the Common Shares. To the extent
that the Fund is unable to invest the proceeds from the use of leverage in assets which pay interest at a rate which exceeds the rate paid on the leverage, the yield on the Common Shares will decrease. In addition, in
the event of a general market decline in the value of assets such as those in which the Fund invests, the effect of that decline will be magnified in the Fund because of the additional assets purchased with the
proceeds of the leverage. Further, because the fee paid to the Adviser will be calculated on the basis of Managed Assets, the fee will be higher when leverage is utilized, giving the Adviser an incentive to utilize
leverage. The Fund is subject to certain restrictions imposed by lenders to the Fund and may be subject to certain restrictions imposed by guidelines of one or more rating agencies which may issue ratings for debt or
the Preferred Shares issued by the Fund. These restrictions are expected to impose asset coverage, fund composition requirements and limits on investment techniques, such as the use of financial derivative products
that are more stringent than those imposed on the Fund by the 1940 Act. These restrictions could impede the manager from fully managing the Fund’s portfolio in accordance with the Fund’s investment
objective and policies. As of June 5, 2020 the Fund had [$] million in outstanding borrowings under its credit facility.
Limited Liquidity For
Investors: The Fund does not repurchase its shares on a daily basis and no market for the Common Shares is expected to exist. To provide a measure of
liquidity, the Fund will normally make monthly repurchase offers for not less than 5% of its outstanding Common Shares. If more than 5% of Common Shares are tendered, investors may not be able to completely liquidate
their holdings in any one month. Shareholders also will not have liquidity between these monthly repurchase dates.
Limited Secondary Market for
Loans: Because of the limited secondary market for loans, the Fund may be limited in its ability to sell loans in its portfolio in a timely fashion
and/or at a favorable price. Transactions in loans typically settle on a delayed basis and typically take longer than 7 days to settle. As a result the Fund may not receive the proceeds from a sale of a floating rate
loan for a significant period of time. Delay in the receipts of settlement proceeds may impair the ability of the Fund to meet its repurchase obligations and may increase
the amounts the Fund may be required to borrow.
It may also limit the ability of the Fund to repay debt, pay dividends, or to take advantage of new investment opportunities.
Market
Disruption and Geopolitical: The Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. Due
to the increasing interdependence among global economies and markets, conditions in one country, market, or region might adversely impact markets, issuers and/or foreign exchange rates in other countries, including
the U.S. War, terrorism, global health crises and pandemics, and other geopolitical events have led, and in the future may lead, to increased market volatility and may have adverse short- or long-term effects on U.S.
and world economies and markets generally. For example, the recent COVID-19 pandemic has resulted, and may continue to result, in significant market volatility, exchange trading suspensions and closures, declines in
global financial markets, higher default rates, and a substantial economic downturn in economies throughout the world. Natural and environmental disasters and systemic market dislocations are also highly disruptive to
economies and markets. Those events as well as other changes in non-U.S. and domestic economic, social, and political conditions also could adversely affect individual issuers or related groups of issuers, securities
markets, interest rates, credit ratings, inflation, investor sentiment, and other factors affecting the value of the investments of the Fund and the Fund. Any of these occurrences could disrupt the operations of the
Fund and of the Fund’s service providers.
Non-U.S. and Non-Canadian
Issuers: Investment in foreign borrowers involves special risks, including that foreign borrowers may be subject to: less rigorous regulatory,
accounting, and reporting requirements than U.S. borrowers; differing legal systems and laws relating to creditors’ rights; the potential inability to enforce legal judgments; economic adversity that would
result if the value of the borrower’s non-U.S. dollar denominated revenues and assets were to fall because of fluctuations in currency values; and the potential for political, social, and economic adversity in
the foreign borrower’s country.
Other Investment
Companies: The main risk of investing in other investment companies, including exchange-traded funds (“ETFs”), is the risk that the value of
the securities underlying an investment company might decrease. Shares of investment companies that are listed on an exchange may trade at a discount or premium from their net asset value. You will pay a proportionate
share of the expenses of those other investment companies (including management fees, administration fees, and custodial fees) in addition to the expenses of the Fund. The investment policies of the other investment
companies may not be the same as those of the Fund; as a result, an investment in the other investment companies may be subject to additional or different risks than those to which the Fund is typically
subject.
Temporary Defensive
Positions: When market conditions make it advisable, the Fund may hold a portion of its assets in cash and short-term interest bearing instruments.
Moreover, in periods when, in the opinion of the manager, a temporary defensive
4
Voya Senior Income Fund
position is appropriate, up to 100% of the
Fund’s assets may be held in cash, short-term interest bearing instruments and/or any other securities the manager considers consistent with a temporary defensive position. The Fund may not achieve its
investment objective when pursuing a temporary defensive position.
Valuation of Loans: The Fund values its assets daily. However, because the secondary market for floating rate loans is limited, it may be difficult to value loans,
exposing the Fund to the risk that the price at which it sells loans will be less than the price at which they were valued when held by the Fund. Reliable market value quotations may not be readily available for some
loans and determining the fair valuation of such loans may require more research than for securities that trade in a more active secondary market. In addition, elements of judgment may play a greater role in the
valuation of loans than for more securities that trade in a more developed secondary market because there is less reliable, objective market value data available. If the Fund purchases a relatively large portion of a
loan, the limitations of the secondary market may inhibit the Fund from selling a portion of the loan and reducing its exposure to a borrower when the manager deems it advisable to do so. Even if the Fund itself does
not own a relatively large portion of a particular loan, the Fund, in combination with other similar accounts under management by the same portfolio managers, may own large portions of loans. The aggregate amount of
holdings could create similar risks if and when the portfolio managers decide to sell those loans. These risks could include, for example, the risk that the sale of an initial portion of the loan could be at a price
lower than the price at which the loan was valued by the Fund, the risk that the initial sale could adversely impact the price at which additional portions of the loan are sold, and the risk that the foregoing events
could warrant a reduced valuation being assigned to the remaining portion of the loan still owned by the Fund.
Voya Senior Income Fund
5
WHAT YOU PAY TO INVEST - FUND
EXPENSES
The cost you pay to invest in the Fund varies
depending upon which class of Common Shares you purchase. In accordance with SEC requirements, the table below shows the expenses of the Fund, including interest expense on borrowings, as a percentage of the average
net assets of the Fund and not as a percentage of gross assets or Managed Assets. By showing expenses as a percentage of the average net assets, expenses are not expressed as a percentage of all of the assets that are
invested for the Fund. The table below assumes that the Fund has borrowed an amount equal to 25% of its Managed Assets. For information about the Fund’s expense ratios if the Fund had not borrowed, see
“Risk Factors and Special Considerations - Annual Expenses Without Borrowings.” Investors investing in the Fund through an intermediary should consult the Appendix to this Prospectus, which includes
information regarding financial intermediary specific sales charges and related discount policies that apply to purchases through certain specified intermediaries.
Fees and Expenses of the Fund
Class
| Class A
| Class C
| Class I
| Class T
| Class W
|
Shareholder Transaction Expenses
|
|
|
|
|
Maximum sales charge on your investment (as a percentage of offering price)1
| 2.50%2
| None
| None
| 2.50%2
| None
|
Dividend Reinvestment and Cash Purchase Plan Fees
| None
| None
| None
| None
| None
|
Early Withdrawal Charge
| None3
| 1.00%3
| None
| None
| None
|
Exchange Fee
| None
| None
| None
| None
| None
|
Annual Expenses (as a percentage of average net assets attributable to Common Shares)
|
|
|
|
|
Management Fees4
| 1.20%
| 1.20%
| 1.20%
| 1.20%
| 1.20%
|
Service Fee
| 0.25%
| 0.25%
| None
| 0.25%
| None
|
Distribution Fee5
| None
| 0.50%
| None
| None
| None
|
Interest Expense on Borrowed Funds
| [%]
| [%]
| [%]
| [%]
| [%]
|
Other Operating Expenses6
| [%]
| [%]
| [%]
| [%]
| [%]
|
Total Annual Expenses
| [%]
| [%]
| [%]
| [%]
| [%]
|
Fee Waivers/Reimbursements/Recoupment7
| [%]
| [%]
| [%]
| [%]
| [%]
|
Net Annual Expenses8
| [%]
| [%]
| [%]
| [%]
| [%]
|
1
| The Distributor will pay a dealer reallowance for Class A and Class T Common Shares from the sales charge. The Distributor will pay a sales commission for Class C Common Shares to authorized dealers from its own
assets.
|
2
| Reduced for purchases of $100,000 and over for Class A Common Shares and $250,000 and over for Class T Common Shares, please see “Sales Charges.”
|
3
| There is no front-end sales charge if you purchase Class A Common Shares in the amount of $500,000 or more. [Effective June 30, 2020, Class A Common Shares purchased in an amount of $500,000 or more are subject to a
1.00% EWC if repurchased by the Fund within [12 months] of purchase.] Class C Common Shares repurchased by the Fund within the first year after purchase will incur a 1.00% EWC. See “Sales Charges - Early
Withdrawal Charge.” No EWC will be charged on redemptions that are due to the closing of shareholder accounts having a value of less than $1,000.
|
4
| Pursuant to the investment management agreement with the Fund, the Adviser is paid a fee of 0.90% of the Fund's Managed Assets. For the description of “Managed Assets,” please see “Description of
the Fund – Adviser/Sub-Adviser” earlier in this Prospectus.
|
5
| Because the distribution fees payable by Class C Common Shares may be considered an asset-based sales charge, long-term shareholders in that class of the Fund may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the Financial Industry Regulatory Authority.
|
6
| Other Operating Expenses are estimated amounts for the current fiscal year.
|
7
| The Adviser is contractually obligated to limit expenses of the Fund through [July 1, 2021] to the following: Class A Common Shares - 0.90% of Managed Assets plus 0.45% of average daily net assets; Class C Common
Shares - 0.90% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets; Class T Common Shares – 0.90% of Managed Assets
plus 0.45% of average daily net assets; and Class W Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets. The limitation does not extend to interest, taxes, investment-related costs, leverage
expenses, extraordinary expenses, and Acquired Fund Fees and Expenses. The obligation is subject to possible recoupment by the adviser within 36 months of the waiver or reimbursement. Termination or modification of
this obligation requires approval by the Fund’s Board.
|
8
| If the expenses of the Fund are calculated on the Managed Assets of the Fund (assuming that the Fund has used leverage by borrowing an amount equal to 25% of the Fund’s Managed
Assets), the Net Annual Expenses for the Fund would be lower than the expenses shown in the table. Such lower Net Annual Expense ratios would be as follows: [2.04%, 2.42%, 1.86%, 2.04%, and 1.86%] for Class A, Class
C, Class I, Class T, and Class W shares, respectively.
|
WHAT YOU PAY TO INVEST - FUND
EXPENSES (continued)
Examples
The following Examples show the amount of the
expenses that an investor in the Fund would bear on a $1,000 investment in the Fund that is held for the different time periods in the table. In the first table, it is assumed that the $1,000 remains invested over the
entire 10-year period. As a result, no EWCs are included in the listed expense amounts. The second table assumes that the $1,000 investment is tendered and repurchased at the end of each period shown. As a result,
EWCs are imposed on certain of those repurchases.
The Examples assume that all
dividends and other distributions are reinvested at NAV and that the percentage amounts listed under Net Annual Expenses in the previous table remain the same in the years shown (except that the Fee
Waivers/Reimbursements only apply for the first year). The tables and the assumption in the Examples of a 5% annual return are required by regulations of the SEC applicable to all investment companies. The assumed 5%
annual return is not a prediction of, and does not represent, the projected or actual performance of the Fund's Common Shares. For more complete descriptions of certain of the Fund's costs and expenses, see
“Classes of Shares,” “Sales Charges,” and “Investment Management and Other Service Providers.”
Example #1—No Repurchases
|
|
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return and borrowings by the Fund in an amount equal to 25% of its
Managed Assets.
|
Class A Common Shares
|
| $
|
|
|
|
|
Class C Common Shares
|
| $
|
|
|
|
|
Class I Common Shares
|
| $
|
|
|
|
|
Class T Common Shares
|
| $
|
|
|
|
|
Class W Common Shares
|
| $
|
|
|
|
|
Example #2—With Repurchases at Period End
|
| 1 Year
| 3 Years
| 5 Years
| 10 Years
|
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return, borrowings by the Fund in an amount equal to 25% of its Managed
Assets, and the tender and repurchase of the entire investment at the end of each period shown.
|
Class A Common Shares
| $
|
|
|
|
|
Class C Common Shares
| $
|
|
|
|
|
Class I Common Shares
| $
|
|
|
|
|
Class T Common Shares
| $
|
|
|
|
|
Class W Common Shares
| $
|
|
|
|
|
The purpose of each table is to
assist you in understanding the various costs and expenses that an investor in the Fund will bear directly or indirectly. See “Classes of Shares - Choosing a Share Class.”
The foregoing Examples should not be
considered a representation of future expenses and actual expenses may be greater or less than those shown.
The financial
highlights table is intended to help you understand the Fund's financial performance for the periods shown. Certain information reflects the financial results for a single share. The total returns in the table
represent the rate of return that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and/or distributions). The information for the fiscal year ended February
29, 2020, has been audited by [ ], whose report, along with the Fund’s financial statements, is included in the Fund’s Annual Report, which is available upon request. The information for the prior fiscal
years or periods was audited by a different independent public accounting firm.
Because Class T shares of the
Fund had not commenced operations as of the fiscal year ended February 29, 2020, such share class financial highlights are not presented; however, financial highlights for Class A shares are presented for the Fund.
Annual returns would differ only to the extent that Class T shares and Class A shares have different fees and expenses.
FINANCIAL HIGHLIGHTS (continued)
Selected data for a share of
beneficial interest outstanding throughout each year or period.
|
|
| Per Share Operating Performance
|
|
|
|
|
| Ratios to average
net assets after
reimbursement/
recoupment
|
| Ratios to average
net assets before
reimbursement/
recoupment
|
| Supplemental data
|
| Net asset value,
beginning of year
or period
|
| Net investment
income (loss)
|
| Net realized and
unrealized
gain (loss)
|
| Total from investment
operations
|
| Distributions from net
investment income
|
| Distributions from net
realized gains on
investments
|
| Distributions from return
of capital
|
| Total distributions
|
| Net asset value,
end of year or period
|
| Total Investment
Return(1)
|
| Expenses (before interest
and other fees related to
revolving credit facility)(2)
|
| Expenses (with interest
and other fees related to
revolving credit facility)(2)
|
| Net investment
income (loss)(2)
|
| Expenses (before interest
and other fees related to
revolving credit facility)
|
| Expenses (with interest
and other fees related to
revolving credit facility)
|
| Net investment
income (loss)
|
| Net assets,
end of year or period
|
| Portfolio Turnover
|
| Borrowings at end
of year or period
|
| Asset coverage per $1,000 of debt
|
| Average borrowings(3)
|
| Shares outstanding
at end of year
or period
|
Year or period ended
| ($)
|
| ($)
|
| ($)
|
| ($)
|
| ($)
|
| ($)
|
| ($)
|
| ($)
|
| ($)
|
| (%)
|
| (%)
|
| (%)
|
| (%)
|
| (%)
|
| (%)
|
| (%)
|
| ($000's)
|
| (%)
|
| ($000's)
|
| ($)
|
| ($000's)
|
| (000's)
|
Class A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02-29-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02-28-19
| 12.61
|
| 0.64
|
| (0.38)
|
| 0.26
|
| (0.68)
|
| —
|
| —
|
| (0.68)
|
| 12.19
|
| 2.14
|
| 1.72
|
| 3.03
|
| 5.21
|
| 1.80
|
| 3.11
|
| 5.14
|
| 122,868
|
| 60
|
| 118,500
|
| 3,650
|
| 149,594
|
| 10,082
|
02-28-18
| 12.85
|
| 0.57*
|
| (0.17)
|
| 0.40
|
| (0.50)
|
| —
|
| (0.14)
|
| (0.64)
|
| 12.61
|
| 3.22
|
| 1.69
|
| 2.55
|
| 4.50
|
| 1.73
|
| 2.59
|
| 4.46
|
| 164,285
|
| 88
|
| 169,300
|
| 3,370
|
| 173,235
|
| 13,026
|
02-28-17
| 11.85
|
| 0.67
|
| 1.02
|
| 1.69
|
| (0.69)
|
| —
|
| —
|
| (0.69)
|
| 12.85
|
| 14.56
|
| 1.63
|
| 2.12
|
| 5.34
|
| 1.68
|
| 2.17
|
| 5.28
|
| 207,989
|
| 69
|
| 154,800
|
| 4,200
|
| 149,897
|
| 16,188
|
02-29-16
| 13.15
|
| 0.70
|
| (1.30)
|
| (0.60)
|
| (0.70)
|
| —
|
| —
|
| (0.70)
|
| 11.85
|
| (4.77)
|
| 1.65
|
| 2.07
|
| 5.48
|
| 1.75
|
| 2.17
|
| 5.38
|
| 196,812
|
| 44
|
| 160,900
|
| 3,970
|
| 188,201
|
| 16,602
|
02-28-15
| 13.50
|
| 0.65*
|
| (0.28)
|
| 0.37
|
| (0.72)
|
| —
|
| —
|
| (0.72)
|
| 13.15
|
| 2.81
|
| 1.66
|
| 2.09
|
| 4.90
|
| 1.69
|
| 2.12
|
| 4.87
|
| 264,305
|
| 63
|
| 224,500
|
| 3,870
|
| 276,481
|
| 20,093
|
02-28-14
| 13.34
|
| 0.70*
|
| 0.26
|
| 0.96
|
| (0.72)
|
| —
|
| (0.08)
|
| (0.80)
|
| 13.50
|
| 7.44
|
| 1.61
|
| 1.98
|
| 5.23
|
| 1.59
|
| 1.95
|
| 5.25
|
| 403,027
|
| 76
|
| 293,500
|
| 4,090
|
| 228,860
|
| 29,859
|
02-28-13
| 12.76
|
| 0.95
|
| 0.60
|
| 1.55
|
| (0.97)
|
| —
|
| —
|
| (0.97)
|
| 13.34
|
| 12.56
|
| 1.66
|
| 2.14
|
| 7.23
|
| 1.68
|
| 2.16
|
| 7.21
|
| 234,056
|
| 94
|
| 169,000
|
| 4,470
|
| 191,959
|
| 17,541
|
02-29-12
| 13.40
|
| 0.75
|
| (0.75)
|
| (0.00)•
|
| (0.64)
|
| —
|
| —
|
| (0.64)
|
| 12.76
|
| 0.13
|
| 1.63
|
| 2.09
|
| 5.54
|
| 1.66
|
| 2.13
|
| 5.51
|
| 237,853
|
| 68
|
| 202,000
|
| 3,810
|
| 208,126
|
| 18,644
|
02-28-11
| 12.60
|
| 0.52
|
| 0.89
|
| 1.41
|
| (0.57)
|
| —
|
| (0.04)
|
| (0.61)
|
| 13.40
|
| 11.52
|
| 1.52
|
| 1.93
|
| 4.27
|
| 1.51
|
| 1.92
|
| 4.28
|
| 400,327
|
| 64
|
| 183,000
|
| 5,430
|
| 158,805
|
| 29,876
|
Class C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02-29-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02-28-19
| 12.59
|
| 0.58
|
| (0.39)
|
| 0.19
|
| (0.62)
|
| —
|
| —
|
| (0.62)
|
| 12.16
|
| 1.56
|
| 2.22
|
| 3.53
|
| 4.72
|
| 2.30
|
| 3.61
|
| 4.64
|
| 145,198
|
| 60
|
| 118,500
|
| 3,650
|
| 149,594
|
| 11,940
|
02-28-18
| 12.82
|
| 0.50
|
| (0.15)
|
| 0.35
|
| (0.44)
|
| —
|
| (0.14)
|
| (0.58)
|
| 12.59
|
| 2.79
|
| 2.19
|
| 3.05
|
| 4.00
|
| 2.23
|
| 3.09
|
| 3.96
|
| 175,929
|
| 88
|
| 169,300
|
| 3,370
|
| 173,235
|
| 13,977
|
02-28-17
| 11.83
|
| 0.61
|
| 1.01
|
| 1.62
|
| (0.63)
|
| —
|
| —
|
| (0.63)
|
| 12.82
|
| 13.93
|
| 2.13
|
| 2.62
|
| 4.84
|
| 2.18
|
| 2.67
|
| 4.79
|
| 214,361
|
| 69
|
| 154,800
|
| 4,200
|
| 149,897
|
| 16,715
|
02-29-16
| 13.13
|
| 0.63
|
| (1.29)
|
| (0.66)
|
| (0.64)
|
| —
|
| —
|
| (0.64)
|
| 11.83
|
| (5.27)
|
| 2.15
|
| 2.57
|
| 4.98
|
| 2.25
|
| 2.67
|
| 4.88
|
| 220,899
|
| 44
|
| 160,900
|
| 3,970
|
| 188,201
|
| 18,667
|
02-28-15
| 13.47
|
| 0.59*
|
| (0.28)
|
| 0.31
|
| (0.65)
|
| —
|
| —
|
| (0.65)
|
| 13.13
|
| 2.38
|
| 2.16
|
| 2.59
|
| 4.42
|
| 2.19
|
| 2.62
|
| 4.39
|
| 294,011
|
| 63
|
| 224,500
|
| 3,870
|
| 276,481
|
| 22,392
|
02-28-14
| 13.32
|
| 0.64*
|
| 0.25
|
| 0.89
|
| (0.66)
|
| —
|
| (0.08)
|
| (0.74)
|
| 13.47
|
| 6.85
|
| 2.10
|
| 2.47
|
| 4.78
|
| 2.08
|
| 2.44
|
| 4.81
|
| 345,801
|
| 76
|
| 293,500
|
| 4,090
|
| 228,860
|
| 25,664
|
02-28-13
| 12.74
|
| 0.88
|
| 0.61
|
| 1.49
|
| (0.91)
|
| —
|
| —
|
| (0.91)
|
| 13.32
|
| 12.05
|
| 2.14
|
| 2.62
|
| 6.75
|
| 2.16
|
| 2.64
|
| 6.73
|
| 265,812
|
| 94
|
| 169,000
|
| 4,470
|
| 191,959
|
| 19,949
|
02-29-12
| 13.38
|
| 0.68
|
| (0.74)
|
| (0.06)
|
| (0.58)
|
| —
|
| —
|
| (0.58)
|
| 12.74
|
| (0.38)
|
| 2.13
|
| 2.59
|
| 5.11
|
| 2.16
|
| 2.63
|
| 5.08
|
| 273,361
|
| 68
|
| 202,000
|
| 3,810
|
| 208,126
|
| 21,454
|
02-28-11
| 12.58
|
| 0.48
|
| 0.87
|
| 1.35
|
| (0.51)
|
| —
|
| (0.04)
|
| (0.55)
|
| 13.38
|
| 10.99
|
| 2.02
|
| 2.43
|
| 3.78
|
| 2.01
|
| 2.42
|
| 3.79
|
| 354,965
|
| 64
|
| 183,000
|
| 5,430
|
| 158,805
|
| 26,522
|
Class I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02-29-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02-28-19
| 12.57
|
| 0.68
|
| (0.39)
|
| 0.29
|
| (0.71)
|
| —
|
| —
|
| (0.71)
|
| 12.15
|
| 2.41
|
| 1.47
|
| 2.78
|
| 5.47
|
| 1.53
|
| 2.84
|
| 5.42
|
| 29,733
|
| 60
|
| 118,500
|
| 3,650
|
| 149,594
|
| 2,448
|
02-28-18
| 12.81
|
| 0.60*
|
| (0.17)
|
| 0.43
|
| (0.53)
|
| —
|
| (0.14)
|
| (0.67)
|
| 12.57
|
| 3.49
|
| 1.44
|
| 2.30
|
| 4.74
|
| 1.45
|
| 2.31
|
| 4.73
|
| 34,324
|
| 88
|
| 169,300
|
| 3,370
|
| 173,235
|
| 2,730
|
02-28-17
| 11.82
|
| 0.69
|
| 1.03
|
| 1.72
|
| (0.73)
|
| —
|
| —
|
| (0.73)
|
| 12.81
|
| 14.79
|
| 1.38
|
| 1.87
|
| 5.57
|
| 1.41
|
| 1.90
|
| 5.55
|
| 46,319
|
| 69
|
| 154,800
|
| 4,200
|
| 149,897
|
| 3,615
|
02-29-16
| 13.12
|
| 0.72
|
| (1.29)
|
| (0.57)
|
| (0.73)
|
| —
|
| —
|
| (0.73)
|
| 11.82
|
| (4.54)
|
| 1.40
|
| 1.82
|
| 5.71
|
| 1.48
|
| 1.90
|
| 5.63
|
| 33,210
|
| 44
|
| 160,900
|
| 3,970
|
| 188,201
|
| 2,809
|
02-28-15
| 13.47
|
| 0.68*
|
| (0.28)
|
| 0.40
|
| (0.75)
|
| —
|
| —
|
| (0.75)
|
| 13.12
|
| 3.09
|
| 1.41
|
| 1.84
|
| 5.14
|
| 1.41
|
| 1.84
|
| 5.14
|
| 53,877
|
| 63
|
| 224,500
|
| 3,870
|
| 276,481
|
| 4,106
|
02-28-14
| 13.31
|
| 0.73*
|
| 0.27
|
| 1.00
|
| (0.76)
|
| —
|
| (0.08)
|
| (0.84)
|
| 13.47
|
| 7.76
|
| 1.33
|
| 1.70
|
| 5.43
|
| 1.30
|
| 1.67
|
| 5.46
|
| 109,180
|
| 76
|
| 293,500
|
| 4,090
|
| 228,860
|
| 8,106
|
02-28-13
| 12.73
|
| 0.99
|
| 0.59
|
| 1.58
|
| (1.00)
|
| —
|
| —
|
| (1.00)
|
| 13.31
|
| 12.87
|
| 1.41
|
| 1.89
|
| 7.50
|
| 1.43
|
| 1.91
|
| 7.48
|
| 36,900
|
| 94
|
| 169,000
|
| 4,470
|
| 191,959
|
| 2,772
|
02-29-12
| 13.37
|
| 0.71
|
| (0.68)
|
| 0.03
|
| (0.67)
|
| —
|
| —
|
| (0.67)
|
| 12.73
|
| 0.38
|
| 1.38
|
| 1.84
|
| 6.19
|
| 1.41
|
| 1.88
|
| 6.16
|
| 27,051
|
| 68
|
| 202,000
|
| 3,810
|
| 208,126
|
| 2,126
|
02-28-11
| 12.54
|
| 0.63
|
| 0.84
|
| 1.47
|
| (0.60)
|
| —
|
| (0.04)
|
| (0.64)
|
| 13.37
|
| 12.05
|
| 1.27
|
| 1.68
|
| 4.71
|
| 1.26
|
| 1.67
|
| 4.72
|
| 3,977
|
| 64
|
| 183,000
|
| 5,430
|
| 158,805
|
| 297
|
FINANCIAL HIGHLIGHTS (continued)
|
|
| Per Share Operating Performance
|
|
|
|
|
| Ratios to average
net assets after
reimbursement/
recoupment
|
| Ratios to average
net assets before
reimbursement/
recoupment
|
| Supplemental data
|
| Net asset value,
beginning of year
or period
|
| Net investment
income (loss)
|
| Net realized and
unrealized
gain (loss)
|
| Total from investment
operations
|
| Distributions from net
investment income
|
| Distributions from net
realized gains on
investments
|
| Distributions from return
of capital
|
| Total distributions
|
| Net asset value,
end of year or period
|
| Total Investment
Return(1)
|
| Expenses (before interest
and other fees related to
revolving credit facility)(2)
|
| Expenses (with interest
and other fees related to
revolving credit facility)(2)
|
| Net investment
income (loss)(2)
|
| Expenses (before interest
and other fees related to
revolving credit facility)
|
| Expenses (with interest
and other fees related to
revolving credit facility)
|
| Net investment
income (loss)
|
| Net assets,
end of year or period
|
| Portfolio Turnover
|
| Borrowings at end
of year or period
|
| Asset coverage per $1,000 of debt
|
| Average borrowings(3)
|
| Shares outstanding
at end of year
or period
|
Class W
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02-29-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02-28-19
| 12.62
|
| 0.67
|
| (0.38)
|
| 0.29
|
| (0.71)
|
| —
|
| —
|
| (0.71)
|
| 12.20
|
| 2.40
|
| 1.47
|
| 2.78
|
| 5.44
|
| 1.55
|
| 2.86
|
| 5.36
|
| 16,250
|
| 60
|
| 118,500
|
| 3,650
|
| 149,594
|
| 1,332
|
02-28-18
| 12.86
|
| 0.60
|
| (0.17)
|
| 0.43
|
| (0.53)
|
| —
|
| (0.14)
|
| (0.67)
|
| 12.62
|
| 3.47
|
| 1.44
|
| 2.30
|
| 4.76
|
| 1.48
|
| 2.34
|
| 4.72
|
| 27,431
|
| 88
|
| 169,300
|
| 3,370
|
| 173,235
|
| 2,173
|
02-28-17
| 11.86
|
| 0.70*
|
| 1.03
|
| 1.73
|
| (0.73)
|
| —
|
| —
|
| (0.73)
|
| 12.86
|
| 14.83
|
| 1.38
|
| 1.87
|
| 5.59
|
| 1.43
|
| 1.92
|
| 5.54
|
| 27,161
|
| 69
|
| 154,800
|
| 4,200
|
| 149,897
|
| 2,113
|
02-29-16
| 13.16
|
| 0.73
|
| (1.30)
|
| (0.57)
|
| (0.73)
|
| —
|
| —
|
| (0.73)
|
| 11.86
|
| (4.52)
|
| 1.40
|
| 1.82
|
| 5.73
|
| 1.50
|
| 1.92
|
| 5.63
|
| 26,306
|
| 44
|
| 160,900
|
| 3,970
|
| 188,201
|
| 2,218
|
02-28-15
| 13.51
|
| 0.69*
|
| (0.29)
|
| 0.40
|
| (0.75)
|
| —
|
| —
|
| (0.75)
|
| 13.16
|
| 3.08
|
| 1.41
|
| 1.84
|
| 5.15
|
| 1.44
|
| 1.87
|
| 5.12
|
| 31,608
|
| 63
|
| 224,500
|
| 3,870
|
| 276,481
|
| 2,401
|
02-28-14
| 13.36
|
| 0.74*
|
| 0.25
|
| 0.99
|
| (0.76)
|
| —
|
| (0.08)
|
| (0.84)
|
| 13.51
|
| 7.65
|
| 1.36
|
| 1.73
|
| 5.51
|
| 1.34
|
| 1.70
|
| 5.54
|
| 48,587
|
| 76
|
| 293,500
|
| 4,090
|
| 228,860
|
| 3,597
|
02-28-13
| 12.76
|
| 0.98
|
| 0.62
|
| 1.60
|
| (1.00)
|
| —
|
| —
|
| (1.00)
|
| 13.36
|
| 13.00
|
| 1.41
|
| 1.89
|
| 7.40
|
| 1.43
|
| 1.91
|
| 7.38
|
| 49,149
|
| 94
|
| 169,000
|
| 4,470
|
| 191,959
|
| 3,678
|
02-29-12
| 13.40
|
| 0.78
|
| (0.75)
|
| 0.03
|
| (0.67)
|
| —
|
| —
|
| (0.67)
|
| 12.76
|
| 0.38
|
| 1.38
|
| 1.84
|
| 5.82
|
| 1.41
|
| 1.88
|
| 5.79
|
| 19,186
|
| 68
|
| 202,000
|
| 3,810
|
| 208,126
|
| 1,503
|
02-28-11
| 12.60
|
| 0.57
|
| 0.87
|
| 1.44
|
| (0.60)
|
| —
|
| (0.04)
|
| (0.64)
|
| 13.40
|
| 11.75
|
| 1.27
|
| 1.68
|
| 4.52
|
| 1.26
|
| 1.67
|
| 4.53
|
| 26,353
|
| 64
|
| 183,000
|
| 5,430
|
| 158,805
|
| 1,966
|
(1)
| Total investment return has been calculated assuming a purchase at the beginning of each period and a sale at the end of each period and assumes reinvestment of dividends, capital gain distributions, and return of
capital distributions/allocations, if any, on the dividend/distribution date. Total investment return does not include sales load.
|
(2)
| The Adviser has agreed to limit expenses excluding interest, taxes, brokerage commissions, leverage expenses, other investment related costs and extraordinary expenses, subject to
possible recoupment by the Adviser within three years to the following: Class A - 0.90% of Managed Assets plus 0.45% of average daily net assets; Class C - 0.90% of Managed Assets plus 0.95% of average daily net
|
| assets; Class I - 0.90% of Managed Assets plus 0.20% of average daily net assets; and Class W - 0.90% of Managed Assets plus 0.20% of average daily net assets.
|
(3)
| Based on the active days of borrowing.
|
(4)
| Includes excise tax fully reimbursed by the Adviser.
|
*
| Calculated using average amount of shares outstanding throughout the period.
|
•
| Amount is less than $0.005 or more than $(0.005).
|
INVESTMENT OBJECTIVE AND
POLICIES
Investment Objective
The Fund's investment objective is to provide
investors with a high level of monthly income. The investment objective is fundamental and may not be changed without a majority vote of the shareholders of the Fund. See “Description of the Fund –
Fundamental and Non-Fundamental Investment Policies of the Fund” later in this Prospectus. The Fund seeks to achieve this investment objective by investing in the types of assets described below:
1.
| Senior Loans. Under normal market conditions, at least 80% of the Fund's net assets (plus borrowings for investment purposes) will be invested in Senior Loans. This investment policy may be changed
without shareholder approval so long as the Fund provides its shareholders with at least 60 days' prior notice of any changes in this investment policy. Under normal market conditions, the Fund invests at least 80% of
its assets in Senior Loans made to corporations or other business entities organized under U.S. or Canadian law and that are domiciled in the United States and in U.S. territories and possessions or Canada.
|
| The Senior Loans in which the Fund invests either hold the most senior position in the capital structure of the borrower, hold an equal ranking with other senior debt, or have characteristics (such as a senior
position secured by liens on a borrower's assets) that the Adviser or Sub-Adviser believes justify treatment as senior debt. These Senior Loans are typically rated below investment-grade credit quality. Investments
rated below investment-grade (or of similar quality if unrated) are commonly known as high-yielding, high risk investments or as “junk” investments.
|
| The Fund typically makes its investments in Senior Loans by purchasing a portion of the overall loan, i.e., the Fund becomes one of a number of lenders investing in the loan. The Fund may also make its investments in Senior Loans through the use of derivative instruments such as
participations, credit-linked notes, credit default swaps, and total return swaps as long as the reference obligation for any such instrument is a Senior Loan. Investments through the use of such derivative
instruments involve counterparty risk, i.e., the risk that the party from which such instrument is purchased will not perform as agreed. The Fund seeks to minimize such counterparty risk by purchasing such investments only
from large, well established and highly rated counterparties.
|
2.
| Other Investments. Under normal market conditions, the Fund may invest up to 20% of its total assets, measured at the time of investment, in a combination of one or more of the following types of investments
(“Other Investments”):
|
•
| loans to borrowers organized or located in countries outside the United States and outside U.S. territories and possessions or Canada;
|
•
| unsecured floating rate loans, notes, and other debt instruments;
|
•
| floating rate subordinated loans;
|
•
| tranches of floating rate asset-backed securities, including structured notes;
|
•
| corporate debt securities;
|
•
| subject to 1940 Act limitations, other investment companies such as money market funds;
|
•
| executing repurchase and reverse repurchase agreements; and
|
•
| equity securities incidental to investments in loans.
|
3.
| Cash and Short-Term Instruments. Under normal market conditions, the Fund may invest up to 10% of its total assets in cash and/or short-term instruments. During periods when, in the opinion of the Adviser or Sub-Adviser,
a temporary defensive posture in the market is appropriate, the Fund may hold up to 100% of its assets in cash and/or short-term instruments.
|
4.
| Other Investment Strategies. The Fund may lend its portfolio securities, on a short-term or long-term basis, in an amount up to 33 1⁄3% of its total assets.
|
Fundamental Policies
1.
| Industry Concentration. The Fund may invest in any industry. The Fund may not invest more than 25% of its total assets, measured at the time of investment, in any single industry.
|
2.
| Borrower Diversification. The Fund is diversified, as such term is defined in the 1940 Act. A diversified fund may not, as to 75% of its total assets, invest more than 5% of its total assets in any one issuer and
may not purchase more than 10% of the outstanding voting securities of any one issuer (other than securities issues or guaranteed
|
INVESTMENT OBJECTIVE AND
POLICIES (continued)
| by the U.S. government or any of its agencies or instrumentalities, or other investment companies). The Fund will consider the borrower on a loan, including a loan participation, to be the issuer of such loan. With
respect to no more than 25% of its total assets, the Fund may make investments that are not subject to the foregoing restrictions.
|
These fundamental policies may only
be changed with approval by a majority of all shareholders. See “Description of the Fund – Fundamental and Non-Fundamental Investment Policies of the Fund” later in this Prospectus.
Investment Policies
The Adviser and Sub-Adviser follow certain
investment policies set by the Fund's Board. Some of those policies are set forth below. Please refer to the SAI for additional information on these and other investment policies.
1.
| Limitations on currencies. The Fund's investments must be denominated in U.S. dollars, provided that the Fund may invest up to 15% of its total assets in investments denominated in the OECD currencies (including the
euro), other than the U.S. dollar. The Fund will engage in currency exchange transactions to seek to hedge, as closely as practicable, 100% of the economic impact to the Fund arising from foreign currency
fluctuations.
|
2.
| Maturity. Although the Fund has no restrictions on portfolio maturity, under normal market conditions, at least 80% of the Fund's total assets will be invested in assets with remaining maturities of
ten years or less.
|
3.
| Limitations on Other Investments. The Fund may also invest up to 20% of its total assets, measured at the time of investment, in Other Investments. The following additional limitations apply to Other Investments:
|
•
| Unsecured Debt Instruments. The Fund may not invest in unsecured floating rate loans, notes, and other debt instruments, in an aggregate amount that exceeds 20% of the Fund's total assets, measured at the time of
investment.
|
•
| Equities. The Fund may acquire equity securities only as an incident to the purchase or ownership of a loan or in connection with a reorganization of a borrower or its debt.
|
•
| Subordinated Loans. The Fund may not invest in floating rate subordinated loans, whether or not secured, in an aggregated amount that exceeds 5% of its total assets, measured at the time of investment.
|
•
| Corporate Debt Securities. The Fund may not invest in corporate debt securities in an aggregate amount that exceeds 10% of the Fund’s total assets, measured at the time of investment.
|
•
| Other Investment Companies. The Fund may invest in securities of other investment companies to the extent permitted by the 1940 Act, calculated at the time of purchase.
|
4.
| Investment Quality; Credit Analysis. Loans in which the Fund invests generally are rated below investment-grade credit quality or are unrated. In acquiring a loan, the Adviser or Sub-Adviser will consider some or all of the
following factors concerning the borrower: ability to service debt from internally generated funds; adequacy of liquidity and working capital; appropriateness of capital structure; leverage consistent with industry
norms; historical experience of achieving business and financial projections; the quality and experience of management; and adequacy of collateral coverage. The Adviser or Sub-Adviser performs its own independent
credit analysis of each borrower. In so doing, the Adviser or Sub-Adviser may utilize information and credit analyses from agents that originate or administer loans, other lenders investing in a loan, and other
sources. The Adviser or Sub-Adviser also may communicate directly with management of the borrowers. These analyses continue on a periodic basis for any Senior Loan held by the Fund. See “Risk Factors and Special
Considerations - Credit for Loans.”
|
5.
| Use of Leverage. The Fund may borrow money and issue Preferred Shares to the fullest extent permitted by the 1940 Act. See “Investment Objective and Policies - Policy on Borrowing” and
“Investment Objective and Policies - Policy on Issuance of Preferred Shares.”
|
Policy on Borrowing
The Fund has a policy of borrowing for
investment purposes. The Fund seeks to use proceeds from borrowing to acquire loans and other investments which pay interest at a rate higher than the rate the Fund pays on borrowings. Accordingly, borrowing has the
potential to increase the Fund's total income available to holders of its Common Shares. The Fund may also borrow to finance the repurchase of its Common Shares or to meet cash requirements.
The Fund may issue notes,
commercial paper, or other evidences of indebtedness and may be required to secure repayment by mortgaging, pledging, or otherwise granting a security interest in the Fund's assets. The terms of any such borrowings
will be subject to the provisions of the 1940 Act and they will also be subject to the more restrictive
INVESTMENT OBJECTIVE AND
POLICIES (continued)
terms of any credit agreements relating to
borrowings and, to the extent the Fund seeks a rating for borrowings, to additional guidelines imposed by rating agencies, which are expected to be more restrictive than the provisions of the 1940 Act. The Fund is
permitted to borrow an amount up to 33 1⁄3%, or such other percentage permitted by law, of its total assets (including the amount borrowed) less all liabilities other than borrowings. See “Risk Factors and
Special Considerations - Leverage” and “Risk Factors and Special Considerations - Restrictive Covenants and 1940 Act Restrictions.”
Policy on Issuance of Preferred
Shares
The Fund has a
policy which permits it to issue Preferred Shares for investment purposes. The Fund seeks to use the proceeds from Preferred Shares to acquire loans and other investments which pay interest at a rate higher than the
dividends payable on Preferred Shares. The terms of the issuance of Preferred Shares are subject to the 1940 Act and to additional guidelines imposed by rating agencies, which are more restrictive than the provisions
of the 1940 Act. Under the 1940 Act, the Fund may issue Preferred Shares so long as immediately after any issuance of Preferred Shares the value of the Fund's total assets (less all Fund liabilities and indebtedness
that is not senior indebtedness) is at least twice the amount of the Fund's senior indebtedness plus the involuntary liquidation preference of all outstanding Preferred Shares. See “Risk Factors and Special
Considerations - Leverage.” As of June 5, 2020 the Fund had [no] Preferred Shares outstanding.
As stated under “Investment Objective and
Policies,” the Fund will invest primarily in Senior Loans. This section contains a discussion of the characteristics of Senior Loans and the manner in which those investments are made.
Senior Loan Characteristics
Senior Loans are loans that are typically made
to business borrowers to finance leveraged buy-outs, recapitalizations, mergers, stock repurchases, and internal growth. Senior Loans generally hold the most senior position in the capital structure of a borrower and
are usually secured by liens on the assets of the borrowers; including tangible assets such as cash, accounts receivable, inventory, property, plant and equipment, common and/or preferred stocks of subsidiaries; and
intangible assets including trademarks, copyrights, patent rights, and franchise value. The Fund may also receive guarantees as a form of collateral.
Senior Loans are typically
structured to include two or more types of loans within a single credit agreement. The most common structure is to have a revolving loan and a term loan. A revolving loan is a loan that can be drawn upon, repaid fully
or partially, and then the repaid portions can be drawn upon again. A term loan is a loan that is fully drawn upon immediately and once repaid, it cannot be drawn upon again. Sometimes there may be two or more term
loans and they may be secured by different collateral, have different repayment schedules and maturity dates. In addition to revolving loans and term loans, Senior Loan structures can also contain facilities for the
issuance of letters of credit and may contain mechanisms for lenders to pre-fund letters of credit through credit-linked deposits.
The Fund typically invests only in
the term loan portions of Senior Loan structures, although it does sometimes invest in the revolving loan portions and the pre-funded letters of credit portions.
By virtue of their senior
position and collateral, Senior Loans typically provide lenders with the first right to cash flows or proceeds from the sale of a borrower's collateral if the borrower becomes insolvent (subject to the limitations of
bankruptcy law, which may provide higher priority to certain claims such as employee salaries, employee pensions, and taxes). This means Senior Loans are generally repaid before unsecured bank loans, corporate bonds,
subordinated debt, trade creditors, and preferred or common stockholders.
Senior Loans typically pay
interest at least quarterly at rates which equal a fixed percentage spread over a base rate such as the London Inter-Bank Offered Rate (“LIBOR”). For example, if LIBOR were 3% and the borrower were paying
a fixed spread of 2.50%, the total interest rate paid by the borrower would be 5.50%. Base rates, and therefore the total rates paid on Senior Loans, float, i.e., they change as market rates of interest change.
Although a base rate such as
LIBOR can change every day, loan agreements for Senior Loans typically allow the borrower the ability to choose how often the base rate for its loan will change. A single loan may have multiple reset periods at the
same time, with each reset period applicable to a designated portion of the loan. Such periods can range from one day to one year, with most borrowers choosing monthly or quarterly reset periods. During periods of
rising interest rates, borrowers will tend to choose longer reset periods, and during periods of declining interest rates, borrowers will tend to choose shorter reset periods. The fixed spread over the base rate on a
Senior Loan typically does not change.
Senior Loans generally are
arranged through private negotiations between a borrower and several financial institutions represented by an agent who is usually one of the originating lenders. In larger transactions, it is common to have several
agents; however, generally only one such agent has primary responsibility for ongoing administration of a Senior Loan. Agents are typically paid fees by the borrower for their services. The agent is primarily
responsible for negotiating the loan agreement which establishes the terms and conditions of the Senior Loan and the rights of the borrower and the lenders. The agent also is responsible for monitoring collateral and
for exercising remedies available to the lenders such as foreclosure upon collateral.
Loan agreements may provide for
the termination of the agent's agency status in the event that it fails to act as required under the relevant loan agreement, becomes insolvent, enters Federal Deposit Insurance Corporation (“FDIC”)
receivership or, if not FDIC insured, enters into bankruptcy. Should such an agent, lender, or assignor with respect to an assignment interpositioned between the Fund and the borrower become insolvent or enter FDIC
receivership or bankruptcy, any interest in the Senior Loan of such person and any loan payment held by such person for the benefit of the Fund should not be included in such person's or entity's bankruptcy estate.
If, however, any such amount were included in such person's or entity's bankruptcy estate, the Fund would incur certain costs and delays in realizing payment or could suffer a loss of principal or interest. In this
event, the Fund could experience a decrease in the NAV.
THE FUND'S INVESTMENTS (continued)
The Fund acquires Senior Loans from
lenders such as commercial and investment banks, insurance companies, finance companies, other investment companies, and private investment funds.
Investment by the Fund
The Fund typically invests in Senior Loans
primarily by purchasing an assignment of a portion of a Senior Loan from a third party, either in connection with the original loan transaction (i.e., in the primary market) or after the initial loan transaction (i.e., in the secondary market). When the Fund purchases a Senior Loan in the primary market, it may share in a fee paid to the original lender. When the Fund purchases a Senior Loan
in the secondary market, it may pay a fee to, or forego a portion of interest payments from, the lender making the assignment. The Fund may also make its investments in Senior Loans through the use of derivative
instruments such as participations, credit-linked notes, credit default swaps, and total return swaps as long as the reference obligation for any such instrument is a Senior Loan. Investments through the use of such
derivative instruments involve counterparty risk, i.e., the risk that the party from which such instrument is purchased will not perform as agreed. Unlike an assignment as described below, the Fund does not have a direct contractual
relationship with the borrower. The Fund seeks to minimize such counterparty risk by purchasing such investments only from large, well-established, and highly-rated counterparties.
There is no minimum rating or
other independent evaluation of a borrower limiting the Fund's investments and most Senior Loans that the Fund may acquire, if rated, will be rated below investment-grade credit quality. See “Risk Factors and
Special Considerations - Credit for Loans.”
Assignments. When the Fund is a purchaser of an assignment, it succeeds to all the rights and obligations under the loan agreement of the assigning lender and becomes a lender under the loan
agreement with the same rights and obligations as the assigning lender. These rights include the ability to vote along with the other lenders on such matters as enforcing the terms of the loan agreement (e.g., declaring defaults, initiating collection action, etc.). Taking such actions typically requires at least a vote of the lenders holding a majority of the investment in the loan and may require a vote by lenders holding two-thirds or more of the
investment in the loan. Because the Fund usually does not hold a majority of the investment in any loan, it will not be able by itself to control decisions that require a vote by the lenders.
Acquisition Costs. When the Fund acquires an interest in a Senior Loan in the primary market, it typically acquires the loan at par value less its portion of the fee paid to all originating lenders.
When the Fund acquires an interest in a Senior Loan in the secondary market, it may be at par value but typically the Fund will do so at premium or discount to par value.
RISK FACTORS AND SPECIAL
CONSIDERATIONS
Risk is inherent in all investing. The following
discussion summarizes some of the risks that you should consider before deciding whether to invest in the Fund. For additional information about the risks associated with investing in the Fund, please see the SAI.
Asset-Backed Securities: Defaults on, or low credit quality or liquidity of the underlying assets of the asset-backed securities may impair the value of these
securities and result in losses. There may be limitations on the enforceability of any security interest or collateral granted with respect to those underlying assets and the value of collateral may not satisfy the
obligation upon default. These securities also present a higher degree of prepayment and extension risk and interest rate risk than do other types of debt instruments. Because of prepayment risk and extension risk,
small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain asset-backed securities. The value of longer-term securities generally changes more in
response to changes in market interest rates than shorter term securities.
These securities may be
significantly affected by government regulation, market interest rates, market perception of the creditworthiness of an issuer servicer, and loan-to-value ratio of the underlying assets. During an economic downturn,
the mortgages, commercial or consumer loans, trade or credit card receivables, installment purchase obligations, leases, or other debt obligations underlying an asset-backed security may experience an increase in
defaults as borrowers experience difficulties in repaying their loans which may cause the valuation of such securities to be more volatile and may reduce the value of such securities. These risks are particularly
heightened for investments in asset-backed securities that contain sub-prime loans which are loans made to borrowers with weakened credit histories and often have higher default rates.
Bank Instruments: Bank instruments include certificates of deposit, fixed time deposits, bankers’ acceptances, and other debt and deposit-type obligations
issued by banks. Changes in economic, regulatory or political conditions, or other events that affect the banking industry may have an adverse effect on bank instruments or banking institutions that serve as
counterparties in transactions with the Fund.
Corporate Debt
Instruments: Corporate debt instruments are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligation.
The value of corporate debt instruments may be subject to price volatility due to such factors as market interest rates, market perception of the creditworthiness of the issuer, and general market liquidity. When
market interest rates decline, the value of corporate debt instruments can be expected to rise, and when market interest rates rise, the value of those securities can be expected to decline. Corporate debt instruments
with longer maturities tend to be more sensitive to market interest rate movements than those with shorter maturities.
Credit Default Swaps: The Fund may enter into credit default swaps, either as a buyer or a seller of the swap. A buyer of a swap pays a fee to buy protection against
the risk that a security will default. If no default occurs, the Fund will have paid the fee, but typically will recover nothing under the swap. A seller of a swap receives payment(s) in return for an obligation to
pay the counterparty the full notional value of a security in the event of a default of the security issuer. As a seller of a swap, the Fund would effectively add leverage to its portfolio because, in addition to its
total net assets, the Fund would be subject to investment exposure on the full notional value of the swap. Credit default swaps are particularly subject to counterparty, credit, valuation, liquidity and leveraging
risks and the risk that the swap may not correlate with its underlying asset as expected. Certain standardized swaps are subject to mandatory central clearing. Central clearing is expected to reduce counterparty
credit risk and increase liquidity; however, there is no assurance that central clearing will achieve that result, and in the meantime, central clearing and related requirements expose the Fund to new kinds of costs
and risks. In addition, credit default swaps expose the Fund to the risk of improper valuation.
Credit
Facility: The Fund has a policy of borrowing to acquire income-producing investments. The Fund currently is a party to a credit facility with State
Street Bank and Trust Company and The Bank of Nova Scotia that permits the Fund to borrow up to an aggregate amount of [$] million. Interest is payable on the amounts borrowed under the credit facility as well as
a benchmark rate such as LIBOR or the federal funds rate, plus a facility fee on unused commitments. The lender under the credit facility has a security interest in all assets of the Fund. As of June 5, 2020 the Fund
had [$] million in outstanding borrowings under its credit facility.
Under the credit facility, the
lender has the right to liquidate Fund assets in the event of default by the Fund, and the Fund may be prohibited from paying dividends in the event of a material adverse event or condition regarding the Fund, the
Adviser, or Sub-Adviser until outstanding debts are paid or until the event or condition is cured.
RISK FACTORS AND SPECIAL
CONSIDERATIONS (continued)
Credit (Loans): Prices of the Fund’s investments are likely to fall if the actual or perceived financial health of the borrowers on, or issuers of, such
investments deteriorates, whether because of broad economic or issuer-specific reasons, or if the borrower or issuer is late (or defaults) in paying interest or principal. The Fund invests a substantial portion of its
assets in below investment-grade Senior Loans and other below investment-grade assets. Below investment-grade loans commonly known as high-yielding, high risk investments or as “junk” investments involve a
greater risk that borrowers may not make timely payment of the interest and principal due on their loans and are subject to greater levels of credit and liquidity risks. They also involve a greater risk that the value
of such loans could decline significantly. If borrowers do not make timely payments of the interest due on their loans, the yield on the Common Shares will decrease. If borrowers do not make timely payment of the
principal due on their loans, or if the value of such loans decreases, the net asset value will decrease. The Fund’s ability to pay dividends and repurchase its Common Shares is dependent upon the performance of
the assets in its portfolio.
The Fund generally invests in
loans that are senior in the capital structure of the borrower or issuer, hold an equal ranking with other senior debt, or have characteristics (such as a senior position secured by liens on a borrower’s assets)
that the manager believes justify treatment as senior debt. Loans that are senior and secured generally involve less risk than unsecured or subordinated debt and equity instruments of the same borrower because the
payment of principal and interest on senior loans is an obligation of the borrower that, in most instances, takes precedence over the payment of dividends or the return of capital to the borrower’s shareholders,
and payments to bond holders; and because of the collateral supporting the repayment of the debt instrument. However, the value of the collateral may not equal the Fund’s investment when the debt instrument is
acquired or may decline below the principal amount of the debt instrument subsequent to the Fund’s investment. Also, to the extent that collateral consists of stocks of the borrower, or its subsidiaries or
affiliates, the Fund bears the risk that the stocks may decline in value, be relatively illiquid, or may lose all or substantially all of their value, causing the Fund’s investment to be undercollateralized.
Therefore, the liquidation of the collateral underlying a loan in which the Fund has invested, may not satisfy the borrower’s obligation to the Fund in the event of non-payment of scheduled interest or
principal, and the collateral may not be able to be readily liquidated. In addition, it is possible that disputes as to the nature or identity of the collateral securing a loan may delay the Fund's ability to realize
on the collateral or, if the dispute is resolved adversely to the Fund, may prevent the Fund from realizing on assets it had considered to constitute collateral.
In the event of the bankruptcy
of a borrower or issuer, the Fund could experience delays and limitations on its ability to realize the benefits of the collateral securing the investment. Among the risks involved in a bankruptcy are assertions that
the pledge of collateral to secure a loan constitutes a fraudulent conveyance or preferential transfer that would have the effect of nullifying or subordinating the Fund’s rights to the collateral.
The Senior Loans in which the
Fund invests are generally rated lower than investment-grade credit quality, i.e., rated lower than Baa by Moody’s Investors Service, Inc. or BBB by S&P Global Ratings, or have been issued by issuers who have issued other debt instruments which, if
unrated, would be rated lower than investment-grade credit quality.
Lower quality securities
(including securities that have fallen below investment-grade and are classified as “junk bonds” or “high yield securities”) have greater credit risk and liquidity risk than higher quality
(investment-grade) securities, and their issuers’ long-term ability to make payments is considered speculative. Prices of lower quality bonds or other debt instruments are also more volatile, are more sensitive
to negative news about the economy or the issuer, and have greater liquidity and price volatility risk. Investment decisions are based largely on the credit analysis performed by the manager, and not on rating agency
evaluation. This analysis may be difficult to perform. Information about a loan and its borrower generally is not in the public domain. Investors in loans may not be afforded the protections of the anti-fraud
provisions of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, because loans may not be considered “securities” under such laws. In addition, many borrowers have
not issued securities to the public and are not subject to reporting requirements under federal securities laws. Generally, however, borrowers are required to provide financial information to lenders and information
may be available from other loan market participants or agents that originate or administer loans.
Demand for Loans: An increase in demand for loans may benefit the Fund by providing increased liquidity for such loans and higher sales prices, but it may also
adversely affect the rate of interest payable on such loans and the rights provided to the Fund under the terms of the applicable loan agreement, and may increase the price of loans in the secondary market. A decrease
in the demand for loans may adversely affect the price of loans in the Fund’s portfolio, which could cause the Fund’s net asset value to decline and reduce the liquidity of the Fund’s loan
holdings.
RISK FACTORS AND SPECIAL
CONSIDERATIONS (continued)
Derivative
Instruments: Derivative instruments are subject to a number of risks, including the risk of changes in the market price of the underlying securities, credit
risk with respect to the counterparty, risk of loss due to changes in market interest rates and liquidity and volatility risk. The amounts required to purchase certain derivatives may be small relative to the
magnitude of exposure assumed by the Fund. Therefore, the purchase of certain derivatives may have an economic leveraging effect on the Fund and exaggerate any increase or decrease in the net asset value. Derivatives
may not perform as expected, so the Fund may not realize the intended benefits. When used for hedging purposes, the change in value of a derivative may not correlate as expected with the currency, security or other
risk being hedged. When used as an alternative or substitute for direct cash investment, the return provided by the derivative may not provide the same return as direct cash investment. In addition, given their
complexity, derivatives expose the Fund to the risk of improper valuation. Generally, derivatives are sophisticated financial instruments whose performance is derived, at least in part, from the performance of an
underlying asset or assets. Derivatives include, among other things, swap agreements, options, forward foreign currency exchange contracts, and futures. Investments in derivatives are generally negotiated
over-the-counter with a single counterparty and as a result are subject to credit risks related to the counterparty’s ability or willingness to perform its obligations; any deterioration in the
counterparty’s creditworthiness could adversely affect the value of the derivative. In addition, derivatives and their underlying securities may experience periods of illiquidity which could cause the Fund to
hold a security it might otherwise sell, or to sell a security it otherwise might hold at inopportune times or at an unanticipated price. A manager might imperfectly judge the direction of the market. For instance, if
a derivative is used as a hedge to offset investment risk in another security, the hedge might not correlate to the market’s movements and may have unexpected or undesired results such as a loss or a reduction
in gains. The U.S. government has enacted legislation that provides for new regulation of the derivatives market, including clearing, margin, reporting, and registration requirements. The European Union (and other
countries outside of the European Union) has implemented similar requirements, which affects the Fund when it enters into a derivatives transaction with a counterparty organized in that country or otherwise subject to
that country's derivatives regulations. Because these requirements are new and evolving (and some of the rules are not yet final), their ultimate impact remains unclear. Central clearing is expected to reduce
counterparty risk and increase liquidity, however, there is no assurance that it will achieve that result, and in the meantime, central clearing and related requirements expose the Fund to new kinds of costs and
risks.
Equity Securities Incidental
to Investments in Loans: Investments in equity securities incidental to investment in loans entail certain risks in addition to those associated with investments in
loans. The value of such equity securities may change more rapidly, and to a greater extent, than fixed-income debt instruments issued by the same issuer in response to company-specific developments and general market
conditions. The Fund’s holdings of equity securities may increase fluctuations in the Fund’s net asset value. The Fund may frequently possess material non-public information about a borrower as a result of
its ownership of a loan of such borrower. Because of prohibitions on trading in securities of issuers while in possession of such information, the Fund might be unable to enter into a transaction in a security of such
a borrower when it would otherwise be advantageous to do so.
Interest Rate: Changes in short-term market interest rates will directly affect the yield on Common Shares. If short-term market interest rates fall, the
yield on Common Shares will also fall. To the extent that the interest rate spreads on loans in the Fund’s portfolio experience a general decline, the yield on the Common Shares will fall and the value of the
Fund’s assets may decrease, which will cause the Fund’s net asset value to decrease. Conversely, when short-term market interest rates rise, because of the lag between changes in such short-term rates and
the resetting of the floating rates on assets in the Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. In the case of inverse securities, the interest rate paid by such
securities generally will decrease when the market rate of interest to which the inverse security is indexed increases. With respect to investments in fixed rate instruments, a rise in market interest rates generally
causes values of such instruments to fall. The values of fixed rate instruments with longer maturities or duration are more sensitive to changes in market interest rates.
As of the date of this
Prospectus, market interest rates in the United States are at or near historic lows, which may increase the Fund’s exposure to risks associated with rising market interest rates. Rising market interest rates
could have unpredictable effects on the markets and may expose fixed-income and related markets to heightened volatility, which could reduce liquidity for certain investments, adversely affect values, and increase
costs. If dealer capacity in fixed-income and related markets is insufficient for market conditions, it may further inhibit liquidity and increase volatility in the fixed-income and related markets. Further, recent
and potential changes in government policy may affect interest rates.
RISK FACTORS AND SPECIAL
CONSIDERATIONS (continued)
Market interest rate changes
also may cause the Fund’s net asset value to experience moderate volatility. This is because the value of a loan asset held by the Fund is partially a function of whether it is paying what the market perceives
to be a market rate of interest for the particular loan, given its individual credit and other characteristics. If market interest rates change, a loan’s value could be affected to the extent the interest rate
paid on that loan does not reset at the same time. As discussed above, the Fund will ordinarily maintain a dollar-weighted average time until the next interest rate adjustment on its loans of 90 days or less.
Therefore, the impact of the lag between a change in market interest rates and the change in the overall rate on the portfolio is expected to be minimal.
To the extent that changes in
market rates of interest are reflected not in a change to a base rate such as LIBOR but in a change in the spread over the base rate which is payable on loans of the type and quality in which the Fund invests, the
Fund’s net asset value could also be adversely affected. However, unlike changes in market rates of interest for which there is only a temporary lag before the portfolio reflects those changes, changes in a
loan’s value based on changes in the market spread on loans in the Fund’s portfolio may be of longer duration.
Finally, substantial increases
in interest rates may cause an increase in loan defaults as borrowers may lack the resources to meet higher debt service requirements. In the case of inverse securities, the interest rate paid by the securities is a
floating rate, which generally will decrease when the market rate of interest to which the inverse security is indexed increases and will increase when the market rate of interest to which the inverse security is
indexed decreases.
Leverage: The use of leverage through borrowings or the issuance of Preferred Shares can adversely affect the yield on the Common Shares. To the extent
that the Fund is unable to invest the proceeds from the use of leverage in assets which pay interest at a rate which exceeds the rate paid on the leverage, the yield on the Common Shares will decrease. In addition, in
the event of a general market decline in the value of assets such as those in which the Fund invests, the effect of that decline will be magnified in the Fund because of the additional assets purchased with the
proceeds of the leverage. Further, because the fee paid to the Adviser will be calculated on the basis of Managed Assets, the fee will be higher when leverage is utilized, giving the Adviser an incentive to utilize
leverage. The Fund is subject to certain restrictions imposed by lenders to the Fund and may be subject to certain restrictions imposed by guidelines of one or more rating agencies which may issue ratings for debt or
the Preferred Shares issued by the Fund. These restrictions are expected to impose asset coverage, fund composition requirements and limits on investment techniques, such as the use of financial derivative products
that are more stringent than those imposed on the Fund by the 1940 Act. These restrictions could impede the manager from fully managing the Fund’s portfolio in accordance with the Fund’s investment
objective and policies. As of June 5, 2020 the Fund had [$] million in outstanding borrowings under its credit facility.
The Fund is permitted to borrow
an amount up to 33 1⁄3%, or such other percentage permitted by law, of its total assets (including the amount borrowed) less all liabilities other than borrowings. The Fund may also issue
Preferred Shares so long as immediately after any issuance of Preferred Shares, the value of the Fund’s total assets (less all Fund liabilities and indebtedness that is not senior indebtedness for 1940 Act
purposes) is at least twice the amount of the Fund’s senior indebtedness plus the involuntary liquidation preference of all outstanding shares. As of the date of this Prospectus, the Fund had no Preferred Shares
outstanding. Borrowings and the issuance of Preferred Shares are referred to in this Prospectus collectively as “leverage.” The Fund may use leverage for investment purposes, to finance the repurchase of
its Common Shares, and to meet other cash requirements. The use of leverage for investment purposes increases both investment opportunity and investment risk.
Capital raised through leverage
will be subject to interest and other costs, and these costs could exceed the income earned by the Fund on the proceeds of such leverage. There can be no assurance that the Fund’s income from the proceeds of
leverage will exceed these costs. The manager seeks to use leverage for the purposes of making additional investments only if they believe, at the time of using leverage, that the total return on the assets purchased
with such funds will exceed interest payments and other costs on the leverage.
The Fund
currently uses leverage by borrowing money on a floating rate basis. The current rate on borrowings as of June 5, 2020 is [%].
The Fund’s leveraged
capital structure creates special risks not associated with unleveraged funds having similar investment objectives and policies. The funds borrowed pursuant to the credit facilities or obtained through any issuance of
Preferred Shares may constitute a substantial lien and burden by reason of their prior claim against the income of the Fund and against the net assets of the Fund in liquidation.
RISK FACTORS AND SPECIAL
CONSIDERATIONS (continued)
The Fund is not permitted to
declare dividends or other distributions, including dividends and distributions with respect to Common Shares or Preferred Shares, or to purchase Common Shares or Preferred Shares unless: (i) at the time thereof the
Fund meets certain asset coverage requirements; and (ii) there is no event of default under any credit facility program that is continuing. See “Risk Factors and Special Considerations - Restrictive Covenants
and 1940 Act Restrictions” later in this Prospectus. In the event of a default under a credit facility program, the lenders have the right to cause a liquidation of the collateral (i.e., sell assets of the Fund) and, if any such default is not cured, the lenders may be able to control the liquidation as well.
In addition, the Fund is not
permitted to pay dividends on, or redeem or repurchase, Common Shares unless all accrued dividends on any Preferred Shares and all accrued interest on borrowings have been paid or set aside for payment.
Annual Expenses Without Borrowings
From the
inception of the Fund through June 5, 2020 the income earned on the assets purchased with the Fund's borrowings has always exceeded the interest expense on such borrowings. This has increased the overall yield of the
Fund. If the Fund were not to borrow, or the interest expense on the borrowings is excluded from the expenses of the Fund, the remaining expenses, as a percentage of the average net assets of the Fund, would be as
follows:
| Class A
| Class C
| Class I
| Class T
| Class W
|
Annual Expenses Without Borrowings
(as a percentage of average net assets
attributable to Common Shares)
|
|
|
|
|
|
Management Fees1
| 0.90%
| 0.90%
| 0.90%
| 0.90%
| 0.90%
|
Service Fee
| 0.25%
| 0.25%
| None
| 0.25%
| None
|
Distribution Fee2
| None
| 0.50%
| None
| None
| None
|
Other Operating Expenses3
| [%]
| [%]
| [%]
| [%]
| [%]
|
Total Annual Expenses
| [%]
| [%]
| [%]
| [%]
| [%]
|
Fee Waivers/Reimbursements/Recoupment4
| [%]
| [%]
| [%]
| [%]
| [%]
|
Net Annual Expenses
| [%]
| [%]
| [%]
| [%]
| [%]
|
1
| Pursuant to its investment management agreement with the Fund, the Adviser is paid a fee of 0.90% of the Fund's Managed Assets.
|
2
| Because the distribution fees payable by Class C Common Shares may be considered an asset-based sales charge, long-term shareholders in that class of the Fund may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the Financial Industry Regulatory Authority.
|
3
| Other Operating Expenses are based on estimated amounts for the current fiscal year.
|
4
| The Adviser is contractually obligated to limit expenses of the Fund through [July 1, 2021] to the following: Class A Common Shares - 0.90% of Managed Assets plus 0.45% of average daily net assets; Class C Common
Shares - 0.90% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets; Class T Common Shares – 0.90% of Managed Assets
plus 0.45% of average daily net assets; and Class W Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets. The limitation does not extend to interest, taxes, investment-related costs, leverage
expenses, extraordinary expenses, and Acquired Fund Fees and Expenses. The obligation is subject to possible recoupment by the adviser within 36 months of the waiver or reimbursement. Termination or modification of
this obligation requires approval by the Fund’s Board.
|
Effect of Leverage
To cover the
annual interest payments on the borrowings for the current fiscal year (assuming that the current rate remains in effect for the entire fiscal year and assuming that the Fund borrows an amount equal to 25% of its
Managed Assets as of June 5, 2020) the Fund would need to experience an annual return of [%] on its portfolio (including the assets purchased with the assumed leverage) to cover such annual interest.
The following table is designed
to illustrate the effect on return to a holder of the Fund's Common Shares of the leverage created by the Fund's use of borrowing, using the average annual interest rate of [%] for the fiscal year ended February 29,
2020, assuming the Fund has used leverage by borrowing an amount equal to 25% of the Fund's Managed Assets and assuming hypothetical annual returns on the Fund's portfolio of minus 10% to plus 10%. As can be seen,
leverage generally increases the return to shareholders when portfolio return is positive and decreases return when the portfolio return is negative. Actual returns may be greater or less than those appearing in the
table.
Assumed Portfolio Return, net of expenses1
| -10%
| -5%
| 0%
| 5%
| 10%
|
Corresponding Return to Common Shareholders2
|
|
|
|
|
|
1
| The Assumed Portfolio Return is required by regulation of the SEC and is not a prediction of, and does not represent, the projected or actual performance of the Fund.
|
2
| In order to compute the Corresponding Return to Common Shareholders, the Assumed Portfolio Return is multiplied by the total value of the Fund's assets at the beginning of the Fund's
fiscal year to obtain an assumed return to the Fund. From this amount, all interest accrued during the year is subtracted to determine the return available to
|
RISK FACTORS AND SPECIAL
CONSIDERATIONS (continued)
| shareholders. The return available to shareholders is then divided by the total value of the Fund's net assets attributable to Common Shares as of the beginning of the fiscal year to determine the Corresponding
Return to Common Shareholders.
|
Limited Secondary Market for
Loans: Because of the limited secondary market for loans, the Fund may be limited in its ability to sell loans in its portfolio in a timely fashion
and/or at a favorable price. Transactions in loans typically settle on a delayed basis and typically take longer than 7 days to settle. As a result the Fund may not receive the proceeds from a sale of a floating rate
loan for a significant period of time. Delay in the receipts of settlement proceeds may impair the ability of the Fund to meet its repurchase obligations and may increase the amounts the Fund may be required to
borrow. It may also limit the ability of the Fund to repay debt, pay dividends, or to take advantage of new investment opportunities. Although the re-sale, or secondary market for loans has grown substantially over
the past decade, both in overall size and number of market participants, there is no organized exchange or board of trade on which loans are traded. Instead, the secondary market for loans is a private, unregulated
inter-dealer or inter-bank re-sale market.
Loans usually trade in large
denominations and trades can be infrequent and the market for loans may experience volatility. The market has limited transparency so that information about actual trades may be difficult to obtain. Accordingly, some
loans will be relatively illiquid.
In addition, loans may require the
consent of the borrower and/or the agent prior to sale or assignment. These consent requirements can delay or impede the Fund’s ability to sell loans and can adversely affect the price that can be obtained.
These considerations may cause
the Fund to sell assets at lower prices than it would otherwise consider to meet cash needs or cause the Fund to maintain a greater portion of its assets in cash equivalents than it would otherwise, which could
negatively impact performance. The Fund may seek to avoid the necessity of selling assets to meet such needs by the use of borrowings.
From time to time, the
occurrence of one or more of the factors described above may create a cascading effect where the market for debt instruments (including the market for loans) first experiences volatility and then decreased liquidity.
Such conditions, or other similar conditions, may then adversely affect the value of loans and other instruments, widening spreads against higher-quality debt instruments, and making it harder to sell loans at prices
at which they have historically or recently traded, thereby further reducing liquidity. For example, during the global liquidity crisis in the second half of 2008, the average price of loans in the S&P/LSTA
Leveraged Loan Index (which includes loans of the type in which the Fund invests) declined by 32% (which included a decline of 3.06% on a single day).
Declines in the Fund's share
price or other market developments (which may be more severe than these prior declines) may lead to increased repurchases, which could cause the Fund to have to sell loans and other instruments at disadvantageous
prices and inhibit the ability of the Fund to retain its assets in the hope of greater stabilization in the secondary markets. In addition, these or similar circumstances could cause the Fund to sell its highest
quality and most liquid loans and other investments in order to satisfy an initial wave of repurchases while leaving the Fund with a remaining portfolio of lower-quality and less liquid investments. In anticipation of
such circumstances, the Fund may also need to maintain a larger portion of its assets in liquid instruments than usual. However, there can be no assurance that the Fund will foresee the need to maintain greater
liquidity or that actual efforts to maintain a larger portion of assets in liquid investments would successfully mitigate the foregoing risks.
During its monthly repurchase
offers, the Fund is required to maintain a percentage of its portfolio, equal to the value of the repurchase amounts, in securities that can be sold or disposed of at approximately the price at which the Fund has
valued the investment, within a period equal to the period between a repurchase request deadline and the repurchase payment deadline, or of assets that mature by the next repurchase payment deadline. The requirement
to keep a portion of the portfolio in liquid securities, however, could negatively impact performance.
Manager: The Fund is subject to manager risk because it is an actively managed investment portfolio. The adviser, the sub-adviser or each individual
portfolio manager will make judgments and apply investment techniques and risk analyses in making investment decisions, but there can be no guarantee that these decisions will produce the desired results.
Market
Disruption and Geopolitical: The Fund is subject to the risk that geopolitical events will disrupt securities markets and adversely affect global economies and markets. Due
to the increasing interdependence among global economies and markets, conditions in one country, market, or region might adversely impact markets, issuers and/or foreign exchange rates in other countries, including
the U.S. War, terrorism, global health crises and pandemics, and
RISK FACTORS AND SPECIAL
CONSIDERATIONS (continued)
other geopolitical events have led, and in the
future may lead, to increased market volatility and may have adverse short- or long-term effects on U.S. and world economies and markets generally. For example, the recent COVID-19 pandemic has resulted, and may
continue to result, in significant market volatility, exchange trading suspensions and closures, declines in global financial markets, higher default rates, and a substantial economic downturn in economies throughout
the world. Natural and environmental disasters and systemic market dislocations are also highly disruptive to economies and markets. Those events as well as other changes in non-U.S. and domestic economic, social, and
political conditions also could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment, and other factors affecting the
value of the investments of the Fund and the Fund. Any of these occurrences could disrupt the operations of the Fund and of the Fund’s service providers.
Non-U.S. and Non-Canadian
Issuers: Investment in foreign borrowers involves special risks, including that foreign borrowers may be subject to: less rigorous regulatory,
accounting, and reporting requirements than U.S. borrowers; differing legal systems and laws relating to creditors’ rights; the potential inability to enforce legal judgments; economic adversity that would
result if the value of the borrower’s non-U.S. dollar denominated revenues and assets were to fall because of fluctuations in currency values; and the potential for political, social, and economic adversity in
the foreign borrower’s country. The Fund may invest up to 15% of its total assets in investments denominated in OECD currencies (including the euro), other than the U.S. dollar.
The Fund will engage in currency
exchange transactions to seek to hedge, as closely as practicable, 100% of the economic impact to the Fund arising from foreign currency fluctuations.
Operational: The Fund, its service providers, and other market participants increasingly depend on complex information technology and communications systems to
conduct business functions. These systems are subject to a number of different threats or risks that could adversely affect the Fund and its shareholders, despite the efforts of the Fund and its service providers to
adopt technologies, processes, and practices intended to mitigate these risks. Cyber-attacks, disruptions, or failures that affect the Fund’s service providers, counterparties, market participants, or issuers of
securities held by the Fund may adversely affect the Fund and its shareholders, including by causing losses or impairing the Fund’s operations.
Other Investment
Companies: The main risk of investing in other investment companies, including exchange-traded funds (“ETFs”), is the risk that the value of
the securities underlying an investment company might decrease. Shares of investment companies that are listed on an exchange may trade at a discount or premium from their net asset value. You will pay a proportionate
share of the expenses of those other investment companies (including management fees, administration fees, and custodial fees) in addition to the expenses of the Fund. The investment policies of the other investment
companies may not be the same as those of the Fund; as a result, an investment in the other investment companies may be subject to additional or different risks than those to which the Fund is typically
subject.
ETFs are exchange-traded
investment companies that are, in many cases, designed to provide investment results corresponding to an index. The value of the underlying securities can fluctuate in response to activities of individual companies or
in response to general market and/or economic conditions. Additional risks of investments in ETFs include: (i) an active trading market for an ETF’s shares may not develop or be maintained; or (ii) trading may
be halted if the listing exchanges’ officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large
decreases in stock prices) halts trading generally. Other investment companies include Holding Company Depositary Receipts (“HOLDRs”). Because HOLDRs concentrate in the stocks of a particular industry,
trends in that industry may have a dramatic impact on their value.
Prepayment and
Extension: Many types of debt instruments are subject to prepayment and extension risk. Prepayment risk is the risk that the issuer of a debt instrument
will pay back the principal earlier than expected. This may occur when interest rates decline. Prepayment may expose the Fund to a lower rate of return upon reinvestment of principal. Also, if a debt instrument
subject to prepayment has been purchased at a premium, the value of the premium would be lost in the event of prepayment. Extension risk is the risk that the issuer of a debt instrument will pay back the principal
later than expected. This may occur when interest rates rise. This may negatively affect performance, as the value of the debt instrument decreases when principal payments are made later than expected. Additionally,
the Fund may be prevented from investing proceeds it would have received at a given time at the higher prevailing interest rates. Loans typically do not have call protection and may be prepaid partially or in full at
any time without penalty.
RISK FACTORS AND SPECIAL
CONSIDERATIONS (continued)
Ranking of Senior
Indebtedness: The rights of lenders to receive payments of interest and repayments of principal of any borrowings made by the Fund under the credit facility
program are senior to the rights of holders of Common Shares and Preferred Shares with respect to the payment of dividends or upon liquidation.
Repurchase Agreements: In the event that the other party to a repurchase agreement defaults on its obligations, the Fund would generally seek to sell the underlying
security serving as collateral for the repurchase agreement. However, the value of collateral may be insufficient to satisfy the counterparty's obligation and/or the Fund may encounter delay and incur costs before
being able to sell the security. Such a delay may involve loss of interest or a decline in price of the security, which could result in a loss. In addition, if the Fund is characterized by a court as an unsecured
creditor, it would be at risk of losing some or all of the principal and interest involved in the transaction.
Restrictive Covenants and 1940
Act Restrictions: The credit agreements governing the credit facility program (“Credit Agreements”) include usual and customary covenants for this
type of transaction, including limits on the Fund’s ability to: (i) issue Preferred Shares; (ii) incur liens or pledge portfolio securities; (iii) change its investment objective or fundamental investment
restrictions without the approval of lenders; (iv) make changes in any of its business objectives, purposes, or operations that could result in a material adverse effect; (v) make any changes in its capital structure;
(vi) amend the Fund documents in a manner which could adversely affect the rights, interests, or obligations of any of the lenders; (vii) engage in any business other than the businesses currently engaged in; (viii)
create, incur, assume, or permit to exist certain debt except for certain specified types of debt; and (ix) permit any of its Employee Retirement Income Security Act of 1974 (“ERISA”) affiliates to cause
or permit to occur an event that could result in the imposition of a lien under the Internal Revenue Code of 1986 or ERISA. In addition, the Credit Agreements do not permit the Fund’s asset coverage ratio (as
defined in the Credit Agreements) to fall below 300% at any time (“Credit Agreement Asset Coverage Test”). These covenants or guidelines could impede the manager from fully managing the Fund's portfolio in
accordance with the investment objectives and policies.
Under the requirements of the
1940 Act, the Fund must have asset coverage of at least 300% immediately after any borrowing under a credit facility program. For this purpose, asset coverage means the ratio which the value of the total assets of the
Fund, less liabilities and indebtedness not represented by senior securities, bears to the aggregate amount of borrowings represented by senior securities issued by the Fund.
The Credit Agreements limit the
Fund’s ability to pay dividends or make other distributions on the Common Shares, or purchase or redeem Common Shares, unless the Fund complies with the Credit Agreement Asset Coverage Test. In addition, the
Credit Agreements do not permit the Fund to declare dividends or other distributions or purchase or redeem Common Shares: (i) at any time that an event of default under the credit agreement has occurred and is
continuing; or (ii) if, after giving effect to such declaration, the Fund would not meet the Credit Agreement Asset Coverage Test set forth in the Credit Agreements.
Securities Lending: To generate additional income, the Fund may lend portfolio securities, on a short- or long-term basis, in an amount up to 33 1⁄3% of the Fund’s total assets, to broker-dealers, major banks, or other recognized domestic institutional borrowers of securities. When
the Fund lends its securities, it is responsible for investing the cash collateral it receives from the borrower of the securities, and the Fund could incur losses in connection with the investment of such cash
collateral. As with other extensions of credit, there are risks of delay in recovery or even loss of rights in the collateral should the borrower default or fail financially. The Fund intends to engage in lending
portfolio securities only when such lending is fully secured by investment-grade collateral held by an independent agent.
Short-Term Debt Instruments
and Cash: Some of the Senior Loans in which the Fund invests are in the form of revolving credits. In order to permit the Fund to meet its obligations
under such loans and to advance additional funds on short notice, the Fund normally maintains unused borrowing capacity that equals or exceeds the total of all unfunded portions of loans in its portfolio. Short-term
debt instruments are subject to the risk of the issuer’s inability to meet principal and interest payments on the debt obligation and also may be subject to price volatility due to such factors as market
interest rates, market perception of the creditworthiness of the issuer, and general market liquidity.
Because short-term debt
instruments pay interest at a fixed-rate, when market interest rates decline, the value of the Fund’s short-term debt instruments can be expected to rise, and when market interest rates rise, the value of those
securities can be expected to decline.
RISK FACTORS AND SPECIAL
CONSIDERATIONS (continued)
Temporary Defensive
Positions: When market conditions make it advisable, the Fund may hold a portion of its assets in cash and short-term interest bearing instruments.
Moreover, in periods when, in the opinion of the manager, a temporary defensive position is appropriate, up to 100% of the Fund’s assets may be held in cash, short-term interest bearing instruments and/or any
other securities the manager considers consistent with a temporary defensive position. The Fund may not achieve its investment objective when pursuing a temporary defensive position.
Unsecured Debt Instruments and
Subordinated Loans: Unsecured loans and subordinated loans share the same credit risks as those discussed under “Risk Factors and Special Considerations -
Credit for Loans” except that unsecured loans are not secured by any collateral of the borrower and subordinated loans are not the most senior debt in a borrower’s capital structure. Unsecured loans do not
enjoy the security associated with collateralization and may pose a greater risk of nonpayment of interest or loss of principal than do secured loans. The primary additional risk in a subordinated loan is the
potential loss in the event of default by the issuer of the loan. Subordinated loans in an insolvency bear an increased share, relative to senior secured lenders, of the ultimate risk that the borrower’s assets
are insufficient to meet its obligations to its creditors.
Valuation of Loans: The Fund values its assets daily. However, because the secondary market for floating rate loans is limited, it may be difficult to value loans,
exposing the Fund to the risk that the price at which it sells loans will be less than the price at which they were valued when held by the Fund. Reliable market value quotations may not be readily available for some
loans and determining the fair valuation of such loans may require more research than for securities that trade in a more active secondary market. In addition, elements of judgment may play a greater role in the
valuation of loans than for more securities that trade in a more developed secondary market because there is less reliable, objective market value data available. If the Fund purchases a relatively large portion of a
loan, the limitations of the secondary market may inhibit the Fund from selling a portion of the loan and reducing its exposure to a borrower when the manager deems it advisable to do so. Even if the Fund itself does
not own a relatively large portion of a particular loan, the Fund, in combination with other similar accounts under management by the same portfolio managers, may own large portions of loans. The aggregate amount of
holdings could create similar risks if and when the portfolio managers decide to sell those loans. These risks could include, for example, the risk that the sale of an initial portion of the loan could be at a price
lower than the price at which the loan was valued by the Fund, the risk that the initial sale could adversely impact the price at which additional portions of the loan are sold, and the risk that the foregoing events
could warrant a reduced valuation being assigned to the remaining portion of the loan still owned by the Fund.
Choosing a Share Class
When choosing between classes of Common Shares,
you should carefully consider: (1) how long you plan to hold shares of the Fund; (2) the amount of your investment; (3) the expenses you will pay for each class, including ongoing annual expenses along with the
initial sales charge or the EWC; and (4) whether you qualify for any sales charge discounts. Please review the disclosure about all of the available share classes carefully. Before investing, you should discuss with
your financial intermediary which share class may be right for you.
The tables below summarize the
features of the classes of shares available through this Prospectus. Fund charges may vary so you should review the Fund's fee table as well as the section entitled “Sales Charges” in this Prospectus.
Class T Common Shares are available for purchase
only through financial intermediaries that have entered into agreements with the Fund’s distributor to sell Class T Common Shares.
Class A Common Shares
|
|
Initial Sales Charge
| Up to 2.50% (reduced for purchases of $100,000 or more and eliminated for purchases of $500,000 or more)
|
Early Withdrawal Charge
| None (except that a charge of 1.00% applies to certain repurchases by the Fund made within [12 months] of purchase)
|
Distribution and/or Shareholder Services (12b-1) Fees
| 0.25% annually
|
Purchase Maximum
| None
|
Minimum Initial Purchase/Minimum Account Size
| $1,000 ($250 for IRAs)/$1,000 ($250 for IRAs)
|
Minimum Subsequent Purchases
| None (At least $100/month for Pre-Authorized Investment Plan)
|
Conversion
| None
|
Class C Common Shares
|
|
Initial Sales Charge
| None
|
Early Withdrawal Charge
| 1.00% on shares sold within one year of purchase
|
Distribution and/or Shareholder Services (12b-1) Fees
| 0.75% annually
|
Purchase Maximum
| $1,000,000
|
Minimum Initial Purchase/Minimum Account Size
| $1,000 ($250 for IRAs)/$1,000 ($250 for IRAs)
|
Minimum Subsequent Purchases
| None (At least $100/month for Pre-Authorized Investment Plan)
|
Conversion
| Effective January 2, 2020, automatic conversion to Class A Common Shares after 10 years, so annual expenses
decrease
|
Class I Common Shares
|
|
Initial Sales Charge
| None
|
Early Withdrawal Charge
| None
|
Distribution and/or Shareholder Services (12b-1) Fees
| None
|
Purchase Maximum
| None
|
Minimum Initial Purchase1 /Minimum Account Size
| $250,000/$250,000
|
Minimum Subsequent Purchases
| None (At least $100/month for Pre-Authorized Investment Plan)
|
Conversion
| None
|
CLASSES OF SHARES (continued)
Class T Common Shares
|
|
Initial Sales Charge
| Up to 2.50% (reduced for purchases of $250,000 or more)
|
Early Withdrawal Charge
| None
|
Distribution and/or Shareholder Services (12b-1) Fees
| 0.25% annually
|
Purchase Maximum
| None
|
Minimum Initial Purchase/Minimum Account Size
| $1,000 ($250 for Individual Retirement Accounts (“IRAs”))/$1,000 ($250 for IRAs)
|
Minimum Subsequent Purchases
| None (At least $100/month for Pre-Authorized Investment Plan)
|
Conversion
| None
|
Class W Common Shares
|
|
Initial Sales Charge
| None
|
Early Withdrawal Charge
| None
|
Distribution and/or Shareholder Services (12b-1) Fees
| None
|
Purchase Maximum
| None
|
Minimum Initial Purchase/Minimum Account Size
| $1,000/$1,000
|
Minimum Subsequent Purchases
| None
|
Conversion
| None
|
1
| There is no minimum investment requirement for qualified retirement plans or other defined contribution plans and defined benefit plans that invest in the Voya funds through omnibus arrangements or for employees of
Voya Investment Management Co. LLC (“Voya IM”) who are eligible to participate in “notional” bonus programs sponsored by Voya IM.
|
The relative impact of the
initial sales charge, if applicable, and ongoing annual expenses will depend on the length of time a share is held. Higher distribution fees mean a higher expense ratio, so Class C Common Shares pay correspondingly
lower dividends and may have a lower net asset value (“NAV”) than Class A Common Shares, Class I Common Shares, Class T Common Shares, or Class W Common Shares.
Because the Fund may not be able
to identify an individual investor's trading activities when investing through omnibus account arrangements, you and/or your financial intermediary are responsible for ensuring that your investment in Class C shares
does not exceed $1,000,000. The Fund cannot ensure that it will identify purchase orders that would cause your investment in Class C shares to exceed the maximum allowed amount. When investing through such
arrangements, you and/or your financial intermediary should be diligent in determining that you have selected the appropriate share class for you.
You and/or your financial
intermediary should also take care to assure that you are receiving any sales charge reductions or other benefits to which you may be entitled. As an example, as is discussed below, you may be able to reduce a Class A
sales charge payable by aggregating purchases to achieve breakpoint discounts. The Fund uses the net amount invested when determining whether a shareholder has reached the required investment amount in order to be
eligible for a breakpoint discount. In order to ensure that you are receiving any applicable sales charge reduction, it may be necessary for you to inform the Fund or your financial intermediary of the existence of
other accounts that may be eligible to be aggregated. The SAI discusses specific classes of investors who may be eligible for a reduced sales charge. In addition, investors investing in the Fund through an
intermediary should consult Appendix A to this Prospectus, which includes information regarding financial intermediary specific sales charges and related discount policies that apply to purchases through certain
specified intermediaries. Before investing you should discuss which share class may be right for you with your financial intermediary.
Distribution and Service (12b-1)
Fees
The Fund pays fees to the Distributor on an
ongoing basis as compensation for the services the Distributor provides and the expenses it bears in connection with the sale and distribution of Fund shares (“distribution fees”) and/or in connection with
personal services rendered to Fund shareholders and the maintenance of shareholder accounts (“service
CLASSES OF SHARES (continued)
fees”). These payments are made pursuant
to distribution and/or shareholder servicing plans adopted by the Fund pursuant to Rule 12b-1 of the 1940 Act (“12b-1 Plan”). Because these distribution and service fees are paid on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
The Fund has adopted a 12b-1
Plan for at least one of the following share classes: Class A, Class C, and Class T Common Shares. The following table lists the maximum annual rates at which the distribution and/or servicing fees may
be paid under a 12b-1 Plan (calculated as a percentage of the Fund's average daily net assets attributable to the particular class of shares):
Fund
| Class A
| Class C
| Class T
|
Voya Senior Income Fund
| 0.25%
| 0.75%
| 0.25%
|
The Fund makes available in a clear and
prominent format, free of charge, on its website, (www.voyainvestments.com), information regarding applicable sales loads, reduced sales charges (i.e., breakpoint discounts), sales load waivers, eligibility minimums and purchases of the Fund's shares. The website includes hyperlinks that facilitate access to the information.
Class A Common Shares
This section includes important information
about sales charges and sales charge reduction programs available to investors in the Fund's Class A Common Shares and describes the information or records you may need to provide to the Distributor or your financial
intermediary in order to be eligible for sales charge reduction programs.
Unless you are eligible for a
waiver, the public offering price you pay when you buy Class A Common Shares is the NAV of the shares at the time of purchase, plus an initial sales charge. The initial sales charge varies depending on the size of
your purchase, as set forth in the following tables. No sales charge is imposed when Class A Common Shares are issued to you pursuant to the automatic reinvestment of income dividends or capital gains distributions.
For investors investing in Class A Common Shares through a financial intermediary, it is the responsibility of the financial intermediary to ensure that the investor obtains the proper breakpoint discount, if any.
Because the offering price is
calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on
whether downward or upward rounding was required during the calculation process.
Class A Common Shares are sold
subject to the following sales charge:
Your Investment
| As a % of
the offering price
| As a % of net
asset value
|
Less than $100,000
| 2.50
| 2.56
|
$100,000 - $499,999
| 2.00
| 2.04
|
$500,000 and over1
| N/A
| N/A
|
1
| See Early Withdrawal Charge below.
|
Shareholders
that purchased funds that were a part of the Lexington family of funds or the Aetna family of funds prior to February 2, 1998, at the time of purchase, are not subject to sales charges for the life of their account on
purchases made directly with the Fund. Former Class C Common Shareholders that were converted to Class A Common Shareholders are not subject to sales charges for the life of their account on purchases made directly
with the Fund.
Early Withdrawal Charge
Class A Common Shares
There is no
front-end sales charge if you purchase Class A Common Shares in an amount of $500,000 or more. However, the shares will be subject to a 1.00% EWC if they are repurchased by the Fund within [12 months] of purchase.
Former Class C Common Shareholders that were converted to Class A Common Shareholders are not subject to an EWC for the life of their account on purchases made directly with the Fund.
Class C Common Shares
Class C Common Shares are
offered at their NAV per share without any initial sales charge. However, you may be charged an EWC on Class C Common Shares that you offer to the Fund for repurchase (and are repurchased) within a certain period of
time after you bought them. The amount of the EWC is based on the NAV of the Common Shares at the time of purchase. The EWCs are as follows:
SALES CHARGES (continued)
Class C Common Shares
Sold during
| EWC on shares
being repurchased
|
1st year
| 1.00%
|
After 1st year
| none
|
To keep your EWC as low as
possible, each time you offer your Common Shares for repurchase, the Fund will first repurchase Common Shares in your account that are not subject to an EWC and then will repurchase Common Shares that have the lowest
EWC.
Class T Common Shares
This section includes important information about
sales charges and sales charge reductions available to investors in the Fund's Class T Common Shares.
The public offering price you
pay when you buy Class T Common Shares of the Fund is the NAV of the shares at the time of purchase, plus an initial sales charge. The initial sales charge varies depending on the size of your purchase, as set forth
in the table below. No sales charge is imposed when Class T Common Shares are issued to you pursuant to the automatic reinvestment of income dividends or capital gains distributions. It is the responsibility of you
and/or your financial intermediary to ensure that you obtain the proper breakpoint discount, if any.
Because the offering price is
calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on
whether downward or upward rounding was required during the calculation process.
Class T Common Shares of the Fund
are sold subject to the following sales charge:
Your Investment
| As a % of
the offering price
| As a % of net
asset value
|
Less than $250,000
| 2.50
| 2.56
|
$250,000 - $499,999
| 2.00
| 2.04
|
$500,000 - $999,999
| 1.50
| 1.52
|
$1,000,000 and over
| 1.00
| 1.01
|
Sales Charge Reductions and
Waivers
Reduced Sales Charges. The sales charge and EWC waiver categories described in this section do not apply to customers purchasing Common Shares of the Fund through any of the financial intermediaries
specified in the Appendix A to this Prospectus (each a “Specified Intermediary”). In all instances, it is the investor’s responsibility to notify the Fund or the investor’s financial
intermediary at the time of purchase of any relationship or other facts qualifying the purchaser for sales charge waivers or discounts.
Different financial intermediaries
may apply different sales charge or EWC waivers. Please refer to the Appendix A for the sales charge or EWC waivers that are applicable to each Specified Intermediary.
Investors in the Fund could
reduce or eliminate sales charges applicable to the purchase of Class A Common Shares through utilization of the Letter of Intent, Rights of Accumulation, or Combination Privilege. These programs are summarized below
and are described in greater detail in the SAI.
•
| Letter of Intent—lets you purchase shares over a 13 month period and pay the same sales charge as if the shares had all been purchased at once.
|
•
| Rights of Accumulation—lets you add the value of shares of any open-end Voya mutual fund (excluding Voya Government Money Market Fund) you already own to the amount of your next purchase for purposes of
calculating the sales charge.
|
•
| Combination Privilege—shares held by investors in the Voya mutual funds which impose a contingent deferred sales charge (“CDSC”) may be combined with Class A Common Shares for a reduced sales
charge.
|
See the Account Application or the
SAI for details, or contact your financial intermediary or a Shareholder Services Representative for more information.
SALES CHARGES (continued)
EWC Waivers. The EWC for Class A and Class C Common Shares will be waived in the following cases (In determining whether an EWC is applicable, it will be assumed that Common Shares held in the
shareholder's account that are not subject to such charge are repurchased first):
•
| The EWC on shares will be waived in the case of repurchase following the death or permanent disability of a shareholder. The waiver is available for total or partial repurchases of shares of the Fund owned by an
individual or an individual in joint tenancy (with rights of survivorship), but only for those Common Shares held at the time of death or initial determination of permanent disability.
|
•
| The EWC will also be waived in the case of a total or partial repurchase of Common Shares of the Fund in connection with any mandatory distribution from a tax-deferred retirement plan or an IRA. The shareholder must
have attained the age of 70½ to qualify for the EWC waiver relating to mandatory distributions. This waiver does not apply in the case of a tax-free rollover or transfer of assets, other than one following a
separation of service, except that an EWC may be waived in certain circumstances involving repurchases in connection with a distribution from a qualified employer retirement plan in connection with termination of
employment or termination of the employer's plan and the transfer to another employer's plan or to an IRA. The shareholder must notify the Transfer Agent either directly or through the Distributor, at the time of
repurchase, that the shareholder is entitled to a waiver of the EWC. The EWC Waiver Form included in the New Account Application must be completed and provided to the Transfer Agent at the time of the repurchase
request. The waiver will be granted subject to confirmation of the grounds for the waiver. The foregoing waivers may be changed at any time.
|
•
| Reinvestment of dividends and capital gains distributions.
|
•
| The EWC which may be imposed on Class A Common Shares purchased in excess of $500,000, may also be waived for registered investment advisors, trust companies and bank trust
departments investing on their own behalf or on behalf of their clients. These waivers may be changed at any time.
|
In addition, the EWC will be waived
on the redemption of Common Shares held through an intermediary if the intermediary has entered into an agreement with the Distributor to waive the EWC.
Reinstatement Privilege. Shareholders who have had their Class A and Class C Common Shares repurchased within the previous 90 days may purchase Class A and Class C Common Shares at NAV (at the time of
reinstatement) in an amount up to the repurchase proceeds. Reinstated Class A and Class C Common Shares will retain their original purchase date for purposes of the EWC. The amount of any EWC also will be
reinstated.
To exercise this privilege, a
written order for the purchase of new Class A and Class C Common Shares must be received by the transfer agent or be postmarked within 90 days after the date of repurchase pursuant to the repurchase offer. This
privilege can be used only once per calendar year. If a loss is incurred on the repurchase and the reinstatement privilege is used, some or all of the loss may not be allowed as a tax deduction.
The Fund is open for business every day the New
York Stock Exchange (“NYSE”) opens for regular trading (each such day, a “Business Day”). The NAV per Common Share of each class of the Fund is determined each Business Day as of the close of
the regular trading session (“Market Close”), as determined by the Consolidated Tape Association (“CTA”), the central distributor of transaction prices for exchange-traded securities (normally
4:00 p.m. Eastern time unless otherwise designated by the CTA). The data reflected on the consolidated tape provided by the CTA is generated by various market centers, including all securities exchanges, electronic
communications networks, and third-market broker-dealers. The NAV per Common Share of each class of the Fund is calculated by calculated by dividing the value of the Fund’s loan assets plus all cash and other
assets (including accrued expenses but excluding capital and surplus) attributable to that class of Common Shares by the number of Common Shares outstanding. The NAV per Common Shares is made available for
publication. On days when the Fund is closed for business, Fund Common Shares will not be priced and the Fund does not transact purchase and redemption orders. To the extent the Fund’s assets are traded in other
markets on days when the Fund does not price its Common Shares, the value of the Fund’s assets will likely change and you will not be able to purchase or redeem shares of the Fund.
Assets for which market
quotations are readily available are valued at market value. A security listed or traded on an exchange is valued at its last sales price or official closing price as of the close of the regular trading session on the
exchange where the security is principally traded or, if such price is not available, at the last sale price as of the Market Close for such security provided by the CTA. Bank loans are valued at the average of the
averages of the bid and ask prices provided to an independent loan pricing service by brokers. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed
options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Investments in open-end registered investment companies that do not trade on an exchange are
valued at the end of day NAV per share. Investments in registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the regular trading
session on the exchange where the security is principally traded.
When a market quotation is not
readily available or is deemed unreliable, the Fund will determine a fair value for the relevant asset in accordance with procedures adopted by the Fund’s Board. Such procedures provide, for example, that:
•
| Exchange-traded securities are valued at the mean of the closing bid and ask.
|
•
| Debt obligations are valued using an evaluated price provided by an independent pricing service. Evaluated prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and
may reflect factors such as institution-size trading in similar groups of securities, developments related to specific securities, benchmark yield, quality, type of issue, coupon rate, maturity individual trading
characteristics and other market data.
|
•
| Securities traded in the over-the-counter market are valued based on prices provided by independent pricing services or market makers.
|
•
| Options not listed on an exchange are valued by an independent source using an industry accepted model, such as Black-Scholes.
|
•
| Centrally cleared swap agreements are valued using a price provided by the central counterparty clearinghouse.
|
•
| Over-the-counter swap agreements are valued using a price provided by an independent pricing service.
|
•
| Forward foreign currency exchange contracts are valued utilizing current and forward rates obtained from an independent pricing service. Such prices from the third party pricing service are for specific settlement
periods and the Fund’s forward foreign currency exchange contracts are valued at an interpolated rate between the closest preceding and subsequent period reported by the independent pricing service.
|
•
| Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by brokers.
|
The prospectuses of the open-end
registered investment companies in which the Fund may invest explain the circumstances under which they will use fair value pricing and the effects of using fair value pricing.
Foreign securities’
(including forward foreign currency exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of Market Close. If market quotations are available and believed to be
reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before Market Close, closing market quotations
may become unreliable. An
HOW SHARES ARE PRICED (continued)
independent pricing service determines the
degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of Market Close. Foreign securities’ prices meeting the
approved degree of certainty that the price is not reflective of current value will be valued by the independent pricing service using pricing models designed to estimate likely changes in the values of those
securities between the times in which the trading in those securities is substantially completed and Market Close. Multiple factors may be considered by the independent pricing service in determining the value of such
securities and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures.
All other assets for which
market quotations are not readily available or became unreliable (or if the above fair valuation methods are unavailable or determined to be unreliable) are valued at fair value as determined in good faith by or under
the supervision of the Board following procedures approved by the Board. Issuer specific events, transaction price, position size, nature and duration of restrictions on disposition of the security, market trends,
bid/ask quotes of brokers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. Valuations change in response to many factors including the
historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties
of fair valuation, the values used to determine the Fund’s NAV may materially differ from the value received upon actual sale of those investments. Thus, fair valuation may have an unintended dilutive or
accretive effect on the value of shareholders’ investments in the Fund.
Customer Identification
To help the government fight the funding of
terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person that opens an account, and to determine whether such
person’s name appears on government lists of known or suspected terrorists and terrorist organizations.
What this means for you: the Fund,
the Distributor, or a third-party selling you the Fund, must obtain the following information for each person that opens an account:
•
| Name;
|
•
| Date of birth (for individuals);
|
•
| Physical residential address (although post office boxes are still permitted for mailing); and
|
•
| Social Security number, taxpayer identification number, or other identifying number.
|
You may also be asked to show
your driver’s license, passport, or other identifying documents in order to verify your identity. In addition, it may be necessary to verify your identity by cross-referencing your identification information
with a consumer report or other electronic database. Additional information may be required to open accounts for corporations and other non-natural persons.
Federal law prohibits the Fund,
the Distributor, and other financial institutions from opening accounts unless they receive the minimum identifying information listed above. They also may be required to close your account if they are unable to
verify your identity within a reasonable time.
The Fund and the Distributor
reserve the right to reject any purchase order. Please note that cash, traveler's checks, third-party checks, money orders, and checks drawn on non-U.S. banks (even if payment may be effected through a U.S. bank)
generally will not be accepted. The Fund and the Distributor reserve the right to waive minimum investment amounts. Waiver of the minimum investment amount can increase operating expenses of the Fund. The Fund and the
Distributor reserve the right to liquidate sufficient shares to recover annual transfer agent fees or to close your account and redeem your shares should you fail to maintain your account value minimum.
The Fund reserves the right to
suspend the offering of shares.
Class A and Class C Common Shares
Class A and Class C Common Shares may be
purchased from certain financial services firms that have sales agreements with Voya Investments Distributor, LLC (“Authorized Dealers”). Investors may be charged a fee for transactions made through a
broker or agent.
Beginning January 2, 2020, a
shareholder’s Class C Common Shares will automatically convert to Class A Common Shares on the second calendar day of the following month in which the tenth anniversary of the issuance of the Class C Common
Shares occurs, together with a pro rata portion of all Class C Common Shares representing dividends and other distributions paid in additional Class C Common Shares.
Class I Common Shares
Class I Common Shares may be purchased without
a sales charge by: (1) qualified retirement plans such as 401(a), 401(k), or other defined contribution plans and defined benefit plans; (2) 529 college savings plans; (3) insurance companies and foundations investing
for their own account; (4) wrap programs offered by broker-dealers and financial institutions; (5) accounts of, or managed by, trust departments; (6) individuals whose accounts are managed by an investment adviser
representative; (7) employees of Voya IM who are eligible to participate in “notional” bonus programs sponsored by Voya IM; (8) retirement plans affiliated with Voya Financial, Inc.; (9) Voya Financial,
Inc. affiliates for purposes of corporate cash management; and (10) other registered investment companies.
Class T Shares
Class T shares are available to the general public
through certain financial intermediaries. Investors wishing to purchase Class T shares should contact their financial intermediary.
Class W Common Shares
Class W Common Shares may be purchased without
a sales charge by: (1) qualified retirement plans such as 401(a), 401(k), or other defined contribution plans and defined benefit plans; (2) insurance companies and foundations investing for their own account; (3)
wrap programs offered by broker-dealers and financial institutions; (4) accounts of, or managed
HOW TO BUY SHARES (continued)
by, trust departments; (5) individuals whose
accounts are managed by an investment adviser representative; (6) retirement plans affiliated with Voya Financial, Inc.; (7) Voya Financial, Inc. affiliates for purposes of corporate cash management; and (8) by other
Voya mutual funds in the Voya family of funds.
In addition, Class W Common
Shares are available to the following persons through direct investment (not through broker-dealers that are not approved by Voya) into a Voya mutual fund or through a Voya approved broker-dealer (currently, Voya
Financial Advisors, Inc.): (1) current and retired officers and directors/trustees of the Voya mutual funds; (2) current and retired officers, directors, and full-time employees of Voya Investments, LLC, Directed
Services LLC; any Voya mutual fund's sub-adviser; Voya Investments Distributor, LLC; and any of their affiliates; (3) family members of the foregoing persons (defined as current spouse, children, parents,
grandparents, grandchildren, uncles, aunts, siblings, nephews, nieces, step-relations, relations at-law, and cousins); (4) any trust, pension, profit-sharing, or other benefit plan for such persons (including family
members); (5) discretionary advisory accounts of Voya Investments, LLC, Directed Services LLC, any Voya mutual fund's sub-adviser, or Voya Investments Distributor, LLC; and (6) qualifying investments made through
Voya promotional programs as determined by Voya Investments Distributor, LLC.
Price of Shares
Purchase and exchange orders for Common Shares
of the Fund are effected at NAV, determined after the order is received by the Transfer Agent in proper form. A purchase order will be deemed to be in proper form when all of the required steps set forth above have
been completed. In the case of an investment by wire, however, the order will be deemed to be in proper form after the telephone notification and the federal funds wire have been received. A shareholder who purchases
by wire must submit an application form in a timely fashion. If an order or payment by wire is received after the close of regular trading on the NYSE (normally 4:00 p.m. Eastern time), the shares will not be credited
until the next business day.
You will receive a confirmation
of each new transaction in your account, which also will show you the number of Fund Common Shares you own including the number of shares being held in safekeeping by the Transfer Agent for your account. You may rely
on these confirmations in lieu of certificates as evidence of your ownership. Certificates representing Common Shares of the Fund will not be issued unless you request them in writing.
The Fund may, on occasion,
suspend the continuous offering of its Common Shares. If this occurs, shareholders will still be permitted to reinvest dividends in additional Common Shares, and qualified plan investors will be permitted to continue
making automatic contributions for additional Common Shares.
Pre-Authorized Investment Plan
You may establish a pre-authorized investment
plan to purchase Common Shares with automatic bank account debiting. For further information on pre-authorized investment plans, see the New Account Application or contact a Shareholder Services Representative at
1-800-992-0180.
Retirement Plans
The Fund has available prototype qualified
retirement plans for corporations and self-employed individuals. The Fund also has available prototype IRA, Roth IRA and Simple IRA plans (for both individuals and employers), Simplified Employee Pension Plans and
Pension and Profit Sharing Plans. BNY Mellon Investment Servicing Trust Company acts as the custodian under these plans. For further information, contact a Shareholder Services Representative at 1-800-992-0180. BNY
Mellon Investment Servicing Trust Company currently receives a $12 custodial fee annually for the maintenance of each such account.
Make your investment using the
purchase minimum guidelines in the following table.
HOW TO BUY SHARES (continued)
Minimum Investments
| Class
| Initial Purchase
| Subsequent Purchases
|
Non-retirement accounts
| A/C/T/W
I1
| $1,000
$250,000
| No minimum
|
Retirement accounts
| A/C/T
I1
W
| $250
$250,000
$1,000
| No minimum
|
Pre-Authorized Investment Plan
| A/C/T/W
I1
| $1,000
$250,000
| At least $100/month
|
Certain omnibus accounts
| A/C/T
| $250
| No minimum
|
1
| There is no minimum initial investment requirement for qualified retirement plans or other defined contribution plans and defined benefit plans that invest in the Voya funds through omnibus arrangements or for
employees of Voya IM who are eligible to participate in “notional” bonus programs sponsored by Voya IM.
|
Make your investment using the
methods outlined in the following table. If you are a participant in a qualified retirement plan, you should make purchases through your plan administrator or sponsor, who is responsible for transmitting orders.
Buying Shares
| Opening an Account
| Adding to an Account
|
By Contacting Your Financial Intermediary
| A financial intermediary with an authorized firm can help you establish and maintain your account.
| Contact your financial intermediary.
|
By Mail
| Make your check payable to Voya Investment Management and mail it with a completed Account Application. Please indicate your financial
intermediary on the New Account Application.
| Fill out the Account Additions form at the bottom of your account statement and mail it along with your check payable to Voya Investment
Management to the address on the account statement. Please write your account number on the check.
|
By Wire
| Call Shareholder Services at 1-800-992-0180 to obtain an account number and indicate your financial intermediary on the
account.
Instruct your bank to wire funds to the Fund in the care of:
Bank of New York Mellon
ABA # 011001234
credit to: BNY Mellon Investment Servicing (US) Inc. as Agent for Voya mutual funds
A/C #0000733938; for further credit to Shareholder A/C #
(A/C # you received over the telephone)
Shareholder Name:
(Your Name Here)
After wiring funds you must complete the Account Application and send it to:
Voya Investment Management
P.O. Box 9772
Providence, RI
02940-9772
| Wire the funds in the same manner described under “Opening an Account.”
|
HOW TO BUY SHARES (continued)
Execution of Purchase Orders
Purchase orders are executed at the next NAV
determined after the order is received in proper form by the Transfer Agent or the Distributor. A purchase order will be deemed to be in proper form when all of the required steps set forth under “How to Buy
Shares” have been completed. If you purchase by wire, however, the order will be deemed to be in proper form after the federal funds wire has been received. If you are opening a new account and you purchase by
wire, you must submit an application form prior to Market Close. If an order or payment by wire is received after Market Close, your order will not be executed until the next NAV is determined. For your transaction to
be counted on the day you place your order with your broker-dealer or other financial institution, your broker-dealer or financial institution must receive your order in proper form before Market Close and transmit
the order to the Transfer Agent or the Distributor in a timely manner.
You will receive a confirmation
of each new transaction in your account, which also will show you the number of shares you own including the number of shares being held in safekeeping by the Transfer Agent for your account. You may rely on these
confirmations in lieu of certificates as evidence of your ownership.
Exchanges Between Shares of the Voya
Mutual Funds
You may exchange shares of certain other Voya
mutual funds into Common Shares of the Fund. You may also move your investment in the Common Shares of the Fund into certain other Voya mutual funds in conjunction with monthly repurchases made by the Fund. In this
case, rather than tendering your shares for cash, you would elect to have the dollar value of those Common Shares accepted for purchases of shares of the other Voya mutual fund.
The total value of shares being
exchanged into the Fund must at least equal the minimum investment requirement applicable to the relevant class of Common Shares of the Fund, and the total value of shares being exchanged out of the Fund into other
Voya mutual funds must meet the minimum investment requirements of those products, as applicable. The exchange privilege is only available in states where shares of the Fund being acquired may be legally sold.
Class T shares of the Fund are not
eligible for exchange into shares of the same class of any other Voya mutual fund.
Early Withdrawal Charge on
Exchanges
You are not required to pay an applicable EWC
upon an exchange of Common Shares from the Fund to any Voya mutual fund. However, if you exchange and subsequently redeem your shares, the EWC from the Fund (not the CDSC schedule from the fund into which you
exchanged your Common Shares) will apply. However, the time period for application of the EWC will be calculated based on the first date you acquired your Common Shares of the Fund so that you get the benefit of the
full period of time you owned your Common Shares of the Fund.
Exchanges Between Classes of Shares
of the Fund
You may exchange Class C and Class W Common
Shares of the Fund for Class I Common Shares of the Fund, or you may exchange Class A Common Shares and Class I Common Shares of the Fund for any other class of the Fund, if you otherwise meet the eligibility
requirements of the class of Common Shares to be received in the exchange, or you may exchange Class C Common Shares of the Fund for Class A Common Shares of the Fund after you have held your Class C Common Shares for
10 years or more, except that: (1) you may not exchange Common Shares that are subject to an EWC until the EWC period has expired, unless the Distributor approves the exchange and determines that no EWC is payable in
connection with the exchange; (2) you may not exchange Class A Common Shares for Class W Common Shares unless you acquired the Class A Common Shares through a Voya approved broker-dealer (currently, Voya Financial
Advisors, Inc.); and (3) you may not exchange Class C Common Shares for Class A Common Shares unless your intermediary has agreed to waive its right to receive the front-end sales charge that otherwise would be
applicable to the Class A Common Shares. All exchanges within the Fund are subject to the discretion of the Distributor to permit or reject such exchanges.
You may exchange any other share
class for Class T Common Shares without paying a sales charge, if you otherwise meet the eligibility requirements of Class T Common Shares, except that you may not exchange shares that are subject to a contingent
deferred sales charge (“CDSC”) until the applicable CDSC period has expired, unless the Distributor approves the exchange and determines that no CDSC is payable in connection with the exchange. Class T
Common Shares may not be exchanged for any other share class of the same Fund.All exchanges within the Fund are subject to the discretion of the Distributor to permit or reject such exchanges.
Shareholders generally should
not recognize gain or loss for U.S. federal income tax purposes for an exchange between classes of shares of the same Fund provided that the transaction is undertaken and processed, with respect to any shareholder, as
a direct exchange transaction. Shareholders should consult their tax advisors as to the federal, state, local and non-U.S. tax consequences of an exchange between classes of shares of the same Fund.
Exchanges between classes of shares
within the Fund are not subject to the frequent trading and market timing policies of Voya mutual funds.
Additional Information About
Exchanges
Fees and expenses differ among Voya mutual
funds and among share classes of the same Fund. Please read the prospectus for the Voya mutual fund and share class you are interested in prior to exchanging into that Voya mutual fund or share class. Contact your
financial intermediary or consult your plan documents for additional information.
HOW TO EXCHANGE SHARES (continued)
An exchange of Common Shares of
the Fund for shares of another Voya mutual fund is treated as a sale and purchase of shares and may result in the recognition of a gain or loss for federal and state income tax purposes. For exchanges between Voya
mutual funds, you should consult your own tax advisor for advice about the particular federal, state, and local tax consequences to you of such exchange. The total value of shares being exchanged must at least equal
the minimum investment requirement of the Voya mutual fund into which they are being exchanged.
In addition to the Fund, the
Distributor offers many other funds. Shareholders exercising the exchange privilege with any other Voya mutual fund should carefully review the prospectus of that fund before exchanging their shares. Investors may
obtain a copy of a prospectus of any Voya mutual fund not discussed in this Prospectus by calling 1-800-992-0180 or by going to www.voyainvestments.com.
Exchanges between classes of Common
Shares of the Fund are not subject to the frequent trading and market timing policies of Voya mutual funds.
FREQUENT TRADING - MARKET TIMING
It is possible that frequent, short-term
trading activity may occur in the Fund. Because the Fund conducts repurchase offers only monthly, the Fund believes that the potential adverse effects from short-term trading are less significant than in open-end
funds, and the Fund does not monitor trading activity of shareholders to attempt to identify market timers.
The Fund believes that market
timing or frequent, short-term trading in any account is not in the best interest of the Fund or its shareholders. Due to the disruptive nature of this activity, it can adversely affect the ability of the Adviser or
Sub-Adviser to invest assets in an orderly, long-term manner. Frequent trading can raise Fund expenses through: increased trading and transaction costs; increased administrative costs; and lost opportunity costs.
This, in turn, can have an adverse effect on Fund performance.
It is possible that certain
shareholders holding large amounts of shares of the Fund may tender for repurchase all or some of their shares through the normal monthly offers to repurchase made by the Fund. If more shares are tendered for
repurchase in any monthly repurchase offer than the Fund offered to repurchase that month, repurchases may be made on a pro-rata basis. As a result, shareholders who tender their shares for repurchase may not have their entire tender accepted by the Fund.
PAYMENTS TO FINANCIAL
INTERMEDIARIES
Voya mutual funds are distributed by the
Distributor. The Distributor is a broker-dealer that is licensed to sell securities. The Distributor generally does not sell directly to the public but sells and markets its products through intermediaries such as
other broker-dealers. Each Voya mutual fund also has an investment adviser which is responsible for managing the money invested in each of the mutual funds. Both of these entities or their affiliates (collectively,
“Voya”) may compensate an intermediary for selling Voya mutual funds.
Persons licensed with the
Financial Industry Regulatory Authority (“FINRA”) as a registered representative (often referred to as a broker or financial adviser) and associated with a specific broker-dealer may receive compensation
from a Fund for providing services which are primarily intended to result in the sale of Fund shares. The Distributor has an agreement in place with each broker-dealer selling the Fund defining specifically what that
broker-dealer will be paid for the sale of a particular Voya mutual fund. The broker-dealer then pays the registered representative who sold you the mutual fund some or all of what they receive from Voya. A registered
representative may receive a payment when the sale is made and in some cases, can continue to receive payments while you are invested in the mutual fund. In addition, other entities may receive compensation from a
Fund for providing services which are primarily intended to result in the sale of Fund shares, so long as such entities are permitted to receive these fees under applicable rules and regulations.
The Distributor may pay, from
its own resources, additional fees to these broker-dealers or other financial institutions including affiliated entities. These additional fees paid to intermediaries may take the following forms: (1) a percentage of
that entity’s customer assets invested in Voya mutual funds; (2) a percentage of that entity's gross sales; or (3) some combination of these payments. Depending on the broker-dealer's satisfaction of the
required conditions, these payments may be periodic and may be up to: (1) 0.30% per annum of the value of the Fund's shares held by the broker-dealer’s customers; or (2) 0.30% of the value of the Fund's shares
sold by the broker-dealer during a particular period. For example, if that initial investment averages a value of $10,000 over the year, the Distributor could pay a maximum of $30 on those assets. If you invested
$10,000, the Distributor could pay a maximum of $30 for that sale.
Voya, out of its own resources
and without additional cost to the Fund or its shareholders, may provide additional cash or non-cash compensation to intermediaries selling shares of the Fund, including affiliates of Voya. These amounts would be in
addition to the distribution payments made by the Fund under the distribution agreements. Management personnel of Voya may receive additional compensation if the overall amount of investments in funds advised by Voya
meets certain target levels or increases over time.
Voya may provide additional cash
or non-cash compensation to third parties selling our mutual funds including affiliated companies. This may take the form of cash incentives and non-cash compensation and may include, but is not limited to: cash;
merchandise; trips; occasional entertainment; meals or tickets to a sporting event; client appreciation events; payment for travel expenses (including meals and lodging) to pre-approved training and education seminars;
and payment for advertising and sales campaigns. The Distributor may also pay concessions in addition to those described above to broker-dealers so that Voya mutual funds are made available by those broker-dealers
for their customers. The Sub-Adviser of the Fund may contribute to non-cash compensation arrangements.
The compensation paid by Voya to
a financial intermediary is typically paid continually over time, during the period when the intermediary’s clients hold investments in the Voya mutual funds. The amount of continuing compensation paid by Voya
to different financial intermediaries for distribution and/or shareholder services varies. The compensation is typically a percentage of the value of the financial intermediary’s clients’ investments in
Voya mutual funds or a per account fee. The variation in compensation may, but will not necessarily, reflect enhanced or additional services provided by the intermediary.
Voya or a Voya mutual fund may
pay service fees to intermediaries for administration, recordkeeping, and other shareholder services. Intermediaries receiving these payments may include, among others, brokers, financial planners or advisers, banks,
and insurance companies. The Voya mutual funds may reimburse Voya for some or all of the payments made by Voya to intermediaries for these services.
In some cases, a financial
intermediary may hold its clients’ mutual fund shares in nominee or street name. These financial intermediaries may (though they will not necessarily) provide services including, among other things: processing
and mailing trade confirmations; capturing and processing tax data; issuing and mailing dividend checks to shareholders who have selected cash distributions; preparing record date shareholder lists for proxy
solicitations; collecting and posting distributions to shareholder accounts; and establishing and maintaining systematic withdrawals and automated investment plans and shareholder account registrations.
PAYMENTS TO FINANCIAL
INTERMEDIARIES (continued)
The top firms Voya paid to sell its
mutual funds as of the last calendar year are:
Advisor Group,
Inc.; Ameriprise Financial Services, Inc.; Broadridge Business Process Outsourcing, LLC; Cetera Advisor Networks, LLC; Charles Schwab & Co. Inc.; Directed Services LLC; Goldman Sachs & Co.; J.P. Morgan
Securities, LLC; LPL Financial LLC; Merrill Lynch, Pierce, Fenner & Smith Inc.; Morgan Stanley; National Financial Services, LLC; Oppenheimer & Co., Inc.; Pershing, LLC; Prudential Insurance Company of America;
Raymond James & Associates, Inc.; RBC Capital Markets, LLC; ReliaStar Life Insurance Company of New York; TD Ameritrade, Inc.; UBS Financial Services, Inc.; Voya Financial Advisors, Inc.; Voya Retirement
Insurance and Annuity Company; Wells Fargo Bank N.A.; and Wells Fargo Clearing Services, LLC.
Your registered representative
or broker-dealer could have a financial interest in selling you a particular mutual fund, or the mutual funds of a particular company, to increase the compensation they receive. Please make sure you read fully each
mutual fund prospectus and discuss any questions you have with your registered representative.
Telephone Orders
Neither the Fund nor the transfer agent will be
responsible for the authenticity of phone instructions or losses, if any, resulting from unauthorized shareholder transactions if they reasonably believe that such instructions were genuine. The Fund and the transfer
agent have established reasonable procedures to confirm that instructions communicated by telephone are genuine. These procedures include recording telephone instructions for exchanges and expedited redemptions,
requiring the caller to give certain specific identifying information, and providing written confirmation to shareholders of record not later than five days following any such telephone transactions. If the Fund or
the transfer agent do not employ these procedures, they may be liable for any losses due to unauthorized or fraudulent telephone instructions.
Small Accounts
Due to the relatively high cost of handling
small investments, the Fund reserves the right, upon 30 days’ prior written notice, to redeem at NAV (less any applicable deferred sales charge), the shares of any shareholder whose account (except for
IRAs) has a total value that is less than the Fund's minimum. Before the Fund redeems such shares and sends the proceeds to the shareholder, it will notify the shareholder that the value of the shares in the account
is less than the minimum amount allowed and will allow the shareholder 30 days to make an additional investment in an amount that will increase the value of the account to the minimum before the redemption is
processed. Your account will not be closed if its drop in value is due to Fund performance.
Account Access
Unless your Fund Common Shares are held through
a third-party fiduciary or in an omnibus registration at your bank or brokerage firm, you will be able to access your account information over the Internet at www.voyainvestments.com or via a touch tone telephone by
calling 1-800-992-0180. Should you wish to speak with a Shareholder Services Representative, you may call the toll-free number listed above.
Privacy Policy
The Fund has adopted a policy concerning
investor privacy. To review the privacy policy, contact a Shareholder Services Representative at 1-800-992-0180, obtain a policy over the Internet at www.voyainvestments.com, or see the privacy promise that
accompanies any Prospectus obtained by mail.
Householding
To reduce expenses, we may mail only one copy
of the Fund's Prospectus and each annual and semi-annual shareholder report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please call a Shareholder
Services Representative at 1-800-992-0180 or speak to your investment professional. We will begin sending you individual copies 30 days after receiving your request.
Repurchase Offers
As a fundamental policy, which may not be
changed without shareholder approval, the Fund offers shareholders the opportunity to redeem their Common Shares on a monthly basis. The time and dates by which repurchase offers must be received in good order
(“Repurchase Request Deadline”) are 4:00 p.m. Eastern time on the 10th business day of each month.
The Fund is required to offer to
repurchase not less than 5% of its outstanding Common Shares with each Repurchase Offer and under normal market conditions, the Board expects to authorize a 5% offer. The Fund may not offer to repurchase more than 25%
of its outstanding Common Shares during any calendar quarter. The repurchase price will be the Fund's NAV determined on the repurchase pricing date, which will be a date not more than 14 calendar days following the
Repurchase Request Deadline (“Repurchase Offer Amount”). Payment for all Common Shares repurchased pursuant to these offers will be made not later than 5 business days or 7 calendar days (whichever period
is shorter) after the repurchase pricing date (“Repurchase Payment Deadline”). Under normal circumstances, it is expected that the repurchase pricing date will be the Repurchase Request Deadline and that
the repurchase price will be the Fund's NAV determined after close of business on the Repurchase Request Deadline. Payment for Common Shares tendered will normally be made on the first business day following the
repurchase pricing date and, in every case, at least five business days before sending notification of the next monthly repurchase offer. If the tendered shares have been purchased immediately prior to the tender, the
Fund will not release repurchase proceeds until payment for the tendered shares has settled. During the period the offer to repurchase is open, shareholders may obtain the current NAV by calling 1-800-992-0180.
At least 7 and no more than 14
days prior to the Repurchase Request Deadline, the Fund will send notice to each shareholder setting forth: (i) the number of Common Shares the Fund will repurchase; (ii) the Repurchase Request Deadline and other
terms of the offer to repurchase; and (iii) the procedures for shareholders to follow to request a repurchase. Shareholders and financial intermediaries must submit repurchase requests in good order by the Repurchase
Request Deadline. The Repurchase Request Deadline will be strictly observed. Shareholders and financial intermediaries failing to submit repurchase requests in good order by such deadline will be unable to liquidate
Common Shares until a subsequent repurchase offer.
If more Common Shares are
tendered for repurchase than the Fund has offered to repurchase, the Board may, but is not obligated to, increase the number of Common Shares to be repurchased by up to 2% of the Fund's Common Shares outstanding per
quarter, subject to the 25% limitation on the repurchase of the Fund's outstanding Common Shares during any calendar quarter. If there are still more Common Shares tendered than are offered for repurchase, Common
Shares will be repurchased on a pro-rata basis. However, the Fund may determine to alter the pro-rata allocation and the Fund may accept all Common Shares tendered by persons who own, in the aggregate, fewer than 100 Common Shares and who tender all of their Common Shares,
before prorating shares tendered by others.
Because of the foregoing,
shareholders may be unable to liquidate all, or a given percentage, of their Common Shares and some shareholders may tender more Common Shares than they wish to have repurchased in order to ensure repurchase of at
least a specific number of shares. Shareholders may withdraw Common Shares tendered for repurchase at any time prior to the Repurchase Request Deadline.
The Fund does not presently
intend to deduct any repurchase fees, other than any applicable EWC, from the repurchase amount. However, in the future, the Board may determine to charge a repurchase fee payable to the Fund, to reasonably compensate
it for its expenses directly related to the repurchase. These fees could be used to compensate the Fund for, among other things, its costs incurred in disposing of securities or in borrowing in order to make payment
for repurchased shares. Any repurchase fees will never exceed 2% of the proceeds of the repurchase. It should be noted that the Board may implement repurchase fees without a shareholder vote.
Repurchase offers and the need
to fund repurchase obligations may affect the ability of the Fund's portfolio to be fully invested, which may reduce returns. Moreover, diminution in the size of the Fund's portfolio through repurchases without
offsetting new sales, may result in untimely sales of portfolio securities and a higher expense ratio, and may limit the ability of the Fund to participate in new investment opportunities. Repurchases resulting in
portfolio turnover will result in additional expenses being borne by the Fund. The Fund may also sell portfolio securities to meet repurchase obligations which, in certain circumstances, may adversely affect the
market for Senior Loans and reduce the Fund's value. Notwithstanding the foregoing, it is the Adviser's or Sub-Adviser's intention to fund repurchases with the proceeds of borrowings whenever practical. Use of the
borrowing facility entails certain risks and costs. See “Repurchase Offers - Liquidity Requirements.”
REPURCHASE OFFERS (continued)
See “Tax Matters”
for a general summary for U.S. shareholders. Investors should rely on their own tax adviser for advice about the particular federal, state and local tax consequences of investing in the Fund and participating in the
Fund's repurchase offer program.
Suspension or Postponement of a
Repurchase Offer
The Fund may suspend or postpone a repurchase
offer only: (i) if making or effecting the repurchase offer would cause the Fund to lose its status as a regulated investment company under the Internal Revenue Code; (ii) for any period during which the NYSE or any
market in which the securities owned by the Fund are principally traded is closed, other than customary weekend and holiday closings, or during which trading in such market is restricted; (iii) for any period during
which an emergency exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable, or during which it is not reasonably practicable for the Fund fairly to determine the value
of its net assets; or (iv) for such other periods as the SEC may by order permit for the protection of shareholders of the Fund.
Liquidity Requirements
From the time that the notification is sent to
shareholders until the Repurchase Payment Deadline, the Fund will ensure that a percentage of its net assets equal to at least 100% of the Repurchase Offer Amount consists of assets: (i) that can be sold or disposed
of in the ordinary course of business at approximately the price at which the Fund has valued the investment within the time period between the Repurchase Request Deadline and the Repurchase Payment Deadline; or (ii)
that mature by the Repurchase Payment Deadline.
The Board has adopted procedures
that are reasonably designed to ensure that the Fund's assets are sufficiently liquid so that the Fund can comply with the repurchase policy and the liquidity requirements described in the previous paragraph.
The Fund intends to finance
repurchase offers with cash on hand, cash raised through borrowings, or the liquidation of portfolio securities. There is some risk that the need to sell Senior Loans to fund repurchase offers may affect the market
for those Senior Loans. In turn, this could diminish the Fund's NAV.
Redemption of Senior Securities
In order to permit the Fund to repurchase
Common Shares, the borrowing or other indebtedness issued by the Fund, as well as the terms of any Preferred Shares, must either mature by the next Repurchase Request Deadline or provide for their redemption, call or
repayment by the next Repurchase Request Deadline without penalty or premium. Although the Fund ordinarily does not expect to redeem any senior security, including Preferred Shares, it may be required to redeem such
securities if, for example, the Fund does not meet an asset coverage ratio required by law or correct a failure to meet a rating agency guideline in a timely manner.
INVESTMENT MANAGEMENT AND OTHER
SERVICE PROVIDERS
The business and affairs of the Fund, including
supervision of the duties performed by the Fund's Adviser and Sub-Adviser, are managed under the direction of the Board. The names and business addresses of the Trustees and Officers of the Fund and their principal
occupations and other affiliations during the past five years are set forth under “Management of the Fund” in the SAI.
The Investment Adviser
Voya Investments, an Arizona limited liability
company, serves as the investment adviser to the Fund. Voya Investments has overall responsibility for the management of the Fund. Voya Investments oversees all investment advisory and portfolio management services
and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance
and related services. Voya Investments is registered with the SEC as an investment adviser.
The Adviser is an indirect,
wholly-owned subsidiary of Voya Financial, Inc. Voya Financial, Inc. is a U.S.-based financial institution whose subsidiaries operate in the retirement, investment, and insurance industries.
Voya Investments'
principal office is located at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258. As of March 31, 2020, Voya Investments managed approximately [$] billion in assets.
Management Fee
The Adviser bears the expenses of providing the
services described above. The Adviser currently receives from the Fund an annual fee of 0.90% of the Fund’s Managed Assets.
The Adviser is responsible for all
of its own costs, including costs of its personnel required to carry out its duties.
For information
regarding the basis for the Board’s approval of the investment advisory and investment sub-advisory relationships, please refer to the Fund’s annual shareholder report dated February 29, 2020.
The Sub-Adviser and Portfolio
Managers
The Adviser has engaged a sub-adviser to
provide the day-to-day management of the Fund's portfolio. The sub-adviser is an affiliate of the Adviser. The Adviser is responsible for monitoring the investment program and performance of the sub-adviser. Under the
terms of the sub-advisory agreement, the agreement can be terminated by either the Adviser or the Board. In the event the sub-advisory agreement is terminated, the sub-adviser may be replaced subject to any regulatory
requirements or the Adviser may assume day-to-day investment management of the Fund.
Voya Investment Management Co.
LLC
Voya IM, a
Delaware limited liability company, was founded in 1972 and is registered with the SEC as an investment adviser. Voya IM is an indirect, wholly-owned subsidiary of Voya Financial, Inc. and is an affiliate of the
Adviser. Voya IM has acted as adviser or sub-adviser to mutual funds since 1994 and has managed institutional accounts since 1972. Voya IM's principal office is located at 230 Park Avenue, New York, New York, 10169.
As of March 31, 2020, Voya IM managed approximately [$] billion in assets.
The Sub-Adviser currently receives
an annual fee, paid by the Adviser, of 0.36% of the Fund’s Managed Assets.
Portfolio Management. The following individuals are jointly responsible for the day-to-day management of the Fund's portfolio and have co-managed the Fund since April of 2001.
Jeffrey A. Bakalar, Portfolio
Manager, Managing Director and Group Head of the Voya IM Senior Loan Group, since January 2000.
Charles LeMieux,
CFA, Portfolio Manager and Senior Vice President of the Voya IM Senior Loan Group, since 1998.
Daniel A. Norman, Portfolio
Manager, Managing Director and Group Head of the Voya IM Senior Loan Group, since January 2000.
Additional Information Regarding the
Portfolio Managers
The SAI provides additional information about each
portfolio manager's compensation, other accounts managed by each portfolio manager, and each portfolio manager’s ownership of securities in the Fund.
INVESTMENT MANAGEMENT AND OTHER
SERVICE PROVIDERS (continued)
The Transfer Agent, Dividend
Disbursing Agent, and Registrar
BNY Mellon Investment Servicing (US) Inc.
(“Transfer Agent”) serves as the transfer agent, dividend disbursing agent, and registrar for the Common Shares of the Fund. Its principal office is located at 301 Bellevue Parkway, Wilmington, Delaware
19809.
The Custodian
The Fund's securities and cash are held and
maintained under a Custody Agreement with State Street Bank and Trust Company (“Custodian”). Its principal office is located at 801 Pennsylvania Avenue, Kansas City, Missouri 64105.
The Distributor
Voya Investments Distributor, LLC
(“Distributor”) is the principal underwriter and distributor of the Fund. It is a Delaware limited liability company with its principal offices at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale,
Arizona 85258. The Distributor is an indirect, wholly-owned subsidiary of Voya Financial, Inc. and is an affiliate of the Adviser. See “Principal Underwriter” in the SAI.
The Distributor is a member of
FINRA. To obtain information about FINRA member firms and their associated persons, you may contact FINRA at www.finra.org or the Public Disclosure Hotline at 800-289-9999.
Contractual Arrangements
The Fund has contractual arrangements with
various service providers, which may include, among others, investment advisers, distributors, custodians and fund accounting agents, shareholder service providers, and transfer agents, who provide services to the
Fund. Shareholders are not parties to, or intended (“third-party”) beneficiaries of, any of those contractual arrangements, and those contractual arrangements are not intended to create in any individual
shareholder or group of shareholders any right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the Fund. This paragraph is
not intended to limit any rights granted to shareholders under federal or state securities laws.
DIVIDENDS AND DISTRIBUTIONS
Distribution Policy
Income dividends on Common Shares are calculated
and declared daily and paid monthly under guidelines approved by the Board. The Fund may make one or more annual payments from any realized capital gains.
Dividend Reinvestment
Unless you instruct the Fund to pay you
dividends in cash, dividends and distributions paid by the Fund will be reinvested in additional shares of the Fund. You may, upon written request or by completing the appropriate section of the Account Application,
elect to have all dividends and other distributions paid on Common Shares of the Fund invested in another Voya mutual fund that offers the same class of shares. If you are a shareholder of Voya Prime Rate Trust
whose shares are not held in a broker or nominee account, you may, upon written request, elect to have all dividends invested into a pre-existing Class A shares account of any open-end Voya mutual fund.
Plan of Distribution
The Fund has entered into a distribution
agreement with the Distributor (“Distribution Agreement”). Subject to the terms and conditions of the Distribution Agreement, the Fund may issue and sell Common Shares of the Fund from time to time through
certain broker-dealers which have entered into dealer agreements with the Distributor. The Common Shares will be offered on a continuous basis and may be purchased at NAV.
In connection with the sale of
Class A Common Shares, the Distributor will reallow to broker-dealers participating in the offering from the sales charge depending on the amount of the sale as follows: 2.50% for amounts less than $100,000; and 2.00%
for amounts of $100,000 to $499,999. For purchases of Class A Common Shares that are subject to a 1.00% EWC, the Distributor may compensate broker-dealers participating in the offering at the rate of 1.00% for amounts
of $500,000 or more.
In connection with the sale of
Class T Common Shares, the Distributor will reallow to broker-dealers participating in the offering from the sales charge depending on the amount of the sale as follows: 2.50% for amounts less than $250,000; 2.00% for
amounts of $250,000 to $499,999; 1.50% for amounts of $500,000 to $999,000; and 1.00% for amounts of $1 million dollars and over.
The Distributor will compensate
broker-dealers participating in the offering at a rate of 1.00% of the gross sales price per share for Class C Common Shares purchased from the Fund by such broker-dealer.
Settlements of sales of Common
Shares will occur on the third business day following the date on which any such sales are made. Unless otherwise indicated in a prospectus supplement, the Distributor will act as underwriter on a reasonable efforts
basis.
In addition, the Distributor
will compensate broker-dealers participating in the offering on a quarterly basis at rates that are based on the average daily net assets of shares that are registered in the name of such broker-dealer as nominee or
held in a shareholder account that designates such broker-dealer as the dealer of record. The rates, on an annual basis, are as follows: 0.25% for Class A and Class T Common Shares and 0.50% for Class C Common Shares.
Rights to these ongoing payments generally begin accruing in the 13th month following a purchase of Class A or Class C Common Shares, although the Distributor may, in its discretion, make payments prior to the 13th
month. Rights to these ongoing payments generally begin accruing immediately following a purchase of Class T Common Shares.
Use of Proceeds
It is expected that 100% of the net proceeds of
Common Shares issued pursuant to the offering will be invested in Senior Loans and other securities consistent with the Fund's investment objective and policies within three months. Pending investment in Senior Loans,
the proceeds will be used to pay down the Fund's outstanding borrowings under its credit facilities or to fund redemptions. See “Investment Objective and Policies - Policy on Borrowing.”
As of June 5,
2020 the Fund had outstanding borrowings of [$] million under its credit facility. By paying down the Fund's borrowings, the Fund can avoid adverse impacts on yields pending investment of such proceeds in Senior
Loans. As investment opportunities are subsequently identified, it is expected that the Fund will reborrow amounts previously repaid and invest such amounts in additional Senior Loans or to fund redemptions.
The Fund is a Delaware statutory trust
organized on December 14, 2000 and is registered with the SEC as a continuously-offered, diversified, closed-end management investment company that makes monthly repurchase offers for its Common Shares, subject to
certain conditions. The business and affairs of the Fund, including supervision of the duties performed by the Fund's Adviser and Sub-Adviser are managed under the direction of its Board. The names and business
addresses of the Trustees and Officers of the Fund and their principal occupations and other affiliations during the past five years are set forth under “Management of the Fund” in the SAI. The Trustees
are experienced executives who oversee the Fund's activities, review contractual arrangements with companies that provide services to the Fund, and review the Fund's performance.
The Fund's Agreement and
Declaration of Trust (“Declaration of Trust”) authorizes the issuance of an unlimited number of shares of beneficial interest classified as Common Shares, and an unlimited number of shares of beneficial
interest classified as Preferred Shares.
Under Delaware law, Fund
shareholders are entitled to the same limitation of personal liability extended to stockholders of private corporations organized under the general corporation law of Delaware. As an added protection, the Fund's
Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund. The Fund's Declaration of Trust provides for indemnification out of the Fund's property for all losses and expenses of any
shareholder held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund
would be unable to meet its obligations wherein the complaining party was held not to be bound by the disclaimer.
The Fund will send unaudited
reports at least semi-annually and audited financial statements annually to all of its shareholders.
The Declaration of Trust
provides that obligations of the Fund are not binding upon Trustees individually but only upon the property of the Fund. It also provides that the Trustees will not be liable for errors of judgment or mistakes of fact
or law, but nothing in the Declaration of Trust protects a Trustee against any liability to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his or her office.
The Fund is responsible for paying
all of the expenses of its operations, including, without limitation, the management fee payable and extraordinary expenses, such as litigation expenses.
Dividends, Voting and Liquidation
Rights
Each Common Share of the Fund has one vote and
shares equally in dividends and distributions, when and if, declared by the Fund, and in the Fund's net assets upon liquidation. Matters such as approval of new advisory agreements and changes in a fundamental policy
of the Fund require the affirmative vote of all shareholders. Matters affecting a certain class of the Fund will be voted on by shareholders of that particular class.
All Common Shares, when issued,
are fully paid and are non-assessable by the Fund. There are no preemptive or conversion rights applicable to any of the Common Shares. Common Shares do not have cumulative voting rights and, as such, holders of more
than 50% of the Common Shares voting for trustees representing the holder of Common Shares can elect all trustees representing the holders of Common Shares and the remaining shareholders would not be able to elect any
such trustees.
In the event Preferred Shares
are outstanding, holders of Preferred Shares, voting as a separate class, are entitled to elect: (i) two trustees of the Fund at all times; and (ii) a majority of the trustees if, at any time, dividends on Preferred
Shares are unpaid in an amount equal to two years' dividends thereon, and to continue to be so represented until all dividends in arrears have been paid or otherwise provided for. In all other cases, trustees will be
elected by holders of Common Shares voting separately as a single class.
Subject to the voting rights
described above, the Fund may not, among other things, without the approval of the holders of a majority of the outstanding Preferred Shares voting as a separate class, approve any plan of reorganization adversely
affecting Preferred Shares. In addition, the Fund may not, without the affirmative vote of the holders of at least a majority of the outstanding Preferred Shares voting as a separate class: (i) authorize, create, or
issue additional Preferred Shares or classes or series of Preferred Shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or the distribution of assets upon liquidation;
(ii) amend, alter, or repeal the provisions of
DESCRIPTION OF THE FUND (continued)
the Declaration of Trust, the Bylaws of the
Fund or any Certificate of Designation, whether by merger, consolidation or otherwise, so as to materially affect any preference, right or power of such Preferred Shares or the holders thereof; or (iii) change or
adjust any investment restrictions of the Fund that are designated as fundamental in the Prospectus or SAI.
When the Fund has any Preferred
Shares outstanding, the Fund may not pay any dividend or distribution (other than a dividend or distribution paid in shares of a series of, or in options, warrants, or rights to subscribe for or purchase, Common
Shares) in respect of Common Shares or call for redemption, redeem, purchase or otherwise acquire for consideration any Common Shares (except by conversion into or exchange for shares of the Fund ranking junior to the
Preferred Shares as to the payment of dividends and the distribution of assets upon liquidation), unless: (i) it has paid all cumulative dividends on Preferred Shares; (ii) it has redeemed any Preferred Shares that it
has called for mandatory redemption; and (iii) after paying the dividend, the Fund meets asset coverage requirements set forth in the Declaration of Trust or any Certificate of Designation.
Status of Shares
The following
table sets forth information about the Fund's outstanding Common Shares as of June 5, 2020:
Title of Class
| Number Authorized
| Number Held By
the Fund or for its
Own Account
| Number
Outstanding
|
Class A Common Shares
| Unlimited
| 0
|
|
Class C Common Shares
| Unlimited
| 0
|
|
Class I Common Shares
| Unlimited
| 0
|
|
Class W Common Shares
| Unlimited
| 0
|
|
Class T Common Shares
| Unlimited
| 0
| N/A1
|
1
| The Fund had no shares of Class T Common Shares outstanding as of the date of this Prospectus.
|
Fundamental and Non-Fundamental
Policies of the Fund
The investment objective of the Fund, certain
policies of the Fund specified herein as fundamental, and the investment restrictions of the Fund described in the SAI are fundamental policies of the Fund and may not be changed without a majority vote of the
shareholders of the Fund. The term majority vote means the affirmative vote of: (i) more than 50% of the outstanding shares of the Fund; or (ii) 67% or more of the shares present at a meeting if more than 50% of the
outstanding shares of the Fund are represented at the meeting in person or by proxy, whichever is less. All other policies of the Fund may be modified by resolution of the Board.
DESCRIPTION OF THE CAPITAL
STRUCTURE
Common Shares
The Fund's Declaration of Trust authorizes the
issuance of an unlimited number of Common Shares of beneficial interest, with par value of $0.01 per share. All Common Shares have equal rights to the payment of dividends and the distribution of assets upon
liquidation. Common Shares will, when issued, be fully paid and non-assessable and will have no pre-emptive or conversion rights or rights to cumulative voting.
Whenever Preferred Shares are
outstanding, holders of Common Shares will not be entitled to receive any distributions from the Fund, unless at the time of such declaration: (i) all accrued dividends on Preferred Shares or accrued interest on
borrowings have been paid; and (ii) the value of the Fund's total assets (determined after deducting the amount of such dividend or other distribution), less all liabilities and indebtedness of the Fund not
represented by senior securities, is at least 300% of the aggregate amount of such securities representing indebtedness and at least 200% of the aggregate amount of securities representing indebtedness plus the
aggregate liquidation value of the outstanding Preferred Shares. In addition to the requirements of the 1940 Act, the Fund would be required to comply with other asset coverage requirements as a condition of the Fund
obtaining a rating of the Preferred Shares from a rating agency. These requirements include asset coverage tests more stringent than under the 1940 Act. See “Description of the Capital Structure - Preferred
Shares.”
Borrowings
The Fund's Declaration of Trust authorizes the
Fund, without the prior approval of holders of Common Shares, to borrow money. In this connection, the Fund may issue notes or other evidence of indebtedness (including bank borrowings or commercial paper) and may
secure any such borrowings by mortgaging, pledging, or otherwise granting a security interest in the Fund's assets. See “Risk Factors and Special Considerations.”
Preferred Shares
The Fund's Declaration of Trust authorizes the
issuance of an unlimited number of shares of a class of beneficial interest with preference rights, including Preferred Shares as may be authorized from time to time by the Trustees, in one or more series, with rights
as determined by the Board, by action of the Board without the approval of the holders of Common Shares or other series of outstanding Preferred Shares. The Preferred Shares will have such preferences, voting powers,
terms of redemption, if any, and special or relative rights or privileges (including conversion rights, if any) as the Board may determine and would be set forth in the Fund's Certificate of Designation establishing
the terms of the Preferred Shares.
Any decision to offer Preferred
Shares is subject to market conditions and to the Board and the Adviser's or Sub-Adviser's continuing belief that leveraging the Fund's capital structure through the issuance of Preferred Shares is likely to achieve
the benefits to the Common Shares described in this Prospectus for long-term investors. The terms of the Preferred Shares will be determined by the Board in consultation with the Adviser or Sub-Adviser (subject to
applicable law and the Fund's Declaration of Trust) if and when it authorizes a Preferred Shares offering. It is expected, at least initially, that the Preferred Shares would likely pay cumulative dividends at rates
determined over relatively shorter-term periods (such as 7 days) and would provide for the periodic redetermination of the dividend rate through an auction or remarketing procedure. The preference on
distribution, preference on liquidation, voting rights, and redemption provisions of the Preferred Shares will likely be as stated below.
Under the 1940 Act, the Fund may
issue Preferred Shares so long as immediately after any issuance of Preferred Shares the value of the Fund's total assets (less all Fund liabilities and indebtedness that is not senior indebtedness) is at least twice
the amount of the Fund's senior indebtedness plus the involuntary liquidation preference of all outstanding shares. In addition, the Fund is not permitted to declare any cash dividend or other distribution on its
Common Shares unless the liquidation value of the Preferred Shares is less than one-half of the value of the Fund's total net assets (determined after deducting the amount of such dividend or distribution) immediately
after the distribution.
The Preferred Shares would have
complete priority over the Common Shares as to distribution of assets. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Fund, holders of Preferred Shares would
be entitled to receive a preferential liquidating distribution (expected to equal the original purchase price per share plus accumulated and unpaid dividends thereon, whether or not earned or declared) before any
distribution of assets is made to holders of Common Shares.
The following information is meant as a general
summary for U.S. shareholders. Please see the SAI for additional information. Investors should rely on their own tax adviser for advice about the particular federal, state, and local tax consequences to them of
investing in the Fund.
The Fund will distribute all or
substantially all of its net investment income and net realized capital gains, if any, to its shareholders each year. Although the Fund will not be taxed on amounts it distributes, most shareholders will be taxed on
amounts they receive. A particular distribution generally will be taxable as either ordinary income or long-term capital gain. It generally does not matter how long a shareholder has held the Fund's Common Shares or
whether the shareholder elects to receive distributions in cash or reinvest them in additional Common Shares. For example, if the Fund properly reports a particular distribution as a capital gain dividend, it will be
taxable to a shareholder at his or her long-term capital gains rate.
Dividends from the Fund are not
expected to be eligible for the reduced rate of tax that may apply to distributions attributable to certain qualifying dividends on corporate stocks. Distributions attributable to non-qualifying dividends, interest
income, other types of ordinary income, and short-term capital gains will be taxed at the ordinary income tax rate applicable to the shareholder.
Dividends declared by the Fund
and payable to shareholders of record in October, November, or December and paid during the following January will be treated as having been received by shareholders in the year the distributions were declared.
Each shareholder will receive an
annual statement summarizing the shareholder's dividend and capital gains distributions.
If a shareholder invests through
a tax-advantaged account such as a retirement plan, the shareholder generally will not have to pay tax on dividends, at least until they are distributed from the account. These accounts are subject to complex tax
rules and shareholders should consult a tax adviser about investment through a tax-advantaged account.
There may be tax consequences to
a shareholder if the shareholder sells the Fund's Common Shares. A shareholder will generally have a capital gain or loss, which will be long-term or short-term, generally depending on how long the shareholder has
held those Common Shares. If a shareholder exchanges shares, the shareholder may be treated as if he or she sold them. Any capital loss incurred on the sale or exchange of Fund shares held for six months or less will
be treated as long-term loss to the extent of capital gain dividends received with respect to such shares. Additionally, any loss realized on a sale, redemption, or exchange of shares of the Fund may be disallowed
under “wash sale” rules to the extent the shares disposed of are replaced with other shares of the Fund within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed
of, including pursuant to a dividend reinvestment plan. If disallowed, the loss will be reflected as an adjustment to the tax basis of the shares acquired. You are responsible for any tax liabilities generated by your
transactions.
The Fund generally is required
to withhold U.S. federal income tax on all taxable distributions payable to a shareholder if the shareholder fails to provide the Fund with his or her correct taxpayer identification number or to make required
certifications, or if the shareholder has been notified by the Internal Revenue Service (“IRS”) that he or she is subject to backup withholding. Backup withholding is not an additional tax; rather, it is a
way in which the IRS ensures it will collect taxes otherwise due. Any amounts withheld may be credited against a shareholder's U.S. federal income tax liability.
The IRS requires mutual fund
companies and brokers to report on Form 1099-B the cost basis on the sale or exchange of Fund shares acquired on or after January 1, 2012 (“covered shares”). If you acquire and hold shares directly through
the Fund and not through a financial intermediary, the Fund will use an average cost single category methodology for tracking and reporting your cost basis on covered shares, unless you request, in writing, another
cost basis reporting methodology. Information regarding the methods available for cost basis reporting is included in the SAI.
An additional 3.8% Medicare tax
is imposed on certain net investment income (including ordinary dividends and capital gain distributions received from the Fund and net gains from redemptions, sales, exchanges or other taxable dispositions of Fund
shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of
an estate or trust) exceeds certain threshold amounts.
If, pursuant to an offer by the
Fund to repurchase its Common Shares, a shareholder tenders all Common Shares of the Fund that he or she owns or is considered to own, the shareholder may realize a taxable gain or loss. This gain or loss will be
treated as capital gain or loss if the Fund's Common Shares are held as capital assets and will generally
be long-term or short-term depending upon the
shareholder's holding period for the Common Shares. If, pursuant to an offer by the Fund to repurchase its Common Shares, a shareholder tenders fewer than all of the Common Shares of the Fund that he or she owns or is
considered to own, the redemption may not qualify as a sale or exchange, and the proceeds received may be treated as a dividend, return of capital or capital gain, depending on the Fund's earnings and profits and the
shareholder's basis in the tendered Common Shares. If that occurs, there is a risk that non-tendering shareholders may be considered to have received a deemed distribution as a result of the Fund's purchase of
tendered Common Shares, and all or a portion of that deemed distribution may be taxable as a dividend.
MORE INFORMATION ABOUT THE FUND
Legal Matters
The validity of the Common Shares offered hereby
will be passed upon for the Fund by Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston MA 02199-3600, counsel to the Fund.
Independent Registered Public
Accounting Firm
[ ] serves as the
independent registered public accounting firm for the Fund. The principal address of [ ] is [ ].
STATEMENT OF ADDITIONAL INFORMATION
- Table of Contents
TABLE OF CONTENTS
|
| Page
|
Introduction and Glossary
| [1
|
History of the Trust
| 2
|
Supplemental Description of Fund Investments and Risks
| 3
|
Portfolio Turnover
| 8
|
Fundamental and Non-Fundamental Investment Restrictions
| 8
|
Repurchase Offer Fundamental Policy
| 9
|
Management of the Trust
| 10
|
Code of Ethics
| 23
|
Principal Shareholders and Control Persons
| 23
|
Proxy Voting Procedures and Guidelines
| 25
|
Adviser
| 25
|
Expenses
| 26
|
Expense Limitations
| 26
|
Sub-Adviser
| 27
|
Principal Underwriter
| 29
|
Other Service Providers
| 30
|
Portfolio Transactions
| 30
|
Additional Purchase Information
| 33
|
Tax Considerations
| 35
|
Financial Statements
| 45]
|
Appendix A – Proxy Voting Procedures and Guidelines
| A-1
|
Financial Intermediary Specific
Sales Charge Waiver and Related Discount Policy Information
As described in the Prospectus, Class A Common
Shares may be subject to an initial sales charge and an EWC and Class C Common Shares may be subject to an EWC. Certain financial intermediaries may impose different initial sales charges or waive the initial sales
charge or EWC in certain circumstances. This Appendix details the variations in sales charge waivers by financial intermediary. You should consult your financial representative for assistance in determining whether
you may qualify for a particular sales charge waiver.
AMERIPRISE FINANCIAL
Class A Common Shares Front-End Sales
Charge Waivers Available at Ameriprise Financial:
The following information applies
to Class A Common Shares purchases if you have an account with or otherwise purchase Fund shares through Ameriprise Financial:
Shareholders
purchasing Fund shares through an Ameriprise Financial platform or account will be eligible for the following front-end sales charge waivers and discounts, and EWC waivers, which may differ from those disclosed
elsewhere in this Fund’s prospectus or SAI:
•
| Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
|
•
| Common Shares purchased through an Ameriprise Financial investment advisory program (if an Advisory or similar share class for such investment advisory program is not available).
|
•
| Common Shares purchased by third party investment advisors on behalf of their advisory clients through Ameriprise Financial’s platform (if an Advisory or similar share class for such investment advisory
program is not available).
|
•
| Common Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other fund within the same fund family).
|
•
| Common Shares exchanged from Class C Common Chares of the same fund in the month of or following the 10-year anniversary of the purchase date. To the extent that this prospectus elsewhere provides for a waiver with
respect to such shares following a shorter holding period, that waiver will apply to exchanges following such shorter period. To the extent that this prospectus elsewhere provides for a waiver with respect to
exchanges of Class C Common Shares for load waived shares, that waiver will also apply to such exchanges.
|
•
| Employees and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
|
•
| Common Shares purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit plans) that are held by a covered family
member, defined as an Ameriprise financial advisor and/or the advisor’s spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s
lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse of a covered family member who is a lineal descendant.
|
•
| Common Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption
and purchase occur in the same account, and (3) redeemed Common Shares were subject to a front-end or deferred sales load (i.e. Rights of Reinstatement).
|
EDWARD JONES
Effective on or after May 1,
2020, clients of Edward Jones (also referred to as “shareholders”) purchasing fund shares on the Edward Jones commission and fee-based platforms are eligible only for the following sales charge discounts
(also referred to as “breakpoints”) and waivers, which can differ from breakpoints and waivers described elsewhere in the mutual fund prospectus or SAI or through another broker-dealer. In all instances,
it is the shareholder's responsibility to inform Edward Jones at the time of purchase of any relationship, holdings of Voya funds or other facts qualifying the purchaser for breakpoints or waivers. Edward Jones can
ask for documentation of such circumstance.
Breakpoints
Rights of Accumulation
(“ROA”)
•
| The applicable sales charge on a purchase of Class A Common Shares is determined by taking into account all share classes (except any money market funds and retirement plan share classes) of the Voya funds held by
the shareholder or in an account grouped by Edward Jones with other accounts for the purpose of providing certain pricing considerations (“pricing groups”). This includes all share classes held on the
Edward Jones platform and/or held on another platform. The inclusion of eligible fund family assets in the rights of accumulation calculation is dependent on the shareholder notifying his or her financial advisor of
such assets at the time of calculation.
|
•
| ROA is determined by calculating the higher of cost or market value (current shares x NAV).
|
Letter of Intent
(“LOI”)
•
| Through a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders intend to make over a 13-month period from the date Edward Jones receives the LOI. The LOI is determined
by calculating the higher of cost or market value of qualifying holdings at LOI initiation in combination with the value that the shareholder intends to buy over a 13-month period to calculate the front-end sales
charge and any breakpoint discounts. Each purchase the shareholder makes during that 13-month period will receive the sales charge and breakpoint discount that applies to the total amount. The inclusion of eligible
fund family assets in the LOI calculation is dependent on the shareholder notifying his or her financial advisor of such assets at the time of calculation. Purchases made before the LOI is received by Edward Jones are
not covered under the LOI and will not reduce the sales charge previously paid. Sales charges will be adjusted if LOI is not met.
|
Sales Charge Waivers
Sales charges are waived for the
following shareholders and in the following situations:
•
| Associates of Edward Jones and its affiliates and their family members who are in the same pricing group (as determined by Edward Jones under its policies and procedures) as the associate. This waiver will continue
for the remainder of the associate's life if the associate retires from Edward Jones in good-standing.
|
•
| Common Shares purchased in an Edward Jones fee-based program.
|
•
| Common Shares purchased through reinvestment of capital gains distributions and dividend reinvestment.
|
•
| Common Shares purchased from the proceeds of redeemed shares of the same fund family so long as the following conditions are met: 1) the proceeds are from the sale of shares within 60 days of the purchase, and 2)
the sale and purchase are made in the same share class and the same account or the purchase is made in an individual retirement account with proceeds from liquidations in a non-retirement account.
|
•
| Common Shares exchanged into class A Common Shares from another share class so long as the exchange is into the same fund and was initiated at the discretion of Edward Jones. Edward Jones is responsible for any
remaining EWC due to the fund company, if applicable. Any future purchases are subject to the applicable sales charge as disclosed in the prospectus.
|
•
| Exchanges from class C Common Shares to class A Common Shares of the same fund, generally, in the 84th month following the anniversary of the purchase date or earlier at the discretion of Edward Jones.
|
Early Withdrawal Charge (EWC)
Waivers
If the shareholder purchases Common
Shares that are subject to a EWC and those Common Shares are redeemed before the EWC is expired, the shareholder is responsible to pay the EWC except in the following conditions:
•
| The death or disability of the shareholder
|
•
| Systematic withdrawals with up to 10% per year of the account value
|
•
| Return of excess contributions from an Individual Retirement Account (IRA)
|
•
| Common Shares sold as part of a required minimum distribution for IRA and retirement accounts if the redemption is taken in or after the year the shareholder reaches qualified age based on applicable IRS regulations
|
•
| Common Shares sold to pay Edward Jones fees or costs in such cases where the transaction is initiated by Edward Jones
|
•
| Common Shares exchanged in an Edward Jones fee-based program
|
•
| Common Shares acquired through NAV reinstatement
|
Other Important Information
Minimum Purchase Amounts
•
| $250 initial purchase minimum
|
•
| $50 subsequent purchase minimum
|
Minimum Balances
•
| Edward Jones has the right to redeem at its discretion fund holdings with a balance of $250 or less. The following are examples of accounts that are not included in this policy:
|
•
| A
fee-based account held on an Edward Jones platform
|
•
| A
529 account held on an Edward Jones platform
|
•
| An account with an active systematic investment plan or letter of intent (LOI)
|
Changing Share Classes
•
| At any time it deems necessary, Edward Jones has the authority to exchange at NAV a shareholder's holdings in a fund to Class A Common Shares.
|
JANNEY MONTGOMERY SCOTT LLC
Effective May 1, 2020,
shareholders purchasing Fund shares through a Janney Montgomery Scott LLC (“Janney”) account will be eligible only for the following load waivers (front-end sales charge waivers and EWC, or back-end, sales
charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus or SAI.
Front-end sales charge waivers on
Class A Common Shares available at Janney
•
| Common Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family).
|
•
| Common Shares purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
|
•
| Common Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following the redemption, (2) the redemption and purchase occur in the
same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e., right of reinstatement).
|
•
| Class C Common Shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same Fund pursuant to Janney’s policies and
procedures.
|
Sales charge waivers on Class A and C
Common Shares available at Janney
Common Shares sold upon the death
or disability of the shareholder.
•
| Common Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
|
•
| Common Shares purchased in connection with a return of excess contributions from an IRA account.
|
•
| Common Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½
|
•
| Common Shares sold to pay Janney fees but only if the transaction is initiated by Janney.
|
•
| Common Shares acquired through a right of reinstatement.
|
Front-end load discounts available at
Janney: breakpoints, and/or rights of accumulation
•
| Breakpoints as described in the Fund’s Prospectus.
|
•
| Rights of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at Janney. Eligible fund family assets not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor
about such assets.
|
MERRILL LYNCH
If you purchase Fund Common
Shares through a Merrill Lynch platform or account held at Merrill Lynch, you will be eligible only for the following sales charge waivers (front-end sales charge waivers and EWC waivers) and discounts, which may
differ from those disclosed elsewhere in the Fund’s Prospectus or SAI. It is your responsibility to notify your financial representative at the time of purchase of any relationship or other facts qualifying you
for sales charge waivers or discounts.
Front-end Sales Charge Waivers on
Class A Common Shares available at Merrill Lynch
•
| Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the Common Shares are not held in a
commission-based brokerage account and Common Shares are held for the benefit of the plan
|
•
| Common Shares purchased by college savings plans that qualify for tax-exempt treatment under Section 529 of the Internal Revenue Code of 1986, as amended
|
•
| Common Shares purchased through a Merrill Lynch-affiliated investment advisory program
|
•
| Common Shares purchased by third party investment advisors on behalf of their advisory clients through Merrill Lynch’s platform
|
•
| Common Shares of Funds purchased through the Merrill Edge Self-Directed platform
|
•
| Common Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other Fund within the fund family)
|
•
| Common Shares exchanged from Class C Common Shares of the Fund in the month of or following the 10-year anniversary of the purchase date
|
•
| Employees and registered representatives of Merrill Lynch or its affiliates and their family members
|
•
| Trustees of the Fund, and employees of the Adviser or any of its affiliates, as described in the Fund’s Prospectus
|
•
| Common Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption
and purchase occur in the same account, and (3) redeemed Common Shares were subject to a front-end or deferred sales charge (known as Rights of Reinstatement)
|
EWC Waivers on Class A and Class C
Common Shares available at Merrill Lynch
•
| Death or disability of the shareholder
|
•
| Common Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus
|
•
| Return of excess contributions from an IRA Account
|
•
| Common Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½
|
•
| Common Shares sold to pay Merrill Lynch fees but only if the transaction is initiated by Merrill Lynch
|
•
| Common Shares acquired through a right of reinstatement
|
•
| Common Shares held in retirement brokerage accounts that are exchanged for a lower cost share class due to transfer to certain fee based accounts or platforms (applicable to Class A
and Class C Common Shares only)
|
Front-End Load Discounts available at
Merrill Lynch: Breakpoints, Rights of Accumulation & Letters of Intent
•
| Breakpoints as described in the Fund’s Prospectus
|
•
| ROA, which entitle shareholders to breakpoint discounts, will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Merrill
Lynch. Eligible fund family assets not held at Merrill Lynch may be included in the ROA calculation only if the shareholder notifies his or her financial adviser about such assets
|
•
| Letters of Intent (“LOI”), which allow for breakpoint discounts based on anticipated purchases within a fund family, through Merrill Lynch, over a 13-month period of time
|
MORGAN STANLEY WEALTH MANAGEMENT
Shareholders
purchasing Fund shares through a Morgan Stanley Wealth Management transactional brokerage account will be eligible only for the following front-end sales charge waivers with respect to Class A Common Shares, which may
differ from and may be more limited than those disclosed elsewhere in this Fund’s Prospectus or SAI.
Front-end Sales Charge Waivers on
Class A Common Shares available at Morgan Stanley Wealth Management
•
| Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans
|
•
| Morgan Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules
|
•
| Common Shares purchased through reinvestment of dividends and capital gains distributions when purchasing Common Shares of the same fund
|
•
| Common Shares purchased through a Morgan Stanley self-directed brokerage account
|
•
| Class C Common Shares (i.e., level-load) shares that are no longer subject to an EWC and are converted to Class A Common Shares of the same fund pursuant to Morgan Stanley Wealth Management’s share
class conversion program – Common Shares purchased from the proceeds of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption
and purchase occur in the same account, and (iii) redeemed shares were subject to a frontend or deferred sales charge.
|
RAYMOND JAMES & ASSOCIATES, INC.,
RAYMOND JAMES FINANCIAL SERVICES, INC. and each entity’s affiliates (“RAYMOND JAMES”)
Shareholders
purchasing fund shares through a Raymond James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James provides trade execution, clearance,
and/or custody services, will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those
disclosed elsewhere in this Fund’s Prospectus or SAI.
Front-end sales load waivers on Class
A Common Shares available at Raymond James
•
| Common Shares purchased in an investment advisory program.
|
•
| Common Shares purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
|
•
| Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
|
•
| Common Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same
account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement).
|
•
| A shareholder in the Fund’s Class C Common Shares shares will have their shares converted at net asset value to Class A Common Shares (or the appropriate share class) of the
Fund if the shares are no longer subject to an EWC and the conversion is in line with the policies and procedures of Raymond James.
|
EWC Waivers on Classes A and C Common
Shares available at Raymond James
•
| Death or disability of the shareholder.
|
•
| Common Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
|
•
| Return of excess contributions from an IRA Account.
|
•
| Common Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the Fund’s Prospectus.
|
•
| Common Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
|
•
| Common Shares acquired through a right of reinstatement.
|
Front-end load discounts available at
Raymond James: breakpoints, rights of accumulation, and/or letters of intent
•
| Breakpoints as described in this Prospectus.
|
•
| Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s
household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of accumulation calculation only if the shareholder notifies his or her financial advisor
about such assets.
|
•
| Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at
Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
|
(This page intentionally left blank.)
Voya Senior Income Fund
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
1-800-992-0180
FUND ADVISERS AND SERVICE
PROVIDERS
Adviser
Voya Investments, LLC
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
Sub-Adviser
Voya Investment Management Co. LLC
230 Park Avenue
New York, NY 10169
Custodian
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, MO 64105
Independent
Registered Public Accounting Firm
[ ]
[ ]
Distributor
Voya Investments Distributor, LLC
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258
Transfer Agent
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
Legal Counsel
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston MA 02199-3600
Institutional Investors and
Analysts
Call 1-800-336-3436
The Fund has not
authorized any person to provide you with any information or to make any representations other than those contained in this Prospectus in connection with this offer. You should rely only on the information in this
Prospectus or other information to which we have referred you. This Prospectus is not an offer to sell, or the solicitation of any offer to buy, any security other than the Common Shares offered by this Prospectus;
nor does it constitute an offer to sell, or a solicitation of any offer to buy, the Common Shares by anyone in any jurisdiction in which such offer or solicitation is not authorized, or in which the person making such
offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such an offer or solicitation. The delivery of this Prospectus or any sale made pursuant to this Prospectus does not
imply that the information contained in this Prospectus is correct as of any time after the date of this Prospectus. However, if any material change occurs while this Prospectus is required by law to be delivered,
this Prospectus will be amended or supplemented.
Copies
of this information may also be obtained for a duplicating fee, by contacting the SEC at: publicinfo@sec.gov.
Or obtain the
information at no cost by visiting the EDGAR Database on the SEC's Internet website at: www.sec.gov.
When contacting the SEC,
you will want to refer to the Fund's SEC file number. The file number is as follows:
1940 Act File No.
| 811-10223
|
STATEMENT OF ADDITIONAL
INFORMATION
June 30,
2020
Voya Senior Income Fund
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
1-800-992-0180
Class/Ticker: A/XSIAX; C/XSICX; I/XSIIX; T/XSITX; W/XSIWX Common Shares
This
Statement of Additional Information (“SAI”) contains additional information about the Fund listed above. This SAI is not a prospectus and should be read in conjunction with the Prospectus dated June 30,
2020, as supplemented or revised from time to time. The Fund’s financial statements for the fiscal year ended February 29, 2020, including the independent registered public accounting firm’s report thereon
found in the Fund’s most recent annual report to shareholders, are incorporated into this SAI by reference. The Fund’s Prospectus and annual or unaudited semi-annual shareholder reports may be obtained
free of charge by contacting the Fund at the address and phone number written above or by visiting our website at www.voyainvestments.com.
INTRODUCTION AND GLOSSARY
This SAI is designed to
elaborate upon information contained in the Fund’s Prospectus, including the discussion of certain securities and investment techniques. The more detailed information contained in this SAI is intended for
investors who have read the Prospectus and are interested in a more detailed explanation of certain aspects of some of the Fund’s securities and investment techniques. Some investment techniques are described
only in the Prospectus and are not repeated here.
Capitalized terms used, but
not defined, in this SAI have the same meaning as in the Prospectus and some additional terms are defined particularly for this SAI.
Following are definitions of
general terms that may be used throughout this SAI:
1933 Act: Securities Act of 1933, as amended
1934 Act: Securities Exchange Act of 1934, as amended
1940 Act: Investment Company Act of 1940, as amended
Adviser: Voya Investments, LLC or Voya Investments (formerly, ING Investments, LLC)
Affiliated Fund: A fund within the Voya family of funds
Board: The Board of Trustees for the Trust
Business Day: Each day the NYSE opens for regular trading
CDSC: Contingent deferred sales charge
CFTC: United States Commodity Futures Trading Commission
Code: Internal Revenue Code of 1986, as amended
Distributor: Voya Investments Distributor, LLC (formerly, ING Investments Distributor, LLC)
Distribution Agreement: The Distribution Agreement for the Fund, as described herein
ETF: Exchange Traded Fund
EU: European Union
Expense Limitation
Agreement: The Expense Limitation Agreement(s) for the Fund, as described herein
FDIC: Federal Deposit Insurance Corporation
FHLMC: Federal Home Loan Mortgage Corporation
FINRA: Financial Industry Regulatory Authority, Inc.
Fiscal Year End of the
Fund: February 28 or 29, as applicable
Fitch: Fitch Ratings
FNMA: Federal National Mortgage Association
Fund: One or more of the investment management companies listed on the front cover of this SAI
GNMA: Government National Mortgage Association
Independent Trustees: The Trustees of the Board who are not “interested persons” (as defined in the 1940 Act) of the Fund
Interested Trustees: The Trustees of the Board who are currently treated as “interested persons” (as defined in the 1940 Act) of the Fund
Investment Management
Agreement: The Investment Management Agreement for the Fund, as described herein
IPO: Initial Public Offering
IRA: Individual Retirement Account
IRS: United States Internal Revenue Service
LIBOR: London Interbank Offered Rate
MLPs: Master Limited Partnerships
Moody’s: Moody’s Investors Service, Inc.
NAV: Net Asset Value
NRSRO: Nationally Recognized Statistical Rating Organization
NYSE: New York Stock Exchange
OTC: Over-the-counter
Principal Underwriter: Voya Investments Distributor, LLC or the “Distributor”
Prospectus: One or more prospectuses for the Fund
REIT: Real Estate Investment Trust
REMICs: Real Estate Mortgage Investment Conduits
RIC: A “Regulated Investment Company,” pursuant to the Code
Rule 12b-1: Rule 12b-1 (under the 1940 Act)
Rule 12b-1 Plan: A distribution and/or Shareholder Service Plan adopted under Rule 12b-1
S&L: Savings & Loan Association
S&P: S&P Global Ratings
SEC: United States Securities and Exchange Commission
Sub-Adviser: One or more sub-advisers for a Fund, as described herein
Sub-Advisory Agreement: The Sub-Advisory Agreement(s) for the Fund, as described herein
Underlying Funds: Unless otherwise stated, other mutual funds or ETFs in which the Fund may invest
Voya family of funds or the
“funds”: All of the RICs managed by Voya Investments
Voya IM: Voya Investment Management Co. LLC (formerly, ING Investment Management Co. LLC)
The Trust: Voya Senior Income Fund
HISTORY OF the Trust
Effective March 26, 2001,
the Trust changed its name from ING Pilgrim Senior Income Fund to Pilgrim Senior Income Fund. Effective March 1, 2002, the Trust changed its name from Pilgrim Senior Income Fund to ING Senior Income Fund. Effective
May 1, 2014, the Trust changed its name from ING Senior Income Fund to Voya Senior Income Fund.
SUPPLEMENTAL DESCRIPTION OF
Fund INVESTMENTS AND RISKS
Some of the different types
of securities in which the Fund may invest, subject to its investment objective, policies, and restrictions, are described in the Prospectus under “Investment Objective and Policies.” Additional
information concerning certain of the Fund’s investments and investment techniques is set forth below.
DERIVATIVES
Generally, derivatives can
be characterized as financial instruments whose value is derived, at least in part, from the value of an underlying asset or assets. Types of derivatives include swaps, options, futures contracts, options on futures,
and forward contracts. Derivative instruments may be used for a variety of reasons, including enhancing returns, hedging against certain market risks, or providing a substitute for purchasing or selling particular
securities. Derivatives may provide a cheaper, quicker, or more specifically focused way for the Fund to invest than “traditional” securities would.
Derivatives can be volatile
and involve various types and degrees of risk, depending upon the characteristics of the particular derivative and the portfolio as a whole. Derivatives permit the Fund to increase or decrease the level of risk, or
change the character of the risk, to which its portfolio is exposed in much the same way as the Fund can increase or decrease the level of risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
Derivatives may be
purchased on established exchanges or through privately negotiated transactions referred to as over-the-counter derivatives. Exchange-traded derivatives generally are guaranteed by the clearing agency, which is the
issuer or counterparty to such derivatives. This guarantee usually is supported by a daily payment system (i.e., margin requirements) operated by the clearing agency in order to reduce overall credit risk. As a result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with derivatives purchased on an exchange. By contrast, no clearing agency guarantees over-the-counter derivatives. Therefore, each party to an over-the-counter derivative bears the
risk that the counterparty will default. Accordingly, the Fund will consider the creditworthiness of counterparties to over-the-counter derivatives in the same manner as they would review the credit quality of a
security to be purchased by the Fund. Over-the-counter derivatives are less liquid than exchange-traded derivatives since the other party to the transaction may be the only investor with sufficient understanding of
the derivative to be interested in bidding for it.
The Fund has claimed an
exclusion from the definition of a Commodity Pool Operator (“CPO”) under the Commodity Exchange Act and therefore is not subject to registration or regulation as a CPO. In February 2012, the CFTC adopted
regulatory changes that impact the Fund by subjecting the Fund’s adviser to registration with the CFTC as a CPO of the Fund, unless the Fund is able to comply with certain trading and marketing limitations on
its investments in futures, many over-the-counter derivatives and certain other instruments. A related CFTC proposal to harmonize applicable CFTC and SEC regulations could, if adopted, mitigate certain disclosure and
operational burdens where CPO registration is required for an adviser. Compliance with these additional CFTC regulatory requirements may increase Fund expenses.
EQUITY SECURITIES
In connection with its
purchase or holding of interests in Senior Loans, the Fund may acquire (and subsequently sell) equity securities or exercise warrants that it receives. The Fund will acquire such interests only as an incident to the
intended purchase or ownership of loans or in connection with a reorganization of a borrower or its debt. The Fund normally will not hold more than 20% of its total assets in equity securities. Equity securities will
not be treated as Senior Loans; therefore, an investment in such securities will not count toward the 80% of the Fund’s net assets (plus borrowings for investment purposes) that normally will be invested in
Senior Loans. Equity securities are subject to financial and market risks and can be expected to fluctuate in value.
DEBT INSTRUMENTS
Interest Rates and Portfolio
Maturity
Interest rates on loans in
which the Fund invests adjust periodically. The interest rates are adjusted based on a base rate plus a premium or spread over the base rate. The base rate usually is the London Inter-Bank Offered Rate
(“LIBOR”), the federal funds rate, the prime rate, or other base lending rates used by commercial lenders. LIBOR usually is an average of the interest rates quoted by several designated banks as the rates
at which they pay interest to major depositors in the London interbank market on U.S. dollar-denominated deposits. The Adviser and Sub-Adviser believe that changes in short-term LIBOR rates are closely related to
changes in the Federal Reserve federal funds rate, although the two are not technically linked. The prime rate quoted by a major U.S. bank is generally the interest rate at which that bank is willing to lend U.S.
dollars to its most creditworthy borrowers, although it may not be the bank’s lowest available rate.
Loans in which the Fund
invests typically have multiple reset periods at the same time, with each reset period applicable to a designated portion of the loan. The maximum duration of an interest rate reset on any loan in which the Fund may
invest is one year. Although the Fund has no restrictions on investment maturity, normally at least 80% of its portfolio will be invested in assets with remaining maturities of ten years or less. The Fund’s
portfolio of loans will ordinarily have a dollar-weighted average time until the next interest rate adjustment of 90 days or less, although the time may exceed 90 days. The Fund may find it possible and appropriate to
use interest rate swaps and other investment practices to shorten the effective interest rate adjustment period of loans. If the Fund does so, it will consider the shortened period to be the adjustment period of the
loan. As short-term interest rates rise, interest payable to the Fund should increase. As short-term interest rates decline, interest payable to the Fund should decrease. The amount of time that will pass before the
Fund experiences the effects of changing short-term interest rates will depend on the dollar-weighted average time until the next interest rate adjustment on the Fund’s portfolio of loans.
Loans usually have
mandatory and optional prepayment provisions. Because of prepayments, the actual remaining maturity of a loan may be considerably less than its stated maturity. If a loan is prepaid, the Fund will have to reinvest the
proceeds in other loans or securities, which may have a lower fixed spread over its base rate. In such a case, the amount of interest paid to the Fund would likely decrease.
In the event of a change in
the benchmark interest rate on a loan, the rate payable to lenders under the loan will, in turn, change at the next scheduled reset date. If the benchmark rate goes up, the Fund as lender would earn interest at a
higher rate, but only on and after the reset date. If the benchmark rate goes down, the Fund as lender would earn interest at a lower rate, but only on and after the reset date.
During normal market
conditions, changes in market interest rates will affect the Fund in certain ways. The principal effect will be that the yield on the Fund’s Common Shares will tend to rise or fall as market interest rates rise
and fall. This is because almost all of the assets in which the Fund invests pay interest at rates which float in response to changes in market rates. However, because the interest rates on the Fund’s assets
reset over time, there will be an imperfect correlation between changes in market rates and changes to rates on the portfolio as a whole. This means that changes to the rate of interest paid on the portfolio as a
whole, will tend to lag behind changes in market rates.
Market interest rate
changes may also cause the Fund’s NAV to experience moderate volatility. This is because the value of a loan asset in the Fund is partially a function of whether it is paying what the market perceives to be a
market rate of interest for the particular loan given its individual credit and other characteristics. If market interest rates change, a loan’s value could be affected to the extent the interest rate paid on
that loan does not reset at the same time. As discussed above, the rates of interest paid on the loans in which the Fund invests have a weighted average reset period that typically is less than 90 days. Therefore, the
impact of the lag between a change in market interest rates and the change in the overall rate on the portfolio is expected to be minimal.
Finally, to the extent that
changes in market rates of interest are reflected, not in a change to a base rate such as LIBOR, but in a change in the spread over the base rate which is payable on loans of the type and quality in which the Fund
invests, the Fund’s NAV could be adversely affected. Again, this is because the value of a loan asset in the Fund is partially a function of whether it is paying what the market perceives to be a market rate of
interest for the particular loan given its individual credit and other characteristics. However, unlike changes in market rates of interest for which there is only a temporary lag before the portfolio reflects those
changes, changes in a loan’s value based on changes in the market spread on loans in the Fund’s portfolio may be of longer duration.
Lending Loans and Other
Portfolio Instruments
To generate additional
income, the Fund may lend its portfolio securities, including interests in Senior Loans, in an amount up to 33 1/3% of the Fund’s total assets to broker-dealers, major banks, or other recognized domestic
institutional borrowers of securities. No lending may be made to any companies affiliated with the Adviser or Sub-Adviser. During the time portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities and the Fund may invest the cash collateral and earn additional income, or it may receive an agreed-upon amount of interest income from the borrower who has delivered equivalent
collateral or a letter of credit. As with other extensions of credit, there are risks of delay in recovery or even loss of rights in the collateral should the borrower fail financially.
The Fund may seek to
increase its income by lending financial instruments in its portfolio in accordance with present regulatory policies, including those of the Board of Governors of the Federal Reserve System and the SEC. The lending of
financial instruments is a common practice in the securities industry. The loans are required to be secured continuously by collateral, consistent with the requirements of the 1940 Act discussed below, maintained on a
current basis at an amount at least equal to the market value of the portfolio instruments loaned. The Fund has the right to call a loan and obtain the portfolio instruments loaned at any time on such notice as
specified in the transaction documents. For the duration of the loan, the Fund will continue to receive the equivalent of the interest paid by the issuer on the portfolio instruments loaned and may also receive
compensation for the loan of the financial instrument. Any gain or loss in the market price of the instruments loaned that may occur during the term of the loan will be for the account of the Fund.
The Fund may lend its
portfolio instruments so long as the terms and the structure of such loans are not inconsistent with the requirements of the 1940 Act, which currently require that: (a) the borrower pledge and maintain with the Fund
collateral consisting of cash, a letter of credit issued by a domestic U.S. bank, or securities issued or guaranteed by the U.S. government having a value at all times not less than 100% of the value of the
instruments loaned; (b) the borrowers add to such collateral whenever the price of the instruments loaned rises (i.e., the value of the loan is marked-to-market on a daily basis); (c) the loan be made subject to termination by the Fund at any time; and (d) the Fund receives reasonable interest
on the loan (which may include the Fund’s investing any cash collateral in interest bearing short-term investments), any distributions on the loaned instruments, and increase in their market value. The Fund may
lend its portfolio instruments to member banks of the Federal Reserve System, members of the NYSE or other entities determined by the Adviser or Sub-Adviser to be creditworthy. All relevant facts and circumstances,
including the creditworthiness of the qualified institution, will be monitored by the Adviser or Sub-Adviser and will be considered in making decisions with respect to the lending of portfolio instruments.
The Fund may pay reasonable
negotiated fees in connection with loaned instruments. In addition, voting rights may pass with loaned securities but if a material event were to occur affecting such a loan, the Fund will retain the right to call the
loan and vote the securities. If a default occurs by the other party to such transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction but such remedies may be subject
to bankruptcy and insolvency laws which could materially and adversely affect the Fund’s rights as a creditor. However, the loans will be made only to firms deemed by the Adviser or Sub-Adviser to be of good
financial standing and when, in the judgment of the Adviser or Sub-Adviser, the consideration which can be earned currently from loans of this type justifies the attendant risk.
Loan Participation and
Assignments
The Fund’s investment
in loan participations typically will result in the Fund having a contractual relationship only with the lender and not with the borrower. The Fund will have the right to receive payments of principal, interest, and
any fees to which it is entitled only from the lender selling the participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing participation, the Fund generally
will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any right of set-off against the borrower, and the Fund may not directly benefit from any
collateral supporting the loan in which it has purchased the participation. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event
of the insolvency of the lender selling the participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower.
When the Fund purchases a
loan assignment from lenders, it will acquire direct rights against the borrowers on the loan. However, because assignments are arranged through private negotiations between potential assignees and potential
assignors, the rights and obligations acquired by the Fund as the purchaser of an assignment may differ from, and be more limited than, those held by the assigning lender. Because there is no liquid market for such
securities, the Fund anticipates that such securities could be sold only to a limited number of institutional investors. The lack of a liquid secondary market may have an adverse impact on the value of such securities
and the Fund’s ability to dispose of particular assignments or participation when necessary to meet redemption of Fund shares, to meet the Fund’s liquidity needs or, when necessary in response to a
specific economic event such as deterioration in the creditworthiness of the borrower. The lack of a liquid secondary market for assignments and participation also may make it more difficult for the Fund to value
these securities for purposes of calculating its NAV.
Originating Loans
The Fund has the ability to
act as an agent in originating and administering a loan on behalf of all lenders or as one of a group of co-agents in originating loans. However, the Fund has not acted as agent or co-agent on any loans and has no
present intention of doing so in the future. An agent for a loan is required to administer and manage the loan and to service or monitor the collateral. The agent is also responsible for the collection of principal,
interest, and fee payments from the borrower and the apportionment of these payments to the credit of all lenders which are parties to the loan agreement. The agent is charged with the responsibility of monitoring
compliance by the borrower with the restrictive covenants in the loan agreement and of notifying the lenders of any adverse change in the borrower’s financial condition. In addition, the agent generally is
responsible for determining that the lenders have obtained a perfected security interest in the collateral securing the loan. When evaluating Senior Loans, the Adviser may consider, and may rely in part on, analysis
performed by the Agent and other lenders. This analysis may include an evaluation of the value and sufficiency of any collateral securing Senior Loans. The valuation of assets pledged as collateral will reflect market
value and the agent may rely on independent appraisals as to the value of specific collateral. The Agent, however, may not obtain an independent appraisal as to the value of assets pledged as collateral in all cases
and the value assigned to such collateral may not reflect its fair value.
Lenders generally rely on
the agent to collect their portion of the payments on a loan and to use the appropriate creditor remedies against the borrower. Typically under loan agreements, the agent is given broad discretion in enforcing the
loan agreement and is obligated to use the same care it would use in the management of its own property. The borrower compensates the agent for these services. Such compensation may include special fees paid on
structuring and funding the loan and other fees on a continuing basis. The precise duties and rights of an agent are defined in the loan agreement.
When the Fund is an agent,
it has as a party to the loan agreement, a direct contractual relationship with the borrower and, prior to allocating portions of the loan to the lenders, if any, assumes all risks associated with the loan. The agent
may enforce compliance by the borrower with the terms of the loan agreement. Agents also have voting and consent rights under the applicable loan agreement. Action subject to agent vote or consent generally requires
the vote or consent of the holders of some specified percentage of the outstanding principal amount of the loan, which percentage varies depending on the relative loan agreement. Certain decisions, such as reducing
the amount or increasing the time for payment of interest on or repayment of principal of a loan, or relating collateral therefore, frequently require the unanimous vote or consent of all lenders affected. When the
Fund participates as an original lender, it typically acquires the loan at par.
Pursuant to the terms of a
loan agreement, the agent typically has sole responsibility for servicing and administering a loan on behalf of the other lenders. Each lender in a loan is generally responsible for performing its own credit analysis
and its own investigation of the financial condition of the borrower. Generally, loan agreements will hold the agent liable for any action taken or omitted that amounts to gross negligence or willful misconduct. In
the event of a borrower’s default on a loan, the loan agreements provide that the lenders do not have recourse against the Fund for its activities as agent. Instead, lenders will be required to look to the
borrower for recourse.
In a typical interest in a
Senior Loan, the agent administers the loan and has the right to monitor the collateral. The agent is also required to segregate the principal and interest payments received from the borrower and to hold these
payments for the benefit of the lenders. The Fund normally looks to the agent to collect and distribute principal of, and interest on, a Senior Loan. Furthermore, the Fund looks to the agent to use normal credit
remedies, such as to foreclose on collateral, monitor credit loan covenants, and notify the lenders of any adverse changes in the borrower’s financial condition or declarations of insolvency. At times the Fund
may also negotiate with the agent regarding the agent’s exercise of credit remedies under a Senior Loan. The agent is compensated for these services by the borrower as set forth in the loan agreement. Such
compensation may take the form of a fee or other amount paid upon the making of the Senior Loan and/or an ongoing fee or other amount.
The loan agreements in
connection with Senior Loans set forth the standard of care to be exercised by the agents on behalf of the lenders and usually provide for the termination of the agent’s agency status in the event that it fails
to act properly, becomes insolvent, enters FDIC receivership, or if not FDIC insured, enters into bankruptcy or if the agent resigns. In the event an agent is unable to perform its obligations as agent, another lender
would generally serve in that capacity.
Additional Information on
Loans
Loans in which the Fund
invests are typically made to business borrowers to finance leveraged buyouts, recapitalizations, mergers, stock repurchases, and to finance internal growth. Such loans usually include restrictive covenants which must
be maintained by the borrower. Such covenants, in addition to the timely payment of interest and principal, may include mandatory prepayment provisions arising from free cash flow and restrictions on dividend
payments, and usually state that a borrower must maintain specific minimum financial ratios as well as establishing limits on total debt. A breach of covenant, which is not waived by the agent, is normally an event of
acceleration, i.e., the agent has the right to call the loan. In addition, loan covenants may include mandatory prepayment provisions stemming from free cash flow. Free cash flow is cash that is in
excess of capital expenditures plus debt service requirements of principal and interest. The free cash flow shall be applied to prepay the loan in an order of maturity described in the loan documents. Under certain
interests in loans, the Fund may have an obligation to make additional loans upon demand by the borrower. The Fund intends to ensure its ability to satisfy such demands by segregating sufficient assets in high-quality
short-term liquid investments or borrowing to cover such obligations.
The Fund believes that the
principal credit risk associated with acquiring loans from another lender is the credit risk associated with the borrower of the underlying loan. The Fund may incur additional credit risk when the Fund acquires a
participation in a loan from another lender because the Fund must assume the risk of insolvency or bankruptcy of the other lender from which the loan was acquired. However, in acquiring loans, the Fund conducts an
analysis and evaluation of the financial condition of each such lender. In this regard, if the lenders have a long-term debt rating, the long-term debt of all such participants is rated “BBB” or better by
S&P or “Baa” or better by Moody’s, or has received a comparable rating by another nationally recognized rating service. In the absence of rated long-term debt, the lenders or, with respect to a
bank, the holding company of such lenders have commercial paper outstanding which is rated at least “A-1” by S&P or “P-1” by Moody’s. In the absence of such rated long-term debt or
rated commercial paper, the Fund may acquire participations in loans from lenders whose long-term debt and commercial paper is of comparable quality to the foregoing rating standards as determined by the Adviser under
the supervision of the Trustees. The Fund also diversifies its portfolio with respect to lenders from which the Fund acquires loans. (See “Fundamental and Non-Fundamental Investment Restrictions.”)
Loans, unlike certain
bonds, usually do not have call protection. This means that investments comprising the Fund’s portfolio, while having a stated one- to ten-year term, may be prepaid, often without penalty. The Fund generally
holds loans to maturity unless it has become necessary to sell them to satisfy any shareholder repurchase offers or to adjust the Fund’s portfolio in accordance with the Adviser’s or Sub-Adviser’s
view of current or expected economic or specific industry or borrower conditions.
Loans frequently require
full or partial prepayment of a loan when there are asset sales or a securities issuance. Prepayments on loans may also be made by the borrower at its election. The rate of such prepayments may be affected by, among
other things, general business and economic conditions, as well as the financial status of the borrower. Prepayment would cause the actual duration of a loan to be shorter than its stated maturity. Prepayment may be
deferred by the Fund. This should, however, allow the Fund to reinvest in a new loan and recognize as income any unamortized loan fees. In many cases this will result in a new facility fee payable to the Fund.
Because interest rates paid on
these loans fluctuate periodically with the market, it is expected that the prepayment and a subsequent purchase of a new loan by the Fund will not have a material adverse impact on the yield of the portfolio. (See
“Portfolio Transactions.”)
Under a loan, the borrower
generally must pledge as collateral, assets which may include one or more of the following: cash, accounts receivable, inventory, property, plant and equipment, both common and preferred stocks in its subsidiaries,
trademarks, copyrights, patent rights, and franchise value. The Fund may also receive guarantees as a form of collateral. In some instances, a loan may be secured only by stock in a borrower or its affiliates.
However, there is no assurance that the borrower would provide additional collateral, that the liquidation of the existing collateral would satisfy the borrower’s obligation in the event of nonpayment of
scheduled interest or principal, or that such collateral could be readily liquidated.
The Fund may be required to
pay and receive various fees and commissions in the process of purchasing, selling, and holding loans. The fee component may include any, or a combination of, the following elements: arrangement fees, non-use fees,
facility fees, letter of credit fees, and ticking fees. Arrangement fees are paid at the commencement of a loan as compensation for the initiation of the transaction. A non-use fee is paid based upon the amount
committed but not used under the loan. Facility fees are on-going annual fees paid in connection with a loan. Letter of credit fees are paid if a loan involves a letter of credit. Ticking fees are paid from the
initial commitment indication until loan closing if for an extended period. The amount of fees is negotiated at the time of closing.
OTHER RISKS
Cyber Security Issues
The Voya family of funds,
and their service providers, may be prone to operational and information security risks resulting from cyber-attacks. Cyber-attacks include, among other behaviors, stealing or corrupting data maintained online or
digitally, denial of service attacks on websites, the unauthorized release of confidential information or various other forms of cyber security breaches. Cyber-attacks affecting the Fund or its service providers may
adversely impact the Fund. For instance, cyber-attacks may interfere with the processing of shareholder transactions, impact the Fund’s ability to calculate its NAV, cause the release of private shareholder
information or confidential business information, impede trading, subject the Fund to regulatory fines or financial losses and/or cause reputational damage. The Fund may also incur additional costs for cyber security
risk management purposes. Similar types of cyber security risks are also present for issuers of securities
in which the Fund may invest, which could
result in material adverse consequences for such issuers and may cause the Fund’s investment in such companies to lose value. In addition, substantial costs may be incurred in order to prevent any cyber-attacks
in the future. While the Fund has established a business continuity plan in the event of, and risk management systems to prevent, such cyber-attacks, there are inherent limitations in such plans and systems including
the possibility that certain risks have not been identified. Furthermore, the Fund cannot control the cyber security plans and systems put in place by service providers to the Fund and issuers in which the Fund
invests. The Fund and its shareholders could be negatively impacted as a result.
Other Investments
Assets not invested in
Senior Loans will generally consist of other instruments, including loans to borrowers organized outside the United States and in U.S. territories and possessions or Canada; unsecured floating rate loans, notes and
other debt instruments; floating rate subordinated loans; tranches of floating rate asset-backed securities, including structured notes, corporate debt securities, cash or short-term debt instruments with remaining
maturities of 120 days or less (which may have yields tied to the prime rate, commercial paper rates, the federal funds rate or LIBOR); equity securities and warrants acquired in connection with investment in or
restructuring of a loan and other instruments as described under “Supplemental Description of Fund Investments and Risks;” and subject to 1940 Act limitations, in other investment companies such as money
market funds. Short-term debt instruments may include: (i) commercial paper rated A-1 by S&P or P-1 by Moody’s, or of comparable quality as determined by the Adviser; (ii) certificates of deposit,
bankers’ acceptances, and other bank deposits and obligations; and (iii) securities issued or guaranteed by the U.S. government, its agencies or instrumentalities. Under normal circumstances, the Fund may invest
up to 10% of its total assets in cash and/or short-term instruments. During periods when, in the judgment of the Adviser or Sub-Adviser, a temporary defensive posture in the market is appropriate, the Fund may hold up
to 100% of its assets in cash.
Repurchase Agreements
The Fund has the ability,
pursuant to its investment objective and policies, to enter into repurchase agreements if the asset which is the subject of the repurchase is a loan. Such agreements may be considered to be loans by the Fund for
purposes of the 1940 Act. Each repurchase agreement must be collateralized fully, in accordance with the provisions of Rule 5b-3 under the 1940 Act, at all times. Pursuant to such repurchase agreements, the Fund
acquires securities from financial institutions such as brokers, dealers, and banks, subject to the seller’s agreement to repurchase and the Fund’s agreement to resell such securities at a mutually agreed
upon date and price. The term of such an agreement is generally quite short, possibly overnight or for a few days, although it may extend over a number of months (up to one year) from the date of delivery. The
repurchase price generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates (which may be more or less than the rate on the underlying portfolio security). The
securities underlying a repurchase agreement will be marked-to-market every business day so that the value of the collateral is at least equal to the value of the loan, including the accrued interest thereon, and the
Adviser or Sub-Adviser will monitor the value of the collateral. Securities subject to repurchase agreements will be held by the custodian or in the Federal Reserve/Treasury Book-Entry System. If the seller defaults
on its repurchase obligation, the Fund will suffer a loss to the extent that the proceeds from a sale of the underlying securities is less than the repurchase price under the agreement. Bankruptcy or insolvency of
such a defaulting seller may cause the Fund’s rights with respect to such securities to be delayed or limited. To mitigate this risk the Fund only enters into repurchase agreements with highly rated, large
financial institutions. The Fund may only enter into repurchase agreements that qualify for an exclusion from any automatic stay of creditors’ rights against the counterparty under applicable insolvency law in
the event of the counterparty’s insolvency.
Reverse Repurchase Agreements
The Fund has the ability,
pursuant to its investment objective and policies, to enter into reverse repurchase agreements. A reverse repurchase agreement is a contract under which the Fund may sell and simultaneously obtain the commitment of
the purchaser to sell the security back to the Fund at an agreed upon price on an agreed upon date. Reverse repurchase agreements will be considered borrowings by the Fund and as such, are subject to the restrictions
on borrowing. Borrowings by the Fund create an opportunity for greater total return but at the same time increase exposure to capital risk. The Fund will maintain in a segregated account with its custodian, cash or
liquid high-grade portfolio securities in an amount sufficient to cover its obligations with respect to the repurchase agreements. The Fund will receive payment for such securities only upon physical delivery or
evidence of book entry transfer by its custodian. Regulations of the SEC require either that securities sold by the Fund under a reverse repurchase agreement be segregated pending repurchase or that the proceeds be
segregated on the Fund’s books and records pending repurchase. Reverse repurchase agreements may involve certain risks in the event of default or insolvency of the other party, including possible loss from
delays or restrictions upon the Fund’s ability to dispose of the underlying securities.
Other Investment Companies
An investment company is a
company engaged in the business of pooling investors’ money and trading in securities for them. Examples include face-amount certificate companies, unit investment trusts and management companies. When the Fund
invests in other investment companies, shareholders of the Fund bear their proportionate share of the underlying investment companies’ fees and expenses.
The Fund may invest in
other investment companies to the extent permitted under the 1940 Act and the rules, regulations, and exemptive orders thereunder. For so long as shares of the Fund are purchased by another fund in reliance on Section
12(d)(1)(G) of the 1940 Act, the Fund will not purchase securities of a registered open-end investment company or registered unit investment trust in reliance on Section 12(d)(1)(F) or Section 12(d)(1)(G) of the 1940
Act.
There are some potential
disadvantages associated with investing in other investment companies. In addition to the advisory and operational fees, the Fund bears directly in connection with its own operation, the Fund would also bear its
pro-rata portions of each other investment company’s advisory and operational expenses. When the Fund invests in other investment companies, you indirectly pay a proportionate share of the expenses of that other
investment company (including management fees, administration fees, and custodial fees) in addition to the expenses of the Fund.
PORTFOLIO TURNOVER
A change in securities held in
the Fund’s portfolio is known as portfolio turnover and may involve the payment by the Fund of dealer mark-ups or brokerage or underwriting commissions and other transaction costs associated with the purchase or
sale of securities.
The Fund may sell a
portfolio investment soon after its acquisition if the Adviser or Sub-Adviser believes that such a disposition is consistent with the Fund’s investment objective. Portfolio investments may be sold for a variety
of reasons, such as a more favorable investment opportunity or other circumstances bearing on the desirability of continuing to hold such investments. Portfolio turnover rate for a fiscal year is the percentage
determined by dividing (i) the lesser of the cost of purchases or sales of portfolio securities by (ii) the monthly average of the value of portfolio securities owned by the Fund during the fiscal year. Securities
with maturities at acquisition of one year or less are excluded from this calculation. The Fund cannot accurately predict its turnover rate; however, the rate will be higher when the Fund finds it necessary or
desirable to significantly change its portfolio to adopt a temporary defensive position or respond to economic or market events.
A portfolio turnover rate
of 100% or more is considered high, although the rate of portfolio turnover will not be a limiting factor in making portfolio decisions. A high rate of portfolio turnover involves correspondingly greater brokerage
commission expenses and transaction costs which are ultimately borne by the Fund’s shareholders. High portfolio turnover may result in the realization of substantial capital gains.
The Fund’s historical
turnover rates are included in the Financial Highlights tables in the Prospectus.
To the extent the Fund
invests in affiliated Underlying Funds, the discussion above relating to investment decisions made by the Adviser or the Sub-Adviser with respect to the Fund also includes investment decisions made by an Adviser or a
Sub-Adviser with respect to those Underlying Funds.
FUNDAMENTAL AND
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
Unless otherwise noted,
whenever an investment policy or limitation states a maximum percentage of a Fund’s assets that may be invested in any security or other asset, or sets forth a policy regarding quality standards, such percentage
limitation or standard will be determined immediately after and as a result of the Fund’s acquisition of such security or other asset, except in the case of borrowing (or other activities that may be deemed to
result in the issuance of a “senior security” under the 1940 Act). Accordingly, any subsequent change in value, net assets or other circumstances will not be considered when determining whether the
investment complies with the Fund’s investment policies and limitations.
There is no limitation on
the percentage of the Fund’s total assets that may be invested in instruments which are not readily marketable or subject to restrictions on resale and to the extent the Fund invests in such instruments, the
Fund’s portfolio should be considered illiquid. The extent to which the Fund invests in such instruments may affect its ability to realize the NAV of the Fund in the event of the voluntary or involuntary
liquidation of its assets.
FUNDAMENTAL INVESTMENT
RESTRICTIONS
The Fund
has adopted the following investment restrictions as fundamental policies, which means they cannot be changed without the approval of the holders of a “majority” of the Fund’s outstanding voting
securities, as that term is defined in the 1940 Act. The term “majority” is defined in the 1940 Act as the lesser of: (i) 67% or more of the Fund’s voting securities present at a meeting of
shareholders at which the holders of more than 50% of the outstanding voting securities of the Fund are present in person or represented by proxy; or (ii) more than 50% of the Fund’s outstanding voting
securities.
As a matter of fundamental
policy, the Fund will not:
1.
| issue senior securities, except insofar as the Fund may be deemed to have issued a senior security by reason of: (i) entering into certain interest rate hedging transactions; (ii) entering into reverse
repurchase agreements; or (iii) borrowing money or issuing preferred shares in amounts not exceeding the asset coverage tests established by Section 18(f) of the 1940 Act or as otherwise permitted by law;
|
2.
| invest more than 25% of its total assets in any industry;
|
3.
| make investments in any one issuer other than U.S. government securities if, immediately after such purchase or acquisition, more than 5% of the value of the Fund’s total assets
would be invested in such issuer, or the Fund would own more than 25% of any outstanding issue, except that up to 25% of the Fund’s total assets may be invested without regard to the foregoing restrictions. For
the purpose of the foregoing restriction, the Fund will consider the borrower on a loan, including a loan participation, to be the issuer of such loan. In addition, with respect to a loan under which the Fund does not
have privity with the borrower or would not have a direct cause of action against the borrower in the event of the failure of the borrower to pay scheduled principal or interest, the Fund will also separately meet the
foregoing requirements and consider each interpositioned bank (a lender from which the Fund acquires a loan) to be an issuer of the loan;
|
4.
| act as an underwriter of securities, except to the extent that it may be deemed to act as an underwriter in certain cases when disposing of its portfolio investments or acting as an agent or one of a group of
co-agents in originating loans;
|
5.
| purchase or sell equity securities, real estate, real estate mortgage loans, commodities, commodity futures contracts, or oil or gas exploration or development programs; or sell short, purchase or sell
straddles, spreads, or combinations thereof, or write put or call options (except that the Fund may, incidental to the purchase or ownership of an interest in a loan, or as part of a borrower reorganization, acquire,
sell and exercise warrants and/or acquire or sell other equity securities as well as other assets, such as real estate and real estate mortgage loans);
|
6.
| make loans of money or property to any person, except that the Fund may: (i) make loans to corporations or other business entities or enter into leases or other arrangements that have the
characteristics of a loan consistent with its investment objective and policies; (ii) lend portfolio instruments; and (iii) acquire securities subject to repurchase agreements; or
|
7.
| make investments on margin, hypothecate, mortgage, or pledge any of its assets except for the purpose of providing security for borrowings in an amount up to 33 1/3% of the
Fund’s total assets as described above in paragraph 1.
|
For purposes of paragraph
number 2 above, the Fund will consider the borrower on a loan, including a loan participation, to be the issuer of that loan. In addition, with respect to a loan under which the Fund does not have privity with the
borrower or would not have a direct cause of action against the borrower in the event of the failure of the borrower to pay scheduled principal or interest, the Fund will also consider each interpositioned bank (a
lender from which the Fund acquires a loan) to be an issuer of the loan.
REPURCHASE OFFER FUNDAMENTAL
POLICY
The Board has adopted a
repurchase offer fundamental policy resolution setting forth the Fund’s fundamental policy that it will conduct monthly repurchase offers. This fundamental policy may be changed only with the approval of a
majority of the Fund’s outstanding voting securities, including a majority of any holders of preferred shares voting separately as a class. The Fund is required to offer to repurchase between 5% and 25% of its
outstanding Common Shares with each repurchase offer and, under normal market conditions, the Board expects to authorize not less than a 5% offer (“Repurchase Offer”). The Fund may not offer to repurchase
more than 25% of its outstanding Common Shares during any calendar quarter.
The time and dates by which
Repurchase Offers must be accepted (“Repurchase Request Deadline”) are 4:00 p.m. Eastern time on the 10th business day of each month. The repurchase price will be the Fund’s NAV determined on the
repurchase pricing date, which will be a date not more than 14 calendar days following the Repurchase Request Deadline (or the next business day if the 14th calendar day is not a business day) (“Repurchase Offer
Amount”). Payment for all Common Shares repurchased pursuant to these offers will be made not later than 5 business days or 7 calendar days (whichever period is shorter) after the repurchase pricing date. Under
normal circumstances, it is expected that the repurchase pricing date will be the Repurchase Request Deadline and that the repurchase price will be the Fund’s NAV determined after close of business on the
Repurchase Request Deadline. Payment for Common Shares tendered will normally be made on the first business day following the repurchase pricing date and, in every case, at least five business days before sending
notification of the next monthly Repurchase Offer. If the tendered shares have been purchased immediately prior to the tender, the Fund will not release repurchase proceeds until payment for the tendered shares has
settled.
The Repurchase Offer
fundamental policy may be changed only with approval of a majority of the Fund’s outstanding voting securities, including a majority of any holders of preferred shares voting separately as a class.
MANAGEMENT OF the Trust
The business and affairs of
the Trust are managed under the direction of the Trust’s Board according to the applicable laws of the State of Delaware.
The Board governs the Fund and
is responsible for protecting the interests of shareholders. The Trustees are experienced executives who oversee the Fund’s activities, review contractual arrangements with companies that provide services to the
Fund, and review the Fund’s performance.
Set forth in the table below
is information about each Trustee of the Fund.
Name, Address and Age
| Position(s) Held with the Trust
| Term of Office and Length of Time Served1
| Principal Occupation(s) During the Past 5 Years
| Number of Funds in the Fund Complex Overseen by Trustees2
| Other Board Positions Held by Trustees
|
Independent Trustees
|
Colleen D. Baldwin
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 59
| Chairperson
Trustee
| January 2020 – Present
November 2007 – Present
| President, Glantuam Partners, LLC, a business consulting firm (January 2009 –
Present).
| 140
| Dentaquest, (February 2014 – Present); RSR Partners, Inc., (2016 – Present).
|
John V. Boyer
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 66
| Trustee
| January 2005 – Present
| Retired. Formerly, President and Chief Executive Officer, Bechtler Arts Foundation, an arts and education
foundation (January 2008 – December 2019).
| 140
| None.
|
Patricia W. Chadwick
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 71
| Trustee
| January 2006 – Present
| Consultant and President, Ravengate Partners LLC, a consulting firm that provides advice
regarding financial markets and the global economy (January 2000 – Present).
| 140
| Wisconsin Energy Corporation (June 2006 – Present); The Royce Fund (22 funds) (December 2009 – Present); and
AMICA Mutual Insurance Company (1992 – Present).
|
Martin J. Gavin
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 70
| Trustee
| August 2015 – Present
| Retired. Formerly, President and Chief Executive Officer, Connecticut Children’s Medical Center (May
2006 – November 2015).
| 140
| None.
|
Joseph E. Obermeyer
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 62
| Trustee
| May 2013 – Present
| President, Obermeyer & Associates, Inc., a provider of financial
and economic consulting services (November 1999 – Present).
| 140
| None.
|
Name, Address and Age
| Position(s) Held with the Trust
| Term of Office and Length of Time Served1
| Principal Occupation(s) During the Past 5 Years
| Number of Funds in the Fund Complex Overseen by Trustees2
| Other Board Positions Held by Trustees
|
Sheryl K. Pressler
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 69
| Trustee
| January 2006 – Present
| Consultant (May 2001 – Present).
| 140
| None.
|
Christopher P. Sullivan
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 66
| Trustee
| October 2015 – Present
| Retired.
| 140
| None.
|
Trustee who is an “Interested Person”
|
Dina Santoro3
230 Park Avenue
New York, NY 10169
Age: 46
| Trustee
| July 2018 – Present
| President, Voya Investments, LLC and Voya Capital, LLC (March 2018
– Present); Senior Vice President, Voya Investments Distributor, LLC (April 2018 – Present); Senior Managing Director, Head of Product and Marketing Strategy, Voya Investment Management (September
2017 – Present). Formerly, Managing Director, Quantitative Management Associates, LLC (January 2004 – August 2017).
| 140
| Voya Investments, LLC, Voya Capital, LLC and Voya Funds Services, LLC (March 2018 – Present);
Voya Investments Distributor, LLC (April 2018 – Present).
|
1
| Trustees serve until their successors are duly elected and qualified. The tenure of each Trustee who is not an “interested person” as defined in the 1940 Act, of the Fund (as defined below,
“Independent Trustee”) is subject to the Board’s retirement policy, which states that each duly elected or appointed Independent Trustee shall retire from and cease to be a member of the Board of
Trustees at the close of business on December 31 of the calendar year in which the Independent Trustee attains the age of 75. A majority vote of the Board’s other Independent Trustees may extend the retirement
date of an Independent Trustee if the retirement would trigger a requirement to hold a meeting of shareholders of the Trust under applicable law, whether for the purposes of appointing a successor to the Independent
Trustee or otherwise complying under applicable law, in which case the extension would apply until such time as the shareholder meeting can be held or is no longer required (as determined by a vote of a majority of
the other Independent Trustees).
|
2
| For the purposes of this table, “Fund Complex” means the Voya family of funds, including the following investment companies: Voya Asia Pacific High Dividend Equity Income Fund; Voya Balanced
Portfolio, Inc.; Voya Emerging Markets High Dividend Equity Fund; Voya Equity Trust; Voya Funds Trust; Voya Global Advantage and Premium Opportunity Fund; Voya Global Equity Dividend and Premium Opportunity
Fund; Voya Government Money Market Portfolio; Voya Infrastructure, Industrials and Materials Fund; Voya Intermediate Bond Portfolio; Voya International High Dividend Equity Income Fund; Voya Investors
Trust; Voya Mutual Funds; Voya Natural Resources Equity Income Fund; Voya Partners, Inc.; Voya Prime Rate Trust; Voya Senior Income Fund; Voya Separate Portfolios Trust; Voya Strategic Allocation
Portfolios, Inc.; Voya Variable Funds; Voya Variable Insurance Trust; Voya Variable Portfolios, Inc.; and Voya Variable Products Trust. The number of funds in the Fund Complex is as of March 31, 2020.
|
3
| Ms. Santoro is deemed to be an interested person of the Trust, as defined by the 1940 Act, because of her current affiliation with any of the Voya funds, Voya Financial, Inc., or Voya Financial,
Inc.’s affiliates.
|
Information Regarding Officers
of the Trust
Set forth in the table below
is information for each Officer of the Trust.
Name, Address and Age
| Position(s) Held with the Trust
| Term of Office and Length of Time Served1
| Principal Occupation(s) During the Past 5 Years
|
Michael Bell
One Orange Way
Windsor, CT 06095
Age: 51
| Chief Executive Officer
| March 2018 - Present
| Chief Executive Officer and Director, Voya Investments, LLC, Voya Capital, LLC, and Voya Funds Services, LLC (March 2018 – Present);
Senior Vice President and Chief Financial Officer, Voya Investments Distributor, LLC (September 2019 – Present); Chief Financial Officer, Voya Investment Management (September 2014 – Present).
Formerly, Senior Vice President and Treasurer, Voya Investments Distributor, LLC (November 2015 – September 2019); Senior Vice President, Chief Financial Officer, and Treasurer, Voya Investments, LLC (November
2015 – March 2018).
|
Dina Santoro
230 Park Avenue
New York, NY 10169
Age: 47
| President
| March 2018 - Present
| President and Director, Voya Investments, LLC and Voya Capital, LLC (March 2018 – Present); Director, Voya Funds
Services, LLC (March 2018 – Present); Director and Senior Vice President, Voya Investments Distributor, LLC (April 2018 – Present); Senior Managing Director, Head of Product and Marketing Strategy,
Voya Investment Management (September 2017 – Present). Formerly, Managing Director, Quantitative Management Associates, LLC (January 2004 – August 2017).
|
Jonathan Nash
230 Park Avenue
New York, NY 10169
Age: 52
| Executive Vice President
Chief Investment Risk Officer
| March 2020 - Present
| Senior Vice President, Investment Risk Management, Voya Investment Management (March 2017 – Present). Formerly,
Consultant, DA Capital LLC (January 2016 – March 2017); Managing Director, Enterprise Risk, AIG (September 2014 – March 2015).
|
Name, Address and Age
| Position(s) Held with the Trust
| Term of Office and Length of Time Served1
| Principal Occupation(s) During the Past 5 Years
|
James M. Fink
5780 Powers Ferry Rd. NW
Atlanta, GA 30327
Age: 62
| Executive Vice President
| March 2018 - Present
| Managing Director, Voya Investments, LLC, Voya Capital, LLC, and Voya Funds Services, LLC (March 2018 – Present);
Senior Vice President, Voya Investments Distributor, LLC (April 2018 – Present); Chief Administrative Officer, Voya Investment Management (September 2017 – Present). Formerly, Managing Director,
Operations, Voya Investment Management (March 1999 – September 2017).
|
Kevin M. Gleason
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 53
| Chief Compliance Officer
| February 2012 - Present
| Senior Vice President Voya Investment Management, LLC and Chief Compliance Officer, Voya Family of Funds (February 2012- Present).
|
Todd Modic
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 52
| Senior Vice President, Chief/Principal Financial Officer and Assistant Secretary
| March 2005 - Present
| President, Voya Funds Services, LLC (March 2018 – Present) and Senior Vice President, Voya Investments, LLC
(April 2005 – Present).
|
Daniel A. Norman
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 62
| Senior Vice President and
Treasurer
| January 2001 - Present
| Senior Managing Director and Group Head, Voya Investment Management Co. LLC (March 2019 – Present). Formerly, Managing Director and
Group Head, Voya Investment Management Co. LLC (January 2012 – February 2019)
|
Kimberly A. Anderson
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 55
| Senior Vice President
| November 2003 - Present
| Senior Vice President, Voya Investments, LLC (September 2003 – Present).
|
Jeffrey A. Bakalar
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 60
| Senior Vice President
| January 2001 - Present
| Senior Managing Director and Group Head, Voya Investment Management Co. LLC (March 2019 – Present). Formerly, Managing Director and
Group Head, Voya Investment Management Co. LLC (January 2012 – February 2019).
|
Elliot A. Rosen
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 67
| Senior Vice President
| May 2002 - Present
| Senior Vice President, Voya Investment Management Co. LLC (February 1999 – Present)
|
Name, Address and Age
| Position(s) Held with the Trust
| Term of Office and Length of Time Served1
| Principal Occupation(s) During the Past 5 Years
|
Robert Terris
5780 Powers Ferry Rd. NW
Atlanta, GA 30327
Age: 50
| Senior Vice President
| May 2006 - Present
| Senior Vice President, Voya Investments Distributor, LLC (April 2018 – Present); Senior Vice President, Head of Division
Operations, Voya Investments, LLC (October 2015 – Present) and Voya Funds Services, LLC (March 2006 – Present).
|
Fred Bedoya
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 47
| Vice President
| September 2012 - Present
| Vice President, Voya Investments, LLC (October 2015 – Present) and Voya Funds Services, LLC (July 2012 –
Present).
|
Maria M. Anderson
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 62
| Vice President
| September 2004 - Present
| Vice President, Voya Investments, LLC (October 2015 – Present) and Voya Funds Services, LLC (September 2004 – Present).
|
Sara M. Donaldson
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 60
| Vice President
| September 2014 - Present
| Vice President, Voya Investments, LLC (October 2015 – Present). Formerly, Vice President, Voya Funds Services,
LLC (April 2014 – October 2015).
|
Micheline S. Faver
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 43
| Vice President
| September 2016 - Present
| Senior Vice President, Head of Fund Compliance, Chief Compliance Officer Voya Investments, LLC (March 2020 – Present). Formerly, Vice
President, Head of Fund Compliance, Chief Compliance Officer Voya Investments, LLC (June 2016 – March 2020); and Vice President Mutual Fund Compliance (March 2014 – June 2016).
|
Robyn L. Ichilov
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 52
| Vice President
| November 1997 - Present
| Vice President, Voya Funds Services, LLC (November 1995 – Present) and Voya Investments, LLC (August 1997 –
Present).
|
Jason Kadavy
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 44
| Vice President
| September 2012 - Present
| Vice President, Voya Investments, LLC (October 2015 – Present) and Voya Funds Services, LLC (July 2007 –
Present).
|
Name, Address and Age
| Position(s) Held with the Trust
| Term of Office and Length of Time Served1
| Principal Occupation(s) During the Past 5 Years
|
Andrew K. Schlueter
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 44
| Vice President
| March 2018 - Present
| Vice President, Voya Investments Distributor, LLC (April 2018 – Present); Vice President, Voya Investments, LLC
and Voya Funds Services, LLC (March 2018 – Present); Vice President, Head of Mutual Fund Operations, Voya Investment Management (February 2018 – Present). Formerly, Vice President, Voya Investment
Management (March 2014 – February 2018).
|
Craig Wheeler
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 51
| Vice President
| May 2013 - Present
| Vice President – Director of Tax, Voya Investments, LLC (October 2015 – Present). Formerly, Vice President – Director of Tax
Voya Funds Services, LLC (March 2013 – October 2015).
|
Monia Piacenti
One Orange Way
Windsor, CT 060952
Age: 43
| Anti-Money Laundering Officer
| June 2018 - Present
| Anti-Money Laundering Officer, Voya Investments Distributor, LLC, Voya Investment Management, and Voya Investment
Management Trust Co. (June 2018 – Present); Compliance Consultant, Voya Financial, Inc. (January 2019 – Present). Formerly, Senior Compliance Officer, Voya Investment Management (December 2009 –
December 2018).
|
Theresa K. Kelety
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 56
| Secretary
| January 2020 - Present
| Vice President and Senior Counsel, Voya Investment Management – Mutual Fund Legal Department (March 2010 – Present).
|
Paul A. Caldarelli
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 67
| Assistant Secretary
| June 2010 - Present
| Vice President and Senior Counsel, Voya Investment Management – Mutual Fund Legal Department (March 2010 –
Present).
|
Joanne F. Osberg
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, AZ 85258-2034
Age: 38
| Assistant Secretary
| January 2020 - Present
| Vice President and Counsel, Voya Investment Management – Mutual Fund Legal Department (January 2013 – Present).
|
1
| The Officers hold office until the next annual meeting of the Board of Trustees and until their successors shall have been elected and qualified.
|
The Board of Trustees
The Trust and the Fund are
governed by the Board, which oversees the Trust’s business and affairs. The Board delegates the day-to-day management of the Trust and the Fund to the Trust’s Officers and to various service providers that
have been contractually retained to provide such day-to-day services. The Voya entities that render services to the Trust and the Fund do so pursuant to contracts that have been approved by the Board. The Trustees are
experienced executives who, among other duties, oversee the Trust’s activities, review contractual arrangements with companies that provide services to the Fund, and review the Fund’s investment
performance.
The Board Leadership Structure
and Related Matters
The Board is
comprised of eight (8) members, seven (7) of whom are independent or disinterested persons, which means that they are not “interested persons” of the Fund as defined in Section 2(a)(19) of the 1940 Act
(“Independent Trustees”).
The Trust is one of 23
registered investment companies (with a total of approximately 140 separate series) in the Voya family of funds and all of the Trustees serve as members of, as applicable, each investment company’s Board of
Directors or Board of Trustees. The Board employs substantially the same leadership structure with respect to each of these investment companies.
One of the Independent
Trustees, currently Colleen D. Baldwin, serves as the Chairperson of the Board of the Trust. The responsibilities of the Chairperson of the Board include: coordinating with management in the preparation of agendas for
Board meetings; presiding at Board meetings; between Board meetings, serving as a primary liaison with other Trustees, officers of the Trust, management personnel, and legal counsel to the Independent Trustees; and
such other duties as the Board periodically may determine. Ms. Baldwin does not hold a position with any firm that is a sponsor of the Trust. The designation of an individual as the Chairperson does not impose on such
Independent Trustee any duties, obligations or liabilities greater than the duties, obligations or liabilities imposed on such person as a member of the Board, generally.
The Board performs many of
its oversight and other activities through the committee structure described below in the “Board Committees” section. Each Committee operates pursuant to a written charter approved by the Board. The Board
currently conducts regular meetings eight (8) times a year. Six (6) of these regular meetings consist of sessions held over a two- or three-day period, and two (2) of these meetings consist of a one-day session. In
addition, during the course of a year, the Board and many of its Committees typically hold special meetings by telephone or in person to discuss specific matters that require action prior to the next regular meeting.
The Independent Trustees have engaged independent legal counsel to assist them in performing their oversight responsibilities.
The Board believes that its
committee structure is an effective means of empowering the Trustees to perform their fiduciary and other duties. For example, the Board’s committee structure facilitates, as appropriate, the ability of
individual Board members to receive detailed presentations on topics under their review and to develop increased familiarity with respect to such topics and with key personnel at relevant service providers. At least
annually, with guidance from its Nominating and Governance Committee, the Board analyzes whether there are potential means to enhance the efficiency and effectiveness of the Board’s operations.
Board Committees
Audit
Committee. The Board has established an Audit Committee whose functions include, among other things: (i) meeting with the independent registered public accounting firm of the Trust
to review the scope of the Trust’s audit, the Trust’s financial statements and accounting controls; (ii) meeting with management concerning these matters, internal audit activities, reports under the
Trust’s whistleblower procedures, the services rendered by various service providers, and other matters; and (iii) overseeing the implementation of the Voya funds’ valuation procedures and the fair value
determinations made with respect to securities held by the Voya funds for which market value quotations are not readily available. The Audit Committee currently consists of three (3) Independent Trustees. The
following Trustees currently serve as members of the Audit Committee: Ms. Baldwin and Messrs. Gavin and Obermeyer. Mr. Gavin currently serves as the Chairperson of the Audit Committee. All Committee members have been designated as Audit Committee Financial Experts under the
Sarbanes-Oxley Act of 2002. The Audit Committee typically meets five (5) times per year, and may hold special meetings by telephone or in person to discuss specific matters that may require action prior to the next
regular meeting. The Audit Committee held [ ] ( ) meetings during the fiscal year ended February 29, 2020.
Compliance Committee. The Board has established a Compliance Committee for the purpose of, among other things: (i) providing oversight with respect to compliance by the funds in the Voya
family of funds and their service providers with applicable laws, regulations, and internal policies and procedures affecting the operations of the funds; (ii) receiving reports of evidence of possible material
violations of applicable U.S. federal or state securities laws and breaches of fiduciary duty arising under U.S. federal or state laws; (iii) coordinating activities between the Board and the Chief Compliance Officer
(“CCO”) of the funds; (iv) facilitating information flow among Board members and the CCO between Board meetings; (v) working with the CCO and management to identify the types of reports to be submitted by
the CCO to the Compliance Committee and the Board; (vi) making recommendations regarding the role, performance, compensation, and oversight of the CCO; (vii) overseeing the cybersecurity practices of the funds and
their key service providers; (viii) overseeing management’s administration of proxy voting; (ix) overseeing the effectiveness of brokerage usage by the Trust’s advisers or sub-advisers, as applicable, and
compliance with regulations regarding the allocation of brokerage for services; and (x) overseeing the implementation of the funds’ liquidity risk management program.
The
Compliance Committee currently consists of four (4) Independent Trustees: Mses. Chadwick and Pressler and Messrs. Boyer and Sullivan. Mr. Boyer currently serves as the Chairperson of the Compliance Committee. The
Compliance Committee typically meets four (4) times per year, and may hold special meetings by telephone or in person to discuss specific matters that may require action prior to the next regular meeting. The
Compliance Committee held [ ] ( ) meetings during the fiscal year ended February 29, 2020.
Contracts Committee. The Board has established a Contracts Committee for the purpose of overseeing the annual renewal process relating to investment advisory and sub-advisory agreements,
distribution agreements, and Rule 12b-1 Plans and, at the discretion of the Board, other service agreements or plans involving the Voya funds (including the Fund). The responsibilities of the Contracts Committee
include, among other things: (i) identifying the scope and format of information to be provided by service providers in connection with applicable contract approvals or renewals; (ii) providing guidance to independent
legal counsel regarding specific information requests to be made by such counsel on behalf of the Trustees; (iii) evaluating regulatory and other developments that might have an impact on applicable approval and
renewal processes; (iv) reporting to the Trustees its recommendations and decisions regarding the foregoing matters; (v) assisting in the preparation of a written record of the factors considered by Trustees relating
to the approval and renewal of advisory and sub-advisory agreements; (vi) recommending to the Board specific steps to be taken by it regarding the contracts approval and renewal process, including, for example,
proposed schedules of certain actions to be taken; and (vii) otherwise providing assistance in connection with Board decisions to renew, reject, or modify agreements or plans.
The
Contracts Committee currently consists of all seven (7) of the Independent Trustees of the Board. Ms. Pressler currently serves as the Chairperson of the Contracts Committee. The Contracts Committee typically meets
five (5) times per year and may hold special meetings by telephone or in person to discuss specific matters that may require action prior to the next regular meeting. The Contracts Committee held [ ] ( ) meetings
during the fiscal year ended February 29, 2020.
For the fiscal year ended
February 29, 2020, one (1) special joint meeting was held of the Boards of Directors/Trustees of the Voya funds, the Contracts Committee, and the Investment Review Committee E.
Investment Review
Committees. The Board has established, for all of the funds under its direction, the following two Investment Review Committees (each an “IRC” and together the
“IRCs”): (i) the Investment Review Committee E (“IRC E”); and (ii) the Investment Review Committee F (“IRC F”). The funds are allocated among IRCs
periodically by the Board as the Board deems appropriate to balance the workloads of the IRCs and to have similar types of funds or funds with the same investment sub-adviser or the same portfolio management team
assigned to the same IRC. Each IRC performs the following functions, among other things: (i) monitoring the investment performance of the funds in the Voya family of funds that are assigned to that Committee; (ii)
making recommendations to the Board with respect to investment management activities performed by the advisers and/or sub-advisers on behalf of such Voya funds, and reviewing and making recommendations regarding
proposals by management to retain new or additional sub-advisers for these Voya funds; and (iii) making recommendations to the Board regarding the role, performance, compensation, and oversight of the Chief Investment
Risk Officer. The Fund is monitored by the IRCs, as indicated below. Each committee is described below.
Fund
| IRC E
| IRC F
|
Voya Senior Income Fund
|
| X
|
The IRC E currently
consists of three (3) Independent Trustees. The following Trustees serve as members of the IRC E: Ms. Chadwick and Messrs. Boyer and Obermeyer. Ms. Chadwick currently serves as the Chairperson of the IRC E. The IRC E
typically meets five (5) times per year and on an as-needed basis. The IRC E held [ ] ( ) meetings during the fiscal year ended February 29, 2020.
For the fiscal year ended
February 29, 2020, one (1) special joint meeting was held of the Boards of Directors/Trustees of the Voya funds, the Contracts Committee, and the Investment Review Committee E.
The IRC F currently
consists of four (4) Independent Trustees. The following Trustees serve as members of the IRC F: Mses. Baldwin and Pressler and Messrs. Gavin and Sullivan. Mr. Sullivan currently serves as the Chairperson of the IRC
F. The IRC F typically meets five (5) times per year and on an as-needed basis. The IRC F held [ ] ( ) meetings during the fiscal year ended February 29, 2020.
Nominating and Governance
Committee. The Board has established a Nominating and Governance Committee for the purpose of, among other things: (i) identifying and recommending to the Board candidates it
proposes for nomination to fill Independent Trustee vacancies on the Board; (ii) reviewing workload and capabilities of Independent Trustees and recommending changes to the size or composition of the Board, as
necessary; (iii) monitoring regulatory developments and recommending modifications to the Committee’s responsibilities; (iv) considering and, if appropriate, recommending the creation of additional committees or
changes to Trustee policies and procedures based on rule changes and “best practices” in corporate governance; (v) conducting an annual review of the membership and chairpersons of all Board committees and
of practices relating to such membership and chairpersons; (vi) undertaking a periodic study of compensation paid to independent board members of investment companies and making recommendations for any compensation
changes for the Independent Trustees; (vii) overseeing the Board’s annual self-evaluation process; (viii) developing (with assistance from management) an annual meeting calendar for the Board and its committees;
(ix) overseeing actions to facilitate attendance by Independent Trustees at relevant educational seminars and similar programs; and (x) overseeing insurance arrangements for the funds.
In
evaluating potential candidates to fill Independent Trustee vacancies on the Board, the Nominating and Governance Committee will consider a variety of factors. Specific qualifications of candidates for Board
membership will be based on the needs of the Board at the time of nomination. The Nominating and Governance Committee will consider nominations received from shareholders and shall assess shareholder nominees in the
same manner as it reviews nominees that it identifies as potential candidates. A shareholder nominee for Trustee should be submitted in writing to the Trust’s Secretary at 7337 East Doubletree Ranch Road, Suite
100, Scottsdale, Arizona 85258-2034. Any such shareholder nomination should include at least the following information as to each individual proposed for nomination as Trustee: such person’s written consent to
be named in a proxy statement as a nominee (if nominated) and to serve as a Trustee (if elected), and all information relating to such individual that is required to be disclosed in the solicitation of proxies for
election of Trustees, or is otherwise required, in each case under applicable federal securities laws, rules, and regulations, including such information as the Board may reasonably deem necessary to satisfy its
oversight and due diligence duties.
The Secretary shall submit
all nominations received in a timely manner to the Nominating and Governance Committee. To be timely in connection with a shareholder meeting to elect Trustees, any such submission must be delivered to the
Trust’s Secretary not earlier than the 90th day prior to such meeting and not later than the close of business on the later of the 60th day prior to such meeting or the 10th day following the day on which public
announcement of the date of the meeting is first made, by either the disclosure in a press release or in a document publicly filed by the Trust with the SEC.
The
Nominating and Governance Committee currently consists of all seven (7) of the Independent Trustees of the Board. Mr. Obermeyer currently serves as the Chairperson of the Nominating and Governance Committee. The
Nominating and Governance Committee typically meets four (4) times per year and on an as-needed basis. The Nominating and Governance Committee held [ ] ( ) meetings during the fiscal year ended February 29, 2020.
The Board’s Risk Oversight
Role
The
day-to-day management of various risks relating to the administration and operation of the Trust is the responsibility of management and other service providers retained by the Board or by management, most of whom
employ professional personnel who have risk management responsibilities. The Board oversees this risk management function consistent with and as part of its oversight duties. The Board performs this risk management
oversight function directly and, with respect to various matters, through its committees. The following description provides an overview of many, but not all, aspects of the Board’s oversight of risk management
for the Fund. In this connection, the Board has been advised that it is not practicable to identify all of the risks that may impact the Fund or to develop procedures or controls that are designed to eliminate all
such risk exposures, and that applicable securities law regulations do not contemplate that all such risks be identified and addressed.
The Board, working with
management personnel and other service providers, has endeavored to identify the primary risks that confront the Fund. In general, these risks include, among others: (i) investment risks; (ii) credit risks; (iii)
liquidity risks; (iv) valuation risks; (v) operational risks; (vi) reputational risks; (vii) regulatory risks; (viii) risks related to potential legislative changes; (ix) the risk of conflicts of interest affecting
Voya affiliates in managing the Fund; and (x) cybersecurity risks. The Board has adopted and periodically reviews various policies and procedures that are designed to address these and other risks confronting the
Fund. In addition, many service providers to the Fund have adopted their own policies, procedures, and controls designed to address particular risks to the Fund. The Board and persons retained to render advice and
service to the Board periodically review and/or monitor changes to, and developments relating to, the effectiveness of these policies and procedures.
The Board oversees risk
management activities in part through receipt and review by the Board or its committees of regular and special reports, presentations and other information from Officers of the Trust, including the CCOs for the Trust
and the Adviser and the Trust’s Chief Investment Risk Officer (“CIRO”), and from other service providers. For example, management personnel and the other persons make regular reports and
presentations to: (i) the Compliance Committee regarding compliance with regulatory requirements and oversight of cybersecurity practices by the Fund and key service providers; (ii) the IRCs regarding investment
activities and strategies that may pose particular risks; (iii) the Audit Committee with respect to financial reporting controls and internal audit activities; (iv) the Nominating and Governance Committee regarding
corporate governance and best practice developments; and (v) the Contracts Committee regarding regulatory and related developments that might impact the retention of service providers to the Trust. The CIRO oversees
an Investment Risk Department (“IRD”) that provides an additional source of analysis and research for Board members in connection with their oversight of the investment process and performance of portfolio
managers. Among its other duties, the IRD seeks to identify and, where practicable, measure the investment risks being taken by the Fund’s portfolio managers. Although the IRD works closely with management of
the Trust in performing its duties, the CIRO is directly accountable to, and maintains an ongoing dialogue with, the Independent Trustees.
Qualifications of the
Trustees
The Board believes that
each of its Trustees is qualified to serve as a Trustee of the Trust based on its review of the experience, qualifications, attributes, and skills of each Trustee. The Board bases this conclusion on its consideration
of various criteria, no one of which is controlling. Among others, the Board has considered the following factors with respect to each Trustee: strong character and high integrity; an ability to review, evaluate,
analyze, and discuss information provided; the ability to exercise effective business judgment in protecting shareholder interests while taking into account different points of views; a background in financial,
investment, accounting, business, regulatory, or other skills that would be relevant to the performance of a Trustee's duties; the ability and willingness to commit the time necessary to perform his or her duties; and
the ability to work in a collegial manner with other Board members. Each Trustee's ability to perform his or her duties effectively is evidenced by his or her: experience in the investment management business; related
consulting experience; other professional experience; experience serving on the boards of directors/trustees of other public companies; educational background and professional training; prior experience serving on the
Board, as well as the boards of other investment companies in the Voya family of funds and/or of other investment companies; and experience as attendees or participants in conferences and seminars that are focused on
investment company matters and/or duties that are specific to board members of registered investment companies.
Information indicating
certain of the specific experience and qualifications of each Trustee relevant to the Board’s belief that the Trustee should serve in this capacity is provided in the table above that provides information about
each Trustee. That table includes, for each Trustee, positions held with the Trust, the length of such service, principal occupations during the past five (5) years, the number of series within the Voya family of
funds for which the Trustee serves as a Board member, and certain directorships held during the past five (5) years. Set forth below are certain additional specific experiences, qualifications, attributes, or skills
that the Board believes support a conclusion that each Trustee should serve as a Board member in light of the Trust’s business and structure.
Independent Trustees
Colleen
D. Baldwin has been a Trustee of the Trust and a board member of other investment companies in the Voya family of funds since 2007. She also has served as the Chairperson of the Trust’s Board of
Trustees since January 1, 2020 and, prior to that, as the Chairperson of the Trust’s IRC E since January 23, 2014. Prior to that, she served as the Chairperson of the Trust’s Nominating and Governance Committee since 2009. Ms. Baldwin is currently an Independent Board Director of Dentaquest and is
currently the Chairperson of its Audit Committee and a member of its Mergers & Acquisitions and Finance/Investment Review Committees. Ms. Baldwin is also an Advisory Board member of RSR Partners, Inc. since 2016
and President of Glantuam Partners, LLC, a business consulting firm, since 2009. Prior to that, she served in senior positions at the following financial services firms: Chief Operating Officer for Ivy Asset
Management, Inc. (2002-2004), a hedge fund manager; Chief Operating Officer and Head of Global Business and Product Development for AIG Global Investment Group (1995-2002), a global investment management firm; Senior
Vice President at Bankers Trust Company (1994-1995); and Senior Managing Director at J.P. Morgan & Company (1987-1994). Ms. Baldwin began her career in 1981 at AT&T/Bell Labs as a systems analyst. Ms. Baldwin
holds a B.S. from Fordham University and an M.B.A. from Pace University.
John V. Boyer has been a Trustee of the Trust and a board member of other investment companies in the Voya family of funds since 1997. He also has served as the Chairperson of the Trust’s
Compliance Committee since January 1, 2020 and, prior to that, as the Chairperson of the Trust’s Board of Trustees since January 23, 2014. Prior to that, he served as the Chairperson of the Trust’s IRC F since 2006 and as the Chairperson of the Compliance Committee for other funds in the Voya family of funds. Mr. Boyer was the President and CEO of the Bechtler Arts Foundation from 2008 until 2019 for which, among his other duties, Mr. Boyer oversaw all fiduciary aspects of the Foundation and
assisted in the oversight of the Foundation’s endowment fund. Previously, he served as President and Chief Executive Officer of the Franklin and Eleanor Roosevelt Institute (2006-2007) and as Executive Director
of The Mark Twain House & Museum (1989-2006) where he was responsible for overseeing business operations, including endowment funds. He also served as a board member of certain predecessor mutual funds of the Voya
family of funds (1997-2005). Mr. Boyer holds a B.A. from the University of California, Santa Barbara and an M.F.A. from Princeton University.
Patricia W. Chadwick has been a Trustee of the Trust and a board member of other investment companies in the Voya family of funds since 2006. She also has served as the Chairperson of the Trust’s IRC E
since January 1, 2020 and, prior to that, as the Chairperson of the Trust’s Joint IRC since January 1, 2018. Prior to that, she served as the Chairperson of the Trust’s IRC F since January 23,
2014.
Since 2000, Ms. Chadwick has been the
Founder and President of Ravengate Partners LLC, a consulting firm that provides advice regarding financial markets and the global economy. She also is a director of The Royce Funds (since 2009), Wisconsin Energy
Corp. (since 2006), and AMICA Mutual Insurance Company (since 1992). Previously, she served in senior roles at several major financial services firms where her duties included the management of corporate pension
funds, endowments, and foundations, as well as management responsibilities for an asset management business. Ms. Chadwick holds a B.A. from Boston University and is a Chartered Financial Analyst.
Martin J. Gavin has been a Trustee of the Trust since August 1, 2015. He also has served as the Chairperson of the Trust’s Audit Committee since January 1, 2018. Mr. Gavin previously served as a
Trustee of the Trust from May 21, 2013 until September 12, 2013, and as a board member of other investment companies in the Voya family of funds from 2009 until 2010 and from 2011 until September 12, 2013.Mr. Gavin
was the President and Chief Executive Officer of the Connecticut Children’s Medical Center from 2006 to 2015. Prior to his position at Connecticut Children’s Medical Center, Mr. Gavin worked in the
insurance and investment industries for more than 27 years. Mr. Gavin served in several senior executive positions with The Phoenix Companies during a 16 year period, including as President of Phoenix Trust
Operations, Executive Vice President and Chief Financial Officer of Phoenix Duff & Phelps, a publicly-traded investment management company, and Senior Vice President of Investment Operations at Phoenix Home Life.
Mr. Gavin holds a B.A. from the University of Connecticut.
Joseph E. Obermeyer has been a Trustee of the Trust since May 21, 2013, and a board member of other investment companies in the Voya family of funds since 2003. He also has served as the Chairperson of the
Trust’s Nominating and Governance Committee since January 1, 2018 and, prior to that, as the Chairperson of the Trust’s Joint IRC since January 23, 2014. Mr. Obermeyer is the founder and President of
Obermeyer & Associates, Inc., a provider of financial and economic consulting services since 1999. Prior to founding Obermeyer & Associates, Mr. Obermeyer had more than 15 years of experience in accounting,
including serving as a Senior Manager at Arthur Andersen LLP from 1995 until 1999. Previously, Mr. Obermeyer served as a Senior Manager at Coopers & Lybrand LLP from 1993 until 1995, as a Manager at Price
Waterhouse from 1988 until 1993, Second Vice President from 1985 until 1988 at Smith Barney, and as a consultant with Arthur Andersen & Co. from 1984 until 1985. Mr. Obermeyer holds a B.A. in Business
Administration from the University of Cincinnati, an M.B.A. from Indiana University, and post graduate certificates from the University of Tilburg and INSEAD.
Sheryl K. Pressler has been a Trustee of the Trust and a board member of other investment companies in the Voya family of funds since 2006. She also has served as the Chairperson of the Trust’s
Contracts Committee since 2007. Ms. Pressler has served as a consultant on financial matters since 2001. Previously, she held various senior positions involving financial services, including as Chief Executive Officer
(2000-2001) of Lend Lease Real Estate Investments, Inc. (real estate investment management and mortgage servicing firm), Chief Investment Officer (1994-2000) of California Public Employees’ Retirement System
(state pension fund), Director of Stillwater Mining Company (May 2002 – May 2013), and Director of Retirement Funds Management (1981-1994) of McDonnell Douglas Corporation (aircraft manufacturer). Ms. Pressler
holds a B.A. from Webster University and an M.B.A. from Washington University.
Christopher P.
Sullivan has been a Trustee of the Trust since October 1, 2015. He also has served as the Chairperson of the Trust’s IRC F since January 1, 2018. He retired from Fidelity Management &
Research in October 2012, following three years as first the President of the Bond Group and then the Head of Institutional Fixed Income. Previously, Mr. Sullivan served as Managing Director and Co-Head of U.S. Fixed
Income at Goldman Sachs Asset Management (2001-2009) and prior to that, Senior Vice President at PIMCO (1997-2001). He currently serves as a Director of Rimrock Funds (since 2013), a fixed income hedge fund. He is
also a Senior Advisor to Asset Grade
(since 2013), a private wealth management
firm, and serves as a Trustee of the Overlook Foundation, a foundation that supports Overlook Hospital in Summit, New Jersey. In addition to his undergraduate degree from the University of Chicago, Mr. Sullivan holds
an M.A. degree from the University of California at Los Angeles and is a Chartered Financial Analyst.
Interested Trustee
Dina
Santoro has been a Trustee of the Trust and a board member of other investment companies in the Voya family of funds since 2018. She also is President and Director of Voya Investments, LLC, Voya
Capital, LLC, and Voya Funds Services, LLC (2018 to Present) and Senior Managing Director, Head of Product and Marketing Strategy for Voya Investment Management (2017 – Present). Ms. Santoro previously
served as Managing Director and Global Head of Product Strategy and Distribution for Quantitative Management Associates, LLC (2004-2017) and several other senior management positions in various aspects of the
financial services business. These positions and experiences have provided Ms. Santoro with extensive investment management, distribution and oversight experience.
Trustee Ownership of
Securities
In order to further align
the interests of the Independent Trustees with shareholders, it is the policy of the Board for Independent Trustees to own, beneficially, shares of one or more funds in the Voya family of funds at all times
(“Ownership Policy”). For this purpose, beneficial ownership of shares of a Voya fund includes, in addition to direct ownership of Voya fund shares, ownership of a variable contract whose proceeds are
invested in a Voya fund within the Voya family of funds, as well as deferred compensation payments under the Board’s deferred compensation arrangements pursuant to which the future value of such payments is
based on the notional value of designated funds within the Voya family of funds.
The Ownership Policy
requires the initial value of investments in the Voya family of funds that are directly or indirectly owned by the Trustees to equal or exceed the annual retainer fee for Board services (excluding any annual retainers
for service as chairpersons of the Board or its committees or as members of committees), as such retainer shall be adjusted from time to time.
The Ownership Policy
provides that existing Trustees shall have a reasonable amount of time from the date of any recent or future increase in the minimum ownership requirements in order to satisfy the minimum share ownership requirements.
In addition, the Ownership Policy provides that a new Trustee shall satisfy the minimum share ownership requirements within a reasonable amount of time of becoming a Trustee. For purposes of the Ownership Policy, a
reasonable period of time will be deemed to be, as applicable, no more than three years after a Trustee has assumed that position with the Voya family of funds or no more than one year after an increase in the minimum
share ownership requirement due to changes in annual Board retainer fees. A decline in value of any fund investments will not cause a Trustee to have to make any additional investments under this Policy.
Investment in mutual funds
of the Voya family of funds by the Trustees pursuant to this Ownership Policy is subject to: (i) policies, applied by the mutual funds of the Voya family of funds to other similar investors, that are designed to
prevent inappropriate market timing trading practices; and (ii) any provisions of the Code of Ethics for the Voya family of funds that otherwise apply to the Trustees.
Trustees' Fund Equity Ownership
Positions
The
following table sets forth information regarding each Trustee's beneficial ownership of equity securities of the Fund and the aggregate holdings of shares of equity securities of all the funds in the Voya family of
funds for the calendar year ended December 31, 2019.
Fund
| Dollar Range of Equity Securities in the Fund as of December 31, 2019
|
Colleen D. Baldwin
| John V. Boyer
| Patricia W. Chadwick
| Martin J. Gavin
|
Voya Senior Income Fund
| [$50,001-$100,0001
| None
| None
| None]
|
Aggregate Dollar Range of Equity Securities in All Registered Investment Companies
Overseen by Trustee in the Voya family of funds
| Over $100,0001
| Over $100,000
Over $100,0001
| Over $100,000
| Over $100,0001
|
Fund
| Dollar Range of Equity Securities in the Fund as of December 31, 2019
|
Joseph E. Obermeyer
| Sheryl K. Pressler
| Dina Santoro
| Christopher P. Sullivan
|
Voya Senior Income Fund
| [None
| None
| None
| None]
|
Aggregate Dollar Range of Equity Securities in All Registered Investment Companies
Overseen by Trustee in the Voya family of funds
| Over $100,0001
| Over $100,0001
| Over $100,0001
| Over $100,000
|
1
| Includes the value of shares in which a Trustee has an indirect interest through a deferred compensation plan and/or a 401(K) plan.
|
Independent Trustee Ownership of
Securities of the Adviser, Underwriter, and their Affiliates
The
following table sets forth information regarding each Independent Trustee's (and his/her immediate family members) share ownership, beneficially or of record, in securities of the Fund’s Adviser or Principal
Underwriter, and the ownership of securities in an entity controlling, controlled by or under common control with the Adviser or Principal Underwriter of the Fund (not including registered investment companies) as of
December 31, 2019.
Name of Trustee
| Name of Owners and Relationship to Trustee
| Company
| Title of Class
| Value of Securities
| Percentage of Class
|
Colleen D. Baldwin
| N/A
| N/A
| N/A
| N/A
| N/A
|
John V. Boyer
| N/A
| N/A
| N/A
| N/A
| N/A
|
Patricia W. Chadwick
| N/A
| N/A
| N/A
| N/A
| N/A
|
Martin J. Gavin
| N/A
| N/A
| N/A
| N/A
| N/A
|
Joseph Obermeyer
| N/A
| N/A
| N/A
| N/A
| N/A
|
Sheryl K. Pressler
| N/A
| N/A
| N/A
| N/A
| N/A
|
Christopher P. Sullivan
| N/A
| N/A
| N/A
| N/A
| N/A
|
Trustee Compensation
Each Trustee is reimbursed
for reasonable expenses incurred in connection with each meeting of the Board or any of its Committee meetings attended. Each Independent Trustee is compensated for his or her services, on a quarterly basis, according
to a fee schedule adopted by the Board. The Board may from time to time designate other meetings as subject to compensation.
The Fund
pays each Trustee who is not an interested person of the Fund his or her pro rata share, as described below, of: (i) an annual retainer of $250,000; (ii) Ms. Baldwin, as the Chairperson of the Board, receives an additional annual retainer of $100,000;
(iii) Mses. Chadwick and Pressler and Messrs. Boyer, Gavin, Obermeyer, and Sullivan, as the Chairpersons of Committees of the Board, each receives an additional annual retainer of $30,000, $65,000, $30,000, $30,000,
$30,000 and $30,000, respectively; (iv) $10,000 per attendance at any of the regularly scheduled meetings (four (4) quarterly meetings, two (2) auxiliary meetings, and two (2) annual contract review meetings); and (v)
out-of-pocket expenses. The Board at its discretion may from time to time designate other special meetings as subject to an attendance fee in the amount of $5,000 for in-person meetings and $2,500 for special
telephonic meetings.
The pro rata share paid by the Fund is based on the Fund’s average net assets as a percentage of the average net assets of all the funds managed by the Adviser or its affiliate for
which the Trustees serve in common as Trustees.
Future Compensation Payment
Certain future payment
arrangements apply to certain Trustees. More particularly, each non-interested Trustee, with the exception of Messrs. Jones and Obermeyer, who was a Trustee on or before May 9, 2007, and who will have
served as a non-interested Trustee for five or more years for one or more funds in the Voya family of funds is entitled to a future payment (“Future Payment”), if such Trustee: (i) retires in
accordance with the Board’s retirement policy; (ii) dies; or (iii) becomes disabled. The Future Payment shall be made promptly to, as applicable, the Trustee or the Trustee’s estate, in an amount
equal to two (2) times the annual compensation payable to such Trustee, as in effect at the time of his or her retirement, death or disability if the Trustee had served as Trustee for at least five years as of May 9,
2007, or in a lesser amount calculated based on the proportion of time served by such Trustee (as compared to five years) as of May 9, 2007. The annual compensation determination shall be based upon the annual
Board membership retainer fee in effect at the time of that Trustee’s retirement, death or disability (but not any separate annual retainer fees for chairpersons of committees and of the Board), provided that
the annual compensation used for this purpose shall not exceed the annual retainer fees as of May 9, 2007. This amount shall be paid by the Voya fund or Voya funds on whose Board the Trustee was serving at the
time of his or her retirement, death, or disability. Each applicable Trustee may elect to receive payment of his or her benefit in a lump sum or in three substantially equal payments.
Compensation Table
The
following table sets forth information provided by the Fund’s Adviser regarding compensation of Trustees by the Fund and other funds managed by the Adviser and its affiliates for the fiscal year ended February
29, 2020. Officers of the Trust and Trustees who are interested persons of the Trust do not receive any compensation from the Trust or any other funds managed by the Adviser or its affiliates.
Fund
| Aggregate Compensation
|
Colleen D. Baldwin
| John V. Boyer
| Patricia W. Chadwick
| Martin J. Gavin
|
Voya Senior Income Fund
| [$]
| [$]
| [$]
| [$]
|
Pension or Retirement Benefits Accrued as Part of Fund Expenses3
| N/A
| $0
| $0
| N/A
|
Estimated Annual Benefits Upon Retirement4
| N/A
| $400,000.00
| $113,333.00
| N/A
|
Total Compensation from the Fund and the Voya family of funds Paid to Trustees
| [$]
| [$]1
| [$]
| [$]1
|
Fund
| Aggregate Compensation
|
Russell H. Jones2
| Joseph E. Obermeyer
| Sheryl K. Pressler
| Christopher P. Sullivan
| Roger B. Vincent2
|
Voya Senior Income Fund
| [$]
| [$]
| [$]
| [$]
| [$]
|
Pension or Retirement Benefits Accrued as Part of Fund Expenses3
| N/A
| $0
| N/A
| N/A
| $400,000.00
|
Estimated Annual Benefits Upon Retirement4
| N/A
| $113,333.00
| N/A
| N/A
| N/A
|
Total Compensation from the Fund and the Voya family of funds Paid to Trustees
| [$]1
| [$]1
| [$]1
| [$]
| [$]
|
1
| During the fiscal year ended February 29, 2020, Mr. Boyer, Mr. Gavin, Mr. Jones, Mr. Kenny, Mr. Obermeyer, and Ms. Pressler deferred [$], [$], [$], [$], [$], and [$], respectively, of their compensation
from the Voya family of funds.
|
2
| Mr. Jones and Mr. Vincent each retired from the Trust’s Board effective December 31, 2019.
|
3
| Future Compensation Payment amounts are accrued pro rata to all Voya funds in the same year that the Trustee retires.
|
4
| As discussed in the section entitled “Future Compensation Payment” above, this is not an annual benefit. Rather each applicable Trustee may elect to receive payment of his
or her benefit in a lump sum or in three substantially equal payments. Future Compensation Payments included in this table represent the total payment allocated pro rata to all Voya funds.
|
CODE OF ETHICS
The Fund, the Adviser, the
Sub-Adviser, and the Distributor have adopted a code of ethics (“Code of Ethics”) pursuant to Rule 17j-1 under the 1940 Act governing personal trading activities of all Trustees, Officers of the Trust and
persons who, in connection with their regular functions, play a role in the recommendation of or obtain information pertaining to any purchase or sale of a security by the Fund. The Code of Ethics is intended to
prohibit fraud against a Fund that may arise from the personal trading of securities that may be purchased or held by that Fund or of the Fund’s shares. The Code of Ethics prohibits short-term trading of a
Fund’s shares by persons subject to the Code of Ethics. Personal trading is permitted by such persons subject to certain restrictions; however, such persons are generally required to pre-clear all security
transactions with the Fund’s Adviser or its affiliates and to report all transactions on a regular basis.
The Code of Ethics can be
reviewed and copied at the SEC’s Public Reference Room located at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at (202)
551-8090. The Code of Ethics is available on the SEC’s website at www.sec.gov and copies may also be obtained at prescribed rates by electronic request at publicinfo@sec.gov, or by writing the SEC’s Public
Reference Section at the address listed above.
PRINCIPAL SHAREHOLDERS AND
CONTROL PERSONS
Control is defined by the 1940
Act as the beneficial ownership, either directly or through one or more controlled companies, of more than 25% of the voting securities of a company. A control person may have a significant impact on matters submitted
to a shareholder vote.
Trustee and Officer Holdings
As of [June
5, 2020], the Trustees and officers of the Trust as a group owned less than 1% of any class of the Fund’s outstanding Common Shares.
Principal Shareholders
As of
[June 5, 2020], to the best knowledge of management, no person owned beneficially or of-record 5% or more of the outstanding shares of any class of the Fund or 5% or more of the outstanding shares of the Fund
addressed herein, except as set forth in the table below. The Trust has no knowledge as to whether all or any portion of shares owned of-record are also owned beneficially.
Name of Fund
| Class
| Name and Address
| Percentage
of Class
| Percentage
of Fund
|
PROXY VOTING PROCEDURES AND
GUIDELINES
The Board has adopted proxy
voting procedures and guidelines to govern the voting of proxies relating to the Fund’s portfolio securities.
The proxy voting procedures and guidelines
delegate to the Adviser the authority to vote proxies relating to portfolio securities, and provide a method for responding to potential conflicts of interest. In delegating voting authority to the Adviser, the Board
has also approved the Adviser’s proxy voting procedures, which require the Adviser to vote proxies in accordance with the Fund’s proxy voting procedures and guidelines. An independent proxy voting service
has been retained to assist in the voting of Fund proxies through the provision of vote analysis, implementation and recordkeeping and disclosure services. In addition, the Compliance Committee oversees the
implementation of the Fund’s proxy voting procedures and guidelines. A copy of the proxy voting procedures and guidelines of the Fund, including procedures of the Adviser, is attached hereto as Appendix A. No
later than August 31st of each year, information regarding how the Fund voted proxies relating to portfolio securities for the one-year period ending June 30th is available online without charge at
www.voyainvestments.com or by accessing the SEC’s EDGAR database at www.sec.gov.
ADVISER
The investment adviser for the
Fund is Voya Investments, LLC. The Adviser, subject to the authority of the Board, has the overall responsibility for the management of the Fund’s portfolio.
The Adviser is registered
with the SEC as an investment adviser and serves as an investment adviser to registered investment companies (or series thereof). The Adviser is an indirect, wholly-owned subsidiary of Voya Financial, Inc. Voya
Financial, Inc. is a U.S.-based financial institution with subsidiaries operating in the retirement, investment, and insurance industries.
Investment Management
Agreement
The Adviser serves pursuant
to an Investment Management Agreement between the Adviser and the Trust on behalf of the Fund. Under the Investment Management Agreement, the Adviser oversees, subject to the authority of the Board, the provision of
all investment advisory and portfolio management services for the Fund. In addition, the Adviser provides administrative services reasonably necessary for the ordinary operation of the Fund. The Adviser has delegated
certain management responsibilities to one or more Sub-Advisers.
Investment Management
Services
Among other things, the
Adviser: (i) provides general investment advice and guidance with respect to the Fund and provides advice and guidance to the Fund’s Board; (ii) provides the Board with any periodic or special reviews or
reporting it requests, including any reports regarding a Sub-Adviser and its investment performance; (iii) oversees management of the Fund’s investments and portfolio composition including supervising any
Sub-Adviser with respect to the services that such Sub-Adviser provides; (iv) makes available its officers and employees to the Board and officers of the Trust; (v) designates and compensates from its own resources
such personnel as the Adviser may consider necessary or appropriate to the performance of its services hereunder; (vi) periodically monitors and evaluates the performance of any Sub-Adviser with respect to the
investment objectives and policies of the Fund and performs periodic detailed analysis and review of the Sub-Adviser’s investment performance; (vii) reviews, considers and reports on any changes in the personnel
of the Sub-Adviser responsible for performing the Sub-Adviser’s obligations or any changes in the ownership or senior management of the Sub-Adviser; (viii) performs periodic in-person or telephonic diligence
meetings with the Sub-Adviser; (ix) assists the Board and management of the Fund in developing and reviewing information with respect to the initial and subsequent annual approval of the Sub-Advisory Agreement; (x)
monitors the Sub-Adviser for compliance with the investment objective or objectives, policies and restrictions of the Fund, the 1940 Act, Subchapter M of the Code, and, if applicable, regulations under these
provisions, and other applicable law; (xi) if appropriate, analyzes and recommends for consideration by the Board termination of a contract with a Sub-Adviser; (xii) identifies potential successors to or replacements
of a Sub-Adviser or potential additional Sub-Adviser, performs appropriate due diligence, and develops and presents recommendations to the Board; and (xiii) is authorized to exercise full investment discretion and
make all determinations with respect to the day-to-day investment of a Fund’s assets and the purchase and sale of portfolio securities for one or more Funds in the event that at any time no sub-adviser is
engaged to manage the assets of such Fund.
In addition, the Adviser
assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance,
and related services. The Adviser also reviews the Fund for compliance with applicable legal requirements and monitors the Sub-Adviser for compliance with requirements under applicable law and with the investment
policies and restrictions of the Fund.
Limitation of Liability
The Adviser is not subject
to liability to the Fund for any act or omission in the course of, or in connection with, rendering services under the Investment Management Agreement, except by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations and duties under the Investment Management Agreement.
Continuation and Termination of
the Investment Management Agreement
After an initial term of
two years, the Investment Management Agreement continues in effect from year to year with respect to the Fund so long as such continuance is specifically approved at least annually by: (i) the Board of Trustees; or
(ii) the vote of a “majority” of a Fund’s outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act); and provided that such continuance is also approved by a vote of at least a
majority of the Independent Trustees who are not parties to the agreement by a vote cast in person at a meeting called for the purpose of voting on such approval.
The Investment Management
Agreement may be terminated as to a particular Fund at any time without penalty by: (i) the vote of the Board; (ii) the vote of a majority of the Fund’s outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act) of that Fund; or (iii) the Adviser, on sixty (60) days’ prior written notice to the other party. The notice provided for herein may be waived by either party, as a single class, or upon
notice given by the Adviser. The Investment Management Agreement will terminate automatically in the event of its “assignment” (as defined in Section 2(a)(4) of the 1940 Act).
Management Fees
The Adviser pays all of its
expenses arising from the performance of its obligations under the Investment Management Agreement, including executive salaries and expenses of the Trustees and officers of the Trust who are employees of the Adviser
or its affiliates, except the CCO and the CIRO. The Adviser pays the fees of the Sub-Adviser.
Total Investment Management Fees
Paid by the Fund
During the past three fiscal
years, the Fund paid the following investment management fees to the Adviser or its affiliates.
Fund
| February 28 or 29, as applicable
|
| 2020
| 2019
| 2018
|
Voya Senior Income Fund
|
|
|
|
Management Fee including Administrative Services
|
| $4,622,175.00
| $5,647,859.00
|
EXPENSES
The Fund’s assets may
decrease or increase during its fiscal year and the Fund’s operating expense ratios may correspondingly increase or decrease.
In addition to the management
fee and other fees described previously, the Fund pays other expenses, such as legal, audit, transfer agency and custodian out-of-pocket fees, proxy solicitation costs, and the compensation of Trustees who are not
affiliated with the Adviser.
Certain expenses of the
Fund are generally allocated to the Fund, and each class of the Fund, in proportion to its pro rata average net assets, provided that expenses that are specific to a class of a Fund may be charged directly to that class in accordance with the Trust’s Multiple Class
Plan(s) pursuant to Rule 18f-3. However, any Rule 12b-1 Plan fees for each class of shares are charged proportionately only to the outstanding shares of that class.
EXPENSE LIMITATIONS
As described in the
Prospectus, the Adviser, Distributor, and/or Sub-Adviser may have entered into one or more expense limitation agreements with the Fund pursuant to which they have agreed to waive or limit their fees. In connection
with such an agreement, the Adviser, Distributor, or Sub-Adviser, as applicable, will assume expenses (excluding certain expenses as discussed below) so that the total annual ordinary operating expenses of a Fund do
not exceed the amount specified in that Fund’s Prospectus.
Exclusions
Expense limitations do not
extend to interest, taxes, other investment-related costs, leverage expenses (as defined below), extraordinary expenses such as litigation and expenses of the CCO and CIRO, other expenses not incurred in the ordinary
course of the Fund’s business, and expenses of any counsel or other persons or services retained by the Independent Trustees. Leverage expenses shall mean fees, costs, and expenses incurred in connection with a
Fund’s use of leverage (including, without limitation, expenses incurred by a Fund in creating, establishing, and maintaining leverage through borrowings or the issuance of preferred shares). Acquired Fund Fees
and Expenses are not covered by any expense limitation agreement.
If an expense limitation is
subject to recoupment (as indicated in the Prospectus), the Adviser, Distributor, or Sub-Adviser, as applicable, may recoup any expenses reimbursed within 36 months of the waiver or reimbursement and the amount of the
recoupment is limited to the lesser of the amounts that would be recoupable under: (i) the expense limitation in effect at the time of the waiver or reimbursement; or (ii) the expense limitation in effect at the time
of recoupment. Reimbursement for fees waived or expenses assumed will only apply to amounts waived or expenses assumed after the effective date of the expense limitation.
The table below shows the net
fund expenses reimbursed, waived, and any recoupment, if applicable, by the Adviser and Distributor for the last three fiscal years.
NET FUND FEES WAIVED,
REIMBURSED, OR RECOUPED
Fund
| February 28 or 29, as applicable
|
| 2020
| 2019
| 2018
|
Voya Senior Income Fund
|
| ($265,984.00)
| ($163,456.00)
|
SUB-ADVISER
The Adviser has engaged the
services of one or more Sub-Advisers to provide sub-advisory services to the Fund and, pursuant to a Sub-Advisory Agreement, has delegated certain management responsibilities to a Sub-Adviser. The Adviser monitors and
evaluates the performance of any Sub-Adviser.
A Sub-Adviser provides,
subject to the supervision of the Board and the Adviser, a continuous investment program for the Fund and determines the composition of the assets of the Fund, including determination of the purchase, retention, or
sale of the securities, cash and other investments for the Fund, in accordance with the Fund’s investment objectives, policies and restrictions and applicable laws and regulations.
Limitation of Liability
A Sub-Adviser is not
subject to liability to a Fund for any act or omission in the course of, or in connection with, rendering services under the Sub-Advisory Agreement, except by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations and duties under the Sub-Advisory Agreement.
Continuation and Termination of
the Sub-Advisory Agreement
After an initial term of
two years, the Sub-Advisory Agreement continues in effect from year-to-year so long as such continuance is specifically approved at least annually by: (i) the Board; or (ii) the vote of a majority of the Fund’s
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act); provided, that the continuance is also approved by a majority of the Independent Trustees who are not parties to the agreement by a vote
cast in person at a meeting called for the purpose of voting on such approval.
The Sub-Advisory Agreement
may be terminated as to a particular Fund without penalty upon sixty (60) days’ written notice by: (i) the Board; (ii) the majority vote of the outstanding voting securities of the relevant Fund; (iii) the
Adviser; or (iv) the Sub-Adviser upon 60-90 days’ written notice, depending on the terms of the Sub-Advisory Agreement. The Sub-Advisory Agreement terminates automatically in the event of its assignment or in
the event of the termination of the Investment Management Agreement.
Sub-Advisory Fees
The Sub-Adviser receives
compensation from the Adviser at the annual rate of a specified percentage of the Fund’s average daily Managed Assets, as indicated below. The fee is accrued daily and paid monthly. The Sub-Adviser pays all of
its expenses arising from the performance of its obligations under the Sub-Advisory Agreement.
Sub-Adviser
| Annual Sub-Advisory Fee
|
Voya Investment Management Co. LLC (“Voya IM”)
| 0.36%
|
Total Sub-Advisory Fees Paid
The following table sets forth
the sub-advisory fees paid by the Adviser for the last three fiscal years.
Fund
| February 28 or 29, as applicable
|
| 2020
| 2019
| 2018
|
Voya Senior Income Fund
|
| $1,848,836.58
| $2,259,129.60
|
Portfolio Management
Other Accounts Managed
The
following table sets forth the number of accounts and total assets in the accounts managed by each portfolio manager as of February 29, 2020:
Portfolio Manager
| Registered Investment Companies
| Other Pooled Investment Vehicles
| Other Accounts
|
Number of Accounts
| Total Assets
| Number of Accounts
| Total Assets
| Number of Accounts
| Total Assets
|
Jeffrey A. Bakalar
| [ ]
| [$]
| [ ]
| [$]
| [ ]
| [$]
|
Charles LeMieux, CFA
| [ ]
| [$]
| [ ]
| [$]
| [ ]
| [$]
|
Daniel A. Norman
| [ ]
| [$]
| [ ]
| [$]
| [ ]
| [$]
|
Potential Material Conflicts
of Interest
A portfolio manager may be
subject to potential conflicts of interest because the portfolio manager is responsible for other accounts in addition to the Fund. These other accounts may include, among others, other mutual funds, separately
managed advisory accounts, commingled trust accounts, insurance separate accounts, wrap fee programs, and hedge funds. Potential conflicts may arise out of the implementation of differing investment strategies for the
portfolio manager’s various accounts, the allocation of investment opportunities among those accounts or differences in the advisory fees paid by the portfolio manager’s accounts.
A potential conflict of
interest may arise as a result of the portfolio manager’s responsibility for multiple accounts with similar investment guidelines. Under these circumstances, a potential investment may be suitable for more than
one of the portfolio manager’s accounts, but the quantity of the investment available for purchase is less than the aggregate amount the accounts would ideally devote to the opportunity. Similar conflicts may
arise when multiple accounts seek to dispose of the same investment.
A portfolio manager may
also manage accounts whose objectives and policies differ from those of the Fund. These differences may be such that under certain circumstances, trading activity appropriate for one account managed by the portfolio
manager may have adverse consequences for another account managed by the portfolio manager. For example, if an account were to sell a significant position in a security, which could cause the market price of that
security to decrease, while the Fund maintained its position in that security.
A potential conflict may
arise when a portfolio manager is responsible for accounts that have different advisory fees – the difference in the fees may create an incentive for the portfolio manager to favor one account over another, for
example, in terms of access to particularly appealing investment opportunities. This conflict may be heightened where an account is subject to a performance-based fee.
As part of its compliance
program, Voya IM has adopted policies and procedures reasonably designed to address the potential conflicts of interest described above.
Finally, a potential
conflict of interest may arise because the investment mandates for certain other accounts, such as hedge funds, may allow extensive use of short sales which, in theory, could allow them to enter into short positions
in securities where other accounts hold long positions. Voya IM has policies and procedures reasonably designed to limit and monitor short sales by the other accounts to avoid harm to the Fund.
Compensation
Compensation consists of:
(i) a fixed base salary; (ii) a bonus, which is based on Voya IM performance, one-, three-, and five-year pre-tax performance of the accounts the portfolio managers are primarily and jointly responsible for relative
to account benchmarks, peer universe performance, and revenue growth and net cash flow growth (changes in the accounts’ net assets not attributable to changes in the value of the accounts’ investments) of
the accounts they are responsible for; and (iii) long-term equity awards tied to the performance of our parent company, Voya Financial, Inc. and/or a notional investment in a pre-defined set of Voya IM sub-advised
funds.
Portfolio managers are also
eligible to receive an annual cash incentive award delivered in some combination of cash and a deferred award in the form of Voya stock. The overall design of the annual incentive plan was developed to tie pay to both
performance and cash flows, structured in such a way as to drive performance and promote retention of top talent. As with base salary compensation, individual target awards are determined and set based on external
market data and internal comparators. Investment performance is measured on both relative and absolute performance in all areas.
The measures for the team
are outlined on a “scorecard” that is reviewed on an annual basis. These scorecards measure investment performance versus benchmark and peer groups over one-, three-, and five-year periods; and
year-to-date net cash flow (changes in the accounts’ net assets not attributable to changes in the value of the accounts’ investments) for all accounts managed by the team. The results for overall Voya IM
scorecards are typically calculated on an asset weighted performance basis of the individual team scorecards.
Investment
professionals’ performance measures for bonus determinations are weighted by 25% being attributable to the overall Voya IM performance and 75% attributable to their specific team results (65% investment
performance, 5% net cash flow, and 5% revenue growth).
Voya IM's long-term
incentive plan is designed to provide ownership-like incentives to reward continued employment and to link long-term compensation to the financial performance of the business. Based on job function, internal
comparators and external market data, employees may be granted long-term awards. All senior investment professionals participate in the long-term compensation plan. Participants receive annual awards determined by the
management committee based largely on investment performance and contribution to firm performance. Plan awards are based on the current year’s performance as defined by the Voya IM component of the annual
incentive plan. Awards typically include a combination of performance shares, which vest ratably over a three-year period, and Voya restricted stock and/or a notional investment in a predefined set of Voya IM
sub-advised funds, each subject to a three-year cliff-vesting schedule.
If a portfolio
manager’s base salary compensation exceeds a particular threshold, he or she may participate in Voya’s deferred compensation plan. The plan provides an opportunity to invest deferred amounts of
compensation in mutual funds, Voya stock or at an annual fixed interest rate. Deferral elections are done on an annual basis and the amount of compensation deferred is irrevocable.
For the Fund, Voya IM has
defined S&P's/Loan Syndications and Trading Association Leveraged Loan Index as the benchmark index for the investment team.
Ownership of Securities
The
following table shows the dollar range of equity securities of the Fund beneficially owned by each portfolio manager as of February 29, 2020, including investments by his/her immediate family members and amounts
invested through retirement and deferred compensation plans:
Portfolio Manager
| Dollar Range of Fund Shares Owned
|
Jeffrey A. Bakalar
| [None]
|
Charles LeMieux, CFA
| [None]
|
Daniel A. Norman
| [None]
|
PRINCIPAL UNDERWRITER
Pursuant to the
Distribution Agreement (“Distribution Agreement”), Voya Investments Distributor, LLC (the “Distributor”), an indirect, wholly-owned subsidiary of Voya Financial, Inc., serves as principal
underwriter and distributor for the Fund. The Distributor’s principal offices are located at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258-2034. Common Shares of the Fund are offered on a
continuous basis. As principal underwriter, the Distributor has agreed to use reasonable efforts to distribute the Common Shares, although it is not obligated to sell any particular amount of shares.
The Distributor is responsible
for all of its expenses in providing services pursuant to the Distribution Agreement, including the payment of any commissions.
The Distribution Agreement
may be continued from year to year if approved annually by the Trustees or by a vote of a majority of the outstanding voting securities of the Fund and by a vote of a majority of the Trustees who are not
“interested persons” of the Distributor, or the Trust or parties to the Distribution Agreement, appearing in person at a meeting called for the purpose of approving such Agreement.
The Distribution Agreement
terminates automatically upon assignment, and may be terminated at any time on sixty (60) days’ written notice by the Trustees or the Distributor or by vote of a majority of the outstanding voting securities of
the Fund without the payment of any penalty.
In addition to paying fees
under the Distribution Agreement, the Fund may pay service fees to intermediaries such as brokers-dealers, financial advisors, or other financial institutions, including affiliates of Voya Investments (such as
Voya Funds Services, LLC) for administration, sub-transfer agency, and other shareholder services associated with investors whose shares are held of record in omnibus accounts. These additional fees paid by the
Fund to intermediaries are a fixed dollar amount payment per each underlying shareholder account. These may include payments for 401k sub-accounting services, networking fees, and omnibus account servicing fees.
For the
fiscal years ended February 29, 2020, February 28, 2019, and February 28, 2018, the Distributor was paid [$], $1,571,580.00, and $1,928,197.00, respectively, for services rendered to the Fund.
Commissions and Compensation
Received by the Principal Underwriter
The following table shows all
commissions and other compensation received by each Principal Underwriter, who is an affiliated person of the Fund or an affiliated person of that affiliated person, directly or indirectly, from the Fund during the
most recent fiscal year.
Fund
| Name of Principal Underwriter
| Net Underwriting Discounts and Commissions
| Compensation on Redemptions and Repurchases
| Brokerage Commissions
| Other Compensation
|
Voya Senior Income Fund
| Voya Investments Distributor, LLC
| [$ ]
| [$ ]
| [$ ]
| N/A
|
Additional Cash Compensation for
Sales by “Focus Firms”
The Distributor may, at its
discretion, pay additional cash compensation to its employee sales staff for sales by certain broker-dealers or “focus firms.” The Distributor may pay up to an additional 0.10% to its employee sales staff
for sales that are made by registered representatives of these focus firms. As of the date of this SAI, the focus firms are: Ameriprise Financial Services, Inc.; Banc of America Investment Services, Inc.; Banc of
America Securities LLC; Charles Schwab & Co. Inc.; Chase Investment Services; Cetera Advisors LLC; Cetera Advisor Networks LLC; Cetera Financial Specialists LLC; Cetera Investment Advisers LLC; Cetera Investment
Services LLC; Deutsche Bank Securities, Inc.; Edward Jones; FSC Securities Corporation; Fidelity Brokerage Services, Inc.; HSBC Securities (USA) Inc.; Janney Montgomery Scott Inc.; LPL Financial, LLC; Merrill, Lynch,
Pierce, Fenner & Smith, Inc.; Morgan Keegan; Morgan Stanley Smith Barney; Morgan Stanley Wealth Management; Oppenheimer & Co., Inc.; Raymond James Financial Services, Inc.; RBC Capital Markets; Royal Alliance
Associates, Inc.; Sagepoint Financial, Inc.; UBS Financial Services, Inc.; USAA Investment Management Co.; Voya Financial Advisors, Inc.; Wells Fargo Bank; Wells Fargo Bank N.A.; Wells Fargo Clearing Services, LLC;
and Woodbury Financial Services, Inc.
Other Incentives
The Distributor may, from
time to time, pay additional cash and non-cash compensation from its own resources to its employee sales staff for sales of certain Voya funds that are made by registered representatives of broker-dealers to the
extent such compensation is not prohibited by law or the rules of any self-regulatory agency, such as FINRA.
OTHER SERVICE PROVIDERS
Custodian
State Street Bank and Trust
Company, 801 Pennsylvania Avenue, Kansas City, MO 64105 serves as custodian for the Fund.
The custodian’s
responsibilities include safekeeping and controlling the Fund’s cash and securities, handling the receipt and delivery of securities, and collecting interest and dividends on the Fund’s investments. The
custodian does not participate in determining the investment policies of a Fund, in deciding which securities are purchased or sold by a Fund or in the declaration of dividends and distributions. A Fund may, however,
invest in obligations of the custodian and may purchase or sell securities from or to the custodian.
Independent Registered Public
Accounting Firm
Prior to
September 12, 2019, [ ] served as an independent registered public accounting firm for the Fund. [ ] had provided audit services and tax return preparation services. [ ] is located at [ ].
On September 12, 2019, the
Board approved the engagement of [ ] to serve as an independent registered public accounting firm for the Fund to provide audit and tax preparation services. [ ] is located at [ ].
Legal Counsel
Legal matters for the Trust
are passed upon by Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199-3600.
Transfer Agent, Dividend
Disbursing Agent, and Registrar
BNY Mellon Investment
Servicing (US) Inc. (“Transfer Agent”) serves as the transfer agent, dividend disbursing agent, and registrar for the Common Shares of the Fund. Its principal office is located at 301 Bellevue Parkway,
Wilmington, Delaware 19809. As transfer agent, dividend disbursing agent and registrar, BNY Mellon Investment Servicing (US) Inc. is responsible for maintaining account records, detailing the ownership of Fund shares
and for crediting income, capital gains and other changes in share ownership to shareholder accounts.
PORTFOLIO TRANSACTIONS
The Fund will generally
have at least 80% of its net assets (plus borrowings for investment purposes) invested in Senior Loans. The remaining assets of the Fund will generally consist of loans to borrowers organized or located in countries
outside the United States and outside U.S. territories and possessions or Canada; unsecured floating rate loans, notes and other debt instruments; floating rate subordinated loans; tranches of floating rate
asset-backed securities, including structured notes; corporate debt securities; subject to 1940 Act limitations, other investment companies, such as money market funds; executing repurchase and reverse repurchase
agreements; and equity securities incidental to investments in loans. The remaining assets may also consist of cash and short-term debt instruments. The Fund will acquire investments from and sell investments to
banks, insurance companies, finance companies, and other investment companies and private investment funds. The Fund may also purchase investments from and sell investments to U.S. branches of foreign banks which are
regulated by the Federal Reserve System or appropriate state regulatory authorities. The Fund’s interest in a particular investment will terminate when the Fund receives full payment on the loan or sells an
investment in the secondary market. Costs associated with purchasing or selling investments in the secondary market include commissions paid to brokers and processing fees paid to agents. These costs are allocated
between the purchaser and seller as agreed between the parties.
To the extent the Fund
invests in affiliated Underlying Funds, the discussion relating to investment decisions made by the Adviser or the Sub-Adviser with respect to the Fund also includes investment decisions made by an Adviser or a
Sub-Adviser with respect to affiliated Underlying Funds. For convenience, only the terms Adviser, Sub-Adviser, and Fund are used.
The Adviser or the Sub-Adviser
for the Fund places orders for the purchase and sale of investment securities for the Fund, pursuant to authority granted in the relevant Investment Management Agreement or Sub-Advisory Agreement.
Subject to policies and
procedures approved by the Board, the Adviser and/or the Sub-Adviser have discretion to make decisions relating to placing these orders including, where applicable, selecting the brokers or dealers that will execute
the purchase and sale of investment securities, negotiating the commission or other compensation paid to the broker or dealer executing the trade, or using an electronic communications network (“ECN”) or
alternative trading system (“ATS”).
In situations where a
Sub-Adviser resigns or the Adviser otherwise assumes day to day management of a Fund pursuant to its Investment Management Agreement with the Fund, the Adviser will perform the services described herein as being
performed by the Sub-Adviser.
How Securities Transactions are
Effected
Purchases and sales of
securities on a securities exchange (which include most equity securities) are effected through brokers who charge a commission for their services. In transactions on securities exchanges in the United States, these
commissions are negotiated, while on many foreign securities exchanges commissions are fixed. Securities traded in the OTC markets (such as fixed-income securities and some equity securities) are generally traded on a
“net” basis with market makers acting as dealers; in these transactions, the dealers act as principal for their own accounts without a stated commission, although the price of the security usually includes
a profit to the dealer. Transactions in certain OTC securities also may be effected on an agency basis when, in the Adviser’s or a Sub-Adviser’s opinion, the total price paid (including commission) is
equal to or better than the best total price available from a market maker. In underwritten offerings, securities are usually purchased at a fixed price, which includes an amount of compensation to the underwriter,
generally referred to as the underwriter’s concession or discount. On occasion, certain money market instruments may be purchased directly from an issuer, in which case no commissions or discounts are paid. The
Adviser or a Sub-Adviser may also place trades using an ECN or ATS.
How the Adviser or Sub-Advisers
Select Broker-Dealers
The Adviser or a
Sub-Adviser has a duty to seek to obtain best execution of the Fund’s orders, taking into consideration a full range of factors designed to produce the most favorable overall terms reasonably available under the
circumstances. In selecting brokers and dealers to execute trades, the Adviser or a Sub-Adviser may consider both the characteristics of the trade and the full range and quality of the brokerage services available
from eligible broker-dealers. This consideration often involves qualitative as well as quantitative judgments. Factors relevant to the nature of the trade may include, among others, price (including the applicable
brokerage commission or dollar spread), the size of the order, the nature and characteristics (including liquidity) of the market for the security, the difficulty of execution, the timing of the order, potential
market impact, and the need for confidentiality, speed, and certainty of execution. Factors relevant to the range and quality of brokerage services available from eligible brokers and dealers may include, among
others, each firm’s execution, clearance, settlement, and other operational facilities; willingness and ability to commit capital or take risk in positioning a block of securities, where necessary; special
expertise in particular securities or markets; ability to provide liquidity, speed and anonymity; the nature and quality of other brokerage and research services provided to the Adviser or a Sub-Adviser (consistent
with the “safe harbor” described below and subject to the restrictions of the European Union’s updated Markets in Financial Instruments Directive (“MiFID II”)); and each firm’s
general reputation, financial condition and responsiveness to the Adviser or the Sub-Adviser, as demonstrated in the particular transaction or other transactions. Subject to its duty to seek best execution of the
Fund’s orders, the Adviser or a Sub-Adviser may select broker-dealers that participate in commission recapture programs that have been established for the benefit of the Fund. Under these programs, the
participating broker-dealers will return to the Fund (in the form of a credit to the Fund) a portion of the brokerage commissions paid to the broker-dealers by the Fund. These credits are used to pay certain expenses
of the Fund. These commission recapture payments benefit the Fund, and not the Adviser or the Sub-Adviser.
The Safe Harbor for Soft Dollar
Practices
In selecting broker-dealers
to execute a trade for the Fund, the Adviser or a Sub-Adviser may consider the nature and quality of brokerage and research services provided to the Adviser or the Sub-Adviser as a factor in evaluating the most
favorable overall terms reasonably available under the circumstances. As permitted by Section 28(e) of the 1934 Act, the Adviser or a Sub-Adviser may cause a Fund to pay
a broker-dealer a commission for effecting
a securities transaction for a Fund that is in excess of the commission which another broker-dealer would have charged for effecting the transaction, as long as the services provided to the Adviser or Sub-Adviser by
the broker-dealer: (i) are limited to “research” or “brokerage” services; (ii) constitute lawful and appropriate assistance to the Adviser or Sub-Adviser in the performance of its investment
decision-making responsibilities; and (iii) the Adviser or the Sub-Adviser makes a good faith determination that the broker’s commission paid by the Fund is reasonable in relation to the value of the brokerage
and research services provided by the broker-dealer, viewed in terms of either the particular transaction or the Adviser’s or the Sub-Adviser’s overall responsibilities to the Fund and its other investment
advisory clients. In making such a determination, the Adviser or Sub-Adviser might consider, in addition to the commission rate, the range and quality of a broker’s services, including the value of the research
provided, execution capability, financial responsibility and responsiveness. The practice of using a portion of a Fund’s commission dollars to pay for brokerage and research services provided to the Adviser or a
Sub-Adviser is sometimes referred to as “soft dollars.” Section 28(e) is sometimes referred to as a “safe harbor,” because it permits this practice, subject to a number of restrictions,
including the Adviser or a Sub-Adviser’s compliance with certain procedural requirements and limitations on the type of brokerage and research services that qualify for the safe harbor. The provisions of MiFID
II may limit the ability of certain Sub-Advisers to pay for research services using soft dollars in various circumstances.
Brokerage and Research
Products and Services Under the Safe Harbor – Research products and services may include, but are not limited to, general economic, political, business and market information and reviews, industry and company information and
reviews, evaluations of securities and recommendations as to the purchase and sale of securities, financial data on a company or companies, performance and risk measuring services and analysis, stock price quotation
services, computerized historical financial databases and related software, credit rating services, analysis of corporate responsibility issues, brokerage analysts’ earnings estimates, computerized links to
current market data, software dedicated to research, and portfolio modeling. Research services may be provided in the form of reports, computer-generated data feeds and other services, telephone contacts, and personal
meetings with securities analysts, as well as in the form of meetings arranged with corporate officers and industry spokespersons, economists, academics, and governmental representatives. Brokerage products and
services assist in the execution, clearance and settlement of securities transactions, as well as functions incidental thereto including, but not limited to, related communication and connectivity services and
equipment, software related to order routing, market access, algorithmic trading, and other trading activities. On occasion, a broker-dealer may furnish the Adviser or a Sub-Adviser with a service that has a mixed use
(that is, the service is used both for brokerage and research activities that are within the safe harbor and for other activities). In this case, the Adviser or a Sub-Adviser is required to reasonably allocate the
cost of the service, so that any portion of the service that does not qualify for the safe harbor is paid for by the Adviser or the Sub-Adviser from its own funds, and not by portfolio commissions paid by a
Fund.
Benefits to the Adviser or
the Sub-Advisers – Research products and services provided to the Adviser or a Sub-Adviser by broker-dealers that effect securities transactions for a Fund may be used by the Adviser or the
Sub-Adviser in servicing all of its accounts. Accordingly, not all of these services may be used by the Adviser or a Sub-Adviser in connection with the Fund. Some of these products and services are also available to
the Adviser or a Sub-Adviser for cash, and some do not have an explicit cost or determinable value. The research received does not reduce the management fees payable to the Adviser or the sub-advisory fees payable to
a Sub-Adviser for services provided to the Fund. The Adviser’s or a Sub-Adviser’s expenses would likely increase if the Adviser or the Sub-Adviser had to generate these research products and services
through its own efforts, or if it paid for these products or services itself. It is possible that a Sub-Adviser subject to MiFID II will cause a Fund to pay for research services with soft dollars in circumstances
where it is prohibited from doing so with respect to other client accounts, although those other client accounts might nonetheless benefit from those research services.
Broker-Dealers that are
Affiliated with the Adviser or the Sub-Advisers
Portfolio transactions may
be executed by brokers affiliated with Voya Financial, Inc., the Adviser, or a Sub-Adviser, so long as the commission paid to the affiliated broker is reasonable and fair compared to the commission that would be
charged by an unaffiliated broker in a comparable transaction.
Prohibition on Use of Brokerage
Commissions for Sales or Promotional Activities
The placement of portfolio
brokerage with broker-dealers who have sold shares of a Fund is subject to rules adopted by the SEC and FINRA. Under these rules, the Adviser or a Sub-Adviser may not consider a broker’s promotional or sales
efforts on behalf of any Fund when selecting a broker-dealer for portfolio transactions, and neither a Fund nor the Adviser or Sub-Adviser may enter into an agreement under which the Fund directs brokerage
transactions (or revenue generated from such transactions) to a broker-dealer to pay for distribution of Fund shares. The Fund has adopted policies and procedures, approved by the Board, that are designed to attain
compliance with these prohibitions.
Principal Trades and Research
Purchases of securities for
the Fund also may be made directly from issuers or from underwriters. Purchase and sale transactions may be effected through dealers which specialize in the types of securities which a Fund will be holding. Dealers
and underwriters usually act as principals for their own account. Purchases from underwriters will include a concession paid by the issuer to the underwriter and purchases from dealers will include the spread between
the bid and the asked price. If the execution and price offered by more than one dealer or underwriter are comparable, the order may be allocated to a dealer or underwriter which has provided such research or other
services as mentioned above.
More Information about Trading
in Fixed-Income Securities
Purchases and sales of
fixed-income securities will usually be principal transactions. Such securities often will be purchased from or sold to dealers serving as market makers for the securities at a net price. The Fund may also purchase
such securities in underwritten offerings and will, on occasion, purchase securities directly from the issuer. Generally, fixed-income securities are traded on a net basis and do not involve brokerage commissions. The
cost of executing fixed-income securities transactions consists primarily of dealer spreads and underwriting commissions.
In purchasing and selling
fixed-income securities, it is the policy of the Fund to obtain the best results, while taking into account the dealer’s general execution and operational facilities, the type of transaction involved and other
factors, such as the dealer’s risk in positioning the securities involved. While the Adviser or a Sub-Adviser generally seeks reasonably competitive spreads or commissions, the Fund will not necessarily pay the
lowest spread or commission available.
Transition Management
Changes in sub-advisers,
investment personnel and reorganizations of a Fund may result in the sale of a significant portion or even all of a Fund’s portfolio securities. This type of change generally will increase trading costs and the
portfolio turnover for the affected Fund. The Fund, the Adviser, or a Sub-Adviser may engage a broker-dealer to provide transition management services in connection with a change in the sub-adviser, reorganization, or
other changes.
Allocation of Trades
Some securities considered
for investment by a Fund may also be appropriate for other clients served by that Fund’s Adviser or Sub-Adviser. If the purchase or sale of securities consistent with the investment policies of a Fund and one or
more of these other clients is considered at, or about the same time, transactions in such securities will be placed on an aggregate basis and allocated among the other funds and such other clients in a manner deemed
fair and equitable, over time, by the Fund’s Adviser or Sub-Adviser and consistent with the Adviser’s or Sub-Adviser’s written policies and procedures. The Adviser and Sub-Adviser may use different
methods of trade allocation. The Adviser’s and Sub-Adviser’s relevant policies and procedures and the results of aggregated trades in which a Fund participated are subject to periodic review by the Board.
To the extent a Fund seeks to acquire (or dispose of) the same security at the same time as other funds, such Fund may not be able to acquire (or dispose of) as large a position in such security as it desires, or it
may have to pay a higher (or receive a lower) price for such security. It is recognized that in some cases, this system could have a detrimental effect on the price or value of the security insofar as the Fund is
concerned. However, over time, a Fund’s ability to participate in aggregate trades is expected to provide better execution for the Fund.
Cross-Transactions
The Board has adopted a policy
allowing trades to be made between affiliated registered investment companies or series thereof, provided they meet the conditions of Rule 17a-7 under the 1940 Act and conditions of the policy.
Brokerage Commissions Paid
No brokerage commissions were
paid by the Fund for the last three fiscal years.
Securities of Regular
Broker-Dealers
During the most recent fiscal
year, the Fund acquired no securities of its regular broker-dealers (as defined in Rule 10b-1 under the 1940 Act) or their parent companies.
ADDITIONAL PURCHASE
INFORMATION
Orders Placed with
Intermediaries
If you invest in a Fund
through a financial intermediary, you may be charged a commission or transaction fee by the financial intermediary for the purchase and sale of Fund shares.
Special Purchases at Net Asset
Value- Class A Common Shares
Class A Common Shares of
the Fund may be purchased at NAV, without a sales charge, by persons who have offered for repurchase their Class A Common Shares of the Fund or redeemed their Class A Common Shares of another Voya fund within the
previous 90 days. The amount that may be so reinvested in the Fund is limited to an amount up to, but not exceeding, the repurchase or redemption proceeds (or to the nearest full share if fractional shares are not
purchased). In order to exercise this privilege, a written order for the purchase of shares must be received by the Transfer Agent, or be postmarked, within 90 days after the date of redemption. This privilege may
only be used once per calendar year. Payment must accompany the request and the purchase will be made at the then current NAV of the Fund. Such purchases may also be handled by a securities dealer who may charge a
shareholder for this service. If the shareholder has realized a gain on the repurchase or redemption, the transaction is taxable and any reinvestment will not alter any applicable federal capital gains tax. If there
has been a loss on the repurchase or redemption and a subsequent reinvestment pursuant to this privilege, some or all of the loss may not be allowed as a tax deduction depending upon the amount reinvested, although
such disallowance is added to the tax basis of the shares acquired upon the reinvestment.
Class A Common Shares of
the Fund may also be purchased at NAV by any charitable organization or any state, county, or city, or any instrumentality, department, authority or agency thereof that has determined that the Fund is a legally
permissible investment and that is prohibited by applicable investment law from paying a sales charge or commission in connection with the purchase of shares of any
registered management investment company
(an “eligible governmental authority”). If an investment by an eligible governmental authority at NAV is made through a dealer who has executed a selling group agreement with respect to the Fund (or an
open-end Voya fund), the Distributor may pay the selling firm 0.25% of the offering price.
The Fund’s Officers
and Trustees (including retired officers and retired Board members), bona fide full-time employees of the Fund (including retired Fund employees) and the officers, directors, and full-time employees of their
investment adviser, sub-adviser, principal underwriter, or any service provider to the Fund or affiliated corporation thereof (including retired officers and employees of the investment adviser, principal underwriter,
Voya-affiliated service providers and affiliated corporations thereof) or any trust, pension, profit-sharing, or other benefit plan for such persons, broker-dealers, for their own accounts or for members of their
families (defined as current spouse, children, parents, grandparents, uncles, aunts, siblings, nephews, nieces, step-relations, relations at-law, and cousins) employees of such broker-dealers (including their
immediate families) and discretionary advisory accounts of Voya Investments or any Sub-Adviser, may purchase Class A Common Shares of the Fund at NAV without a sales charge. Such purchaser may be required to sign a
letter stating that the purchase is for his own investment purposes only and that the securities will not be resold except to the Fund. The Fund may, under certain circumstances, allow registered advisers to make
investments on behalf of their clients at NAV without any commission or concession. The Fund may terminate or amend the terms of this sales charge waiver at any time.
Class A Common Shares may
also be purchased at NAV by certain fee based registered investment advisers, trust companies and bank trust departments under certain circumstances making investments on behalf of their clients and by shareholders
who have authorized the automatic transfer of dividends from the same class of an open-end fund managed by the Adviser or from Voya Prime Rate Trust.
Class A Common Shares may
also be purchased without a sales charge by: (i) shareholders who have authorized the automatic transfer of dividends from the same class of another Voya fund distributed by the Distributor or from Voya Prime
Rate Trust; (ii) registered investment advisors, trust companies and bank trust departments investing in Class A Common Shares on their own behalf or on behalf of their clients, provided that the aggregate amount
invested in any one or more Voya funds, during the 13-month period starting with the first investment, equals at least $1 million; (iii) broker-dealers, who have signed selling group agreements with the Distributor,
and registered representatives and employees of such broker-dealers, for their own accounts or for members of their families (defined as current spouse, children, parents, grandparents, uncles, aunts, siblings,
nephews, nieces, step relations, relations-at-law and cousins); (iv) broker-dealers using third-party administrators for qualified retirement plans who have entered into an agreement with the Fund or an affiliate,
subject to certain operational and minimum size requirements specified from time-to-time by the Fund; (v) accounts as to which a banker or broker-dealer charges an account management fee (“wrap accounts”);
(vi) any registered investment company for which the Adviser serves as adviser; (vii) investors who purchase Fund shares with redemption proceeds received in connection with a distribution from a retirement plan
investing either: (1) directly in the Fund or through an unregistered separate account sponsored by VRIAC or any successor thereto or affiliate thereof; or (2) in a registered separate account sponsored by VRIAC or
any successor thereto or affiliate thereof, but only if no deferred sales charge is paid in connection with such distribution and the investor receives the distribution in connection with a separation from service,
retirement, death, or disability; and (viii) insurance companies (including separate accounts).
The Fund may terminate or
amend the terms of these sales charge waivers at any time.
Letters of Intent and Rights of
Accumulation- Class A Common Shares
An investor may immediately
qualify for a reduced sales charge on a purchase of Class A Common Shares of the Fund by completing the Letter of Intent section of the Shareholder Application (“Letter of Intent” or “Letter”).
By completing the Letter, the investor expresses an intention to invest during the next 13 months a specified amount which, if made at one time, would qualify for the reduced sales charge. At any time within 90 days
after the first investment which the investor wants to qualify for the reduced sales charge, a signed Shareholder Application, with the Letter of Intent section completed, may be filed with the Fund. Those holdings
will be counted towards completion of the Letter of Intent but will not be entitled to a retroactive downward adjustment of sales charge until the Letter of Intent is fulfilled. After the Letter of Intent is filed,
each additional investment made will be entitled to the sales charge applicable to the level of investment indicated on the Letter of Intent as described above. Sales charge reductions based upon purchases in more
than one Voya fund will be effective only after notification to the Distributor that the investment qualifies for a discount. Any shares of the shareholder repurchased by the Fund during the 13-month period will be
subtracted from the amount of the purchases for purposes of determining whether the terms of the Letter of Intent have been completed. If the Letter of Intent is not completed within the 13-month period, there will be
an upward adjustment of the sales charge as specified below, depending upon the amount actually purchased (less amounts repurchased by the Fund) during the period.
An investor acknowledges
and agrees to the following provisions by completing the Letter of Intent section of the Shareholder Application in the Prospectus. A minimum initial investment equal to 25% of the intended total investment is
required. An amount equal to the maximum sales charge, as stated in the Prospectus, will be held in escrow at Voya funds, in the form of shares, in the investor’s name to assure that the full applicable sales
charge will be paid if the intended purchase is not completed. The shares in escrow will be included in the total shares owned as reflected on the purchaser’s monthly statement; income and capital gain
distributions on the escrowed shares will be paid directly to the investor. The escrowed shares will not be available for repurchase by the Fund until the Letter of Intent has been completed, or the higher sales
charge paid. When the total purchases, less repurchases by the Fund, equal the amount specified under the Letter of Intent, the shares in escrow will be released. If the total purchases, less repurchases by the Fund,
exceed the amount specified under the Letter of Intent and is an amount which would qualify for a further quantity discount, a retroactive price adjustment will be made by the Distributor and the dealer with whom
purchases were made pursuant to the Letter of Intent (to reflect such further quantity discount) on purchases made within 90 days before, and on those made after filing the Letter of Intent. The resulting difference
in offering price will be applied to the purchase of additional shares at the applicable offering price. If the total purchases, less repurchases by the Fund, are less than the amount specified under the Letter of
Intent, the investor will remit to the Distributor an amount equal to
the difference in dollar amount of sales
charge actually paid and the amount of sales charge which would have applied to the aggregate purchases if the total of such purchases had been made at a single account in the name of the investor or to the
investor’s order. If within 10 days after written request such difference in sales charge is not paid, an appropriate number of shares in escrow will be repurchased by the Fund at the next monthly repurchase to
realize such difference. If the proceeds from a total repurchase of the escrowed shares are inadequate, the investor will be liable to the Distributor for the difference. In the event of a total repurchase of the
account prior to fulfillment of the Letter of Intent, the additional sales charge due will be deducted from the proceeds of the repurchase and the balance will be forwarded to the Investor. By completing the Letter of
Intent section of the Shareholder Application, an investor grants to the Distributor a security interest in the shares in escrow and agrees to irrevocably appoint the Distributor as his or her attorney-in-fact with
full power of substitution to surrender for repurchase any or all escrowed shares for the purpose of paying any additional sales charge due and authorizes the Transfer Agent or Sub-Transfer Agent to receive and
liquidate shares and pay the proceeds as directed by the Distributor. The investor or the securities dealer must inform the Transfer Agent or the Distributor that the Letter of Intent is in effect each time a purchase
is made.
If at any time prior to or
after completion of the Letter of Intent the investor wishes to cancel the Letter of Intent, the investor must notify the Distributor in writing. If, prior to the completion of the Letter of Intent, the investor
requests the Distributor to liquidate all shares held by the investor, the Letter of Intent will be terminated automatically. Under either of these situations, the total purchased may be less than the amount specified
in the Letter of Intent. If so, the Distributor will redeem at NAV to remit to the Distributor and the appropriate authorized dealer an amount equal to the difference between the dollar amount of the sales charge
actually paid and the amount of the sales charge that would have been paid on the total purchases if made at one time.
The value of shares of the
Fund plus shares of open-end funds distributed by the Distributor can be combined with a current purchase of shares of the Fund to determine the reduced sales charge and applicable offering price of the current
purchase. The reduced sales charge applies to quantity purchases made at one time or on a cumulative basis over any period of time by: (i) an investor; (ii) the investor’s spouse and children under the age of
majority; (iii) the investor’s custodian accounts for the benefit of a child under the Uniform Gift to Minors Act; and (iv) a trustee or other fiduciary of a single trust estate or a single fiduciary account
(including a pension, profit-sharing and/or other employee benefit plan qualified under Section 401 of the Code), by trust companies’ registered investment advisors, banks and bank trust departments for accounts
over which they exercise exclusive investment discretionary authority and which are held in a fiduciary, agency, advisory, custodial or similar capacity.
The reduced sales charge also
applies on a non-cumulative basis to purchases made at one time by the customers of a single dealer in excess of $1 million. The Letter of Intent option may be modified or discontinued at any time.
Shares of the Fund and
open-end Voya funds purchased and owned of record or beneficially by a corporation, including employees of a single employer (or affiliates thereof) including shares held by its employees, under one or more retirement
plans, can be combined with a current purchase to determine the reduced sales charge and applicable offering price of the current purchase, provided such transactions are not prohibited by one or more provisions of
the Employee Retirement Income Security Act or the Code. Individuals and employees should consult with their tax advisors concerning the tax rules applicable to retirement plans before investing.
For the purposes of Rights
of Accumulation and the Letter of Intent privilege, shares held by investors in the Voya family of funds which impose an EWC or CDSC may be combined with Class A Common Shares for a reduced sales charge but will not
affect any EWC or CDSC which may be imposed upon the redemption of shares of the Fund which imposes an EWC or CDSC.
Liquidity Requirements
From the time that the Fund
sends a notification to shareholders until the Repurchase Payment Deadline (as defined in the Fund’s repurchase offer documents), the Fund will maintain a percentage of the Fund’s assets equal to at least
100% of the Repurchase Offer Amount (as defined in the Fund’s repurchase offer documents) in assets: (a) that can be sold or disposed of in the ordinary course of business at approximately the price at which the
Fund has valued the asset within the time period between the Repurchase Request Deadline and the next Repurchase Payment Deadline (as defined in the Fund’s repurchase offer documents); or (b) that mature by the
next Repurchase Payment Deadline. In the event that the Fund’s assets fail to comply with this requirement, the Board will cause the Fund to take such action as the Board deems appropriate to ensure
compliance.
TAX CONSIDERATIONS
The following tax
information supplements and should be read in conjunction with the tax information contained in the Fund’s Prospectus. The Prospectus generally describes the U.S. federal income tax treatment of the Fund and its
shareholders. This section of the SAI provides additional information concerning U.S. federal income taxes. It is based on the Code, applicable U.S. Treasury Regulations, judicial authority, and administrative rulings
and practice, all as in effect as of the date of this SAI and all of which are subject to change, including with retroactive effect. The following discussion is only a summary of some of the important U.S. federal tax
considerations generally applicable to investments in the Fund. There may be other tax considerations applicable to particular shareholders. Shareholders should consult their own tax advisers regarding their
particular situation and the possible application of foreign, state and local tax laws.
Special tax rules apply to
investments through defined contribution plans and other tax-qualified plans or tax-advantaged arrangements. Shareholders should consult their tax advisers to determine the suitability of Fund shares as an investment
through such plans and arrangements and the precise effect of an investment on their particular tax situation.
Qualification as a Regulated
Investment Company
The Fund has elected or
will elect to be treated as a RIC under Subchapter M of the Code and intends each year to qualify and to be eligible to be treated as such. In order to qualify for the special tax treatment accorded RICs and their
shareholders, the Fund must, among other things: (a) derive at least 90% of its gross income for each taxable year from: (i) dividends, interest, payments with respect to certain securities loans, and gains from the
sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gains from options, futures, or forward contracts) derived with respect to its business of investing
in such stock, securities, or currencies; and (ii) net income derived from interests in “qualified publicly traded partnerships” (as defined below); (b) diversify its holdings so that, at the end of each
quarter of the Fund’s taxable year: (i) at least 50% of the fair market value of its total assets consists of: (A) cash and cash items (including receivables), U.S. government securities and securities of other
RICs; and (B) other securities (other than those described in clause (A)) limited in respect of any one issuer to a value that does not exceed 5% of the value of the Fund’s total assets and 10% of the
outstanding voting securities of such issuer; and (ii) not more than 25% of the value of the Fund’s total assets is invested, including through corporations in which the Fund owns a 20% or more voting stock
interest, in the securities of any one issuer (other than those described in clause (i)(A)), the securities (other than securities of other RICs) of two or more issuers the Fund controls and which are engaged in the
same, similar, or related trades or businesses, or the securities of one or more qualified publicly traded partnerships; and (c) distribute with respect to each taxable year at least 90% of the sum of its investment
company taxable income (as that term is defined in the Code without regard to the deduction for dividends paid—generally taxable ordinary income and the excess, if any, of net short-term capital gains over net
long-term capital losses, taking into account any capital loss carryforwards) and its net tax-exempt income, for such year.
In general, for purposes of
the 90% gross income requirement described in (a) above, income derived from a partnership will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership
which would be qualifying income if realized directly by the RIC. However, 100% of the net income derived from an interest in a “qualified publicly traded partnership” (generally defined as a partnership
(x) the interests in which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof, and (y) that derives less than 90% of its income from the
qualifying income described in paragraph (a)(i) above) will be treated as qualifying income. In general, such entities will be treated as partnerships for federal income tax purposes because they meet the passive
income requirement under Code section 7704(c)(2). In addition, although in general the passive loss rules of the Code do not apply to RICs, such rules do apply to a RIC with respect to items attributable to an
interest in a qualified publicly traded partnership. Certain of a Fund’s investments in MLPs and ETFs, if any, may qualify as interests in qualified publicly traded partnerships.
For purposes of the
diversification test in (b) above, the term “outstanding voting securities of such issuer” will include the equity securities of a qualified publicly traded partnership and in the case of a Fund’s
investments in loan participations, the Fund shall treat both the financial intermediary and the issuer of the underlying loan as an issuer. Also, for purposes of the diversification test in (b) above, the
identification of the issuer (or, in some cases, issuers) of a particular Fund investment can depend on the terms and conditions of that investment. In some cases, identification of the issuer (or issuers) is
uncertain under current law, and an adverse determination or future guidance by the IRS with respect to issuer identification for a particular type of investment may adversely affect a Fund’s ability to meet the
diversification test in (b) above. The qualifying income and diversification requirements described above may limit the extent to which a Fund can engage in certain derivative transactions, as well as the extent to
which it can invest in MLPs and certain commodity-linked ETFs.
If a Fund qualifies as a
RIC that is accorded special tax treatment, the Fund will not be subject to U.S. federal income tax on investment company taxable income and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss, determined with reference to any capital loss carryforwards) distributed in a timely manner to its
shareholders in the form of dividends (including Capital Gain Dividends, as defined below).
If a Fund were to fail to
meet the income, diversification or distribution test described above, the Fund could in some cases cure such failure, including by paying a Fund-level tax, paying interest, making additional distributions, or
disposing of certain assets. If the Fund were ineligible to or otherwise did not cure such failure for any year, or if the Fund were otherwise to fail to qualify as a RIC accorded special tax treatment for such year,
the Fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would
be taxable to shareholders as ordinary income. Some portions of such distributions may be eligible for the dividends-received deduction in the case of corporate shareholders and may be eligible to be treated as
“qualified dividend income” in the case of shareholders taxed as individuals, provided, in both cases, the shareholder meets certain holding period and other requirements in respect of the Fund's shares
(as described below). In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before re-qualifying as a RIC that is accorded special
tax treatment.
The Fund intends to
distribute at least annually to its shareholders all or substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction), its net tax-exempt income (if any), and its
net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss, in each case determined with reference to any loss carryforwards). However, no assurance can be given that a Fund
will not be subject to U.S. federal income taxation. Any taxable income, including any net capital gain retained by a Fund, will be subject to tax at the Fund level at regular corporate rates.
In the case of net capital
gain, the Fund is permitted to designate the retained amount as undistributed capital gain in a timely notice to its shareholders who would then, in turn, be: (i) required to include in income for U.S. federal income
tax purposes, as long-term capital gain, their shares of such undistributed amount; and (ii) entitled to credit their proportionate shares of the tax paid by the Fund on such undistributed amount against their U.S.
federal income tax liabilities, if any, and to claim refunds on a properly-filed U.S. tax return to the extent the credit exceeds such liabilities. If a Fund makes this designation, for U.S. federal income tax
purposes, the tax basis of shares
owned by a shareholder of the Fund would
be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder’s gross income under clause (i) of the preceding sentence and the tax deemed paid
by the shareholder under clause (ii) of the preceding sentence. A Fund is not required to, and there can be no assurance a Fund will, make this designation if it retains all or a portion of its net capital gain in a
taxable year.
In determining its net
capital gain, including in connection with determining the amount available to support a Capital Gain Dividend (as defined below), its taxable income, and its earnings and profits, a RIC generally may elect to treat
part or all of any post-October capital loss (defined as any net capital loss attributable to the portion of the taxable year after October 31 or, if there is no such loss, the net long-term capital loss or net
short-term capital loss attributable to any such portion of the taxable year) or late-year ordinary loss (generally, the sum of its: (i) net ordinary loss from the sale, exchange or other taxable disposition of
property, attributable to the portion of the taxable year after October 31, and (ii) other net ordinary loss attributable to the portion, if any, of the taxable year after December 31) as if incurred in the succeeding
taxable year.
In order to comply with the
distribution requirements described above applicable to RICs, a Fund generally must make the distributions in the same taxable year that it realizes the income and gain, although in certain circumstances, a Fund may
make the distributions in the following taxable year in respect of income and gains from the prior taxable year.
If a Fund declares a
distribution to shareholders of record in October, November, or December of one calendar year and pays the distribution in January of the following calendar year, the Fund and its shareholders will be treated as if
the Fund paid the distribution on December 31 of the earlier year.
Excise Tax
If a Fund were to fail to
distribute in a calendar year at least an amount equal to the sum of 98% of its ordinary income for such year and 98.2% of its capital gain net income for the one-year period ending October 31 of such year (or
December 31 of that year if the Fund is permitted to elect and so elects), plus any such amounts retained from the prior year, the Fund would be subject to a nondeductible 4% excise tax on the undistributed
amounts.
The Fund intends generally to
make distributions sufficient to avoid the imposition of the 4% excise tax. However, no assurance can be given that a Fund will not be subject to the excise tax.
For purposes of the
required excise tax distribution, a RIC’s ordinary gains and losses from the sale, exchange or other taxable disposition of property that would otherwise be taken into account after October 31 of a calendar year
generally are treated as arising on January 1 of the following calendar year. Also, for these purposes, a Fund will be treated as having distributed any amount on which it is subject to corporate income tax in the
taxable year ending within the calendar year.
Use of Tax Equalization
The Fund distributes its
net investment income and capital gains to shareholders at least annually to the extent required to qualify as a RIC under the Code and generally to avoid U.S. federal income or excise tax. Under current law, a Fund
is permitted to treat the portion of redemption proceeds paid to redeeming shareholders that represents the redeeming shareholders’ pro-rata share of the Fund's accumulated earnings and profits as a dividend on the Fund’s tax return. This practice, which involves the use of tax equalization, will reduce the
amount of income and gains that a Fund is required to distribute as dividends to shareholders in order for the Fund to avoid U.S. federal income tax and excise tax, which may include reducing the amount of
distributions that otherwise would be required to be paid to non-redeeming shareholders. A Fund’s NAV generally will not be reduced by the amount of any undistributed income or gains allocated to redeeming
shareholders under this practice and thus the total return on a shareholder’s investment generally will not be reduced as a result of this practice.
Capital Loss Carryforwards
Capital losses in excess of
capital gains (“net capital losses”) are not permitted to be deducted against a Fund’s net investment income. Instead, potentially subject to certain limitations, the Fund is able to carry forward a
net capital loss from any taxable year to offset its capital gains, if any, realized during a subsequent taxable year. Distributions from capital gains are generally made after applying any available capital loss
carryforwards. Capital loss carryforwards are reduced to the extent they offset current-year net realized capital gains, whether the Fund retains or distributes such gains.
If a Fund
incurs or has incurred net capital losses, those losses will be carried forward to one or more subsequent taxable years without expiration; any such carryover losses will retain their character as short-term or
long-term.
See the Fund’s most
recent annual shareholder report for the Fund’s available capital loss carryforwards, if any, as of the end of its most recently ended fiscal year.
Fund Distributions
For U.S. federal income tax
purposes, distributions of investment income generally are taxable to shareholders as ordinary income. Taxes on distributions of capital gains are determined by how long a Fund owned (or is deemed to have owned) the
investments that generated them, rather than how long a shareholder has owned his or her shares. In general, a Fund will recognize long-term capital gain or loss on investments it has owned for more than one year, and
short-term capital gain or loss on investments it has owned for one year or less. Tax rules can alter a Fund’s holding period in investments and thereby affect the tax treatment of gain or loss on such
investments. Distributions of net capital gain that are properly reported by a Fund as capital gain dividends (“Capital Gain Dividends”) will be taxable to shareholders as long-term capital gains
includible in net capital gain and taxed to individuals at reduced rates relative to ordinary
income. Distributions from capital gains
generally are made after applying any available capital loss carryforwards. Distributions of net short-term capital gain (as reduced by any net long-term capital loss for the taxable year) will be taxable to
shareholders as ordinary income. Distributions of investment income reported by a Fund as derived from “qualified dividend income” will be taxed in the hands of individuals at the rates applicable to net
capital gain, provided holding period and other requirements are met at both the shareholder and Fund level.
The Code generally imposes
a 3.8% Medicare contribution tax on the net investment income of certain individuals, trusts and estates to the extent their income exceeds certain threshold amounts. For these purposes, “net investment
income” generally includes, among other things: (i) distributions paid by a Fund of net investment income and capital gains as described above; and (ii) any net gain from the sale, exchange or other taxable
disposition of Fund shares. Shareholders are advised to consult their tax advisors regarding the possible implications of this additional tax on their investment in a Fund.
As required by federal law,
detailed federal tax information with respect to each calendar year will be furnished to each shareholder early in the succeeding year.
If, in and with respect to
any taxable year, a Fund makes a distribution to a shareholder in excess of the Fund’s current and accumulated earnings and profits, the excess distribution will be treated as a return of capital to the extent
of such shareholder’s tax basis in its shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces a shareholder’s tax basis in its shares, thus reducing any loss or
increasing any gain on a subsequent taxable disposition by the shareholder of its shares. To the extent a Fund makes distributions of capital gains in excess of the Fund’s net capital gain for the taxable year
(as reduced by any available capital loss carryforwards from prior taxable years), there is a possibility that the distributions will be taxable as ordinary dividend distributions, even though distributed excess
amounts would not have been subject to tax if retained by the Fund.
Distributions are taxable as
described herein whether shareholders receive them in cash or reinvest them in additional shares.
A dividend paid to
shareholders in January generally is deemed to have been paid by a Fund on December 31 of the preceding year, if the dividend was declared and payable to shareholders of record on a date in October, November or
December of that preceding year.
Distributions on a
Fund’s shares generally are subject to U.S. federal income tax as described herein to the extent they do not exceed the Fund’s realized income and gains, even though such distributions may economically
represent a return of a particular shareholder’s investment. Such distributions are likely to occur in respect of shares purchased at a time when the Fund’s NAV reflects either unrealized gains, or
realized but undistributed income or gains, that were therefore included in the price the shareholder paid. Such distributions may reduce the fair market value of the Fund’s shares below the shareholder’s
cost basis in those shares. As described above, a Fund is required to distribute realized income and gains regardless of whether the Fund’s NAV also reflects unrealized losses.
If a Fund holds, directly
or indirectly, one or more “tax credit bonds” on one or more applicable dates during a taxable year, it is possible that the Fund will elect to permit its shareholders to claim a tax credit on their income
tax returns equal to each shareholder's proportionate share of tax credits from the applicable bonds that otherwise would be allowed to the Fund. In such a case, a shareholder will be deemed to receive a distribution
of money with respect to its Fund shares equal to the shareholder’s proportionate share of the amount of such credits and be allowed a credit against the shareholder's U.S. federal income tax liability equal to
the amount of such deemed distribution, subject to certain limitations imposed by the Code on the credits involved. Even if a Fund is eligible to pass through tax credits to shareholders, the Fund may choose not to do
so.
In order for some portion
of the dividends received by a Fund shareholder to be “qualified dividend income” that is eligible for taxation at long-term capital gain rates, the Fund must meet holding period and other requirements
with respect to some portion of the dividend-paying stocks in its portfolio and the shareholder must meet holding period and other requirements with respect to the Fund’s shares. In general, a dividend is not
treated as qualified dividend income (at either the Fund or shareholder level): (1) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121-day period beginning on the
date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred stock, 91 days during the 181-day period beginning 90 days before such
date); (2) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property; (3)
if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest; or (4) if the dividend is received from a foreign corporation
that is: (a) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation readily tradable on an established
securities market in the United States); or (b) treated as a passive foreign investment company.
In general, distributions
of investment income reported by a Fund as derived from qualified dividend income are treated as qualified dividend income in the hands of a shareholder taxed as an individual, provided the shareholder meets the
holding period and other requirements described above with respect to the Fund’s shares.
If the aggregate qualified
dividends received by a Fund during a taxable year are 95% or more of its gross income (excluding net long-term capital gain over net short-term capital loss), then 100% of the Fund’s dividends (other than
dividends properly reported as Capital Gain Dividends) are eligible to be treated as qualified dividend income.
In general, dividends of
net investment income received by corporate shareholders of a Fund qualify for the dividends-received deduction generally available to corporations to the extent of the amount of eligible dividends received by the
Fund from domestic corporations for the taxable year. A dividend received by a Fund will not be treated as a dividend eligible for the dividends-received deduction: (1) if it has been received with respect to any
share of stock that the Fund has held for less than 46 days (91 days in the case of certain preferred stock) during the 91-day period beginning on the date which is 45 days before the date on which such share becomes
ex-dividend with
respect to such dividend (during the
181-day period beginning 90 days before such date in the case of certain preferred stock); or (2) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments
with respect to positions in substantially similar or related property. Moreover, the dividends received deduction may otherwise be disallowed or reduced: (1) if the corporate shareholder fails to satisfy the
foregoing requirements with respect to its shares of the Fund; or (2) by application of various provisions of the Code (for instance, the dividends-received deduction is reduced in the case of a dividend received on
debt-financed portfolio stock (generally, stock acquired with borrowed funds)).
Any distribution of income
that is attributable to: (i) income received by a Fund in lieu of dividends with respect to securities on loan pursuant to a securities lending transaction; or (ii) dividend income received by the Fund on securities
it temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute qualified dividend income to individual
shareholders and will not be eligible for the dividends-received deduction for corporate shareholders.
Pursuant to proposed
regulations on which a Fund may rely, distributions by a Fund to its shareholders that the Fund properly reports as “section 199A dividends,” as defined and subject to certain conditions described below,
are treated as qualified REIT dividends in the hands of non-corporate shareholders. Non-corporate shareholders are permitted a federal income tax deduction equal to 20% of qualified REIT dividends received by them,
subject to certain limitations. Very generally, a “section 199A dividend” is any dividend or portion thereof that is attributable to certain dividends received by the Fund from REITs, to the extent such
dividends are properly reported as such by the RIC in a written notice to its shareholders. A section 199A dividend is treated as a qualified REIT dividend only if the shareholder receiving such dividend holds the
dividend-paying RIC shares for at least 46 days of the 91-day period beginning 45 days before the shares become ex-dividend, and is not under an obligation to make related payments with respect to a position in
substantially similar or related property. A Fund is permitted to report such part of its dividends as section 199A dividends as are eligible, but is not required to do so.
Subject to future
regulatory guidance to the contrary, distributions attributable to qualified publicly traded partnership income from a Fund’s investments in MLPs will ostensibly not qualify for the deduction available to
non-corporate taxpayers in respect of such amounts received directly from an MLP.
A shareholder whose
distributions are reinvested in shares under the Dividend Reinvestment Plan generally will be treated as having received a dividend equal to either: (i) if the shares are trading below NAV, the amount of cash
allocated to the shareholder for the purchase of shares on its behalf in the open market; or (ii) if shares are trading at or above NAV, generally the fair market value of the new shares issued to the shareholder.
Tax Implications of Certain Fund
Investments
References to investments by a
Fund also include investments by an Underlying Fund.
Special Rules for Debt
Obligations. Some debt obligations with a fixed maturity date of more than one year from the date of issuance (and zero-coupon debt obligations with a fixed maturity date of more than one year from the
date of issuance) will be treated as debt obligations that are issued originally at a discount. Generally, the original issue discount (“OID”) is treated as interest income and is included in a
Fund’s income and required to be distributed by the Fund over the term of the debt security, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition
of the debt security. In addition, payment-in-kind securities will give rise to income which is required to be distributed and is taxable even though the Fund holding the security receives no interest payment in cash
on the security during the year.
Some debt
obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by a Fund in the secondary market may be treated as having “market discount.” Very generally, market
discount is the excess of the stated redemption price of a debt obligation (or in the case of an obligation issued with OID, its “revised issue price”) over the purchase price of such obligation. Subject
to the discussion below regarding Section 451 of the Code: (i) generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt security having market discount is treated as
ordinary income to the extent the gain, or principal payment, does not exceed the “accrued market discount” on such debt security; (ii) alternatively, a Fund may elect to accrue market discount currently,
in which case the Fund will be required to include the accrued market discount in the Fund's income (as ordinary income) and thus distribute it over the term of the debt security, even though payment of that amount is
not received until a later time, upon partial or full repayment or disposition of the debt security; and (iii) the rate at which the market discount accrues, and thus is included in a Fund's income, will depend upon
which of the permitted accrual methods the Fund elects. Notwithstanding the foregoing, effective for taxable years beginning after 2017, Section 451 of the Code generally requires any accrual method taxpayer to take
into account items of gross income no later than the time at which such items are taken into account as revenue in the taxpayer's financial statements. The Treasury and IRS have issued proposed regulations providing
that this rule does not apply to the accrual of market discount. If the rule were to apply to the accrual of market discount, a Fund would be required to include in income any market discount as it takes the same into
account on its financial statements.
Some debt obligations with
a fixed maturity date of one year or less from the date of issuance may be treated as having OID or, in certain cases, “acquisition discount” (very generally, the excess of the stated redemption price over
the purchase price). The Fund will be required to include the OID or acquisition discount in income (as ordinary income) and thus distribute it over the term of the debt security, even though payment of that amount is
not received until a later time, upon partial or full repayment or disposition of the debt security. The rate at which OID or acquisition discount accrues, and thus is included in a Fund's income, will depend upon
which of the permitted accrual methods the Fund elects.
If a Fund holds the
foregoing kinds of obligations, or other obligations subject to special rules under the Code, it may be required to pay out as an income distribution each year an amount which is greater than the total amount of cash
interest the Fund actually received. Such distributions may be made from the cash assets of the Fund or, if necessary, by disposition of portfolio securities including at a time when it may not be advantageous to do
so. These dispositions may cause the Fund to realize higher amounts of short-term capital gains (generally taxed to shareholders at ordinary income tax rates) and, in the event the Fund realizes net capital gains from
such transactions, its shareholders may receive a larger Capital Gain Dividend than if the Fund had not held such obligations.
Securities Purchased at a
Premium. Very generally, where a Fund purchases a bond at a price that exceeds the redemption price at maturity – that is, at a premium – the premium is amortizable over the remaining
term of the bond. In the case of a taxable bond, if the Fund makes an election applicable to all such bonds it purchases, which election is irrevocable without consent of the IRS, the Fund reduces the current taxable
income from the bond by the amortized premium and reduces its tax basis in the bond by the amount of such offset; upon the disposition or maturity of such bonds acquired on or after January 4, 2013, the Fund is
permitted to deduct any remaining premium allocable to a prior period. In the case of a tax-exempt bond, tax rules require the Fund to reduce its tax basis by the amount of amortized premium.
A portion of the OID
accrued on certain high yield discount obligations may not be deductible to the issuer and will instead be treated as a dividend paid by the issuer for purposes of the dividends received deduction. In such cases, if
the issuer of the high-yield discount obligations is a domestic corporation, dividend payments by a Fund may be eligible for the dividends received deduction to the extent attributable to the deemed dividend portion
of such OID.
At-risk or Defaulted
Securities. Investments in debt obligations that are at risk of or in default present special tax issues for a Fund. Tax rules are not entirely clear about issues such as whether or to what extent a
Fund should recognize market discount on a debt obligation, when the Fund may cease to accrue interest, OID or market discount, when and to what extent the Fund may take deductions for bad debts or worthless
securities and how the Fund should allocate payments received on obligations in default between principal and income. These and other related issues will be addressed by a Fund when, as and if it invests in such
securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and does not become subject to U.S. federal income or excise tax.
Certain Investments in
REITs. Any investment by a Fund in equity securities of REITs qualifying as such under Subchapter M of the Code may result in the Fund’s receipt of cash in excess of the REIT’s earnings;
if the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Dividends received by a Fund from a REIT will not qualify for
the corporate dividends-received deduction and generally will not constitute qualified dividend income.
Certain distributions made by
the Fund attributable to dividends received by the Funds from REITs may qualify as “qualified REIT dividends” in the hands of non-corporate shareholders, as discussed above.
Mortgage-Related
Securities. A Fund may invest directly or indirectly in REMICs (including by investing in residual interests in collateralized mortgage obligations (“CMOs”) with respect to which an
election to be treated as a REMIC is in effect) or equity interests in taxable mortgage pools (“TMPs”). Under a notice issued by the IRS in October 2006 and Treasury regulations that have yet to be issued
but may apply retroactively, a portion of the Fund’s income (including income allocated to the Fund from a REIT or other pass-through entity) that is attributable to a residual interest in a REMIC or an equity
interest in a TMP (referred to in the Code as an “excess inclusion”) will be subject to U.S. federal income tax in all events. This notice also provides, and the regulations are expected to provide, that
excess inclusion income of a RIC will be allocated to shareholders of the RIC in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related interest
directly. As a result, a Fund investing in such interests may not be a suitable investment for charitable remainder trusts, as noted below.
In general, excess
inclusion income allocated to shareholders: (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions); (ii) will constitute unrelated business taxable income
(“UBTI”) to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring
such an entity that is allocated excess inclusion income, and otherwise might not be required to file a tax return, to file a tax return and pay tax on such income; and (iii) in the case of a non-U.S. shareholder,
will not qualify for any reduction in U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding any exemption from such income tax otherwise available
under the Code.
Foreign Currency
Transactions. Any transaction by a Fund in foreign currencies, foreign currency-denominated debt obligations or certain foreign currency options, futures contracts or forward contracts (or similar
instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. Any such net gains could require a larger dividend
toward the end of the calendar year. Any such net losses generally will reduce and potentially require the recharacterization of prior ordinary income distributions. Such ordinary income treatment may accelerate Fund
distributions to shareholders and increase the distributions taxed to shareholders as ordinary income. Any net ordinary losses so created cannot be carried forward by a Fund to offset income or gains earned in
subsequent taxable years.
Foreign currency gains
generally are treated as qualifying income for purposes of the 90% gross income test described above. There is a remote possibility that the Secretary of the Treasury will issue contrary tax regulations with respect
to foreign currency gains that are not directly related to a RIC’s principal business of investing in stocks or securities (or options or futures with respect to stocks or securities), and such regulations could
apply retroactively.
Passive Foreign Investment
Companies. Equity investments by a Fund in certain “passive foreign investment companies” (“PFICs”) could potentially subject the Fund to a U.S. federal income tax (including
interest charges) on distributions received from the company or on proceeds received from the disposition of shares in the company. This tax cannot be eliminated by making distributions to Fund shareholders. However,
a Fund may elect to avoid the imposition of that tax. For example, a Fund may elect to treat a PFIC as a “qualified electing fund” (i.e., make a “QEF election”), in which case the Fund will be required to include its share of the PFIC’s income and net capital gains annually, regardless of whether it
receives any distribution from the PFIC. A Fund also may make an election to mark the gains (and to a limited extent losses) in such holdings “to the market” as though it had sold (and, solely for purposes
of this mark-to-market election, repurchased) its holdings in those PFICs on the last day of the Fund’s taxable year. Such gains and losses are treated as ordinary income and loss. The QEF and mark-to-market
elections may accelerate the recognition of income (without the receipt of cash) and increase the amount required to be distributed by the Fund to avoid taxation. Making either of these elections therefore may require
the Fund to liquidate other investments (including when it is not advantageous to do so) to meet its distribution requirement, which also may accelerate the recognition of gain and affect the Fund’s total
return. Dividends paid by PFICs will not be eligible to be treated as “qualified dividend income.” A foreign issuer in which a Fund invests will not be treated as a PFIC with respect to the Fund if such
issuer is a controlled foreign corporation (“CFC”) for U.S. federal income tax purposes and the Fund holds (directly, indirectly, or constructively) 10% or more of the voting interests in or total value of
such issuer. In such a case, a Fund generally would be required to include in gross income each year, as ordinary income, its share of certain amounts of a CFC's income, whether or not the CFC distributes such amounts
to the Fund.
Because it is not always
possible to identify a foreign corporation as a PFIC, a Fund may incur the tax and interest charges described above in some instances.
Options and Futures
In general, option premiums
received by a Fund are not immediately included in the income of the Fund. Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder, or the Fund transfers or
otherwise terminates the option (e.g., through a closing transaction). If a call option written by a Fund is exercised and the Fund sells or delivers the underlying stock, the Fund generally will recognize capital
gain or loss equal to (a) sum of the strike price and the option premium received by the Fund minus (b) the Fund’s basis in the stock. Such gain or loss generally will be short-term or long-term
depending upon the holding period of the underlying stock. If securities are purchased by a Fund pursuant to the exercise of a put option written by it, the Fund generally will subtract the premium received for
purposes of computing its cost basis in the securities purchased. Gain or loss arising in respect of a termination of the Fund’s obligation under an option other than through the exercise of the option will be
short-term gain or loss depending on whether the premium income received by the Fund is greater or less than the amount paid by the Fund (if any) in terminating the transaction. Thus, for example, if an option written
by a Fund expires unexercised, the Fund generally will recognize short-term gain equal to the premium received.
A Fund’s options
activities may include transactions constituting straddles for U.S. federal income tax purposes, that is, that trigger the U.S. federal income tax straddle rules contained primarily in Section 1092 of the Code. Such
straddles include, for example, positions in a particular security, or an index of securities, and one or more options that offset the former position, including options that are “covered” by a
Fund’s long position in the subject security. Very generally, where applicable, Section 1092 requires: (i) that losses be deferred on positions deemed to be offsetting positions with respect to
“substantially similar or related property,” to the extent of unrealized gain in the latter; and (ii) that the holding period of such a straddle position that has not already been held for the long-term
holding period be terminated and begin anew once the position is no longer part of a straddle. Options on single stocks that are not “deep in the money” may constitute qualified covered calls, which
generally are not subject to the straddle rules; the holding period on stock underlying qualified covered calls that are “in the money” although not “deep in the money” will be suspended during
the period that such calls are outstanding. These straddle rules and the rules governing qualified covered calls could cause gains that would otherwise constitute long-term capital gains to be treated as short-term
capital gains, and distributions that would otherwise constitute “qualified dividend income” or qualify for the dividends-received deduction to fail to satisfy the holding period requirements and therefore
to be taxed as ordinary income or to fail to qualify for the dividends-received deduction, as the case may be.
The tax treatment of
certain positions entered into by a Fund (including regulated futures contracts, certain foreign currency positions and certain listed non-equity options) will be governed by section 1256 of the Code (“section
1256 contracts”). Gains or losses on section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses (“60/40”), although certain foreign currency gains and
losses from such contracts may be treated as ordinary in character. Also, section 1256 contracts held by a Fund at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as
prescribed under the Code) are “marked to market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40
gain or loss, as applicable.
Other Derivatives, Hedging,
and Related Transactions. In addition to the special rules described above in respect of futures and options transactions, the Fund’s transactions in other derivative instruments (e.g., forward contracts and swap agreements), as well as any of its hedging, short sale, securities loan or similar transactions, may be subject to one or more special tax rules
(e.g., notional principal contract, straddle, constructive sale, wash sale and short sale rules). These rules may affect whether gains and losses recognized by a Fund are treated as ordinary or
capital, accelerate the recognition of income or gains to the Fund, defer losses to the Fund, and cause adjustments in the holding periods of the Fund’s securities, thereby affecting, among other things, whether
capital gains and losses are treated as short-term or long-term. These rules could therefore affect the amount, timing and/or character of distributions to shareholders.
Because these and other tax
rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could
be retroactive) may affect whether a Fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a RIC and avoid a Fund-level tax.
Commodity-Linked
Instruments. A Fund’s investments in commodity-linked instruments can be limited by the Fund’s intention to qualify as a RIC, and can bear on the Fund’s ability to so qualify. Income
and gains from certain commodity-linked instruments do not constitute qualifying income to a RIC for purposes of the 90% gross income test described above. The tax treatment of some other commodity-linked instruments
in which a Fund might invest is not certain, in particular with respect to whether income or gains from such instruments constitute qualifying income to a RIC. If a Fund were to treat income or gain from a particular
instrument as qualifying income and the income or gain were later determined not to constitute qualifying income and, together with any other nonqualifying income, caused the Fund’s nonqualifying
income to exceed 10% of its gross income in any taxable year, the Fund would fail to qualify as a RIC unless it is eligible to and does pay a tax at the Fund level.
Exchange-Traded Notes,
Structured Notes. The tax rules are uncertain with respect to the treatment of income or gains arising in respect of commodity-linked ETNs and certain commodity-linked structured notes; also, the timing and
character of income or gains arising from ETNs can be uncertain. An adverse determination or future guidance by the IRS (which determination or guidance could be retroactive) may affect a Fund’s ability to
qualify for treatment as a RIC and to avoid a fund-level tax.
Book-Tax Differences. Certain of a Fund’s investments in derivative instruments and foreign currency-denominated instruments, and any of the Fund's transactions in foreign currencies and hedging
activities, are likely to produce a difference between its book income and the sum of its taxable income and net tax-exempt income (if any). If such a difference arises, and the Fund’s book income is less than
the sum of its taxable income and net tax-exempt income, the Fund could be required to make distributions exceeding book income to qualify as a RIC that is accorded special tax treatment and to avoid an entity-level
tax. In the alternative, if the Fund’s book income exceeds the sum of its taxable income (including realized capital gains) and net tax-exempt income, the distribution (if any) of such excess generally will be
treated as: (i) a dividend to the extent of the Fund’s remaining earnings and profits (including earnings and profits arising from tax-exempt income); (ii) thereafter, as a return of capital to the extent of the
recipient’s basis in its shares; and (iii) thereafter as gain from the sale or exchange of a capital asset.
Investments in Other
RICs. A Fund’s investments in shares of another mutual fund, an ETF or another company that qualifies as a RIC (each, an “investment company”) can cause the Fund to be required
to distribute greater amounts of net investment income or net capital gain than the Fund would have distributed had it invested directly in the securities held by the investment company, rather than in shares of the
investment company. Further, the amount or timing of distributions from a Fund qualifying for treatment as a particular character (e.g., long-term capital gain, exempt interest, eligibility for dividends-received deduction, etc.) will not necessarily be the same as it would have been had the Fund invested directly in the
securities held by the investment company. If a Fund receives dividends from an investment company and the investment company reports such dividends as qualified dividend income, then the Fund is permitted in turn to
report a portion of its distributions as qualified dividend income, provided the Fund meets holding period and other requirements with respect to shares of the investment company.
If a Fund receives
dividends from an investment company and the investment company reports such dividends as eligible for the dividends-received deduction, then the Fund is permitted in turn to report its distributions derived from
those dividends as eligible for the dividends-received deduction as well, provided the Fund meets holding period and other requirements with respect to shares of the investment company.
Investments in Master
Limited Partnerships and Certain Non-U.S. Entities. A Fund’s ability to make direct and indirect investments in MLPs and certain non-U.S. entities is limited by the Fund’s intention to qualify as a RIC, and if the Fund does not
appropriately limit such investments or if such investments are recharacterized for U.S. federal income tax purposes, the Fund’s status as a RIC may be jeopardized. Among other limitations, the Fund is permitted
to have no more than 25% of the value of its total assets invested in qualified publicly traded partnerships, including MLPs.
Subject to any future
regulatory guidance to the contrary, any distribution of income attributable to qualified publicly traded partnership income from a Fund’s investment in a MLP will ostensibly not qualify for the deduction that
would be available to a non-corporate shareholder were the shareholder to own such MLP directly.
Tax-Exempt Shareholders
Income of a RIC that would
be UBTI if earned directly by a tax-exempt entity generally will not constitute UBTI when distributed to a tax-exempt shareholder of the RIC. Notwithstanding this “blocking” effect, a tax-exempt
shareholder could realize UBTI by virtue of its investment in a Fund if shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b).
A tax-exempt shareholder
may also recognize UBTI if a Fund recognizes “excess inclusion income” derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs as described above, if the
amount of such income recognized by the Fund exceeds the Fund’s investment company taxable income (after taking into account deductions for dividends paid by the Fund).
In addition, special tax
consequences apply to charitable remainder trusts (“CRTs”) that invest in RICs that invest directly or indirectly in residual interests in REMICs or equity interests in TMPs. Under legislation enacted in
December 2006, a CRT (as defined in section 664 of the Code) that realizes any UBTI for a taxable year must pay an excise tax annually of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT
will not recognize UBTI as a result of investing in a Fund that recognizes “excess inclusion income.” Rather, if at any time during any taxable year a CRT (or one of certain other tax-exempt shareholders,
such as the United States, a state
or political subdivision, or an agency or
instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a Fund that recognizes “excess inclusion income,” then the Fund will be subject to a tax on that portion of its
“excess inclusion income” for the taxable year that is allocable to such shareholders at the highest federal corporate income tax rate. The extent to which this IRS guidance remains applicable in light of
the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, the Fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such
shareholder’s distributions for the year by the amount of the tax that relates to such shareholder’s interest in the Fund.
CRTs and other tax-exempt
investors are urged to consult their tax advisors concerning the consequences of investing in a Fund.
Sale, Exchange or Redemption of
Shares
The sale, exchange or
redemption of Fund shares may give rise to a gain or loss.
In general, any gain or
loss realized upon a taxable disposition of shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months. Otherwise, the gain or loss on the taxable disposition of Fund
shares will be treated as short-term capital gain or loss. However, any loss realized upon a taxable disposition of Fund shares held by a shareholder for six months or less will be treated as long-term, rather than
short-term, to the extent of any Capital Gain Dividends received (or deemed received) by the shareholder with respect to the shares.
Further, all or a portion
of any loss realized upon a taxable disposition of Fund shares will be disallowed under the Code’s “wash-sale” rule if other substantially identical shares are purchased, including by means of
dividend reinvestment, within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.
Shareholders who tender all
shares held, or considered to be held, by them will be treated as having sold their shares and generally will realize a capital gain or loss. If a shareholder tenders fewer than all of its shares, such shareholder may
be treated as having received a distribution under Section 301 of the Code (“Section 301 distribution”) unless the redemption is treated as being either: (i) “substantially disproportionate”
with respect to such shareholder; or (ii) otherwise “not essentially equivalent to a dividend” under the relevant rules of the Code. A Section 301 distribution is not treated as a sale or exchange giving
rise to a capital gain or loss, but rather is treated as a dividend to the extent supported by the Fund’s current and accumulated earnings and profits, with the excess treated as a return of capital reducing the
shareholder’s tax basis in Fund shares, and thereafter as capital gain. Where a redeeming shareholder is treated as receiving a dividend, there is a risk that non-tendering shareholders whose interests in the
Fund increase as a result of such tender will be treated as having received a taxable distribution from the Fund. The extent of such risk will vary depending upon the particular circumstances of the tender offer.
To the extent that the Fund
recognizes net gains on the liquidation of portfolio securities to meet such tenders or other repurchases of Fund shares, the Fund will be required to make additional distributions to its common shareholders.
Tax Shelter Reporting
Regulations
Under U.S. Treasury
Regulations, if a shareholder recognizes a loss of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on
IRS Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. Future guidance may extend the
current exception from this reporting requirement to shareholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s
treatment of the loss is proper. Shareholders should consult with their tax advisors to determine the applicability of these regulations in light of their individual circumstances.
Foreign Taxation
Income, proceeds and gains
received by a Fund (or RICs in which the Fund has invested) from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. This will decrease the Fund’s yield on securities subject to such taxes. If more than 50% of a Fund’s assets at taxable year end consists of the securities
of foreign corporations, the Fund may elect to permit shareholders to claim a credit or deduction on their income tax returns for their pro rata portions of qualified taxes paid by the Fund to foreign countries in respect of foreign securities that the Fund has held for at least the minimum period specified in the
Code. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes paid by the Fund. A shareholder’s ability to claim an offsetting foreign tax credit or deduction in respect of foreign taxes paid by a Fund is
subject to certain limitations imposed by the Code, which may result in the shareholder’s not receiving a full credit or deduction (if any) for the amount of such taxes. Shareholders who do not itemize on their
U.S. federal income tax returns may claim a credit (but not a deduction) for such foreign taxes.
Even if a Fund were
eligible to make such an election for a given year, it may determine not to do so. Shareholders that are not subject to U.S. federal income tax, and those who invest in a Fund through tax-advantaged accounts
(including those who invest through individual retirement accounts or other tax-advantaged retirement plans), generally will receive no benefit from any tax credit or deduction passed through by the Fund.
Foreign Shareholders
Distributions by a Fund to
shareholders that are not “U.S. persons” within the meaning of the Code (“foreign shareholders”) properly reported by the Fund as: (1) Capital Gain Dividends; (2) short-term capital gain
dividends; and (3) interest-related dividends, each as defined below and subject to certain conditions described below, generally are not subject to withholding of U.S. federal income tax.
In general, the Code
defines (1) “short-term capital gain dividends” as distributions of net short-term capital gains in excess of net long-term capital losses and (2) “interest-related dividends” as distributions
from U.S. source interest income of types similar to those not subject to U.S. federal income tax if earned directly by an individual foreign shareholder, in each case to the extent such distributions are properly
reported as such by the Fund in a written notice to shareholders. The exceptions to withholding for Capital Gain Dividends and short-term capital gain dividends do not apply to (A) distributions to an individual
foreign shareholder who is present in the United States for a period or periods aggregating 183 days or more during the year of the distribution and (B) distributions attributable to gain that is treated as
effectively connected with the conduct by the foreign shareholder of a trade or business within the United States under special rules regarding the disposition of U.S. real property interests as described below. The
exception to withholding for interest-related dividends does not apply to distributions to a foreign shareholder (A) that has not provided a satisfactory statement that the beneficial owner is not a U.S. person, (B)
to the extent that the dividend is attributable to certain interest on an obligation if the foreign shareholder is the issuer or is a 10% shareholder of the issuer, (C) that is within certain foreign countries that
have inadequate information exchange with the United States, or (D) to the extent the dividend is attributable to interest paid by a person that is a related person of the foreign shareholder and the foreign
shareholder is a controlled foreign corporation. If a Fund invests in a RIC that pays such distributions to the Fund, such distributions retain their character as not subject to withholding if properly reported when
paid by the Fund to foreign shareholders. The Fund may report such part of its dividends as interest-related and/or short-term capital gain dividends as are eligible, but is not required to do so. In the case of
shares held through an intermediary, the intermediary may withhold even if the Fund reports all or a portion of a payment as an interest-related or short-term capital gain dividend to shareholders.
Foreign shareholders should
contact their intermediaries regarding the application of these rules to their accounts.
Distributions by a Fund to
foreign shareholders other than Capital Gain Dividends, short-term capital gain dividends and interest-related dividends (e.g., dividends attributable to dividend and foreign-source interest income or to short-term capital gains or U.S. source interest income to which the exception from withholding
described above does not apply) are generally subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate).
A foreign shareholder is
not, in general, subject to U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of a Fund unless: (i) such gain is effectively connected with the conduct by the
foreign shareholder of a trade or business within the United States; (ii) in the case of a foreign shareholder that is an individual, the shareholder is present in the United States for a period or periods aggregating
183 days or more during the year of the sale and certain other conditions are met; or (iii) the special rules relating to gain attributable to the sale or exchange of “U.S. real property interests”
(“USRPIs”) apply to the foreign shareholder's sale of shares of the Fund (as described below).
Subject to certain
exceptions (e.g., for a Fund that is a “United States real property holding corporation” as described below), a Fund is generally not required (and does not expect) to withhold on the
amount of a non-dividend distribution (i.e., a distribution that is not paid out of the Fund’s current earnings and profits for the applicable taxable year or accumulated earnings and profits) when paid to its
foreign shareholders.
Special rules would apply
if a Fund were a qualified investment entity (“QIE”) because it is either a “U.S. real property holding corporation” (“USRPHC”) or would be a USRPHC but for the operation of certain
exceptions to the definition of USRPIs described below. Very generally, a USRPHC is a domestic corporation that holds USRPIs the fair market value of which equals or exceeds 50% of the sum of the fair market values of
the corporation’s USRPIs, interests in real property located outside the United States, and other trade or business assets. USRPIs generally are defined as any interest in U.S. real property and any interest
(other than solely as a creditor) in a USRPHC or, very generally, an entity that has been a USRPHC in the last five years. A Fund that holds, directly or indirectly, significant interests in REITs may be a USRPHC.
Interests in domestically controlled QIEs, including REITs and RICs that are QIEs, not-greater-than-10% interests in publicly traded classes of stock in REITs and not-greater-than-5% interests in publicly traded
classes of stock in RICs generally are not USRPIs, but these exceptions do not apply for purposes of determining whether a Fund is a QIE.
If an interest in a Fund
were a USRPI, the Fund would be required to withhold U.S. tax on the proceeds of a share redemption by a greater-than-5% foreign shareholder or any foreign shareholders if shares of the Fund are not considered
regularly traded on an established securities market, in which case such foreign shareholder generally would also be required to file U.S. tax returns and pay any additional taxes due in connection with the
redemption.
Moreover, if a Fund were a
USRPHC or, very generally, had been one in the last five years, it would be required to withhold on amounts distributed to a greater-than-5% foreign shareholder to the extent such amounts would not be treated as a
dividend, i.e., are in excess of the Fund’s current and accumulated “earnings and profits” for the applicable taxable year. Such withholding generally is not required if the
Fund is a domestically controlled QIE.
If a Fund were a QIE, under
a special “look-through” rule, any distributions by the Fund to a foreign shareholder (including, in certain cases, distributions made by the Fund in redemption of its shares) attributable directly or
indirectly to: (i) distributions received by the Fund from a lower-tier RIC or REIT that the Fund is required to treat as USRPI gain in its hands; and (ii) gains realized on the disposition of USRPIs by the Fund would
retain their character as gains realized from USRPIs in the hands of the Fund’s foreign shareholders and would be subject to U.S. tax withholding. In addition, such distributions could result in the foreign
shareholder being required to file a U.S. tax return and pay tax on the distributions at regular U.S. federal income tax rates. The consequences to a foreign shareholder, including the rate of such withholding and
character of such distributions (e.g., as ordinary income or USRPI gain), would vary depending upon the extent of the foreign shareholder’s current and past ownership of the Fund.
Foreign shareholders of the
Fund also may be subject to “wash sale” rules to prevent the avoidance of the tax-filing and -payment obligations discussed above through the sale and repurchase of Fund shares.
Foreign shareholders should
consult their tax advisers and, if holding shares through intermediaries, their intermediaries, concerning the application of these rules to their investment in a Fund.
Foreign shareholders with
respect to whom income from a Fund is effectively connected with a trade or business conducted by the foreign shareholder within the United States will in general be subject to U.S. federal income tax on the income
derived from the Fund at the graduated rates applicable to U.S. citizens, residents or domestic corporations, whether such income is received in cash or reinvested in shares of the Fund and, in the case of a foreign
corporation, may also be subject to a branch profits tax. If a foreign shareholder is eligible for the benefits of a tax treaty, any effectively connected income or gain will generally be subject to U.S. federal
income tax on a net basis only if it is also attributable to a permanent establishment maintained by the shareholder in the United States. More generally, foreign shareholders who are residents in a country with an
income tax treaty with the United States may obtain different tax results than those described herein, and are urged to consult their tax advisors.
In order to qualify for any
exemptions from withholding described above or for lower withholding tax rates under income tax treaties, or to establish an exemption from backup withholding, a foreign shareholder must comply with special
certification and filing requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN, W-8BEN-E or substitute form). Foreign shareholders should consult their tax advisers in this
regard.
Special rules (including
withholding and reporting requirements) apply to foreign partnerships and those holding Fund shares through foreign partnerships. Additional considerations may apply to foreign trusts and estates. Investors holding
Fund shares through foreign entities should consult their tax advisers about their particular situation.
A foreign shareholder may be
subject to state and local tax and to the U.S. federal estate tax in addition to the U.S. federal income tax referred to above.
Backup Withholding
The Fund generally is
required to withhold and remit to the U.S. Treasury a percentage of the taxable distributions and redemption proceeds paid to any individual shareholder who fails to properly furnish the Fund with a correct taxpayer
identification number, who has under-reported dividend or interest income, or who fails to certify to the Fund that he or she is not subject to such withholding.
Backup withholding is not an
additional tax. Any amounts withheld may be credited against the shareholder’s U.S. federal income tax liability, provided the appropriate information is furnished to the IRS.
Shareholder Reporting
Obligations With Respect to Foreign Bank and Financial Accounts
Shareholders that are U.S.
persons and own, directly or indirectly, more than 50% of a Fund could be required to report annually their “financial interest” in the Fund’s “foreign financial accounts,” if any, on
FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”). Shareholders should consult a tax advisor, and persons investing in the Fund through an intermediary should contact their
intermediary, regarding the applicability to them of this reporting requirement.
Other Reporting and Withholding
Requirements
Sections 1471-1474 of the
Code and the U.S. Treasury and IRS guidance issued thereunder (collectively, “FATCA”) generally require the Fund to obtain information sufficient to identify the status of each of its shareholders under
FATCA or under an applicable intergovernmental agreement (an “IGA”) between the United States and a foreign government. If a shareholder fails to provide the requested information or otherwise fails to
comply with FATCA or an IGA, a Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends it pays. The IRS and the Department of Treasury have issued proposed
regulations providing that these withholding rules will not apply to the gross proceeds of share redemptions or Capital Gain Dividends a Fund pays. If a payment by a Fund is subject to FATCA withholding, the Fund is
required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., interest-related dividends and short-term capital gain dividends).
Each prospective investor is
urged to consult its tax adviser regarding the applicability of FATCA and any other reporting requirements with respect to the prospective investor’s own situation, including investments through an
intermediary.
General Considerations
The U.S. federal income tax
discussion set forth above is for general information only. Prospective investors should consult their tax advisers regarding the specific federal tax consequences of purchasing, holding, and disposing of shares of a
Fund, as well as the effects of state, local, foreign, and other tax law and any proposed tax law changes.
FINANCIAL STATEMENTS
The audited
financial statements, and the independent registered accounting firm’s report thereon, are included in the Fund’s annual report to shareholders for the fiscal year ended February 29, 2020 and are
incorporated herein by reference.
An annual shareholder report
containing financial statements audited by the Trust’s independent registered public accounting firm and an unaudited semi-annual report will be sent to shareholders each year.
APPENDIX A – PROXY
VOTING PROCEDURES AND GUIDELINES
PROXY VOTING PROCEDURES AND GUIDELINES
VOYA FUNDS
VOYA INVESTMENTS, LLC
Date Last Revised: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Introduction
The purpose of these Proxy Voting Procedures and Guidelines (the "Procedures", the "Guidelines") is to set forth the Board of Directors/Trustees of the Voya funds' (the "Board") instructions to Voya Investments, LLC (referred to as the "Advisor") for the voting of proxies for each fund the Board serves as Director/Trustee (the "Funds").
The Board may elect to delegate proxy voting to a sub-advisor of the Funds and also approve the sub- advisor's proxy policies and procedures for implementation on behalf of such Voya fund (a "Sub-Advisor- Voted Fund"). A Sub-Advisor-Voted Fund is not covered under these Procedures and Guidelines, except as described in the Reporting and Record Retention section below with respect to vote reporting requirements. However, they are covered by those sub-advisor's proxy policies, provided that the Board has approved them.
These Procedures and Guidelines incorporate principles and guidance set forth in relevant pronouncements of the Securities and Exchange Commission ("SEC") and its staff on the fiduciary duty of the Board to ensure that proxies are voted in a timely manner and that voting decisions are in the Funds' beneficial owners' best interest.
The Board, through these instructions, delegates to the Advisor's Proxy Coordinator the responsibility to vote the Funds' proxies in accordance with these Procedures and Guidelines on behalf of the Board. The Board further delegates to the Compliance Committee of the Board certain oversight duties regarding the Advisor's functions as it pertains to the voting of the Funds' proxies.
The Board directs the engagement of a Proxy Advisory Firm to be initially appointed and annually reviewed and approved by the Board. The Proxy Coordinator is responsible for overseeing the Proxy Advisory Firm and shall direct the Proxy Advisory Firm to vote proxies in accordance with the Guidelines.
These Procedures and Guidelines will be reviewed by the Board's Compliance Committee annually, and will be updated when appropriate. No change to these Procedures and Guidelines will be made except pursuant to Board direction. Non-material amendments, however, may be approved for immediate implementation by the Board's Compliance Committee, subject to ratification by the full board at its next regularly scheduled meeting.
Advisor's Roles and Responsibilities
Proxy Coordinator
The Voya Proxy Coordinator shall direct the Proxy Advisory Firm to vote proxies on behalf of the Funds and the Advisor in connection with annual and special meetings of shareholders (except those regarding bankruptcy matters and/or related plans of reorganization).
The Proxy Coordinator is responsible for overseeing the Proxy Advisory Firm (as defined in the Proxy Advisory Firm section below) and voting the Funds' proxies in accordance with the Procedures and Guidelines on behalf of the Funds and the Advisor. The Proxy Coordinator is authorized to direct the Proxy Advisory Firm to vote a Fund's proxy in accordance with the Procedures and Guidelines. Responsibilities assigned to the Proxy Coordinator, or activities that support it, may be performed by such members of the Proxy Group (as defined in the Proxy Group section below) or employees of the Advisor's affiliates as the Proxy Group deems appropriate.
The Proxy Coordinator is also responsible for identifying and informing Counsel (as defined in the Counsel section below) of potential conflicts between the proxy issuer and the Proxy Advisory Firm, the Advisor, the Funds' principal underwriters, or an affiliated person of the Funds. The Proxy Coordinator will identify such potential conflicts of interest based on information the Proxy Advisory Firm periodically provides; client analyses, distributor, broker-dealer, and vendor lists; and information derived from other sources, including public filings.
Proxy Advisory Firm
The Proxy Advisory Firm is responsible for coordinating with the Funds' custodians to ensure that all proxy materials received by the custodians relating to the portfolio securities are processed in a timely manner. To the extent applicable, the Proxy Advisory Firm is required to provide research, analysis, and vote
Page | 2
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
recommendations under its Proxy Voting guidelines. Additionally, the Proxy Advisory Firm is required to produce custom vote recommendations in accordance with the Guidelines and their vote recommendations.
Proxy Group
The members of the Proxy Group, which may include employees of the Advisor's affiliates, are identified in Exhibit 1, and may be amended from time to time at the Advisor's discretion except that the Funds' Chief Investment Risk Officer, the Funds' Chief Compliance Officer, and the Funds' Proxy Coordinator shall be members unless the Board determines otherwise.
Investment Professionals
The Funds' sub-advisors and/or portfolio managers are each referred to herein as an "Investment Professional" and collectively, "Investment Professionals". The Board encourages the Funds' Investment Professionals to submit a recommendation to the Proxy Group regarding any proxy-voting-related proposal pertaining to the portfolio securities over which they have day-to-day portfolio management responsibility. Additionally, when requested, Investment Professionals are responsible for submitting a recommendation to the Proxy Group regarding proxy voting related proxy contests, proposals related to companies with dual class shares with superior voting rights, or mergers and acquisitions involving the portfolio securities over which they have day-to-day portfolio management responsibility.
Counsel
A member of the mutual funds legal practice group of the Advisor ("Counsel") is responsible for determining if a potential conflict of interest involving a proxy issuer is in fact a conflict of interest. If Counsel deems a proxy issuer to be a conflict of interest, the Counsel must notify the Proxy Coordinator, who will in turn notify the Chair of the Compliance Committee of such conflict of interest.
Proxy Voting Procedures
Proxy Group Oversight
A minimum of four (4) members of the Proxy Group (or three (3) if one member of the quorum is either the Funds' Chief Investment Risk Officer or the Funds' Chief Compliance Officer) will constitute a quorum for purposes of taking action at any meeting of the Group.
The Proxy Group may meet in person or by telephone. The Proxy Group also may take action via email in lieu of a meeting, provided that the Proxy Coordinator follows the directions of a majority of a quorum responding via e-mail.
A Proxy Group meeting will be held whenever:
∙The Proxy Coordinator receives a recommendation from an Investment Professional to vote a Fund's proxy contrary to the Guidelines.
∙The Proxy Advisory Firm has made no recommendation on a matter and the Procedures do not provide instruction.
∙A matter requires case-by-case consideration, including those in which the Proxy Advisory Firm's recommendation is deemed to be materially conflicted.
∙The Proxy Coordinator requests the Proxy Group's input and vote recommendation on a matter.
At its discretion, the Proxy Group may provide the Proxy Coordinator with standing instructions to perform responsibilities and related activities assigned to the Proxy Group, on its behalf, provided that such instructions do not violate any requirements of these Procedures or the Guidelines.
If the Proxy Group has previously provided the Proxy Coordinator with standing instructions to vote in accordance with the Proxy Advisory Firm's recommendation, these recommendations do not violate any requirements of these Procedures or the Guidelines, and no conflict of interest exists, the Proxy Coordinator may implement the instructions without calling a Proxy Group meeting.
For each proposal referred to the Proxy Group, it will review:
∙The relevant Procedures and Guidelines,
∙The recommendation of the Proxy Advisory Firm, if any,
∙The recommendation of the Investment Professional(s), if any,
∙Other resources that any Proxy Group member deems appropriate to aid in a determination of a recommendation.
Page | 3
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Vote Instruction
While the vote of a simple majority of the voting members present will determine any matter submitted to a vote, tie votes will be resolved by securing the vote of members not present at the meeting. The Proxy Coordinator will ensure compliance with all applicable voting and conflict of interest procedures, and will use best efforts to secure votes from as many absent members as may reasonably be accomplished, providing such members with a substantially similar level of relevant information as that provided at the in- person meeting.
In the event a tie vote cannot be resolved, or in the event that the vote remains a tie, the Proxy Coordinator will refer the vote to the Compliance Committee Chair for vote determination.
In the event a tie vote cannot be timely resolved in connection with a voting deadline, the Proxy Coordinator will abstain from voting on the proposal(s). However, the Proxy Coordinator will vote in accordance with the Proxy Advisory Firm's recommendation if abstaining on the vote is not a valid option; i.e., can only vote For, Against, or Withhold.
A member of the Proxy Group may abstain from voting on any given matter, provided that the member does not participate in the Proxy Group discussion(s) in connection with the vote determination. If abstention results in the loss of quorum, the process for resolving tie votes will be observed.
If the Proxy Group recommends that a Fund vote contrary to the Guidelines, as might be the case upon review of a recommendation from an Investment Professional, the Proxy Coordinator will follow the procedures in the Out-of-Guidelines section below.
Vote Classification
These Procedures and Guidelines specify how the Funds generally will vote with respect to the proposals indicated. Unless otherwise noted, the Proxy Group instructs the Proxy Coordinator, on behalf of the Advisor, to vote in accordance with these Procedures and Guidelines.
Within-Guidelines Votes: Votes in Accordance with the Guidelines
In the event the Proxy Group and, where applicable, an Investment Professional participating in the voting process, recommend a vote Within Guidelines, the Proxy Group will instruct the Proxy Advisory Firm, through the Proxy Coordinator, to vote in this manner.
Out-of-Guidelines Votes: Votes Contrary to the Guidelines A vote would be considered Out-of-Guidelines if the:
∙Vote is contrary to the Guidelines based on the Compliance Committee or Proxy Group determination that the application of the Guidelines is inapplicable or inappropriate under the circumstances. Such votes include, but are not limited to votes cast based on the recommendation of an Investment Professional.
∙Vote is contrary to the Guidelines unless the Guidelines stipulate Case-by-Case consideration or that primary consideration will be given to input from an Investment Professional, notwithstanding that the vote appears contrary to these Procedures and Guidelines and/or the Proxy Advisory Firm's recommendation.
Routine Matters
Upon instruction from the Proxy Coordinator, the Proxy Advisory Firm will submit a vote as described in these Procedures and Guidelines where there is a clear policy (e.g., "For," "Against," "Withhold," or "Abstain") on a proposal.
Matters Requiring Case-by-Case Consideration
The Proxy Advisory Firm will refer proxy proposals to the Proxy Coordinator when these Procedures and Guidelines indicate "Case-by-Case." Additionally, the Proxy Advisory Firm will refer any proxy proposal under circumstances where the application of these Procedures and Guidelines is unclear, appears to involve unusual or controversial issues, or is silent regarding the proposal.
Upon receipt of a referral from the Proxy Advisory Firm, the Proxy Coordinator may solicit additional research or clarification from the Proxy Advisory Firm, Investment Professional(s), or other sources.
The Proxy Coordinator will review matters requiring Case-by-Case consideration to determine if the Proxy
Page | 4
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Group had previously provided the Proxy Coordinator with standing vote instructions, or a provision within the Guidelines is applicable based on prior voting history.
If a matter requires input and a vote determination from the Proxy Group, the Proxy Coordinator will forward the Proxy Advisory Firm's analysis and recommendation, the Proxy Coordinator's recommendation and/or any research obtained from the Investment Professional(s), the Proxy Advisory Firm, or any other source to the Proxy Group. The Proxy Group may consult with the Proxy Advisory Firm and/or Investment Professional(s) as appropriate.
The Proxy Coordinator will use best efforts to convene a Proxy Group meeting with respect to all matters requiring its consideration. In the event quorum requirements cannot be timely met in connection with a voting deadline, it is the policy of the Funds and Advisor to vote in accordance with the Proxy Advisory Firm's recommendation.
Non-Votes: Votes in which No Action is Taken
The Proxy Coordinator will make reasonable efforts to secure and vote all proxies for the Funds, including markets where shareholders' rights are limited. Nevertheless, the Proxy Group may recommend that a Fund refrain from voting under certain circumstances including:
∙The economic effect on shareholders' interests or the value of the portfolio holding is indeterminable or insignificant, e.g., proxies in connection with fractional shares, securities no longer held in the portfolio of a Voya fund or proxies being considered on behalf of a Fund that is no longer in existence.
∙The cost of voting a proxy outweighs the benefits, e.g., certain international proxies, particularly in cases when share blocking practices may impose trading restrictions on the relevant portfolio security.
In such cases, the Proxy Group may instruct the Proxy Advisory Firm, through the Proxy Coordinator, not to vote such proxy. The Proxy Group may provide the Proxy Coordinator with standing instructions on parameters that would dictate a Non-Vote without the Proxy Group's review of a specific proxy.
Further, Counsel may require the Proxy Coordinator to abstain from voting any proposal that is subject to a material conflict of interest provided that abstaining has no effect on the vote outcome.
Matters Requiring Further Consideration
Referrals to the Compliance Committee
If a vote is deemed Out-of-Guidelines and Counsel has determined that a material conflict of interest appears to exist with respect to the party or parties (i.e. Proxy Advisory Firm, the Advisor, underwriters, affiliates, any participating Proxy Group member, or any Investment Professional(s)) participating in the voting process, the Proxy Coordinator will refer the vote to the Compliance Committee Chair.
Further, if an Investment Professional discloses a potential conflict of interest, and Counsel determines that the conflict of interest appears to exist, the proposal will also be referred to the Compliance Committee for review, regardless of whether the vote is Within- or Out-of-Guidelines.
The Compliance Committee will be provided all recommendations (including Investment Professional(s)), analyses, research, and Conflicts Reports and any other written materials used to establish whether a conflict of interest exists, and will instruct the Proxy Coordinator how such referred proposals should be voted.
The Proxy Coordinator will use best efforts to refer matters to the Compliance Committee for its consideration in a timely manner. In the event any such matter cannot be referred to or considered by the Compliance Committee in a timely manner, the Compliance Committee's standing instruction is to vote Within Guidelines.
The Compliance Committee will receive a report detailing proposals that were voted Out-of-Guidelines, if the Investment Professional's recommendation was not acted on, or was referred to the Compliance Committee.
Consultation with Compliance Committee
The Proxy Coordinator may consult the Compliance Committee Chair for guidance on behalf of the Committee if application of these Procedures and Guidelines is unclear, or a recommendation is received from an Investment Professional in connection with any unusual or controversial issue.
Page | 5
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Conflicts of Interest
The Advisor shall act in the Funds' beneficial owners' best interests and strive to avoid conflicts of interest. Conflicts of interest can arise, for example, in situations where:
∙The issuer is a vendor whose products or services are material to the Voya Funds, the Advisor or their affiliates;
∙The issuer is an entity participating to a material extent in the distribution of the Voya Funds;
∙The issuer is a significant executing broker dealer;
∙Any individual that participates in the voting process for the Funds including an Investment Professional, a member of the Proxy Group, an employee of the Advisor, or Director/Trustee of the Board serves as a director or officer of the issuer; or
∙The issuer is Voya Financial.
Potential Conflicts with a Proxy Issuer
The Proxy Coordinator is responsible for identifying and informing Counsel of potential conflicts with the proxy issuer. In addition to obtaining potential conflict of interest information described in the Roles and Responsibilities section above, members of the Proxy Group are required to disclose to the Proxy Coordinator any potential conflicts of interests prior to discussing the Proxy Advisory Firms' recommendation.
The Proxy Group member will advise the Proxy Coordinator in the event he/she believes that a potential or perceived conflict of interest exists that may preclude him/her from making a vote determination in the best interests of the Funds' beneficial owners. The Proxy Group member may elect to recuse himself/herself from consideration of the relevant proxy or have Counsel consider the matter, recusing him/herself only in the event Counsel determines that a material conflict of interest exists. If recusal, whether voluntary or pursuant to Counsel's findings, does not occur prior to the member's participation in any Proxy Group discussion of the relevant proxy, any Out-of-Guidelines Vote determination is subject to the Compliance Committee referral process. Should members of the Proxy Group verbally disclose a potential conflict of interest, they are required to complete a Conflict of Interest Report, which will be reviewed by Counsel.
Investment Professionals are also required to complete a Conflict of Interest Report or confirm that they do not have any potential conflicts of interests when submitting a vote recommendation to the Proxy Coordinator.
The Proxy Coordinator gathers and analyzes the information provided by the Proxy Advisory Firm, the Advisor, the Funds' principal underwriters, affiliates of the Funds, Proxy Group members, Investment Professionals, and the Directors and Officers of the Funds. Counsel will document such potential material conflicts of interest on a consolidated basis as appropriate.
The Proxy Coordinator will instruct the Proxy Advisory Firm to vote the proxy as recommended by the Proxy Group if Counsel determines that a material conflict of interest does not appear to exist with respect to a proxy issuer, any participating Proxy Group member, or any participating Investment Professional(s).
Compliance Committee Oversight
The Proxy Coordinator will refer a proposal to the Funds' Compliance Committee if the Proxy Group recommends an Out-of-Guidelines Vote, and Counsel has determined that a material conflict of interest appears to exist in order that the conflicted party(ies) have no opportunity to exercise voting discretion over a Fund's proxy.
The Proxy Coordinator will refer the proposal to the Compliance Committee Chair, forwarding all information relevant to the Compliance Committee's review, including the following or a summary of its contents:
∙The applicable Procedures and Guidelines
∙The Proxy Advisory Firm recommendation
∙The Investment Professional(s)'s recommendation, if available
∙Any resources used by the Proxy Group in arriving at its recommendation
∙Counsel's findings
∙Conflicts Report(s) and/or any other written materials establishing whether a conflict of interest exists.
Page | 6
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
In the event a member of the Funds' Compliance Committee believes he/she has a conflict of interest that would preclude him/her from making a vote determination in the best interests of the applicable Fund's beneficial owners, the Compliance Committee member will advise the Compliance Committee Chair and recuse himself/herself with respect to the relevant proxy determinations.
Conflicts Reports
Investment Professionals, the Proxy Advisory Firm, and members of the Compliance Committee, the Proxy Group, and the Proxy Coordinator are required to disclose any potential conflicts of interest and/or confirm they do not have a conflict of interest in connection with their participation in the voting process for portfolio securities. The Conflicts Report should describe any known relationships of either a business or personal nature that Counsel has not previously assessed, which may include communications with respect to the referral item, but excluding routine communications with or submitted to the Proxy Coordinator or Investment Professional(s) on behalf of the subject company or a proponent of a shareholder proposal.
The Conflicts Report should also include written confirmation that the Investment Professional based the recommendation in connection with an Out-of-Guidelines Vote or under circumstances where a conflict of interest exists solely on the investment merits of the proposal and without regard to any other consideration.
Completed Conflicts Reports should be provided to the Proxy Coordinator as soon as possible and may be submitted to the Proxy Coordinator verbally, provided the Proxy Coordinator completes the Conflicts Report, and the submitter reviews and approves the Conflict Report in writing.
The Proxy Coordinator will forward all Conflicts Reports to Counsel for review. Upon review, Counsel will provide the Proxy Coordinator with a brief statement indicating if a material conflict of interest is present.
Counsel will document such potential conflicts of interest on a consolidated basis as appropriate rather than maintain individual Conflicts Reports.
Assessment of the Proxy Advisory Firm
The Proxy Coordinator, on behalf of the Board and the Advisor, will assess if the Proxy Advisory Firm:
∙Is independent from the Advisor
∙Has resources that indicate it can competently provide analysis of proxy issues
∙Can make recommendations in an impartial manner and in the best interests of the Funds and their beneficial owners
∙Has adequate compliance policies and procedures to:
o Ensure that its proxy voting recommendations are based on current and accurate information o Identify and address conflicts of interest.
The Proxy Coordinator will utilize, and the Proxy Advisory Firm will comply with, such methods for completing the assessment as the Proxy Coordinator may deem reasonably appropriate. The Proxy Advisory Firm will also promptly notify the Proxy Coordinator in writing of any material change to information previously provided to the Proxy Coordinator in connection with establishing the Proxy Advisory Firm's independence, competence, or impartiality.
Information provided in connection with the Proxy Advisory Firm's potential conflict of interest will be forwarded to Counsel for review. Counsel will review such information and advise the Proxy Coordinator as to whether a material concern exists and if so, determine the most appropriate course of action to eliminate such concern.
Voting Funds of Funds, Investing Funds and Feeder Funds
Funds that are "Funds-of-Funds" will "echo" vote their interests in underlying mutual funds, which may include mutual funds other than the Voya funds indicated on Voya's website (www.voyainvestments.com). Meaning that, if the Fund-of-Funds must vote on a proposal with respect to an underlying investment company, the Fund-of-Funds will vote its interest in that underlying fund in the same proportion all other shareholders in the underlying investment company voted their interests.
However, if the underlying fund has no other shareholders, the Fund-of-Funds will vote as follows:
∙If the Fund-of-Funds and the underlying fund are being solicited to vote on the same proposal (e.g., the election of fund directors/trustees), the Fund-of-Funds will vote the shares it holds in the underlying
Page | 7
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
fund in the same proportion as all votes received from the holders of the Fund-of-Funds' shares with respect to that proposal.
∙If the Fund-of-Funds is being solicited to vote on a proposal for an underlying fund (e.g., a new Sub- Advisor to the underlying fund), and there is no corresponding proposal at the Fund-of-Funds level, the Board will determine the most appropriate method of voting with respect to the underlying fund proposal.
An Investing Fund (e.g., any Voya fund), while not a Fund-of-Funds will have the foregoing Fund-of-Funds procedure applied to any Investing Fund that invests in one or more underlying funds. Accordingly:
∙Each Investing Fund will "echo" vote its interests in an underlying fund, if the underlying fund has shareholders other than the Investing Fund.
∙In the event an underlying fund has no other shareholders, and the Investing Fund and the underlying fund are being solicited to vote on the same proposal, the Investing Fund will vote its interests in the underlying fund in the same proportion as all votes received from the holders of its own shares on that proposal.
∙In the event an underlying fund has no other shareholders, and there is no corresponding proposal at the Investing Fund level, the Board will determine the most appropriate method of voting with respect to the underlying fund proposal.
A fund that is a "Feeder Fund" in a master-feeder structure passes votes requested by the underlying master fund to its shareholders. Meaning that, if the master fund solicits the Feeder Fund, the Feeder Fund will request instructions from its own shareholders, either directly or, in the case of an insurance-dedicated Fund, through an insurance product or retirement plan, as to how it should vote its interest in an underlying master fund.
When a Voya fund is a feeder in a master-feeder structure, proxies for the portfolio securities owned by the master fund will be voted pursuant to the master fund's proxy voting policies and procedures. As such, except as described in the Reporting and Record Retention section below, Feeder Funds will not be subject to these Procedures and Guidelines.
Securities Lending
Many of the Funds participate in securities lending arrangements to generate additional revenue for the Fund. Accordingly, the Fund will not be able to vote securities that are on loan under these arrangements. However, under certain circumstances, for voting issues that may have a significant impact on the investment, the Proxy Group or Proxy Coordinator may request to recall securities that are on loan if they determine that the benefit of voting outweighs the costs and lost revenue to the Fund and the administrative burden of retrieving the securities.
Investment Professionals may also deem a vote is "material" in the context of the portfolio(s) they manage. Therefore, they may request that lending activity on behalf of their portfolio(s) with respect to the relevant security be reviewed by the Proxy Group and considered for recall and/or restriction. The Proxy Group will give primary consideration to relevant Investment Professional input in its determination of whether a given proxy vote is material and the associated security accordingly restricted from lending. The determination that a vote is material in the context of a Fund's portfolio will not mean that such vote is considered material across all Funds voting at that meeting. In order to recall or restrict shares on a timely basis for material voting purposes, the Proxy Coordinator, on behalf of the Proxy Group, will use best efforts to consider, and when appropriate, to act upon, such requests on a timely basis. Requests to review lending activity in connection with a potentially material vote may be initiated by any relevant Investment Professional and submitted for the Proxy Group's consideration at any time.
Reporting and Record Retention
Reporting by the Funds
Annually, as required, each Fund and each Sub-Advisor-Voted Fund will post its proxy voting record, or a link to the prior one-year period ending on June 30th on the Voya Funds' website. The proxy voting record for each Fund and each Sub-Advisor-Voted Fund will also be available on Form N-PX in the EDGAR database on the website of the Securities and Exchange Commission ("SEC"). For any Voya fund that is a feeder in a master/feeder structure, no proxy voting record related to the portfolio securities owned by the
Page | 8
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
master fund will be posted on the Voya funds' website or included in the Fund's Form N-PX; however, a cross-reference to the master fund's proxy voting record as filed in the SEC's EDGAR database will be included in the Fund's Form N-PX and posted on the Voya funds' website. If an underlying master fund solicited any Feeder Fund for a vote during the reporting period, a record of the votes cast by means of the pass-through process described above will be included on the Voya funds' website and in the Feeder Fund's Form N-PX.
Reporting to the Compliance Committee
At each regularly scheduled quarterly Compliance Committee meeting, the Compliance Committee will receive a report from the Proxy Coordinator indicating each proxy proposal, or a summary of such proposals, that was:
1.Voted Out-of-Guidelines, including any proposals voted Out-of-Guidelines as a result of special circumstances raised by an Investment Professional;
2.Voted Within-Guidelines in cases when the Proxy Group did not agree with an Investment Professional's recommendation;
3.Referred to the Compliance Committee for determination.
The report will indicate the name of the company, the substance of the proposal, a summary of the Investment Professional's recommendation, where applicable, and the reasons for voting, or recommending, an Out-of-Guidelines Vote or, in the case of (2) above, a Within-Guidelines Vote.
Reporting by the Proxy Coordinator on behalf of the Advisor
The Advisor will maintain the records required by Rule 204-2(c)(2), as may be amended from time to time, including the following:
∙A copy of each proxy statement received regarding a Fund's portfolio securities. Such proxy statements the issuers send are available either in the SEC's EDGAR database or upon request from the Proxy Advisory Firm.
∙A record of each vote cast on behalf of a Fund.
∙A copy of any Advisor-created document that was material to making a proxy vote decision, or that memorializes the basis for that decision.
∙A copy of written requests for Fund proxy voting information and any written response thereto or to any oral request for information on how the Advisor voted proxies on behalf of a Fund.
∙A record of all recommendations from Investment Professionals to vote contrary to the Guidelines.
∙All proxy questions/recommendations that have been referred to the Compliance Committee, and all applicable recommendations, analyses, research, Conflict Reports, and vote determinations.
All proxy voting materials and supporting documentation will be retained for a minimum of six years, the first two years in the Advisor's office.
Records Maintained by the Proxy Advisory Firm
The Proxy Advisory Firm will retain a record of all proxy votes handled by the Proxy Advisory Firm. Such record must reflect all the information required to be disclosed in a Fund's Form N-PX pursuant to Rule 30b1-4 under the Investment Company Act. In addition, the Proxy Advisory Firm is responsible for maintaining copies of all proxy statements received by issuers and to promptly provide such materials to the Advisor upon request.
Page | 9
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
PROXY VOTING GUIDELINES
Introduction
Proxies must be voted in the best interest of the Funds' beneficial owners. The Guidelines summarize the Funds' positions on various issues of concern to investors, and give an indication of how the Funds' ballots will be voted on proposals dealing with particular issues. Nevertheless, the Guidelines are not exhaustive, do not include all potential voting issues, and proposals may be addressed, as necessary, on a CASE-BY- CASE basis rather than according to the Guidelines, factoring in the merits of the rationale and disclosure provided.
These Guidelines apply to securities of publicly traded companies and to those of privately held companies if publicly available disclosure permits such application. All matters for which such disclosure is not available will be considered CASE-BY-CASE.
The Board encourages Investment Professionals to submit a recommendation to the Proxy Group regarding proxy voting related to the portfolio securities over which they have day-to-day portfolio management responsibility. Recommendations from the Investment Professionals may be submitted or requested in connection with any proposal and are likely to be requested with respect to proxies for private equity or fixed income securities and/or proposals related to merger transactions/corporate restructurings, proxy contests, or unusual or controversial issues.
These policies may be overridden in any case as provided for in the Procedures. Similarly, the Procedures provide that proposals whose Guidelines prescribe a firm voting position may instead be considered on a CASE-BY-CASE basis when unusual or controversial circumstances so dictate.
Interpretation and application of these Guidelines is not intended to supersede any law, regulation, binding agreement, or other legal requirement to which an issuer may be or become subject. No proposal will be supported whose implementation would contravene such requirements.
General Policies
The Funds' policy is generally to support the recommendation of the relevant company's management when the Proxy Advisory Firm's recommendation also aligns with such recommendation and to vote in accordance with the Proxy Advisory Firm's recommendation when management has made no recommendation. However, this policy will not apply to CASE-BY-CASE proposals for which a contrary recommendation from the relevant Investment Professional(s) is being utilized.
The rationale and vote recommendation from Investment Professionals will be given primary consideration with respect to CASE-BY-CASE proposals being considered on behalf of the relevant Fund.
The Fund's policy is to not support proposals that would negatively impact the existing rights of the Funds' beneficial owners. Depending on the relevant market, appropriate opposition may be expressed as an ABSTAIN, AGAINST, or WITHHOLD vote.
Consider on a CASE-BY-CASE basis competing shareholder and board proposals that appear on the same agenda at uncontested proxies.
International Policies
Companies incorporated outside the U.S. are subject to the foregoing U.S. Guidelines if they are listed on a U.S. exchange and treated as a U.S. domestic issuer by the SEC. Where applicable, certain U.S. guidelines may also be applied to companies incorporated outside the U.S., e.g., companies with a significant base of U.S. operations and employees.
However, given the differing regulatory and legal requirements, market practices, and political and economic systems existing in various international markets, the Funds will:
∙Vote AGAINST international proxy proposals when the Proxy Advisory Firm recommends voting AGAINST such proposal because relevant disclosure by the company, or the time provided for consideration of such disclosure, is inadequate;
Page | 10
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
∙Consider proposals that are associated with a firm AGAINST vote on a CASE-BY-CASE basis if the Proxy Advisory Firm recommends their support when:
∙The company or market transitions to better practices (e.g., having committed to new regulations or governance codes);
∙The market standard is stricter than the Fund's guidelines; or
∙It is the more favorable choice when shareholders must choose between alternate proposals.
Proposal Specific Policies
As mentioned above, these policies may be overridden in any case as provided for in the Procedures. Similarly, the Procedures provide that proposals whose Guidelines prescribe a firm voting position may instead be considered on a CASE-BY-CASE basis when unusual or controversial circumstances so dictate.
Proxy Contests:
Consider votes in contested elections on a CASE-BY-CASE basis, with primary consideration given to input from the relevant Investment Professional(s).
Uncontested Proxies:
1- The Board of Directors
Overview
The Funds may lodge disagreement with a company's policies or practices by withholding support from the relevant proposal rather than from the director nominee(s) to which the Proxy Advisory Firm assigns a correlation.
In cases where the lodging of disagreement by the Funds is assigned to the board of directors, support will be withheld from the director(s) deemed responsible. Responsibility may be attributed to the entire board, a committee, or an individual, and the Funds will apply a vote accountability guideline ("Vote Accountability Guideline") specific to the concerns under review. For example:
∙Relevant committee chair
∙Relevant committee member(s)
∙Board chair.
If director(s) to whom responsibility has been attributed is not standing for election (e.g., the board is classified), support will typically not be withheld from other directors in their stead. Additionally, the Funds will typically vote FOR a director in connection with issues raised by the Proxy Advisory Firm if the director did not serve on the board or relevant committee during the majority of the time period relevant to the concerns cited by the Proxy Advisory Firm.
Vote with the Proxy Advisory Firm's recommendation when more candidates are presented than available seats and no other provisions under these Guidelines apply.
In cases where a director holds more than one board seat and corresponding votes, manifested as one seat as a physical person plus an additional seat as a representative of a legal entity, generally vote with the Proxy Advisory Firm's recommendation to withhold support from the legal entity and vote on the physical person.
Bundled Director Slates
WITHHOLD support from directors or slates of directors when they are presented in a manner not aligned with market best practice and/or regulation, irrespective of complying with independence requirements, such as:
∙Bundled slates of directors (e.g., Canada, France, Hong Kong, or Spain);
∙In markets with term lengths capped by regulation or market practice, directors whose terms exceed the caps or are not disclosed; or
∙Directors whose names are not disclosed in advance of the meeting or far enough in advance relative to voting deadlines to make an informed voting decision.
Page | 11
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
For companies with multiple slates in Italy, follow the Proxy Advisory Firm's standards for assessing which slate is best suited to represent shareholder interests.
Independence
Director and Board/Committee Independence
The Funds will consider the relevant country or market listing exchange and the Proxy Advisory Firm's standards with respect to determining director independence and Board/Committee independence levels. Note: Non-voting directors (e.g., director emeritus or advisory director) shall be excluded from calculations with respect to board independence.
The Funds will consider non-independent directors standing for election on a CASE-BY-CASE basis when the full board or committee does not meet the market independence requirements.
∙WITHHOLD support from the non-independent nominating committee chair or non-independent board chair, and if necessary, fewest non-independent directors including the Founder, Chairman or CEO if their removal would achieve the independence requirements across the remaining board or key committee, except that support may be withheld from additional directors whose relative level of independence cannot be differentiated, or the number required to achieve the independence requirements is equal to or greater than the number of non-independent directors standing for election.
∙WITHHOLD support from slates of directors if the board's independence cannot be ascertained due to inadequate disclosure or when the board's independence does not meet the applicable independence requirements of the relevant country or market listing exchange.
∙WITHHOLD support from key committee slates if they contain non-independent directors in the election, unless the composition is acceptable under the relevant country or market listing exchange requirements.
∙WITHHOLD support from non-independent nominating committee chair, board chair, and/or directors if the full board serves as a key committee, or the board has not established the committee, and relevant country or market listing exchange requires such establishment.
Self-Nominated/Shareholder-Nominated Director Candidates
Consider self-nominated or shareholder-nominated director candidates on a CASE-BY-CASE basis. WITHHOLD support from the candidate when:
∙Adequate disclosure has not been provided (e.g., rationale for candidacy and candidate's qualifications relative to the company);
∙The candidate's agenda is not in line with the long-term best interests of the company; or
∙Multiple self-nominated candidates are being considered as a proxy contest if similar issues are raised (e.g., potential change in control).
Management Proposals Seeking Non-Board Member Service on Key Committees
Vote AGAINST proposals that permit non-board members to serve on the audit, remuneration (compensation), nominating and/or governance committee, provided that bundled slates may be supported if no slate nominee serves on the relevant committee(s) except where best market practice otherwise dictates.
Consider other concerns regarding committee members on a CASE-BY-CASE basis.
Shareholder Proposals Regarding Board/Key Committee Independence
Vote AGAINST shareholder proposals asking that the independence be greater than that required by the country or market listing exchange, or asking to redefine director independence.
Page | 12
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Board Member Roles and Responsibilities
Attendance
WITHHOLD support from a director who, during both of the most recent two years, has served on the board during the two-year period but attended less than 75 percent of the board and committee meetings without a valid reason for the absences or if the two-year attendance record cannot be ascertained from available disclosure (e.g., the company did not disclose which director(s) attended less than 75 percent of the board and committee meetings during the director's period of service without a valid reason for the absences).
The two-year attendance policy shall be applied to attendance of statutory auditors at Japanese companies.
Over-boarding
Consider on a CASE-BY-CASE basis CEOs who sit on more than two public boards in addition to their own.
Vote FOR non-executive directors without regard to "over-boarding" issues, unless when in conjunction with attendance issues during the most recent year. Consider such circumstances on a CASE-BY-CASE basis.
Vote AGAINST shareholder proposals limiting the number of public company boards on which a director may serve.
Combined Chairman / CEO Role
Vote FOR directors without regard to recommendations that the position of chairman should be separate from that of CEO, or should otherwise require to be independent, unless other concerns requiring CASE- BY-CASE consideration are raised (e.g., former CEOs proposed as board chairmen in markets, such as the United Kingdom, for which best practice recommends against such practice).
Vote AGAINST shareholder proposals requiring that the positions of chairman and CEO be held separately, unless significant corporate governance concerns have been cited. Consider such circumstances on a CASE-BY-CASE basis.
Cumulative/Net Voting Markets (e.g., Russia)
When cumulative or net voting applies, generally follow the Proxy Advisory Firm's approach to vote FOR nominees, such as when asserted by the issuer to be independent, irrespective of key committee membership, even if independence disclosure or criteria fall short of the Proxy Advisory Firm's standards.
Board Accountability
Diversity (excluding Japan)
Consider directors on a CASE-BY-CASE basis according to the Vote Accountability Guideline if there is an absence of diversity on the board or the company fails to disclose an adequate diversity policy or practice.
Consider shareholder proposals on a CASE-BY-CASE basis that request the company to improve / promote diversity and/or diversity-related disclosure.
Return on Equity
Vote FOR the top executive at companies in Japan if the only reason the Proxy Advisory Firm's Withhold recommendation is due to the company underperforming in terms of capital efficiency or company performance; e.g. net losses or low return on equity (ROE).
Compensation Practices
Support may be withheld from compensation committee appear to support compensation practices aligned with shareholders.
members whose actions or disclosure do not the best interests of the company and its
Where applicable, votes on compensation committee members in connection with compensation practices should be considered on a CASE-BY-CASE basis:
∙Say on Pay responsiveness. Compensation committee members may be opposed for failure to sufficiently address compensation concerns prompting significant opposition to the most recent say on pay vote or continuing to maintain problematic pay practices will be considered on a CASE-BY-CASE basis, factoring in considerations such as level of shareholder opposition, subsequent actions taken by
Page | 13
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
the compensation committee, and level of responsiveness disclosure.
∙Say on Pay frequency. WITHHOLD support according to the Vote Accountability Guideline if the Proxy Advisory Firm opposes directors because the company has failed to include a Say on Pay proposal and/or a Frequency of Say on Pay proposal when required under SEC or market regulatory provisions; or implemented a say on pay schedule that is less frequent than the frequency most recently preferred by at least a plurality of shareholders; or is an externally-managed issuer (EMI) or externally-managed REIT (EMR) and has failed to include a Say on Pay proposal or adequate disclosure of the compensation structure.
∙Commitments. Vote FOR compensation committee members receiving an adverse recommendation by the Proxy Advisory Firm due to problematic pay practices or thresholds (e.g. burn rate) if the company makes a public commitment (e.g., via a Form 8-K filing) to rectify the practice on a going- forward basis. However, consider on a CASE-BY-CASE basis if the company does not rectify the practice by the following year's annual general meeting.
For all other markets in which the issuer has not followed market practice by submitting a resolution on executive compensation, consider remuneration committee members on a CASE-BY-CASE basis.
Accounting Practices
Consider audit committee members and the company's CEO and CFO, if nominated as directors, on a CASE-BY-CASE basis if poor accounting practice concerns are raised, factoring in considerations such as if the:
∙Audit committee failed to remediate known on-going material weaknesses in the company's internal controls for more than a year.
∙Company has not yet had a full year to remediate the concerns since the time they were identified.
∙Company has taken adequate steps to remediate the concerns cited, which would typically include removing or replacing the responsible executives, and if the concerns are not re-occurring.
Vote FOR audit committee members, or the company's CEO or CFO if nominated as directors, who did not serve on the committee or did not have responsibility over the relevant financial function, during the majority of the time period relevant to the concerns cited.
WITHHOLD support on audit committee members according to the Vote Accountability Guideline if the company has failed to disclose auditors' fees and has not provided an auditor ratification or remuneration proposal for shareholder vote.
Problematic Actions
Consider directors on a CASE-BY-CASE basis when the Proxy Advisory Firm cites them for problematic actions including a lack of due diligence in relation to a major transaction (e.g. a merger or an acquisition), material failures, lack of risk oversight, scandals, malfeasance, or negligent internal controls at the company or that of an affiliate, factoring in the merits of the director's performance, rationale, and disclosure when:
∙Culpability can be attributed to the director (e.g., director manages or is responsible for the relevant function); or
∙The director has been directly implicated, resulting in arrest, criminal charge, or regulatory sanction.
Vote FOR directors when the above factors are not present.
Vote FOR a director if the Proxy Advisory Firm cites concerns regarding actions in connection with a director's service on an unaffiliated board and the company has provided adequate rationale regarding the appropriateness of the director to serve on the board under consideration.
Consider on a CASE-BY-CASE basis when the Proxy Advisory Firm recommends withholding support from any director due to share pledging concerns, factoring in the pledged amount, unwind time, and any historical concerns being raised. Responsibility will be assigned to the pledgor, where the pledged amount and unwind time are deemed significant and, therefore, an unnecessary risk to the company.
WITHHOLD support from (a) all members of the governance committee, or nominating committee if a formal governance committee has not been established, and (b) directors holding shares with superior voting rights if the company is controlled by means of a dual class share with superior / exclusive voting rights and does not have a reasonable sunset provision; i.e., fewer than five years.
Page | 14
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Consider on a CASE-BY-CASE basis all directors if no governance or nominating committee directors are under consideration or if the company does not have governance or nominating committees. Investment Professionals that have day-to-day portfolio management responsibility for such companies may be requested to submit a recommendation to the Proxy Coordinator.
WITHHOLD support from directors according to the Vote Accountability Guideline when the Proxy Advisory Firm recommends withholding support due to the board (a) unilaterally adopting by-law amendments that have a negative impact on existing shareholder rights or functions as a diminution of shareholder rights, and which are not specifically addressed under the Guidelines, or (b) failing to remove or subject to a reasonable sunset provision such by-laws.
Anti-Takeover Measures
WITHHOLD support according to the Vote Accountability Guideline if the company implements excessive anti-takeover measures.
WITHHOLD support according to the Vote Accountability Guideline if the company fails to remove restrictive poison pill features, ensure a pill's expiration, or submit the poison pill in a timely manner to shareholders for vote, unless a company has implemented a policy that should reasonably prevent abusive use of its poison pill.
Board Responsiveness
Vote FOR if the majority-supported shareholder proposal has been reasonably addressed or the Funds' Guidelines or voting record did not support the relevant proposal or issue.
oProposals seeking shareholder ratification of a poison pill may be deemed reasonably addressed if the company has implemented a policy that should reasonably prevent abusive use of the pill.
WITHHOLD support according to the Vote Accountability Guideline if the majority-supported shareholder proposal at issue is supported under these Guidelines and the board has not disclosed a credible rationale for not implementing the proposal.
If the board has not acted upon a director who did not receive shareholder support representing a majority of the votes cast at the previous annual meeting, consider directors on a CASE-BY-CASE basis.
Vote FOR when:
∙The issue relevant to the majority negative vote has been adequately addressed or cured, which may include disclosure of the board's rationale; or
∙The Funds' Guidelines or voting record do not support the relevant proposal or issue causing the majority negative vote.
WITHHOLD support according to the Vote Accountability Guideline if the above provisions have not been satisfied.
Board–Related Proposals
Classified/Declassified Board Structure
Vote AGAINST proposals to classify the board unless the proposal represents an increased frequency of a director's election in the staggered cycle (e.g., seeking to move from a three-year cycle to a two-year cycle).
Vote FOR proposals to repeal classified boards and to elect all directors annually.
Board Structure
Vote FOR management proposals to adopt or amend board structures or policies, except consider such proposals on a CASE-BY-CASE basis if the board does not meet the country or market listing exchange independence requirements, corporate governance concerns have been identified, or the proposal may result in a material reduction in shareholders' rights.
For companies in Japan, generally follow the Proxy Advisory Firm's approach to proposals seeking a board structure that would provide greater independence oversight of management and the board.
Board Size
Page | 15
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Vote FOR proposals seeking a board range if the range is reasonable in the context of market practice and anti-takeover considerations; however, vote AGAINST if seeking to remove shareholder approval rights or the board fails to meet market independence requirements.
Director and Officer Indemnification and Liability Protection
Consider on a CASE-BY-CASE basis proposals on director and officer indemnification and liability protection, using Delaware law as the standard.
Vote AGAINST proposals to limit or eliminate entirely directors' and officers' liability in connection with monetary damages for violating the duty of care.
Vote AGAINST indemnification proposals that would expand coverage beyond legal expenses to acts that are more serious violations of fiduciary obligation, such as negligence.
Director and Officer Indemnification and Liability Protection
Vote in accordance with the Proxy Advisory Firm's standards (e.g. overly broad provisions).
Discharge of Management/Supervisory Board Members
Vote FOR management proposals seeking the discharge of management and supervisory board members (including when the proposal is bundled), unless concerns are raised about the past actions of the company's auditors or directors, or legal or regulatory action is being taken against the board by other shareholders.
Vote FOR such proposals in connection with remuneration practices otherwise supported under these Guidelines or as a means of expressing disapproval of broader practices of the company or its board.
Establish Board Committee
Vote FOR shareholder proposals that seek creation of a key committee of the board, unless the company claims an exemption of the listing exchange or the committee is not required under the listing exchange.
Vote AGAINST shareholder proposals requesting creation of additional board committees or offices, except as otherwise provided for herein.
Filling Board Vacancies / Removal of Directors
Vote AGAINST proposals that allow directors to be removed only for cause.
Vote FOR proposals to restore shareholder ability to remove directors with or without cause.
Vote AGAINST proposals that allow only continuing directors to elect replacements to fill board vacancies. Vote FOR proposals that permit shareholders to elect directors to fill board vacancies.
Stock Ownership Requirements
Vote AGAINST such shareholder proposals.
Term Limits / Retirement Age
Vote FOR management proposals and AGAINST shareholder proposals limiting the tenure of outside directors or imposing a mandatory retirement age for outside directors, unless the proposal seeks to relax existing standards.
2- Compensation
Frequency of Advisory Votes on Executive Compensation
Vote FOR proposals seeking an annual say on pay, and AGAINST those seeking less frequent.
Proposals to Provide an Advisory Vote on Executive Compensation (Canada)
Vote FOR if it is an ANNUAL vote, unless the company already provides shareholders with an annual vote.
Executive Pay Evaluation
Advisory Votes on Executive Compensation (Say on Pay) and Remuneration Reports or Committee Members in Absence of Such Proposals
Vote FOR management proposals seeking ratification of the company's executive compensation structure, unless the program includes practices or features not supported under these Guidelines and the proposal
Page | 16
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
receives a negative recommendation from the Proxy Advisory Firm.
Listed below are examples of compensation practices and provisions, and respective consideration and treatment under the Guidelines, factoring in whether the company has provided reasonable rationale/disclosure for such factors or the proposal as a whole.
Consider on a CASE-BY-CASE basis:
∙Short-Term Investment Plans where the board has exercised discretion to exclude extraordinary items.
∙Retesting in connection with achievement of performance hurdles.
∙Long-Term Incentive Plans where executives already hold significant equity positions.
∙Long-Term Incentive Plans where the vesting or performance period is too short or stringency of the performance criteria is called into question.
∙Pay Practices (or combination of practices) that appear to have created a misalignment between CEO pay and performance with regard to shareholder value.
∙Long-Term Incentive Plans that lack an appropriate equity component (e.g., "cash-based only").
∙Excessive levels of discretionary bonuses, recruitment awards, retention awards, non-compete payments, severance/termination payments, perquisites (unreasonable levels in context of total compensation or purpose of the incentive awards or payouts).
Vote AGAINST:
∙Provisions that permit or give the Board sole discretion for repricing, replacement, buy back, exchange, or any other form of alternative options. (Note: cancellation of options would not be considered an exchange unless the cancelled options were re-granted or expressly returned to the plan reserve for reissuance.)
∙Single Trigger Severance Provisions in new or materially amended plans, contracts, or payments that do not require an actual change in control in order to be triggered.
∙Plans that allow named executive officers to have material input into setting their pay.
∙Short-Term Incentive Plans where treatment of payout factors has been inconsistent (e.g., exclusion of losses but not gains).
∙Company plans in international markets that provide for contract or notice periods or severance/termination payments that exceed market practices, e.g., relative to multiple of annual compensation.
∙Compensation structures at externally-managed issuers (EMI) or externally-managed REITs (EMR) that lack adequate disclosure, based on the Proxy Advisory Firm's assessment.
Vote ABSTAIN:
∙Legacy single trigger severance provisions in plans, contracts, or payments that do not require an actual change in control in order to be triggered, unless such provisions were previously opposed by a Fund.
Golden Parachutes
Vote to ABSTAIN on golden parachutes if it is determined that the Funds would not have an economic interest, such as the case in an all-cash transaction, regardless of payout terms, amounts, thresholds, etc.
However, if an economic interest exists, vote AGAINST due to single or modified-single trigger severance provisions; otherwise consider on a CASE-BY-CASE basis taking into account if any of the following factors exist:
∙Total NEO payout as a percentage of the total equity value.
∙Aggregate of all single-triggered components (cash and equity) as a percentage of the total NEO payout.
∙Excessive payout.
∙Recent material amendments or new agreements that incorporate problematic features.
∙CEO/NEO remains employed by merged/acquired company.
Equity-Based and Other Incentive Plans Including OBRA
Equity Compensation
Consider on a CASE-BY-CASE basis compensation and employee benefit plans, including those in connection with OBRA, or the issuance of shares in connection with such plans. Vote the plan or issuance
Page | 17
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
based on factors and related vote treatment under the Executive Pay Evaluation section above or based on circumstances specific to such equity plans as follows:
Vote FOR the plan, if:
∙Board independence is the only concern.
∙Amendment places a cap on annual grants.
∙Amendment adopts or changes administrative features to comply with Section 162(m) of OBRA.
∙Amendment adds performance-based goals to comply with Section 162(m) of OBRA.
∙Cash or cash-and-stock bonus components are being approved for exemption from taxes under Section 162(m) of OBRA.
o Give primary consideration to management's assessment that such plan meets the requirements for exemption of performance-based compensation.
Vote AGAINST if the plan:
∙Exceeds recommended costs (U.S. or Canada).
∙Incorporates share allocation disclosure methods that prevent a cost or dilution assessment.
∙Exceeds recommended burn rates and/or dilution limits, including cases in which dilution cannot be fully assessed (e.g., due to inadequate disclosure).
∙Allows deep or near-term discounts (or the equivalent, such as dividend equivalents on unexercised options) to executives or directors.
∙Provides for retirement benefits or equity incentive awards to outside directors if not in line with market practice.
∙Allows financial assistance to executives, directors, subsidiaries, affiliates, or related parties that is not in line with market practice.
∙Allows plan administrators to benefit from the plan as potential recipients.
∙Allows for an overly liberal change in control definition. (This refers to plans that would reward recipients even if the event does not result in an actual change in control or results in a change in control but does not terminate the employment relationship.)
∙Allows for post-employment vesting or exercise of options if deemed inappropriate.
∙Allows plan administrators to make material amendments without shareholder approval.
∙Allows procedure amendments that do not preserve shareholder approval rights.
Amendment Procedures for Equity Compensation Plans and Employee Stock Purchase Plans (ESPPs) (Toronto Stock Exchange Issuers)
Vote AGAINST if the amendment procedures do not preserve shareholder approval rights.
Stock Option Plans for Independent Internal Statutory Auditors (Japan)
Vote AGAINST.
Matching Share Plans
Vote AGAINST if the matching share plan does not meet recommended standards, considering holding period, discounts, dilution, participation, purchase price, or performance criteria.
Employee Stock Purchase Plans or Capital Issuance in Support Thereof
Voting decisions are generally based on the Proxy Advisory Firm's approach to evaluating such proposals.
Director Compensation
Non-Executive Director Compensation
Vote FOR cash-based proposals.
Consider on a CASE-BY-CASE basis equity-based proposals and patterns of excessive pay.
Bonus Payments (Japan)
Vote FOR if all payments are for directors or auditors who have served as executives of the company, and AGAINST if any payments are for outsiders.
Bonus Payments – Scandals
Vote AGAINST bonus proposals for a retiring director or continuing director or auditor when culpability can
Page | 18
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
be attributed to the nominee.
Consider on a CASE-BY-CASE basis bundled bonus proposals for retiring directors or continuing directors or auditors when culpability cannot be attributed to all nominees.
Severance Agreements
Vesting of Equity Awards upon Change in Control
Vote FOR management proposals seeking a specific treatment (e.g., double trigger or pro-rata) of equity that vests upon change in control, unless evidence exists of abuse in historical compensation practices.
Vote AGAINST shareholder proposals regarding the treatment of equity if:
∙The change in control cash severance provisions are double-triggered; and
∙The company has provided a reasonable rationale regarding the treatment of equity.
Executive Severance or Termination Arrangements, including those Related to Executive Recruitment or Retention
Vote FOR such compensation arrangements if:
∙The primary concerns raised would not result in a negative vote, under these Guidelines, on a management say on pay proposal, or the relevant board or committee member(s);
∙The company has provided adequate rationale and/or disclosure; or
∙Support is recommended as a condition to a major transaction such as a merger.
Treatment of Cash Severance Provisions
Vote AGAINST new or materially amended plans, contracts, or payments that include single trigger change in control cash severance provisions or do not require an actual change in control in order to be triggered.
Vote FOR shareholder proposals seeking double triggers on change in control cash severance provisions.
Compensation-Related Shareholder Proposals
Executive and Director Compensation
Vote AGAINST shareholder proposals that seek to impose new compensation structures or policies; however, consider on a CASE-BY-CASE basis if evidence exists of abuse in historical compensation practices.
Holding Periods
Vote AGAINST shareholder proposals requiring mandatory periods for officers and directors to hold company stock.
Submit Severance and Termination Payments for Shareholder Ratification
Vote FOR shareholder proposals to submit executive severance agreements for shareholder ratification, if such proposals specify change in control events, supplemental executive retirement plans, or deferred executive compensation plans, or if ratification is required by the listing exchange.
3- Audit-Related
Auditor Ratification and/or Remuneration
Vote FOR management proposals except in such cases as indicated below.
Consider on a CASE-BY-CASE basis if:
∙The Proxy Advisory Firm raises questions of disclosure or auditor independence; or
∙Total fees for non-audit services exceed 50 percent of the total auditor fees (including audit-related fees, and tax compliance and preparation fees if applicable).
∙There is evidence of excessive compensation relative to the size and nature of the company.
Vote AGAINST if the company has failed to disclose auditors' fees.
Vote FOR shareholder proposals asking the company to present its auditor annually for ratification.
Auditor Independence
Consider on a CASE-BY-CASE basis shareholder proposals asking companies to prohibit their auditors from engaging in non-audit services (or capping the level of non-audit services).
Page | 19
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Audit Firm Rotation
Vote AGAINST shareholder proposals asking for mandatory audit firm rotation.
Indemnification of Auditors
Vote AGAINST the indemnification of auditors.
Independent Statutory Auditors (Japan)
Vote AGAINST if the candidate is or was affiliated with the company, its main bank, or one of its top shareholders.
Vote AGAINST incumbent directors at companies implicated in scandals or exhibiting poor internal controls.
Vote FOR remuneration as long as the amount is not excessive (e.g., significant increases should be supported by adequate rationale and disclosure), there is no evidence of abuse, the recipient's overall compensation appears reasonable, and the board and/or responsible committee meet exchange or market standards for independence.
4- Shareholder Rights and Defenses
Advance Notice for Shareholder Proposals
Vote FOR management proposals related to advance notice period requirements, provided that the period requested is in accordance with applicable law and no material governance concerns have been identified in connection with the company.
Corporate Documents / Article and Bylaw Amendments or Related Director Actions Vote FOR if the change or policy is editorial in nature or if shareholder rights are protected.
Vote AGAINST if it seeks to impose a negative impact on shareholder rights or diminishes accountability to shareholders, including where the company failed to opt out of a law that affects shareholder rights (e.g., staggered board).
With respect to article amendments for Japanese companies:
∙Vote FOR management proposals to amend a company's articles to expand its business lines in line with its current industry.
∙Vote FOR management proposals to amend a company's articles to provide for an expansion or reduction in the size of the board, unless the expansion/reduction is clearly disproportionate to the growth/decrease in the scale of the business or raises anti-takeover concerns.
∙If anti-takeover concerns exist, vote AGAINST management proposals, including bundled proposals, to amend a company's articles to authorize the Board to vary the annual meeting record date or to otherwise align them with provisions of a takeover defense.
∙Follow the Proxy Advisory Firm's guidelines with respect to management proposals regarding amendments to authorize share repurchases at the board's discretion, voting AGAINST proposals unless there is little to no likelihood of a creeping takeover or constraints on liquidity (free float of shares is low), and where the company is trading at below book value or is facing a real likelihood of substantial share sales; or where this amendment is bundled with other amendments which are clearly in shareholders' interest.
Majority Voting Standard
Vote FOR proposals seeking election of directors by the affirmative vote of the majority of votes cast in connection with a meeting of shareholders, provided they contain a plurality carve-out for contested elections, and provided such standard does not conflict with applicable law in the country in which the company is incorporated.
Vote FOR amendments to corporate documents or other actions promoting a majority standard.
Cumulative Voting
Vote FOR shareholder proposals to restore or permit cumulative voting.
Vote AGAINST management proposals to eliminate cumulative voting if the company:
∙Is controlled;
∙Maintains a classified board of directors; or
Page | 20
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
∙Maintains a dual class voting structure.
Proposals may be supported irrespective of classified board status if a company plans to declassify its board or adopt a majority voting standard.
Confidential Voting
Vote FOR management proposals to adopt confidential voting.
Vote FOR shareholder proposals that request companies to adopt confidential voting, use independent tabulators, and use independent inspectors of election as long as the proposals include clauses for proxy contests as follows:
∙In the case of a contested election, management should be permitted to request that the dissident group honors its confidential voting policy.
∙If the dissidents agree, the policy remains in place.
∙If the dissidents do not agree, the confidential voting policy is waived.
Fair Price Provisions
Consider proposals to adopt fair price provisions on a CASE-BY-CASE basis.
Vote AGAINST fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.
Poison Pills
Vote AGAINST management proposals in connection with poison pills or anti-takeover activities (e.g., disclosure requirements or issuances, transfers, or repurchases) that can be reasonably construed as an anti-takeover measure, based on the Proxy Advisory Firm's approach to evaluating such proposals.
DO NOT VOTE AGAINST director remuneration in connection with poison pill considerations.
Vote FOR shareholder proposals that ask a company to submit its poison pill for shareholder ratification, or to redeem its pill in lieu thereof, unless:
∙Shareholders have approved adoption of the plan;
∙A policy has already been implemented by the company that should reasonably prevent abusive use of the pill; or
∙The board had determined that it was in the best interest of shareholders to adopt a pill without delay, provided that such plan would be put to shareholder vote within twelve months of adoption or expire, and if not approved by a majority of the votes cast, would immediately terminate.
Consider on a CASE-BY-CASE basis shareholder proposals to redeem a company's poison pill.
Proxy Access
Vote FOR proposals to allow shareholders to nominate directors and have those nominees listed in the company's proxy statement and on the company's proxy card, provided that the criteria meet the Funds' internal thresholds, provided such standard does not conflict with applicable law in the country in which the company is incorporated. However, consider on a CASE-BY-CASE basis shareholder and management proposals that appear on the same agenda.
Vote FOR management proposals also supported by the Proxy Advisory Firm.
Quorum Requirements
Consider on a CASE-BY-CASE basis proposals to lower quorum requirements for shareholder meetings below a majority of the shares outstanding.
Exclusive Forum
Vote FOR management proposals to designate Delaware or New York as the exclusive forum for certain legal actions as defined by the company ("Exclusive Forum") if the company's state of incorporation is the same as its proposed Exclusive Forum, otherwise consider on a CASE-BY-CASE basis.
Reincorporation Proposals
Consider proposals to change a company's state of incorporation on a CASE-BY-CASE basis. Vote FOR management proposals not assessed as:
Page | 21
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
∙A potential takeover defense; or
∙A significant reduction of minority shareholder rights that outweigh the aggregate positive impact, but if so assessed, weighing management's rationale for the change.
Vote FOR management reincorporation proposals upon which another key proposal, such as a merger transaction, is contingent if the other key proposal is also supported.
Vote AGAINST shareholder reincorporation proposals not also supported by the company.
Shareholder Advisory Committees
Consider on a CASE-BY-CASE basis proposals to establish a shareholder advisory committee.
Right to Call Special Meetings
Consider management proposals to permit shareholders to call special meetings on a CASE-BY-CASE basis.
Vote FOR shareholder proposals that provide shareholders with the ability to call special meetings when any of the following applies:
∙Company does not currently permit shareholders to do so;
∙Existing ownership threshold is greater than 25 percent; or
∙Sole concern relates to a net-long position requirement.
Written Consent
Vote AGAINST shareholder proposals seeking the right to act by written consent if the company:
∙Permits shareholders to call special meetings;
∙Does not impose supermajority vote requirements on business combinations/actions (e.g., a merger or acquisition) and on bylaw or charter amendments; and
∙Has otherwise demonstrated its accountability to shareholders (e.g., the company has reasonably addressed majority-supported shareholder proposals).
Consider management proposals to eliminate the right to act by written consent on a CASE-BY-CASE basis, voting FOR if the above conditions are present.
Vote FOR shareholder proposals seeking the right to act by written consent if the above conditions are not present.
State Takeover Statutes
Consider on a CASE-BY-CASE basis proposals to opt-in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freeze-out provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, anti-greenmail provisions, and disgorgement provisions).
Supermajority Shareholder Vote Requirement
Vote AGAINST proposals to require a supermajority shareholder vote and FOR proposals to lower supermajority shareholder vote requirements; except,
Consider on a CASE-BY-CASE basis if the company has shareholder(s) with significant ownership levels and the retention of existing supermajority requirements would protect minority shareholder interests.
Time-Phased Voting
Vote AGAINST proposals to implement, and FOR proposals to eliminate, time-phased or other forms of voting that do not promote a one share, one vote standard.
5- Capital and Restructuring
Consider management proposals to make changes to the capital structure not otherwise addressed under these Guidelines on a CASE-BY-CASE basis, voting with the Proxy Advisory Firm's recommendation, unless a contrary recommendation from the relevant Investment Professional(s) is utilized.
Vote AGAINST proposals authorizing excessive discretion to a board.
Capital
Page | 22
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Common Stock Authorization
Consider proposals to increase the number of shares of common stock authorized for issuance on a CASE- BY-CASE basis. The Proxy Advisory Firm's proprietary approach of determining appropriate thresholds will be utilized in evaluating such proposals. In cases where the requests are above the allowable threshold, a company-specific qualitative review (e.g., considering rationale and prudent historical usage) will be utilized.
Vote FOR proposals within the Proxy Advisory Firm's allowable thresholds, or those in excess but meeting Proxy Advisory Firm's qualitative standards, to authorize capital increases, unless the company states that the stock may be used as a takeover defense.
Vote FOR proposals to authorize capital increases exceeding the Proxy Advisory Firm's thresholds when a company's shares are in danger of being delisted.
Notwithstanding the above, vote AGAINST:
∙Proposals to increase the number of authorized shares of a class of stock if the issuance which the increase is intended to service is not supported under these Guidelines (e.g., merger or acquisition proposals).
Dual Class Capital Structures
Vote AGAINST:
∙Proposals to create or perpetuate dual class capital structures with unequal voting rights (e.g., exchange offers, conversions, and recapitalizations) unless supported by the Proxy Advisory Firm (e.g., utilize a one share, one vote standard, contains a sunset provision of five years or fewer, to avert bankruptcy or generate non-dilutive financing, or not designed to increase the voting power of an insider or significant shareholder).
∙Proposals to increase the number of authorized shares of the class of stock that has superior voting rights in companies that have dual class capital structures.
Vote FOR proposals to eliminate dual class capital structures.
General Share Issuances / Increases in Authorized Capital
Consider specific issuance requests on a CASE-BY-CASE basis based on the proposed use and the company's rationale.
Voting decisions to determine support for requests for general issuances (with or without preemptive rights), authorized capital increases, convertible bonds issuances, warrants issuances, or related requests to repurchase and reissue shares, will be based on the Proxy Advisory Firm's assessment.
Preemptive Rights
Consider on a CASE-BY-CASE basis shareholder proposals that seek preemptive rights or management proposals that seek to eliminate them. In evaluating proposals on preemptive rights, consider the size of a company and the characteristics of its shareholder base.
Adjustments to Par Value of Common Stock
Vote FOR management proposals to reduce the par value of common stock, unless doing so raises other concerns not otherwise supported under these Guidelines.
Preferred Stock
Utilize the Proxy Advisory Firm's approach for evaluating issuances or authorizations of preferred stock, taking into account the Proxy Advisory Firm's support of special circumstances, such as mergers or acquisitions, as well as the following criteria:
Consider on a CASE-BY-CASE basis proposals to increase the number of shares of blank check preferred shares or preferred stock authorized for issuance. This approach incorporates both qualitative and quantitative measures, including a review of:
∙Past performance (e.g., board governance, shareholder returns, and historical share usage); and
∙The current request (e.g., rationale, whether shares are blank check and declawed, and dilutive impact as determined through the Proxy Advisory Firm's model for assessing appropriate thresholds).
Vote AGAINST proposals authorizing the issuance of preferred stock or creation of new classes of
Page | 23
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
preferred stock with unspecified voting, conversion, dividend distribution, and other rights ("blank check" preferred stock).
Vote FOR proposals to issue or create blank check preferred stock in cases when the company expressly states that the stock will not be used as a takeover defense or not utilize a disparate voting rights structure.
Vote AGAINST where the company expressly states that, or fails to disclose whether, the stock may be used as a takeover defense.
Vote FOR proposals to authorize or issue preferred stock in cases where the company specifies the voting, dividend, conversion, and other rights of such stock and the terms of the preferred stock appear reasonable.
Preferred Stock (International)
Voting decisions should generally be based on the Proxy Advisory Firm's approach, including:
∙Vote FOR the creation of a new class of preferred stock or issuances of preferred stock up to 50 percent of issued capital unless the terms of the preferred stock would adversely affect the rights of existing shareholders.
∙Vote FOR the creation/issuance of convertible preferred stock as long as the maximum number of common shares that could be issued upon conversion meets the Proxy Advisory Firm's guidelines on equity issuance requests.
∙Vote AGAINST the creation of:
(1)A new class of preference shares that would carry superior voting rights to the common shares, or
(2)Blank check preferred stock, unless the board states that the authorization will not be used to thwart a takeover bid.
Shareholder Proposals Regarding Blank Check Preferred Stock
Vote FOR shareholder proposals requesting to have shareholder ratification of blank check preferred stock placements, other than those shares issued for the purpose of raising capital or making acquisitions in the normal course of business.
Share Repurchase Programs
Vote FOR management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms, but vote AGAINST plans with terms favoring selected parties.
Vote FOR management proposals to cancel repurchased shares.
Vote AGAINST proposals for share repurchase methods lacking adequate risk mitigation or exceeding appropriate volume or duration parameters for the market.
Consider shareholder proposals seeking share repurchase programs on a CASE-BY-CASE basis, giving primary consideration to input from the relevant Investment Professional(s).
Stock Distributions: Splits and Dividends
Vote FOR management proposals to increase common share authorization for a stock split, provided that the increase in authorized shares falls within the Proxy Advisory Firm's allowable thresholds.
Reverse Stock Splits
Consider on a CASE-BY-CASE basis management proposals to implement a reverse stock split, taking into account management's rationale and/or disclosure if the split constitutes a capital increase effectively exceeding the Proxy Advisory Firm's allowable threshold due to the lack of a proportionate reduction in the number of shares authorized.
Allocation of Income and Dividends
With respect to Japanese and South Korean companies, consider management proposals concerning allocation of income and the distribution of dividends, including adjustments to reserves to make capital available for such purposes, on a CASE-BY-CASE basis, voting with the Proxy Advisory Firm's recommendations to oppose such proposals when:
∙The dividend payout ratio has been consistently below 30 percent without adequate explanation; or
∙The payout is excessive given the company's financial position.
Vote FOR such management proposals by companies in other markets.
Page | 24
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Vote AGAINST proposals where companies are seeking to establish or maintain disparate dividend distributions between stockholders of the same share class (e.g., long-term stockholders receiving a higher dividend ratio ("Loyalty Dividends")).
In any market, in the event multiple proposals regarding dividends are on the same agenda, consider on a CASE-BY-CASE basis.
Stock (Scrip) Dividend Alternatives
Vote FOR most stock (scrip) dividend proposals, but vote AGAINST proposals that do not allow for a cash option unless management demonstrates that the cash option is harmful to shareholder value.
Tracking Stock
Consider the creation of tracking stock on a CASE-BY-CASE basis, giving primary consideration to the input from the relevant Investment Professional(s).
Capitalization of Reserves
Vote FOR proposals to capitalize the company's reserves for bonus issues of shares or to increase the par value of shares, unless concerns not otherwise supported under these Guidelines are raised by the Proxy Advisory Firm.
Debt Instruments and Issuance Requests (International)
Vote AGAINST proposals authorizing excessive discretion to a board to issue or set terms for debt instruments (e.g., commercial paper).
Vote FOR debt issuances for companies when the gearing level (current debt-to-equity ratio) is not excessive as defined by the Proxy Advisory Firm's thresholds.
Vote AGAINST proposals where the issuance of debt will result in an excessive gearing level as defined by the Proxy Advisory Firm's thresholds, or for which inadequate disclosure precludes calculation of the gearing level, unless the Proxy Advisory Firm's approach to evaluating such requests results in support of the proposal.
Acceptance of Deposits (India)
Voting decisions generally are based on the Proxy Advisory Firm's approach to evaluating such proposals.
Debt Restructurings
Consider on a CASE-BY-CASE basis proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan.
Financing Plans
Vote FOR the adoption of financing plans if they are in the best economic interests of shareholders.
Investment of Company Reserves (International)
Consider proposals on a CASE-BY-CASE basis.
Restructuring
Mergers and Acquisitions, Special Purpose Acquisition Corporations (SPACs) and Corporate
Restructurings
Vote FOR a proposal not typically supported under these Guidelines if a key proposal, such as a merger transaction, is contingent upon its support and a vote FOR is recommended by the Proxy Advisory Firm or relevant Investment Professional(s).
Votes will be reviewed on a CASE-BY-CASE basis with voting decisions based on the Proxy Advisory Firm's approach to evaluating such proposals if no input is provided by the relevant Investment Professional(s).
Waiver on Tender-Bid Requirement
Consider proposals on a CASE-BY-CASE basis if seeking a waiver for a major shareholder or concert party from the requirement to make a buyout offer to minority shareholders, voting FOR when little concern of a creeping takeover exists and the company has provided a reasonable rationale for the request.
Related Party Transactions
Page | 25
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Vote FOR approval of such transactions, unless the agreement requests a strategic move outside the company's charter, contains unfavorable or high-risk terms (e.g., deposits without security interest or guaranty), or is deemed likely to have a negative impact on director or related party independence.
6- Environmental, Social, and Governance Issues
Environmental and Social Proposals
Boards of directors and company management are responsible for guiding the corporation in connection with matters that are most often the subject of shareholder proposals on environmental and social issues. Such matters may include:
∙Ensuring that the companies they oversee comply with applicable legal, regulatory, and ethical standards;
∙Managing risk effectively; and
∙Assessing and addressing matters that may have a financial impact on shareholder value.
Vote AGAINST shareholder proposals seeking to:
∙Dictate corporate conduct;
∙Impose excessive costs or restrictions; or
∙Duplicate policies already substantially in place.
Shareholder proposals will be considered CASE-BY-CASE if it appears that the
∙Information requested would be helpful to shareholders, and is not duplicative to existing disclosed policies or practices;
∙Company has been subject to significant controversies, litigation, fines, or has suffered punitive damages, penalties, or reputational risk in connection with the relevant issue; or
∙Issue is material to the company.
Vote FOR shareholder proposals if it appears that:
∙Stewardship has fallen short or disclosure practices / policy development lags that of its peers.
Approval of Donations
Vote FOR proposals if they are for single- or multi-year authorities and prior disclosure of amounts is provided. Otherwise, vote AGAINST such proposals.
7- Routine/Miscellaneous
Routine Management Proposals
Consider proposals on a CASE-BY-CASE basis when the Proxy Advisory Firm recommends voting
AGAINST.
Authority to Call Shareholder Meetings on Less than 21 Days' Notice
For companies in the United Kingdom, consider on a CASE-BY-CASE basis, factoring in whether the company has provided clear disclosure of its compliance with any hurdle conditions for the authority imposed by applicable law and has historically limited its use of such authority to time-sensitive matters.
Approval of Financial Statements and Director and Auditor Reports
Vote AGAINST if there are concerns regarding inadequate disclosure, remuneration arrangements (including severance/termination payments exceeding local standards for multiples of annual compensation), or consulting agreements with non-executive directors.
Consider on a CASE-BY-CASE basis if there are other concerns regarding severance/termination payments.
Vote AGAINST if there is concern about the company's financial accounts and reporting, including related party transactions.
Vote AGAINST board-issued reports receiving a negative recommendation from the Proxy Advisory Firm due to concerns regarding independence of the board or the presence of non-independent directors on the audit committee.
Page | 26
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Vote FOR if the only reason for a negative recommendation by the Proxy Advisory Firm is to express disapproval of broader practices of the company or its board.
Other Business
Vote AGAINST proposals for Other Business.
Adjournment
∙Vote FOR when presented with a primary proposal such as a merger or corporate restructuring that is also supported.
∙Consider other circumstances on a CASE-BY-CASE basis.
Changing Corporate Name
Vote FOR management proposals requesting a change in corporate name.
Multiple Proposals
Multiple proposals of a similar nature presented as options to the course of action favored by management may all be voted FOR, provided that:
∙Support for a single proposal is not operationally required;
∙No one proposal is deemed superior in the interest of the Fund(s); and
∙Each proposal would otherwise be supported under these Guidelines.
Vote AGAINST any proposals that would otherwise be opposed under these Guidelines.
Bundled Proposals
Vote FOR if all of the bundled items are supported by these Guidelines.
Consider on a CASE-BY-CASE basis if one or more items are not supported by these Guidelines and/or the Proxy Advisory Firm deems the negative impact, on balance, to outweigh any positive impact.
Moot Proposals
This instruction is in regard to items for which support has become moot (e.g., a director for whom support has become moot since the time the individual was nominated (e.g., due to death, disqualification, or determination not to accept appointment)); WITHHOLD support if recommended by the Proxy Advisory Firm.
8- Mutual Fund Proxies
Approving New Classes or Series of Shares
Vote FOR the establishment of new classes or series of shares.
Hire and Terminate Sub-Advisors
Vote FOR management proposals that authorize the board to hire and terminate sub-advisors.
Master-Feeder Structure
Vote FOR the establishment of a master-feeder structure.
Establish Director Ownership Requirement
Vote AGAINST shareholder proposals for the establishment of a director ownership requirement. All other matters should be examined on a CASE-BY-CASE basis.
Page | 27
Revision Date: March 18, 2020
Proxy Voting Procedures and Guidelines for the Voya Funds and Advisor
Exhibit 1 – Voting Members of the Proxy Group
Name |
Title or Affiliation |
Kevin M. Gleason |
Senior Vice President and Chief Compliance |
|
Officer of the Voya Family of Funds |
Jason Kadavy |
Vice President, Reporting, Fund Accounting, Voya |
|
Investments, LLC |
Todd Modic |
Senior Vice President, Voya Funds Services, LLC |
|
and Voya Investments, LLC; and Chief Financial |
|
Officer of the Voya Family of Funds |
Maria Anderson |
Vice President, Fund Compliance, Voya Funds |
|
Services, LLC |
Sara Donaldson |
Proxy Coordinator for the Voya Family of Funds |
|
and Vice President, Investment Stewardship, Voya |
|
Funds Services, LLC |
Harley Eisner |
Vice President, Financial Analysis, Voya Funds |
|
Services, LLC |
Andrew Schlueter |
Vice President, Mutual Funds Operations, Voya |
|
Funds Services LLC |
Joanne Osberg, Esq. |
Vice President and Counsel II, Voya Funds |
|
Services, LLC |
Jonathan Nash |
Senior Vice President Risk Management, Voya |
|
Investments, LLC |
Effective as of April 1, 2020 |
|
Page | 28
Revision Date: March 18, 2020
PART C
OTHER INFORMATION
Voya Senior Income Fund
ITEM 25. FINANCIAL STATEMENTS AND EXHIBITS
1.Financial Statements
Contained in Part A: The years ended February 28, 2019, February 28, 2018, February 28, 2017, February 29, 2016, February 28, 2015, February 28, 2014, February 28, 2013, February 29, 2012, February 28, 2011, and February 28, 2010.
Contained in Part B: Financial Statements are incorporated in Part B by reference to Registrant's
February 28, 2019 annual shareholder report (audited) and August 31, 2019 semi-annual shareholder report (unaudited).
2. Exhibits
(A)(i) Agreement and Declaration of Trust dated December 15, 2000 – Filed as an exhibit to the Registrant's Registration Statement under the Investment Company Act of 1940, as amended (the "1940 Act") on Form N-2 (File No. 811-10223), filed on February 2, 2001 and incorporated herein by reference.
(a)Amendment No. 1 dated March 1, 2002 to Agreement and Declaration of Trust – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on April 30, 2004 and incorporated herein by reference.
(b)Amendment No. 2 dated January 31, 2008 to Agreement and Declaration of Trust
–Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (the "1933 Act") on Form N-2 (333-150236) filed on April 14, 2008 and incorporated herein by reference.
(c)Amendment No. 3 dated November 20, 2009 to Agreement and Declaration of Trust – Filed as an exhibit to Post-Effective Amendment No. 4 to the Registrant's Registration Statement on Form N-2 on June 29, 2010 and incorporated herein by reference.
(d)Amendment No. 4 dated May 19, 2011 to Agreement and Declaration of Trust – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 26, 2012 and incorporated herein by reference.
(e)Amendment No. 5 dated January 12, 2017 to Agreement and Declaration of Trust
–Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333- 219011) on June 28, 2017 and incorporated herein by reference.
(f)Amendment No. 6 dated May 8, 2017 to Agreement and Declaration of Trust –
Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333- 219011) on June 28, 2017 and incorporated herein by reference.
(ii)Certificate of Trust of Voya Senior Income Fund dated December 15, 2000 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on April 30, 2004 and incorporated herein by reference.
(a)Certificate of Amendment of Certificate of Trust dated March 26, 2001 – Filed as an exhibit to Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on March 30, 2001 and incorporated herein by reference.
(b)Certificate of Amendment of Certificate of Trust effective March 1, 2002 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on April 30, 2002 and incorporated herein by reference.
(c)Certificate of Amendment of Certificate of Trust effective May 1, 2014 – Filed as an exhibit to Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form N-2 filed on June 24, 2014 and incorporated herein by reference.
(B)Amended and Restated By-Laws of Voya Senior Income Fund approved March 18, 2018
– Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.
(C)Not Applicable.
(D)Not Applicable.
(E)Not Applicable.
(F)Not Applicable.
(G)(i) Amended and Restated Investment Management Agreement, dated November 18, 2014, as amended and restated May 1, 2015, between Voya Senior Income Fund and Voya Investments, LLC – Filed as an exhibit to Post-Effective Amendment No. 4 to the Registrant's Registration Statement on Form N-2 filed on June 29, 2015 and incorporated herein by reference.
(ii)Sub-Advisory Agreement, effective November 18, 2014, between Voya Investments, LLC and Voya Investment Management Co. LLC – Filed as an exhibit to Post-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 filed on April 28, 2015 and incorporated herein by reference.
(H)(i) Underwriting Agreement dated November 18, 2014 as amended and restated July 13, 2017 and further amended and restated December 1, 2017 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.
(I)Not Applicable.
(J)(i) Custodian and Investment Accounting Agreement dated November 1, 2001 between the Registrant and State Street Bank and Trust Company – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on April 30, 2004 and incorporated herein by reference.
(a)First Amendment, dated March 1, 2002, to Custodian and Investment Accounting Agreement – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on April 30, 2004 and incorporated herein by reference.
(b)Second Amendment, dated October 1, 2007, to Custodian and Investment Accounting Agreement – Filed as an exhibit to Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2008 and incorporated herein by reference.
(c)Third Amendment and Exhibit A dated August 2, 2010 to Custodian and Investment Accounting Agreement – Filed as an exhibit to the Registrant's Registration Statement on Form N-2 on June 28, 2011 and incorporated herein by reference.
(K)(i) Third Amended and Restated Shareholder Service Plan for Class A shares effective November 16, 2017 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.
(ii)Third Amended and Restated Service and Distribution Plan for Class C shares effective November 16, 2017 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.
(iii)Amended and Restated Service and Distribution Plan for Class T shares effective November 16, 2017 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.
(iv)Eighth Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3 for Voya Senior Income Fund dated February 1, 2019 – Filed as an exhibit to Post-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 filed on June 26, 2019 and incorporated herein by reference.
(v)Expense Limitation Agreement between Voya Senior Income Fund and Voya Investments, LLC effective January 1, 2016 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.
(a)Amended Schedule A effective June 30, 2017 to the Expense Limitation Agreement between Voya Senior Income Fund and Voya Investments, LLC effective November 18, 2014 – Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the
Securities Act of 1933 (333-219011) on June 28, 2017 and incorporated herein by reference.
(vi)Amended and Restated Credit Agreement dated May 12, 2017 between Voya Senior Income Fund and The Bank of Nova Scotia – Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 28, 2017 and incorporated herein by reference.
(a)Amendment No. 1 dated May 11, 2018 to Amended and Restated Credit Agreement dated May 12, 2017 between Voya Senior Income Fund and The Bank of Nova Scotia –Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.
(vii)Transfer Agency Services Agreement dated February 25, 2009 between BNY Mellon Investment Servicing (US) Inc., formerly, PNC Global Investment Servicing (U.S.) Inc., and Voya Senior Income Fund – Filed as an exhibit to Post-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 filed on June 23, 2009 and incorporated herein by reference.
(a)Amendment, dated May 1, 2019, to the Transfer Agency Services Agreement dated February 25, 2009 – Filed as an exhibit to Post-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 filed on June 26, 2019 and incorporated herein by reference.
(viii)Allocation Agreement – Directors & Officers Liability dated May 24, 2002 – Filed as an exhibit to Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form N-2 filed on June 28, 2004 and incorporated herein by reference.
(a)Amended Schedule A, dated September 12, 2013, with respect to Allocation Agreement – Directors and Officers Liability – Filed as an exhibit to Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form N-2 filed on June 24, 2014 and incorporated herein by reference.
(ix)Allocation Agreement – Fidelity Bond dated May 24, 2002 – Filed as an exhibit to Post- Effective Amendment No. 2 to the Registrant's Registration Statement on Form N-2 filed on June 28, 2004 and incorporated herein by reference.
(a)Amended Schedule A, dated April 2019, with respect to Allocation Agreement Fidelity Bond – Filed as an exhibit to Post-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-2 filed on June 26, 2019 and incorporated herein by reference.
(x)Service Agreement effective February 12, 2018 between State Street Bank and Trust Company and Voya Senior Income Fund – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.
(L)(1) Opinion and Consent of Dechert LLP regarding Registration of additional Class A and Class C Common Shares dated June 29, 2007 – Filed as an exhibit to Post-Effective
Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on June 29, 2005 and incorporated herein by reference.
(2)Opinion of Dechert LLP regarding legality of shares being registered – Class I and Class W Common Shares – Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the 1933 Act on Form N-2 (333-150236) filed on April 14, 2008 and incorporated herein by reference.
(3)Opinion and Consent of Dechert LLP regarding legality of shares being registered – Class A, Class C, and Class W Common Shares – Filed as an exhibit to the Registrant's Registration Statement on Form N-2 on June 28, 2011 and incorporated herein by reference.
(4)Opinion and Consent of Dechert LLP regarding legality of shares being registered – Class W Common Shares – Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 on Form N-2 (333-189639) filed on June 27, 2013 and incorporated herein by reference.
(5)Opinion and Consent of Dechert LLP regarding legality of shares being registered – Class A and Class I Common Shares – Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 on Form N-2 (333-192499) filed on November 22, 2013 and incorporated herein by reference.
(6)Opinion and Consent of Ropes & Gray LLP regarding legality of shares being registered – Class T Common Shares – Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 28, 2017 and incorporated herein by reference.
(M)Not Applicable
(N)(i) Consent of Ropes & Gray LLP – To be filed by sub-sequent Post-Effective Amendment.
(ii)Consent of Ernst & Young LLP – To be filed by sub-sequent Post-Effective Amendment.
(O)Not Applicable
(P)Representation Letter dated March 27, 2001 – Filed as an exhibit to Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-2 filed on March 30, 2001 and incorporated herein by reference.
(Q)Not Applicable
(R)Voya Funds and Advisers Code of Ethics Amended May 1, 2017 – Filed as an exhibit to the Registrant's Registration Statement under the 1940 Act on Form N-2 (File No. 811- 10223) and under the Securities Act of 1933 (333-219011) on June 28, 2017 and incorporated herein by reference.
ITEM 26. MARKETING ARRANGEMENTS
Not Applicable.
ITEM 27. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not Applicable.
ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not Applicable.
ITEM 29. NUMBER OF HOLDERS OF SECURITIES
Class A Common Shares |
[] |
as of May 31, 2020 |
Class C Common Shares |
[] |
as of May 31, 2020 |
Class I Common Shares |
[] |
as of May 31, 2020 |
Class W Common Shares |
[] |
as of May 31, 2020 |
Class T Common Shares |
N/A1 |
as of May 31, 2020 |
-----------------------------------------------------------------------------------------------------
1 The Fund has no shares of Class T Common Shares outstanding as of May 31, 2020
Total |
[] |
as of May 31, 2020 |
ITEM 30. INDEMNIFICATION |
|
|
Section 8.2 of the Agreement and Declaration of Trust provides: The Trustees shall not be responsible or liable in any event for any neglect or wrong-doing of any officer, agent, employee, Manager or Principal Underwriter of the Fund, nor shall any Trustee be responsible for the act or omission of any other Trustee, and the Fund out of its assets shall indemnify, defend and hold harmless each and every Trustee from and against any and all claims and demands whatsoever arising out of or related to each Trustee's performance of his or her duties as a Trustee of the Fund; PROVIDED, HOWEVER, that the Fund shall not indemnify a Trustee against liability caused by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or undertaking, and every other act or thing whatsoever issued, executed or done by or on behalf of the Fund or the Trustees or any of them, in connection with the Fund shall be conclusively deemed to have been issued, executed or done only in or with respect to their or his or her capacity as Trustees or a Trustee, and such Trustees or Trustee shall not be personally liable thereon.
Section 8.3 of the Agreement and Declaration of Trust provides: The exercise by the Trustees of their powers and discretion hereunder shall be binding upon everyone interested. A Trustee shall be liable to the Fund and to any Shareholder solely for his or her own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and shall not be liable for errors of judgment or mistakes of fact or law. In performing their duties, the Trustees may rely on any information, advice, opinion, report or statement (including without limiting the generality of the foregoing any financial statement or other financial data and any interpretation of the meaning and operation of the Fund's governing documents), prepared or presented by an officer or employee of the Fund, or prepared or presented by a lawyer, certified public accountant or other person as a matter which a Trustee believes to be within the person's professional or expert competence and the Trustees shall be under no liability for any act or omission in accordance with any such information advice, opinion, report or statement nor failing
6
to rely on or follow such information, advice, opinion, report or statement. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required.
Section 8.4 of the Agreement and Declaration of Trust provides: The Trustees shall be entitled and empowered to the fullest extent permitted by law to purchase with Fund assets insurance for liability and for all expenses reasonably incurred or paid or expected to be paid by a Trustee in connection with any claim, action, suit or proceeding in which he or she becomes involved by virtue of his or her capacity or former capacity with the Fund, whether or not the Fund would have the power to indemnify him or her against such liability under the provisions of this Article.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to Trustees, 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 Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of the Registrant of expenses incurred or paid by a Trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, the Registrant will submit, unless in the opinion of its counsel the matter has been settled by controlling precedent, to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
ITEM 31. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER
Information as to the Trustees and officers of the Investment Manager, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by the directors and officers of the Investment Manager in the last two years, is included in its application for registration as an investment adviser on Form ADV (File No. 801-48282) filed under the Investment Advisers Act of 1940, as amended ("Advisers Act"), and is incorporated herein by reference thereto.
Information as to the directors and officers of the sub-adviser, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by the directors and officers of the sub-adviser in the last two years, is included in its application for registration as an investment adviser on Form ADV for Voya Investment Management Co. LLC (File No. 801-9046) filed under the Investment Advisers Act of 1940, as amended, and is incorporated by reference thereto.
ITEM 32. LOCATION OF ACCOUNTS AND RECORDS
The amounts and records of the Registrant will be maintained at its office at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258 and at the office of its custodian, State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas City, Missouri 64105.
ITEM 33. MANAGEMENT SERVICES
Not Applicable.
ITEM 34. UNDERTAKINGS
1.Not Applicable.
2.Not Applicable.
3.Not Applicable.
4.a. To file during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
b.That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment 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.
c.To remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
5.Not Applicable.
6.The Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, any Statement of Additional Information.
8
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, as amended (the “1933 Act”), and/or the Investment Company Act of 1940, as amended, the Registrant certifies that it has duly caused this Post-Effective
Amendment No. 4 to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Scottsdale and the State of Arizona on the 29th day of April, 2020.
VOYA
SENIOR INCOME FUND
By
| /s/ Paul A. Caldarelli
|
Paul
A. Caldarelli
Assistant Secretary
Pursuant to the
requirements of the 1933 Act, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
SIGNATURE
| TITLE
| DATE
|
/s/ Michael Bell
Michael Bell*
| Chief Executive Officer
| April 29, 2020
|
/s/ Todd Modic
Todd Modic*
| Senior Vice President and
Chief/Principal Financial Officer
| April 29, 2020
|
/s/ Dina Santoro
Dina Santoro*
| Interested Trustee and President
| April 29, 2020
|
/s/ Colleen D. Baldwin
Colleen D. Baldwin*
| Trustee
| April 29, 2020
|
/s/ John V. Boyer
John V. Boyer*
| Trustee
| April 29, 2020
|
/s/ Patricia W. Chadwick
Patricia W. Chadwick*
| Trustee
| April 29, 2020
|
/s/ Martin J. Gavin
Martin J. Gavin*
| Trustee
| April 29, 2020
|
/s/ Joseph E. Obermeyer
Joseph E. Obermeyer*
| Trustee
| April 29, 2020
|
/s/ Sheryl K. Pressler
Sheryl K. Pressler*
| Trustee
| April 29, 2020
|
/s/ Christopher P. Sullivan
Christopher P. Sullivan*
| Trustee
| April 29, 2020
|
*By:
/s/ Paul A. Caldarelli
Paul
A. Caldarelli
Attorney-in-Fact**
**
| Powers of attorney for Michael Bell, Todd Modic, Dina Santoro and each Trustee are attached hereto.
|
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Colleen D. Baldwin, hereby constitutes and appoints Paul A. Caldarelli, Huey P. Falgout, Jr., Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, her true and lawful attorneys-in-fact and agents, to execute in her name, place, and stead, in her capacity as Trustee of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in her name and on her behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as she might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Colleen D. Baldwin__ Colleen D. Baldwin Chairperson and Trustee
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Michael Bell, hereby constitutes and appoints Paul A. Caldarelli, Huey P. Falgout, Jr., Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, his true and lawful attorneys- in-fact and agents, to execute in his name, place, and stead, in his capacity as officer of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Michael Bell______
Michael Bell
Chief Executive Officer
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, John V. Boyer, hereby constitutes and appoints Paul A. Caldarelli, Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, his true and lawful attorneys-in-fact and agents, to execute in his name, place, and stead, in his capacity as officer of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ John V. Boyer_____
John V. Boyer
Chief Executive Officer
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Patricia W. Chadwick, hereby constitutes and appoints Paul A. Caldarelli, Huey P. Falgout, Jr., Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, her true and lawful attorneys-in-fact and agents, to execute in her name, place, and stead, in her capacity as Trustee of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in her name and on her behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as she might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Patricia W. Chadwick Patricia W. Chadwick Trustee
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Martin J. Gavin, hereby constitutes and appoints Paul A. Caldarelli, Huey P. Falgout, Jr., Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, his true and lawful attorneys-in-fact and agents, to execute in his name, place, and stead, in his capacity as Trustee of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Martin J. Gavin Martin J. Gavin Trustee
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(each a "Registrant" and collectively the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Todd Modic, hereby constitutes and appoints Paul A. Caldarelli, Huey P. Falgout, Jr., Theresa K. Kelety, and Joanne F. Osberg, his true and lawful attorneys-in-fact and agents, to execute in his name, place, and stead, in his capacity as officer of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Todd Modic__________________________
Todd Modic
Senior Vice President, Chief/Principal Financial
Officer and Assistant Secretary
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Joseph E. Obermeyer, hereby constitutes and appoints Paul A. Caldarelli, Huey P. Falgout, Jr., Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, his true and lawful attorneys-in-fact and agents, to execute in his name, place, and stead, in his capacity as Trustee of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Joseph E. Obermeyer Joseph E. Obermeyer Trustee
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Sheryl K. Pressler, hereby constitutes and appoints Paul A. Caldarelli, Huey O. Falgout, Jr., Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, her true and lawful attorneys-in-fact and agents, to execute in her name, place, and stead, in her capacity as Trustee of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in her name and on her behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as she might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Sheryl K. Pressler Sheryl K. Pressler Trustee
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Dina Santoro, hereby constitutes and appoints Paul A. Caldarelli, Huey P. Falgout, Jr., Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, her true and lawful attorneys- in-fact and agents, to execute in her name, place, and stead, in her capacity as Trustee of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in her name and on her behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as she might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Dina Santoro Dina Santoro Trustee
Voya Asia Pacific High Dividend Equity Income Fund
Voya Emerging Markets High Dividend Equity Fund
Voya Global Advantage and Premium Opportunity Fund
Voya Global Equity Dividend and Premium Opportunity Fund
Voya Infrastructure, Industrials and Materials Fund
Voya International High Dividend Equity Income Fund
Voya Natural Resources Equity Income Fund
Voya Prime Rate Trust
Voya Senior Income Fund
(the "Registrants")
POWER OF ATTORNEY
Know All Persons by These Presents, that the undersigned, Christopher P. Sullivan, hereby constitutes and appoints Paul A. Caldarelli, Huey P. Falgout, Jr., Theresa K. Kelety, Todd Modic, and Joanne F. Osberg, his true and lawful attorneys-in-fact and agents, to execute in his name, place, and stead, in his capacity as Trustee of the above referenced Registrants, the Registration Statements of such entities on Form N-2 and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the U.S. Securities and Exchange Commission; and any of said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of any of said attorneys being hereby ratified and approved.
DATED: January 24, 2020
/s/ Christopher P. Sullivan Christopher P. Sullivan Trustee