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

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-07528

Special Opportunities Fund, Inc.
(Exact name of registrant as specified in charter)

615 East Michigan Street

Milwaukee, WI 53202
(Address of principal executive offices) (Zip code)

Andrew Dakos

Bulldog Investors, LLC

Park 80 West

250 Pehle Avenue, Suite 708

Saddle Brook, NJ 07663
(Name and address of agent for service)

Copy to:

Thomas R. Westle, Esp.

Blank Rome LLP

The Chrysler Building

405 Lexington Avenue

New York, NY 10174

Registrant's telephone number, including area code

Date of fiscal year end: 12/31/2016

Date of reporting period:  6/30/2016

Special Opportunities Fund, Inc.

(SPE)

Semi-Annual Report

For the six months ended

June 30, 2016

 

 

 

 

 

 

 

 

Special Opportunities Fund, Inc.

 

 

August 29, 2016

 

Dear Fellow Shareholders:

 

On June 30, 2016, the shares of Special Opportunities Fund shares closed at $13.75, up 4.17% from December 31, 2015 while the S&P 500 Index gained 3.84% over the same time span.  The Fund’s discount to net asset value on those dates was 13.08% and 12.64% respectively.

 

We took advantage of the Fund’s discount by repurchasing 351,994 shares during the first half of 2016.  From January 1, 2015 through June 30, 2016, 757,009 shares have been repurchased, all at a discount of at least 12%.  The Fund’s repurchases are reported monthly on its website at http://www.specialopportunitiesfundinc.com.

 

On July 15, 2016, the Fund announced that it would issue transferable rights to common stockholders of record as of July 21, 2016 entitling the holders of such rights to purchase shares of a new class of convertible preferred stock that will pay a dividend of 3.5% per annum and may be converted into common stock at a conversion price of $19.00 per share (adjusted for any distributions made to or on behalf of common stockholders).  The Board intends to use approximately one-third of the net proceeds raised in the offering to fund a self-tender offer for shares of the Fund’s common stock. The remainder of the net proceeds will be invested in accordance with the Fund’s investment objective and used for general working capital purposes.  We are comfortable with some leverage in the form of convertible preferred stock because we manage the Fund to be more risk averse than a hypothetical investment in the S&P 500 Index even though we hope to outperform the Index over the long term through intelligent selection of investments and the use of activism to enhance the value of our investments.  The complete terms of the converts are available at https://www.sec.gov/.  We intend to provide the diluted NAV (assuming full conversion of the converts) as well as the actual NAV of the common shares at least weekly on the Fund’s website.  Initially, we expect the actual NAV and the diluted NAV to be identical.

 

Here is an update on some of our significant positions.

 

Emergent Capital (EMG), formerly known as Imperial Holdings, has been a disappointment.  Emergent owns a portfolio of life insurance policies with an aggregate face value of approximately $3 billion.  Despite management’s best efforts, Emergent’s high cost of capital has precluded it from fully capitalizing on its assets.  Consequently, on August 1, 2016, Emergent announced that, in response to receiving a number of unsolicited inquiries from several interested parties, the board has initiated a formal process to explore strategic alternatives.

---

Special Opportunities Fund, Inc.

 

 

In our opinion, there is no need to have a fire sale.  If a satisfactory transaction does not result, we believe Emergent can still produce a respectable, albeit sub-optimal, return to stockholders over time.

 

Stewart Information Services (STC), a provider of title insurance and other services in connection with real estate transactions, is one of our biggest positions. Earlier this year Stewart eliminated its dysfunctional dual class capital structure partly due to pressure from us.  In our previous letter, we said that there was a possibility that Stewart could become a target for acquisition at a price well above its current market price.  Since that time, the stock has performed well.  Also, two large stockholders have recently made aggressive moves toward Stewart.  On July 28, 2016, Foundation Asset Management initiated a campaign to call a special meeting of stockholders to effect “much-needed change to the composition of the board.”  Then, on August 12, 2016, Starboard Value LP, a well-respected activist investment fund filed a Schedule 13D indicating a 9.9% position in Stewart and stating its belief that Stewart’s shares are undervalued and that Starboard might propose measures to enhance the value of its investment.  Stay tuned.

 

The second quarter of 2016 was an active one for the Fund.  Our proxy contest for Virtus Total Return Fund (DCA) concluded at its annual meeting on June 2, 2016.  We narrowly lost a vote to elect a director but shareholders voted in favor of our proposal to liquidate DCA (which would eliminate the discount) despite management’s opposition.  Even though that proposal is technically not binding on DCA’s board of directors, we believe that, absent a compelling reason, it has a fiduciary duty to abide by that sort of shareholder mandate.  That perception and the fact that we have increased our stake to the point where we are virtually certain to prevail if there is another proxy fight next year has caused DCA’s discount to narrow to less than 6%, well below its historical double-digit discount.  In short, we think the writing is on the wall and that the discount is likely to be eliminated via the liquidation or open-ending of DCA before next year’s annual meeting.

 

As our proxy contest for DCA concluded, we ramped up for our second contest in as many years for Hill International (HIL).  Hill is a global construction management firm that we believe is significantly undervalued primarily because of the disconnect between the high executive compensation paid to the father-and-son team that founded the business and weak stockholder returns.  Also, the board has twice summarily rejected a premium bid for Hill from a potential suitor.  The annual meeting was scheduled to be held on August 11th and shareholders overwhelmingly supported our slate of director nominees and proposals.  That would have set the stage for real change that is needed to unlock Hill’s inherent value including a possible sale of the company at a price well above its current stock price.

---

Special Opportunities Fund, Inc.

 

 

Unfortunately, things did not go as expected.  Less than two hours before the meeting, Hill announced that the meeting was cancelled and gave no reason for the cancellation.  On August 25, 2016, we sued Hill and the directors that voted to cancel the meeting (not all of them did) in Delaware Chancery Court and asked, among other things, that our nominees be declared elected as directors.  A trial is scheduled for September 26, 2016.  We are often asked whether a board of directors can take an action which, on its face, seems like it is a deliberate breach of fiduciary duty – like cancelling an election it knows it will lose.  The sad truth is that a board can usually do whatever it wants until a judge says otherwise.  In this case, unless someone filed a lawsuit challenging Hill’s management, it might be able to get away with its transparent attempt to avoid a crushing defeat by stockholders.  We are fairly confident that the Court will endorse our position, i.e., that the stockholders elected our nominees to replace the incumbent directors.

 

August 1, 2016 was the final day of trading in shares of Winthrop Realty Trust (FUR), a REIT whose shares we held.  FUR shares have since been converted into non-transferable liquidating trust units.  While investors will no longer be able to purchase or sell shares of FUR, we think the Fund will benefit as Winthrop continues to maximize value by liquidating assets in an orderly fashion and making cash distributions to unitholders.  On August 23, 2016, a $1 distribution was made to unitholders.  We conservatively estimate our internal rate of return from this point forward to be between 12% to 22%.  While our actual IRR will be a function of the price and timing of the remaining asset sales, we would be surprised if returns did not meet our expectations because we have known Michael Ashner, Winthrop’s CEO and a veteran real estate investor and operator, for more than 15 years and we are confident about his determination and ability to maximize Winthrop’s liquidating value.

 

We first met Mr. Ashner about fifteen years ago in the course of our first proxy contest for a REIT and have successfully invested in several companies in which he has been involved.  Recently, we accumulated a sizable position in New York REIT, Inc. (NYRT), an underperforming owner and operator of commercial real estate in the hot New York City market.  A few months ago, NYRT announced a proposed merger that was roundly criticized by stockholders and analysts.  Mr. Ashner and Steven Witkoff, another savvy real estate veteran, teamed up to launch a proxy contest to scuttle the merger and elect directors committed to maximizing shareholder value.  Faced with a shareholder uprising, the proposed merger was abandoned in lieu of first, a plan to sell NYRT’s assets, and then, a plan of full liquidation.  At their current price of less than $10, NYRT shares remain well below our estimate of their liquidating value of about $12 per share.  We believe that disparity is due to skepticism about management’s ability to effectively

---

Special Opportunities Fund, Inc.

 

 

execute the plan of liquidation.  The Ashner/Witkoff group has confirmed that it will continue its efforts to gain seats on the board which, if successful, will significantly increase our chances of obtaining the full value of our shares.

 

Lastly, we remind you that the Fund has a policy of seeking instructions from time to time from stockholders with regard to the voting of proxies for certain closed-end funds whose shares the Fund owns.  The specific closed-end funds for which the Fund seeks proxy voting instructions from stockholders are available on the Fund’s website and we urge you to check it from time to time if you would like to provide such instructions.  You may also email us at proxyinstructions@bulldoginvestors.com if you would like to receive an email notification when the Fund seeks proxy voting instructions for a closed-end fund whose shares it owns.

 

Sincerely yours,

Phillip Goldstein

Chairman

---

 

Special Opportunities Fund, Inc.

 

Performance at a glance (unaudited)

 

Average annual total returns for common stock for the periods ended 6/30/2016

 

Past performance does not predict future performance. The return and value of an investment will fluctuate so that an investor’s share, when sold, may be worth more or less than their original cost. The Fund’s common stock net asset value (“NAV”) return assumes, for illustration only, that dividends and other distributions, if any, were reinvested at the NAV on payable dates for dividends and other distributions payable through December 31, 2009 and reinvested at the NAV on the ex-dividend date for dividends and other distributions payable after December 31, 2009. The Fund’s common stock market price returns assume that all dividends and other distributions, if any, were reinvested at prices obtained under the Fund’s Dividend Reinvestment Plan (which was terminated on January 1, 2010) for dividends and other distributions payable through December 31, 2009 and reinvested at the lower of the NAV or the closing market price on the ex-dividend date for dividends and other distributions payable after December 31, 2009. NAV and market price returns for the period of less than one year have not been annualized. Returns do not reflect the deduction of taxes that a shareholder could pay on Fund dividends and other distributions, if any, or the sale of Fund shares.

 

 

The S&P 500^® Index is a capital weighted, unmanaged index that represents the aggregate market value of the common equity of 500 stocks primarily traded on the New York Stock Exchange.

---

 

Special Opportunities Fund, Inc.

 

 

Portfolio composition as of 6/30/2016⁽¹⁾ (unaudited)

 

---

 

Special Opportunities Fund, Inc.

 

Portfolio of investments—June 30, 2016 (unaudited)

 

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

Portfolio of investments—June 30, 2016 (unaudited)

 

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

Portfolio of investments—June 30, 2016 (unaudited)

 

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

Portfolio of investments—June 30, 2016 (unaudited)

 

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

Portfolio of investments—June 30, 2016 (unaudited)

 

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

Portfolio of investments—June 30, 2016 (unaudited)

Percentages are stated as a percent of net assets.

The accompanying notes are an integral part of these financial statements.

---

 

Special Opportunities Fund, Inc.

 

Statement of assets and liabilities—June 30, 2016 (unaudited)

 

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

 

Statement of operations

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

 

Statements of changes in net assets applicable to common shareholders

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

 

Financial highlights

Selected data for a share of common stock outstanding throughout each period is presented below:

 

 

---

Special Opportunities Fund, Inc.

 

 

Financial highlights (continued)

 

 

---

Special Opportunities Fund, Inc.

 

 

Financial highlights (continued)

The accompanying notes are an integral part of these financial statements.

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

Note 1

Organization and significant accounting policies

Special Opportunities Fund, Inc. (formerly, Insured Municipal Income Fund Inc.) (the “Fund”) was incorporated in Maryland on February 18, 1993, and is registered with the United States Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended, as a closed-end diversified management investment company.  Effective December 21, 2009, the Fund changed its name to the Special Opportunities Fund, Inc. and changed its investment objective to total return.  There can be no assurance that the Fund’s investment objective will be achieved.  The Fund’s previous investment objective was to achieve a high level of current income that was exempt from federal income tax, consistent with the preservation of capital.

 

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services—Investment Companies”.

 

In the normal course of business, the Fund may enter into contracts that contain a variety of representations or that provide indemnification for certain liabilities.  The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred.  However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

 

The preparation of financial statements in accordance with Accounting Principles Generally Accepted in the United States of America requires the Fund’s management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements.  Actual results could differ from those estimates.  The following is a summary of significant accounting policies:

 

Valuation of investments—The Fund calculates its net asset value based on the current market value for its portfolio securities.  The Fund obtains market values for its securities from independent pricing sources and broker-dealers.  Independent pricing sources may use last reported sale prices or if not available the most recent bid price, current market quotations or valuations from computerized “matrix” systems that derive values based on comparable securities.  A matrix system incorporates parameters such as security quality, maturity and coupon, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining the valuation of the portfolio securities.  If a market value is not available from an independent pricing source or a broker-dealer for a particular security, that security is valued at fair value as determined in good faith by or under the direction of the Fund’s Board of Directors (the “Board”).  Various factors may be

 

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

reviewed in order to make a good faith determination of a security’s fair value.  The auction rate preferred securities are valued at cost, unless other observable market events occur.  The purchase price, or cost, of these securities is arrived at through an arms length transaction between a willing buyer and seller in the secondary market and is indicative of the value on the secondary market.  Current transactions in similar securities in the marketplace are evaluated.  Factors for other securities may include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; and changes in overall market conditions.  If events occur that materially affect the value of securities between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities may be fair valued.  U.S. and foreign debt securities including short-term debt instruments having a maturity of 60 days or less shall be valued in accordance with the price supplied by a Pricing Service using the evaluated bid price.  Money market mutual funds, demand notes and repurchase agreements are valued at cost.  If cost does not represent current market value the securities will be priced at fair as determined in good faith by or under the direction of the Fund’s Board.

 

The Fund has adopted fair valuation accounting standards that establish an authoritative definition of fair value and set out a hierarchy for measuring fair value.  These standards require additional disclosures about the various input and valuation techniques used in measuring fair value.  Fair value inputs are summarized in the three broad levels listed below:

 

 

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the

 

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

liquidity of markets, and other characteristics particular to the security.  To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

 

The inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

 

The significant unobservable inputs used in the fair value measurement of the Fund’s Level 3 investments are listed in the table on page 25.  Significant changes in any of these inputs in isolation may result in a change in fair value measurement.

 

In accordance with procedures established by the Fund’s Board of Directors, the Adviser shall initially value non-publicly-traded securities (for which a current market value is not readily available) at their acquisition cost less related expenses, where identifiable, unless and until the Adviser determines that such value does not represent fair value.

 

The Adviser sends a memorandum to the Chairman of the Valuation Committee with respect to any non-publicly-traded positions that are valued using a method other than cost detailing the reason, factors considered, and impact on the Fund’s NAV.  If the Chairman determines that such fair valuation(s) require the involvement of the Valuation Committee, a special meeting of the Valuation Committee is called as soon as practicable to discuss such fair valuation(s).  The Valuation Committee of the Board consists of at least two non-interested Directors, as defined by the Investment Company Act of 1940.

 

In addition to special meetings, the Valuation Committee meets prior to each regular quarterly Board meeting.  At each quarterly meeting, the Adviser delivers a written report (the “Quarterly Report”) regarding any recommendations of fair valuation during the past quarter, including fair valuations which have not changed.  The Valuation Committee reviews the Quarterly Report, discusses the valuation of the fair valued securities with appropriate levels of representatives from the Adviser’s management, and approves the valuation of fair valued securities.

 

The Valuation Committee also reviews other interim reports as necessary.

 

The following is a summary of the fair valuations according to the inputs used as of June 30, 2016 in valuing the Fund’s investments:

 

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

 

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

Transfers between Level 1 and Level 2 securities as of June 30, 2016 resulted from securities priced previously with an official close price (Level 1 securities) or on days where there is not an official close price the bid price is used (Level 2 securities).  Transfers as of June 30, 2016 are summarized in the table below:

 

 

The fair value of derivative instruments as reported within the Schedule of Investments as of June 30, 2016:

 

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

The effect of derivative instruments on the Statement of Operations for the period ended June 30, 2016:

 

 

The average monthly share amount of warrants during the six months was 1,175,077. The average monthly market value of warrants during the six months was $368,318.

 

Level 3 Reconciliation Disclosure

The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value:

 

---

Special Opportunities Fund, Inc.

 

 

Notes to financial statements (unaudited)

The following table presents additional information about valuation methodologies and inputs used for investments that are measured at fair value and categorized within Level 3 as of June 30, 2016:

 

 

 

Short sales—The Fund is authorized to make short sales.  Short sales are transactions where a fund sells securities it does not own in anticipation of a decline in the value of the securities.

 

Short sales carry risks of loss if the price of the security sold short increases after the sale.  In this situation, when a fund replaces the borrowed security by buying the security in the securities market, the fund may pay more for the security than it has received from the purchaser in the short sale.  The fund may, however, profit from a change in the value of the security sold short, if the price decreased.

 

As collateral for its short positions, the Fund is required under the 1940 Act to maintain segregated assets consisting of cash, cash equivalents, or liquid securities.  The amount of segregated assets are required to be adjusted daily to the extent additional collateral is required based on the change in fair value of the securities sold short.

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

The Fund did not engage in short sales during the six months ended June 30, 2016.

 

Investment transactions and investment income—Investment transactions are recorded on the trade date.  Realized gains and losses from investment transactions are calculated using the identified cost method.  Dividend income is recorded on the ex-dividend date.  Interest income is recorded on an accrual basis.  Discounts are accreted and premiums are amortized using the effective yield method as adjustments to interest income and the identified cost of investments.

 

Dividends and distributions—Dividends to Common Stockholders from net investment income and distributions of net realized capital gains, if any, will be declared and paid at least annually.  Dividends and distributions to common shareholders are recorded on the ex-dividend date.  The amount of dividends from net investment income and distributions from net realized capital gains was determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles.  These “book/tax” differences are either considered temporary or permanent in nature.  To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification.

 

Note 2

Related party transactions

Bulldog Investors, LLC serves as the Fund’s Investment Adviser (the “Investment Adviser”) under the terms of the Investment Advisory Agreement effective October 10, 2009.  Effective May 7, 2013 Brooklyn Capital Management, LLC changed its name to Bulldog Investors, LLC.  In accordance with the investment advisory agreement, the Fund is obligated to pay the Investment Adviser a monthly investment advisory fee at an annual rate of 1.00% of the Fund’s average weekly total net assets.

 

Effective January 1, 2015, the Fund pays each of its directors who is not a director, officer or employee of the Investment Adviser, the Administrator or any affiliate thereof an annual fee of $35,000, paid pro rata, quarterly.  As additional annual compensation, the Audit Committee Chairman and Valuation Committee Chairman will receive $5,000, and the Corporate Governance Committee Chairman will receive $3,000.  For serving the Fund as Chief Compliance Officer, in addition to the aforementioned Directors’ fees, Mr. Hellerman receives annual compensation in the amount of $45,000.  In addition, the Fund reimburses the directors and Chief Compliance Officer (“CCO”) for travel and out-of-pocket expenses incurred in connection with Board of Directors’ meetings and CCO due diligence requirements.

 

U.S. Bancorp Fund Services, LLC (“USBFS”), an indirect wholly-owned subsidiary of U.S. Bancorp, serves as the Fund’s Administrator and, in that capacity, performs

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

various administrative services for the Fund.  USBFS also serves as the Fund’s Fund Accountant (the “Fund Accountant”).  U.S. Bank, N.A. serves as the Fund’s custodian (the “Custodian”).  The Custodian is an affiliate of the Administrator.  The Administrator prepares various federal and state regulatory filings, reports and returns for the Fund; prepares reports and materials to be supplied to the directors, monitors the activities of the Fund’s Custodian and Fund Accountant; coordinates the preparation and payment of the Fund’s expenses and reviews the Fund’s expense accruals.  American Stock Transfer & Trust Company, LLC serves as the Fund’s Transfer Agent.

 

Note 3

Purchases and sales of securities

For the six months ended June 30, 2016, aggregate purchases and sales of portfolio securities, excluding short-term securities, were $27,625,984 and $33,961,918, respectively.  The Fund did not purchase or sell U.S. government securities during the six months ended June 30, 2016.

 

Note 4

Capital share transactions

During the six months ended June 30, 2016, the Fund purchased 351,994 shares of its capital stock in the open market at a cost of $4,507,404. The weighted average discount of these purchases comparing the average purchase price to net asset value at the close of the New York Stock Exchange was 11.77%.

 

During the year ended December 31, 2015, the Fund issued 261,013 shares for the reinvestment of distributions.  During the same period the Fund purchased 405,015 shares of its capital stock in the open market at a cost of $5,921,562. The weighted average discount of these purchases comparing the average purchase price to net asset value at the close of the New York Stock Exchange was 12.63%.

 

During the year ended December 31, 2014, the Fund issued 338,450 shares for the reinvestment of distributions.  During the same period the Fund issued 2,765,091 of shares of its common stock from the conversion of 744,120 shares of the Fund’s convertible preferred stock.

 

Note 5

Federal tax status

The Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies.  Therefore, no provision for federal income taxes or excise taxes has been made.

 

In order to avoid imposition of the excise tax applicable to regulated investment companies, the Fund intends to declare each year as dividends in each calendar

---

Special Opportunities Fund, Inc.

 

Notes to financial statements (unaudited)

year at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.

 

The tax character of distributions paid to common shareholders during the fiscal years ended December 31, 2015 and December 31, 2014 were as follows:

 

 

The Fund designated as long-term capital gain dividends, pursuant to Internal Revenue Code Section 852(b)(3), the amount necessary to reduce the earnings and profits for the Fund related to net capital gains to zero for the year ended December 31, 2015.

 

The following information is presented on an income tax basis as of December 31, 2015: