Note 6. Capital stock transactions
Under the Fund’s Charter, dividends on Common Stock
cannot be declared unless net assets, after deducting the amount of such dividends and all unpaid dividends declared on Preferred Stock, equal at least $100 per share of Preferred Stock outstanding. The Preferred Stock is subject to redemption at
the Fund’s option at any time on 30 days’ notice at $55 per share (or a total of $41,400,700 for the shares outstanding at June 30, 2018) plus accrued dividends, and entitled in liquidation to $50 per share plus dividends accrued or in
arrears, as the case may be.
Automatic dividend and cash
purchase plan
The Fund, in connection with its Automatic
Dividend Investment and Cash Purchase Plan acquires and issues shares of its own Common Stock, as needed, to satisfy Plan requirements. A total of 31,643 shares were issued to Plan participants during the period for proceeds of $857,203, a weighted
average discount of 10.21% from the net asset value of those shares. In addition, a total of 511,438 shares were issued at market price in distributions during the period for proceeds of $13,792,538, a weighted average discount of 9.23% from the net
asset value of those shares.
For Stockholder accounts
established after June 1, 2007, unless the Stockholder Servicing Agent is otherwise instructed by the Stockholder, distributions on the Common Stock are paid in book shares of Common Stock which are entered in the Stockholder’s account as
“book credits.” Each Stockholder may also elect to receive distributions 75% in shares and 25% in cash, 50% in shares and 50% in cash, or 100% in cash. Any such election must be received by the Stockholder Servicing Agent by the record
date for a distribution. If the Stockholder holds shares of Common Stock through a financial intermediary (such as a broker), the Stockholder should contact the financial intermediary to discuss reinvestment and distribution options. Elections
received after a record date for a distribution will be effective in respect of the next distribution. Shares issued to the Stockholder in respect of distributions will be at a price equal to the lower of: (i) the closing sale price of the Common
Stock on the New York Stock Exchange on the ex-dividend date or (ii) the greater of net asset value per share of Common Stock and 95% of the closing price of the Common Stock on the New York Stock Exchange on the ex-dividend date. The issuance of
Common Stock at less than net asset value per share will dilute the net asset value of all Common Stock outstanding at that time.
For the six months ended June 30, 2018, the Fund purchased
329,828 shares of its Common Stock from Plan participants at a cost of $8,905,489, which represented a weighted average discount of 10.85% from the net asset value of those acquired shares.
Under the Fund’s stock repurchase program for 2017, the
Fund may repurchase up to 5% of the Fund’s outstanding Common Stock during the year directly from Stockholders and in the open market, provided that, with respect to shares purchased in the open market, the discount must be greater than 10%.
In February 2018, the Board approved the Fund’s stock repurchase program for 2018 under the same terms as described above. The intent of the stock repurchase program is, among other things, to moderate the growth in the number of shares of
Common Stock outstanding, increase the NAV of the Fund’s outstanding shares, reduce the dilutive impact on stockholders who do not take capital gain distributions in additional shares, and increase the liquidity of the Fund’s Common
Stock in the marketplace. For the six months ended June 30, 2018, the Fund purchased 938,302 shares of its Common Stock in the open market at an aggregate cost of $25,380,379, which represented a weighted average discount of 11.00% from the net
asset value of those acquired shares.
Shares of Common
Stock repurchased to satisfy Plan requirements or in the open market pursuant to the Fund’s stock repurchase program are retired and no longer outstanding.
Warrants
At June 30, 2018, the Fund reserved 197,028 shares of Common
Stock for issuance upon exercise of 8,145 Warrants, each of which entitled the holder to purchase 24.19 shares of Common Stock at $0.93 per share.
Assuming the exercise of all Warrants outstanding at June 30,
2018, net assets would have increased by $183,236 and the net asset value of the Common Stock would have been $29.82 per share. The number of Warrants exercised during the six months ended June 30, 2018 was zero.