QUESTIONS & ANSWERS
The following is a summary of more complete information appearing in the enclosed Proxy Statement or incorporated by reference into the Proxy Statement. You should carefully read the entire Proxy Statement, including the Agreements and Plans of Reorganization (each, a "Reorganization Agreement" and, collectively, the "Reorganization Agreements"), forms of which are attached as Appendix A thereto, because it contains details that are not in the Questions and Answers.
Q: Why is a shareholder meeting being held?
A: You are being asked to approve the issuance of additional common shares of beneficial interest ("common shares") of abrdn Income Credit Strategies Fund (the "Fund") in connection with the transfer of all of the assets of First Trust High Income Long/Short Fund ("FSD") and First Trust/abrdn Global Opportunity Income Fund ("FAM"), each a Massachusetts business trust, (each, an "Acquired Fund" and, collectively, the "Acquired Funds"), with and into the Fund in exchange solely for newly issued common shares of beneficial interest of the Fund (although cash may be distributed in lieu of fractional shares of the Fund), the assumption by the Fund of all liabilities of each Acquired Fund, the distribution of common shares of beneficial interest of the Fund to the shareholders of each Acquired Fund and complete liquidation of each Acquired Fund (each, a "Reorganization" and, collectively, the "Reorganizations"). The purpose of this proposal is to enable the Fund to have a sufficient number of common shares to issue to the Acquired Funds to effect the Reorganizations, each of which is expected to occur in the first quarter of 2024.
Although the Fund will continue its legal existence and operations after the Reorganizations, the rules of the New York Stock Exchange (on which the Fund's common shares are listed) require the Fund's shareholders to approve the issuance of additional common shares in connection with the Reorganizations.
As described more fully in the Proxy Statement, the Acquired Funds and the Fund (each, a "Fund" and, collectively, the "Funds") are each a closed-end management investment company with similar investment objectives, principal investment strategies and principal risks, with some differences. Please see "Comparison of the Funds" in the Proxy Statement for additional information. The Fund would be the accounting and performance survivor of each Reorganization. The Fund as it would exist after each Reorganization is referred to as the "Combined Fund." No changes to the investment objective, strategy, adviser, portfolio management team, fees, fund structure or policies of the Fund are being made in connection with the Reorganizations, except for the extension of an expense limitation agreement capping certain of the Combined Fund's expenses until June 30, 2025, as described further below.
Separately, the shareholders of the Acquired Funds are being asked to each approve a Reorganization Agreements providing for each Reorganization.
The Reorganization of one Acquired Fund is not contingent on the approval of the other Acquired Fund's shareholders (i.e., a Reorganization of one of the Acquired Funds, if approved by that Acquired Fund's shareholders, may still proceed if the other Reorganization is not approved by the other Acquired Fund's shareholders).
Q: Why are the Reorganizations being proposed?
A: On October 23, 2023, First Trust Advisors L.P. ("First Trust") and abrdn Inc. entered into a separate agreement (the "Purchase Agreement") pursuant to which abrdn Inc. will acquire certain assets related to First Trust's business of providing investment management services with respect to the assets of each Acquired Fund and certain other registered investment companies (the "Business") if the Reorganizations are approved, and upon satisfaction or waiver of certain other conditions. More specifically, under the Purchase Agreement, First
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Trust has agreed to transfer to abrdn Inc., for a cash payment at the closing of the Asset Transfer (as defined below) and subject to certain exceptions, (i) all right, title and interest of First Trust in and to the books and records relating to the Business; (ii) all records required to be maintained to substantiate the track record of the Business; and (iii) all goodwill of the Business as a going concern. Such transfers hereinafter are referred to collectively as the "Asset Transfer."
The Funds are not a party to the Purchase Agreement; however, the completion of the Asset Transfer is subject to certain conditions, including Acquired Fund shareholder approval of each Reorganization described in the Agreement for such Fund's Reorganization to proceed. Therefore, if Acquired Fund shareholders do not approve the Reorganization Agreements or if the other conditions in the Purchase Agreement are not satisfied or waived, then the Asset Transfer may not be completed, and the Purchase Agreement may be terminated.
Q: What happens if the Proposal is not approved by the Acquired Fund shareholders?
A: Completion of each Reorganization requires both the approval of the respective Reorganization Agreement by the respective Acquired Fund shareholders and approval of the Proposal by the Fund shareholders. However, each Reorganization is not contingent on the approval or consummation of the other Reorganization (i.e., a Reorganization of one of the Acquired Funds, if approved by that Acquired Fund's shareholders, may still proceed if the other Reorganization is not approved by the other Acquired Fund's shareholders). If the issuance of the Fund's common shares is not approved by shareholders of the Fund, then neither Reorganization will be effected, and the Fund's common shares will not be issued.
Q: How will the fees and expenses of the Combined Fund compare to those of the Fund?
A: The contractual advisory fee of the Fund is, and the Combined Fund would be, 1.25% of the Fund's average daily Managed Assets. Managed Assets are the total assets of the Fund (including any assets attributable to money borrowed for investment purposes, including proceeds from (and assets subject to) reverse repurchase agreements, any credit facility and any issuance of preferred shares or notes) minus the sum of the Fund's accrued liabilities (other than Fund liabilities incurred for the purpose of leverage).
The gross total annual operating expense ratios, including interest expense, of the Fund, and, following the consummation of one or both Reorganizations, the gross total annual operating expense ratio, including interest expense, of the Combined Fund is expected to be as follows:
Current Expense Ratio of the Fund | | Pro Forma
Combined Fund (FSD into Fund only) | | Pro Forma
Combined Fund (FAM into Fund only) | | Pro Forma
Combined Fund (FSD and FAM into Fund) | |
| | 4.60 | % | | | 4.43 | % | | | 4.54 | % | | | 4.40 | % | |
The net total annual operating expense ratios, including interest expense, of the Fund, and, following the consummation of one or both Reorganizations, the net total annual operating expense ratio, including interest expense, of the Combined Fund is expected to be as follows:
Current Expense Ratio of the Fund | | Pro Forma
Combined Fund (FSD into Fund only) | | Pro Forma
Combined Fund (FAM into Fund only) | | Pro Forma
Combined Fund (FSD and FAM into Fund) | |
| | 4.42 | % | | | 4.36 | % | | | 4.39 | % | | | 4.34 | % | |
The estimated total annual operating expense ratio of the Combined Fund reflects the application of an expense limitation described below and excludes the estimated costs associated with the Combined Fund's anticipated use of leverage, which are excluded from such expense limitation. The current and pro forma information for
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the Combined Fund is based on expenses as of April 30, 2023; however, the Fund's assets have been restated to reflect average net assets for the fiscal year-to-date as of August 11, 2023 in order to provide more accurate expense ratios due to a significant increase in Fund assets that occurred on March 10, 2023 as the result of a reorganization with another investment company. Pro forma combined fees and expenses are estimated in good faith and are hypothetical. There can be no assurance that future expenses will not increase or that any estimated expense savings will be realized.
abrdn Investments Limited ("aIL"), the investment adviser of the Fund, has contractually agreed to limit total "Other Expenses" of the Fund (excluding any interest, taxes, brokerage fees, short sale dividend and interest expenses and non-routine expenses) as a percentage of net assets attributable to common shares of the Fund to 0.25% per annum of the Fund's average daily net assets until March 7, 2024 and then 0.35% per annum of the Fund's average daily net assets until October 31, 2024. aIL has contractually agreed to limit total "Other Expenses" of the Combined Fund (excluding any interest, taxes, brokerage fees, short sale dividend and interest expenses and non-routine expenses) as a percentage of net assets attributable to common shares of the Combined Fund to 0.25% per annum of the Combined Fund's average daily net assets for twelve months following the closing of the Reorganization and 0.35% per annum of the Fund's average daily net assets until June 30, 2025. This contractual limitation may not be terminated before twelve months following the closing of the Reorganization or June 30, 2025 without the approval of the Fund's or Combined Fund's, as applicable, trustees who are not "interested persons" of the Fund or Combined Fund, as applicable (as defined in the 1940 Act).
The Fund or Combined Fund, as applicable, may repay any such reimbursement from aIL, within three years of the reimbursement, provided that the following requirements are met: the reimbursements do not cause the Fund or Combined Fund, as applicable, to exceed the lesser of the applicable expense limitation in the contract at the time the fees were limited or expenses are paid or the applicable expense limitation in effect at the time the expenses are being recouped by aIL.
Please see "Fees and Expenses" in the Proxy Statement for additional information.
Q: How will the Reorganizations affect the Fund and its shareholders?
A: Each Reorganization is expected to benefit the Fund's shareholders in a number of important ways. Each Reorganization is expected to provide greater opportunities to realize economies of scale by combining the Fund's assets with the assets of the Acquired Funds resulting in a larger fund.
Additionally, each Reorganization is expected to help ensure the viability of the Fund by increasing scale, liquidity and marketability of the Fund.
There can be no guarantee that any anticipated benefits will occur as a result of the Reorganizations. To the extent the Acquired Fund is trading at a discount to its net asset value and the Fund is trading at a premium to its net asset value at the time of the Reorganization, Acquired Fund shareholders would have the potential for an economic benefit. There can be no assurance that, after the Reorganization, common shares of the Combined Fund will trade at, above or below net asset value. The market value of the common shares of the Combined Fund may be less than the market value of the common shares of the Fund prior to the Reorganization. Additionally, among other potential consequences of each Reorganization, portfolio transitioning due to each Reorganization may result in capital gains or losses, which may have federal income tax consequences for shareholders of the Acquired Funds and the Combined Fund. Please see the Question "Are the Reorganizations expected to be taxable to the respective shareholders of the Fund?" and "Board Considerations" in the Proxy Statement for additional information.
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Q: Will my rights as a shareholder change as a result of the Reorganizations?
A: No. Your rights as a shareholder will not change as a result of the Reorganizations.
Q: How will the Reorganizations be effected?
A: Assuming the Acquired Funds' shareholders approve the respective Reorganization and the Fund's shareholders approve the Proposal, the Acquired Funds will transfer all of their assets to the Fund in exchange for common shares of the Fund (although shareholders of the Acquired Fund may receive cash for fractional shares of the Fund), and the assumption by the Fund of all liabilities of the Acquired Funds.
If a Reorganization is completed, shareholders of the Acquired Funds will become shareholders of the Fund. Holders of common shares of the Acquired Fund will receive newly issued common shares of the Fund, par value $0.001 per share, the aggregate net asset value (not the market value) of which will equal the aggregate net asset value (not the market value) of the common shares of the respective Acquired Fund held by each Acquired Fund's shareholders immediately prior to the Reorganization (although shareholders may receive cash for fractional shares of the Fund).
For purposes of determining an Acquired Fund's net asset value, corporate, sovereign, government, foreign, mortgage backed, and capital preferred fixed income securities and senior floating rate bank loans are priced at the mean of evaluated bid and asked prices provided by third-party pricing vendors on the valuation date. In contrast, the Fund values such securities at the bid price provided by third-party pricing vendors.
If a Reorganization is approved by shareholders and assuming that FSD's and FAM's fixed income holdings are not sold in advance of the respective Reorganization, this difference in valuation procedures will have a negative impact on the value of a shareholder's investment immediately after the respective Reorganization is consummated, and all else being equal, the net asset value per share of the Fund will be less than the net asset value per share of the respective Acquired Fund. For example, if ACP's valuation procedures were used to value FSD and FAM's fixed income security holdings as of September 29, 2023, the value of the Combined Fund's shares is estimated to be reduced by approximately $1,052,639 (0.13% of the Combined Fund as of September 29, 2023) or $0.009 per share of the Combined Fund.
Q: Will the Reorganizations impact Fund distributions to shareholders?
A: The Fund currently pays a monthly distribution of $0.100 per share. The Combined Fund expects to pay a monthly distribution of $0.100 per share, which is the same as the current monthly distribution of the Fund. The Combined Fund would have the same distribution yield as the Fund.
The Combined Fund intends to make its first distribution to shareholders in the month immediately following the closing of the Reorganizations. In addition, the Combined Fund expects to follow the same frequency of payments as the Fund and make monthly distributions to shareholders.
Q: Who will manage the Combined Fund's portfolio?
A: The Combined Fund will be advised by aIL, the Fund's current adviser, and sub-advised by abrdn Inc., the Fund's current sub-adviser. Furthermore, the Fund's current portfolio management team will be primarily responsible for the day-to-day management of the Combined Fund's portfolio. No changes are proposed to the Fund's investment objective or strategies.
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Q: Will there be any significant portfolio transitioning in connection with the Reorganizations that impacts Fund shareholders?
A: Each Acquired Fund will be required to pay back its outstanding leverage in connection with the closing of the Reorganization. It is anticipated that approximately 28% of FSD's holdings and approximately 21% of FAM's holdings will be sold by such Acquired Fund before the closing of the Reorganizations in order to pay back each Acquired Fund's outstanding leverage.
Following each Reorganization, the Combined Fund expects to realign its portfolio in a manner consistent with its investment strategies and policies, which will be the same as the Fund's current strategies and policies. The Combined Fund may not be invested consistent with its investment strategies or aIL's investment approach while such realignment occurs. The realignment is anticipated to take approximately one week following the closing of the Reorganizations, based on current market conditions and assuming that the Acquired Funds' holdings are the same as of September 21, 2023. Sales and purchases of less liquid securities could take longer. Based on the FSD and FAM holdings as of September 21, 2023, the Combined Fund expects to sell approximately 99% of FAM's portfolio following the closing of the Reorganization. As of September 21, 2023, the expected cost to sell 99% of FAM's holdings following the closing of the Reorganizations, which is estimated to equal 7.7% of the Combined Fund's portfolio, would be approximately $315,300 (or 0.04% of the estimated NAV of the Combined Fund as of September 21, 2023) or $0.0026 per share. The Combined Fund currently does not expect to sell any of FSD's portfolio following the closing of the Reorganization. To the extent there are any transaction costs (including brokerage commissions, transaction charges and related fees) associated with the sales and purchases made in connection with the respective Reorganization, these will be borne by the respective Acquired Fund with respect to the portfolio transitioning conducted before the Reorganizations and borne by the Combined Fund with respect to the portfolio transitioning conducted after the Reorganizations. The portfolio transitioning pre- and post-Reorganizations may result in capital gains or losses, which may have federal income tax consequences for shareholders of the Acquired Funds and the Combined Fund. The foregoing estimates are subject to change depending on the composition of the portfolio holdings transferred to the Fund at closing and market circumstances when the portfolio transitioning occurs.
Q: Who will pay for the costs associated with the Meeting and each Reorganization?
A: abrdn Inc. and aIL and their affiliates and First Trust, the investment manager of each Acquired Fund, and its affiliates will bear expenses incurred in connection with the Meeting and the Reorganization, except as otherwise disclosed in the proxy statements to Acquired Fund and Acquiring Fund shareholders including portfolio transaction costs and certain taxes, whether or not the Reorganization is consummated. The expenses of the Reorganizations expected to be borne by abrdn and First Trust are estimated to be approximately $589,000 for FSD and approximately $453,000 for FAM and the expenses of the Meeting are estimated to be approximately $225,000.
To the extent there are any transaction costs (including brokerage commissions, transaction charges and related fees) associated with the sales and purchases made in connection with the Reorganization, these will be borne by the Acquired Fund with respect to the portfolio transitioning conducted before the Reorganization and borne by the Combined Fund with respect to the portfolio transitioning conducted after the Reorganization. In addition, to the extent an Acquired Fund has holdings in France, Spain and/or Italy, such countries may impose an additional foreign transfer tax on the transfer of such securities to the Fund. These taxes are in addition to the transaction costs disclosed above and would be borne by the applicable Acquired Fund.
Q: Are the Reorganizations expected to be taxable to the respective shareholders of the Fund?
A: No. Each Reorganization is not expected to be a taxable event for shareholders of the Fund. Each Reorganization is intended to be treated as a tax-free reorganization for U.S. federal income tax purposes.
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The portfolio transitioning after the Reorganization discussed above may result in capital gains or losses, which may have federal income tax consequences. For example, if the Reorganization of FAM only was completed on September 21, 2023, it is estimated that approximately $9,875,000, or $0.08 per share, in capital losses would have resulted from portfolio transitioning in the Combined Fund following the Reorganization. No sales of portfolio securities are anticipated after the Reorganization as it relates to the FSD Reorganization.
The actual tax consequences as a result of portfolio repositioning after the closing of a Reorganization is dependent on the portfolio composition of the relevant Acquired Fund at the time of closing and market conditions. Any net capital gain resulting from the realignment coupled with the results of the Fund's normal operations during the tax year following the close of the Reorganization would be distributed to the shareholder base of the Combined Fund post-Reorganization in connection with the annual distribution requirements under U.S. federal tax laws.
Q: How does the Board of Trustees of the Fund suggest that I vote?
A: The Board of Trustees of the Fund recommends that you vote "FOR" the Proposal.
Q: How do I vote my proxy?
A: All shareholders are requested to vote by proxy over the Internet, by telephone or by completing, dating and signing the enclosed proxy card and returning it promptly.
We will admit to the Special Meeting (1) all shareholders of record at the close of business on October 23, 2023 (the "Record Date"), (2) persons holding proof of beneficial ownership on the Record Date, such as a letter or account statement from the person's broker, (3) persons who have been granted proxies, and (4) such other persons that we, in our sole discretion, may elect to admit.
All persons wishing to be admitted to the Special Meeting must present photo identification. If you plan to attend the Special Meeting, we ask that you call us in advance at 1-800-522-5465.
Q: Who do I contact for further information?
A: If you need any assistance or have any questions regarding the Proposal or how to vote your shares, please call (888) 869-7406.
Please complete, sign and return the enclosed proxy card in the enclosed envelope. You may proxy vote by internet or telephone in accordance with the instructions set forth on the enclosed proxy card. No postage is required if mailed in the United States.
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ABRDN INCOME CREDIT STRATEGIES FUND
(the "Fund")
1900 Market Street, Suite 200
Philadelphia, PA 19103
PROXY STATEMENT
For the Special Meeting of Shareholders
to be held on January 19, 2024
This Proxy Statement is furnished in connection with the solicitation of proxies by the Fund's Board of Trustees (the "Board" with members of the Board being referred to as "Trustees") to be voted at the Special Meeting of Shareholders of the Fund (the "Meeting") to be held at the offices of abrdn Inc., located at 1900 Market Street, Suite 200, Philadelphia, PA 19103, on January 19, 2024 and at any adjournments or postponements thereof. A Notice of Special Meeting of Shareholders and a proxy card accompany this Proxy Statement. This Proxy Statement is first being mailed to shareholders on or about November 17, 2023.
The purpose of the Meeting is to consider and act upon the following proposal (the "Proposal") and to consider and act upon such other matters as may properly come before the Meeting or any adjournments or postponements thereof:
To approve the issuance of additional common shares of beneficial interest of the Fund in connection with the reorganization of First Trust High Income Long/Short Fund and First Trust/abrdn Global Opportunity Income Fund, each a closed-end fund, with and into the Fund
All properly executed proxies received prior to the Meeting will be voted at the Meeting, or at any adjournments or postponements thereof, in accordance with the instructions marked on the proxy card. Unless instructions to the contrary are marked on the proxy card, proxies received will be voted "FOR" the Proposal. The persons named as proxy holders on the proxy card will vote in their discretion on any other matters that may properly come before the Meeting or any adjournments or postponements thereof. Any proxy card may be revoked at any time prior to its exercise by submitting a properly executed, subsequently dated proxy card, giving written notice to Megan Kennedy, Secretary of the Fund, 1900 Market Street, Suite 200, Philadelphia, PA 19103, or by attending the Meeting and voting in person. Shareholders may authorize proxy voting by using the enclosed proxy card along with the enclosed envelope with pre-paid postage. Shareholders may also authorize proxy voting by telephone or through the internet by following the instructions contained on their proxy card.
We will admit to the Special Meeting (1) all shareholders of record at the close of business on October 23, 2023 (the "Record Date"), (2) persons holding proof of beneficial ownership on the Record Date, such as a letter or account statement from the person's broker, (3) persons who have been granted proxies, and (4) such other persons that we, in our sole discretion, may elect to admit. All persons wishing to be admitted to the SpecialAnnual Meeting must present photo identification. If you plan to attend the SpecialAnnual Meeting, we ask that you call us in advance at 1-800-522-5465.
This Notice and related proxy materials are first being mailed to shareholders on or about April 8, 2024.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on Thursday, May 16, 2024: This Notice, the Proxy Statement and the form of proxy card(s) are available on the Internet at http://www.abrdnacp.com. On this website, you will be able to access the Notice, the Proxy Statement, the form of proxy card(s) and any amendments or supplements to the foregoing materials that are required to be furnished to shareholders.
By order of the Board of Trustees,
Megan Kennedy, Vice President and Secretary
abrdn Income Credit Strategies Fund
TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE ANNUAL MEETING. ACCORDINGLY, YOU ARE REQUESTED TO PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) FOR THE ANNUAL MEETING PROMPTLY, OR TO AUTHORIZE THE PROXY VOTE BY TELEPHONE OR THROUGH THE INTERNET PURSUANT TO THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD(S). NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IT IS IMPORTANT THAT YOUR PROXY CARD(S) BE RETURNED PROMPTLY IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION.
ABRDN INCOME CREDIT STRATEGIES FUND
("ACP" or the "Fund")
1900 Market Street, Suite 200
Philadelphia, PA 19103
PROXY STATEMENT
For the Annual Meeting of Shareholders
to be held on May 16, 2024
This Proxy Statement is furnished in connection with the solicitation of proxies by the Fund's Board of Trustees (the "Board" with members of the Board being referred to as "Trustees") to be voted at the Annual Meeting of Shareholders of the Fund (the "Meeting") to be held at the offices of abrdn Inc., located at 1900 Market Street, Suite 200, Philadelphia, PA 19103, on Thursday, May 16, 2024, at 10:30 a.m. Eastern Time and at any adjournments or postponements thereof. A Notice of Annual Meeting of Shareholders and a proxy card (the "Proxy Card") accompany this Proxy Statement. This Proxy Statement is first being sent on or about April 8, 2024 to shareholders of record as of April 1, 2024.
The purpose of the Meeting is to consider and act upon the following proposal (the "Proposal") for the Fund and to consider and act upon such other matters as may properly come before the Meeting or any adjournments or postponements thereof:
Proposal: To elect Mr. John Sievwright as a Class I Trustee, to serve for a three-year term.
All properly executed proxies received prior to the Meeting will be voted at the Meeting, or at any adjournments or postponements thereof, in accordance with the instructions marked on the Proxy Card. Unless instructions to the contrary are marked on the Proxy Card, proxies received will be voted "FOR" the Proposal. The persons named as proxy holders on the Proxy Card will vote in their discretion on any other matters that may properly come before the Meeting or any adjournments or postponements thereof. Any Proxy Card may be revoked at any time prior to its exercise by submitting a properly executed, subsequently dated Proxy Card, giving written notice to Megan Kennedy, Secretary of the Fund, 1900 Market Street, Suite 200, Philadelphia, PA 19103, or by attending the Meeting and voting in person. Shareholders may authorize proxy voting by using the enclosed Proxy Card along with the enclosed envelope with pre-paid postage. Shareholders may also authorize proxy voting by telephone or through the Internet by following the instructions contained on their Proxy Card. Shareholders do not have dissenters' rights of appraisal in connection with any of the matters to be voted on by the shareholders at the Meeting.
A quorum of shareholders is constituted by the presence at the Meeting, in person or by proxy, of one-third (1/3) of the shares entitled to vote, which, for the avoidance of doubt, will include shares held by brokers who provide votes and/or non-votes to all matters.
The election of a Trustee to the Board requires the affirmative vote of a plurality of the votes cast by shares entitled to vote for the election of such Trustee present in person or represented by proxy at a meeting with a quorum present. Under a plurality vote, the nominees who receive the highest number of votes up to the number of Trustees to be elected will be elected even if they receive less than a majority of votes cast. For purposes of the election of Trustees, abstentions and broker non-votes (i.e., proxies from brokers or nominees indicating that they have not received instructions from the beneficial owners regarding an item for which the brokers or nominees do not have discretionary power to vote) will be counted as shares present for quorum purposes, but will not be treated as votes cast. Abstentions and broker non-votes therefore, will have no effect on the election of Trustees (except to the extent
they cause a quorum to be present). All properly executed proxies received prior to the Meeting will be voted at the Meeting in accordance with the instructions marked thereon. Proxies received prior to the Meeting on which no vote is indicated will be voted "FOR" the Proposal.
Whether or not a quorum is present, the Chair, the Trustees (or their designees) or a majority of the votes may adjourn the Meeting one or more times for any lawful purpose without notice other than announcement at the Meeting. A majority of the shareholders present at the Meeting or the persons named as proxies shall have the power, but are under no obligation, to propose and approve an adjournment of the Meeting, without further notice to shareholders entitled to vote at the Meeting. If the Meeting is adjourned to a date more than one hundred fifty (150) days after the original record date set for the Meeting, written notice of such an adjournment stating the place, date and hour thereof shall be given to each shareholder entitled to vote thereat, at least seven (7) days prior to the Meeting. The persons named as proxies will vote all proxies in favor of adjournment that voted in favor of the Proposal, and vote against adjournment all proxies that voted against the Proposal. Abstentions and broker non-votes will have the same effect at any adjourned meeting as noted above. Any business that might have been transacted at the Meeting may be transacted at any such adjourned meeting(s) at which a quorum is present.
We will admit to the Meeting (1) all shareholders of record on April 1, 2024 (the "Record Date"), (2) persons holding proof of beneficial ownership on the Record Date, such as a letter or account statement from the person's broker, (3) persons who have been granted proxies, and (4) such other persons that we, in our sole discretion, may elect to admit. To gain admittance, if you are a shareholder of record or a proxy holder of a shareholder of record, you must bring a form of personal identification to the Meeting, where your name will be verified against our shareholder list. If a broker or other nominee holds your shares and you plan to attend the Meeting, you should bring a recent brokerage statement showing your ownership of the shares, as well as a form of personal identification. If you are a beneficial owner and plan to vote at the Meeting, you should also bring a proxy card from your broker.
The Board has fixed the close of business on October 23, 2023,April 1, 2024 as the Record Date for the determination of shareholders entitled to notice of, and to vote at, the Meeting and at any adjournment or postponement thereof. Shareholders of the Fund as ofon the Record Date for the Fund will be entitled at the Meeting to one vote for each share held and a proportionate share of one vote for each fractional share held.the Meeting. As of the Record Date, 52,109,950 shares of the Fund were issued and outstanding.
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The common shares of the Fund are listed on the New York Stock Exchange (the "NYSE") under the ticker symbol "ACP" and will continue to be so listed following the Reorganizations. The common shares of the Acquired Funds are listed on the NYSE under the ticker symbols "FSD" and "FAM" for the First Trust High Income Long/Short Fund and the First Trust/abrdn Global Opportunity Income Fund, respectively and would be delisted from the NYSE following the Reorganizations. Shareholder reports, proxy statements and other information concerning Funds can be inspected at the NYSE.
The Board of Trustees of the Fund believes that the Reorganizations may benefit the Fund and its shareholders, including through economies of scale that could result from the increased total assets of the Fund. The Trustees considered that increased assets of the Fund following the Reorganizations may provide the Fund with additional liquidity and may decrease the total expense ratio of the Fund by spreading fixed expenses over a larger asset base. The Trustees also noted that aIL, the investment adviser to the Fund, had contractually agreed to limit total "Other Expenses" of the Combined Fund (excluding any interest, taxes, brokerage fees, short sale dividend and interest expenses and non-routine expenses) as a percentage of net assets attributable to common shares of the Combined Fund to 0.25% per annum of the Combined Fund's average daily net assets for twelve months following the closing of the Reorganizations and to 0.35% per annum of the Combined Fund's average daily net assets until June 30, 2025.
After careful consideration, the Board of Trustees of the Fund recommends that you vote "FOR" the Proposal.
Important Notice Regarding the Availability of Proxy Materials for the SpecialShareholder Meeting of Shareholders to Be Held on January 19, 2024.Thursday, May 16, 2024 at the offices of abrdn Inc., located at 1900 Market Street, Suite 200, Philadelphia, PA 19103. The proxy materials are available onProxy Materials and the Internet at https://vote.proxyonline.com/aberdeen/docs/acp.pdf.
The Fund's most recent annual report for the fiscal year ended October 31, 2022 and2023 are available on the Acquired Funds'Internet at http://www. abrdnacp.com/. The Fund will furnish, without charge, a copy of its annual reportsreport for the fiscal year ended October 31, 2022 for FSD and December 31, 2022 for FAM2023, and any more recent reports, forto any Fund shareholder upon request. To request a copy, please write to the Fund c/o abrdn Inc., 1900 Market Street, Suite 200, Philadelphia, PA 19103, or call 1-800-522-5465. You may also call for information on how to obtain directions to be able to register to attend the Meeting.
Proposal: Election of Common Share Trustee
The Fund's Amended and Restated Agreement and Declaration of Trust (the "Charter") provides that the Fund's Board be elected by holders of the Fund's common shares divided into three classes, as nearly equal in number as possible, each of which will serve for three years, with one class being elected each year. Each year the term of office of one class expires. Trustees who are deemed "interested persons" (as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940 Act")), of the Fund, the Fund's investment adviser, abrdn Investments Limited (the "Investment Adviser"), or the Fund's investment sub-adviser, abrdn Inc. (the
"Sub-Adviser"), are referred to in this Proxy Statement as "Interested Trustees." Trustees who are not interested persons, as described above, are referred to in this Proxy Statement as "Independent Trustees."
The Board, including the Independent Trustees, upon the recommendation of the Board's Nominating and Corporate Governance Committee, which is composed entirely of Independent Trustees, has nominated the following individual for election as a Class I Trustee as follows:
John Sievwright (Class I Trustee, 3-year term ending 2027)
Holders of the Fund's common shares and holders of the Fund's preferred shares will vote together to elect a Class I Trustee nominee.
The nominee has indicated an intention to serve if elected and has consented to be named in this Proxy Statement.
The Board knows of no reason why a nominee will be unable to serve, but in the event of any such inability, the proxies received will be voted for such substituted nominee as the Board may recommend.
It is the intention of the persons named on the enclosed proxy card to vote "FOR" the Proposal.
The following tables set forth certain information regarding the nominees for election to the Board, Trustees whose terms of office continue beyond the Meeting, and the Acquiredprincipal officers of the Fund.
Name, Address and
Year of Birth | | Position(s)
Held with
Fund | | Term of Office
and Length of
Time Served | | Principal Occupation(s)
During at Least the
Past Five Years | | Number of
Registered
Investment
Companies
("Registrants")
consisting of
Investment
("Portfolios")
in Fund
Complex*
Overseen by
Trustee or
Nominee for
Trustee | | Other
Directorships
Held by Trustee
or Nominee for
Trustee*** | |
Nominee for Independent Trustee: | |
John Sievwright** †
c/o abrdn Inc.
1900 Market Street,
Suite 200
Philadelphia, PA 19103
Year of Birth: 1955 | | Class I Trustee | | Term expires 2024, 2027 if elected
Trustee since 2017 | | Mr. Sievwright is a Non-Executive Director of Burford Capital Ltd (since May 2020) (provider of legal, finance, complex strategies, post-settlement finance and asset management services and products) and Revolut Limited, a UK-based digital banking firm (since August 2021); and Chair of the Board of LoopFX (fin-tech start-up operating in large foreign currency institutional transactions) (since Sept. 2022). | | 6 Registrants consisting of 8 Portfolios | | Non-Executive Director of Burford Capital Ltd (provider of legal finance, complex strategies, post-settlement finance and asset management services and products) since May 2020. | |
Name, Address and
Year of Birth | | Position(s)
Held with
Fund | | Term of Office
and Length of
Time Served | | Principal Occupation(s)
During at Least the
Past Five Years | | Number of
Registered
Investment
Companies
("Registrants")
consisting of
Investment
("Portfolios")
in Fund
Complex*
Overseen by
Trustee or
Nominee for
Trustee | | Other
Directorships
Held by Trustee
or Nominee for
Trustee*** | |
Independent Trustees whose terms of office continue beyond the Meeting: | |
P. Gerald Malone** †
c/o abrdn Inc.
1900 Market Street,
Suite 200
Philadelphia, PA 19103
Year of Birth: 1950 | | Chair of the Board and Class III Trustee | | Term expires 2026
Trustee since 2017 | | Mr. Malone is, by profession, a lawyer of over 40 years. Currently, he is a non-executive director of a number of U.S. companies, including Medality Medical (medical technology company) and Bionik Laboratories Corp. (US healthcare company) since 2018. He is also Chairman of many of the open and closed end funds in the Fund Complex. He previously served as Independent Chairman of UK companies Crescent OTC Ltd (pharmaceutical services) until February 2018; and fluidOil Ltd. (oil services) until June 2018; U.S. company Rejuvenan llc (wellbeing services) until September 2017 and as chairman of UK company Ultrasis plc (healthcare software services company) until October 2014. Mr. Malone was previously a Member of Parliament in the U.K. from 1983 to 1997 and served as Minister of State for Health in the U.K. government from 1994 to 1997. | | 8 Registrants consisting of 26 Portfolios | | Director of Bionik Laboratories Corporation (U.S. healthcare company) since 2018. | |
Name, Address and
Year of Birth | | Position(s)
Held with
Fund | | Term of Office
and Length of
Time Served | | Principal Occupation(s)
During at Least the
Past Five Years | | Number of
Registered
Investment
Companies
("Registrants")
consisting of
Investment
("Portfolios")
in Fund
Complex*
Overseen by
Trustee or
Nominee for
Trustee | | Other
Directorships
Held by Trustee
or Nominee for
Trustee*** | |
Randolph Takian** †
c/o abrdn Inc.
1900 Market Street,
Suite 200
Philadelphia, PA 19103
Year of Birth: 1974 | | Class III Trustee and Preferred Shares Trustee | | Term expires 2026
Trustee since 2010 | | Managing Director and Head of Bank and Lending of Global Wealth and Investment Management at Bank of America (since 2019); Vice President of Boulevard Acquisition Corp. II, a blank check company and an affiliate of Avenue Capital Group (from 2015 to 2019); President, Chief Executive Officer and Trustee of Avenue Mutual Funds Trust (from 2012 to 2019); Senior Managing Director and Head of Traditional Asset Management of Avenue Capital Group (from 2010 to 2019). Board Member and member of Executive Committee of Lenox Hill Neighborhood House, a non-profit. | | 1 Registrant consisting of 1 Portfolio | | None. | |
Name, Address and
Year of Birth | | Position(s)
Held with
Fund | | Term of Office
and Length of
Time Served | | Principal Occupation(s)
During at Least the
Past Five Years | | Number of
Registered
Investment
Companies
("Registrants")
consisting of
Investment
("Portfolios")
in Fund
Complex*
Overseen by
Trustee or
Nominee for
Trustee | | Other
Directorships
Held by Trustee
or Nominee for
Trustee*** | |
Nancy Yao ** †
c/o abrdn Inc.
1900 Market Street,
Suite 200
Philadelphia, PA 19103
Year of Birth: 1972 | | Class II Trustee and Preferred Shares Trustee | | Term expires 2025
Trustee since 2019 | | Ms. Yao is a lecturer on accounting and governance at Yale University. She is also a strategic consultant. Ms. Yao was the President of the Museum of Chinese in America from 2015 until 2023. Prior to that, she served as the executive director of the Yale-China Association and managing director of the corporate program at the Council on Foreign Relations. Prior to her work in non-profit, Ms. Yao launched the Asia coverage at the Center for Financial Research and Analysis (currently known as RiskMetrics), served as the inaugural director of policy research of Goldman Sachs' Global Markets Institute, and was an investment banker at Goldman Sachs (Asia) L.L.C. Ms. Yao is a board member of the National Committee on U.S.-China Relations, a member of the Council on Foreign Relations | | 8 Registrants consisting of 8 Portfolios | | None. | |
Name, Address and
Year of Birth | | Position(s)
Held with
Fund | | Term of Office
and Length of
Time Served | | Principal Occupation(s)
During at Least the
Past Five Years | | Number of
Registered
Investment
Companies
("Registrants")
consisting of
Investment
("Portfolios")
in Fund
Complex*
Overseen by
Trustee or
Nominee for
Trustee | | Other
Directorships
Held by Trustee
or Nominee for
Trustee*** | |
Interested Trustee whose term of office continues beyond the Meeting: | |
Stephen Bird ††
c/o abrdn Inc.
1900 Market Street,
Suite 200
Philadelphia, PA 19103
Year of Birth: 1967 | | Class II Trustee | | Term expires 2025
Trustee since 2021 | | Mr. Bird joined the Board of abrdn plc in July 2020 as Chief Executive-Designate and was formally appointed Chief Executive Officer in September 2020. Previously, Mr. Bird served as chief executive officer of global consumer banking at Citigroup from 2015, retiring from the role in November 2019. His responsibilities encompassed all consumer and commercial banking businesses in 19 countries, including retail banking and wealth management, credit cards, mortgages, and operations and technology supporting these businesses. Prior to this, Mr. Bird was chief executive for all of Citigroup's Asia Pacific business lines across 17 markets in the region, including India and China. Mr. Bird joined Citigroup in 1998, and during his 21 years with the company he held a number of leadership roles in banking, operations and technology across its Asian and Latin American businesses. Before this, he held management positions in the UK at GE Capital—where he was director of UK operations from 1996 to 1998—and at British Steel. | | 15 Registrants consisting of 33 Portfolios | | None. | |
* As of the most recent fiscal year end, the Fund Complex has a total of 18 Registrants with each Board member serving on the number of Registrants listed. Each Registrant in the Fund Complex has one Portfolio except for two Registrants that are open-end
funds, abrdn Funds filed afterand abrdn ETFs, which each have multiple portfolios. The Registrants in the date hereof, may be obtained without charge:
for the Fund:
By Phone: 1-800-522-5465
By Mail:Fund Complex are as follows: abrdn Asia-Pacific Income Fund, Inc., abrdn Global Income Fund, Inc., abrdn Australia Equity Fund, Inc., abrdn Japan Equity Fund, Inc., The India Fund, Inc., abrdn Emerging Markets Equity Income Fund, Inc., abrdn Income Credit Strategies Fund,
c/o abrdn Inc.
1900 Market Street, Suite 200
Philadelphia, PA 19103
By Internet: www.abrdnacp.com
for FSD:
By Phone: (630) 765-8000
By Mail: First Trust High Income Long/Short Fund
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
By Internet: www.ftportfolios.com
for FAM:
By Phone: (630) 765-8000
By Mail: First Trust/abrdn Global OpportunityDynamic Dividend Fund, abrdn Total Dynamic Dividend Fund, abrdn Global Premier Properties Fund, abrdn Global Infrastructure Income Fund,
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
By Internet: www.ftportfolios.com
2
The abrdn Funds (which consists of 19 portfolios), abrdn National Municipal Income Fund, abrdn Healthcare Investors, abrdn Life Sciences Investors, abrdn Healthcare Opportunities Fund, abrdn World Healthcare Fund and abrdn ETFs (which consists of 3 portfolios).
** Member of the Acquired Funds are subjectNominating and Corporate Governance Committee.
*** Current directorships (excluding Fund Complex) as of the most recent fiscal year end held in (1) any other investment companies registered under the 1940 Act, (2) any company with a class of securities registered pursuant to the informational requirementsSection 12 of the Securities Exchange Act of 1934, as amended (the "1934 Act"), or (3) any company subject to the requirements of Section 15(d) of the Exchange Act.
† Member of the Audit Committee.
†† Deemed to be an Interested Trustee of the Fund because of his position with abrdn plc, the parent company of the Investment Adviser and Sub-Adviser.
ADDITIONAL INFORMATION ABOUT THE TRUSTEES
The Board believes that each Trustee's experience, qualifications, attributes and skills on an individual basis and in accordance therewith, file reports, proxy statements, proxy materialscombination with those of the other Trustees lead to the conclusion that the Trustees possess the requisite experience, qualifications, attributes and skills to serve on the Board. The Board believes that the Trustees' ability to review critically, evaluate, question and discuss information provided to them; to interact effectively with the Investment Adviser, Sub-Adviser, other service providers, counsel and independent auditors; and to exercise effective business judgment in the performance of their duties, support this conclusion. The Board has also considered the contributions that each Trustee can make to the Board and to the Fund. A Trustee's ability to perform his or her duties effectively may have been attained through the Trustee's executive, business, consulting, and/or legal positions; experience from service as a Trustee of the Fund and other funds/portfolios in the abrdn complex, other investment funds, public companies, or non-profit entities or other organizations; educational background or professional training or practice; and/or other life experiences. In this regard, the following specific experience, qualifications, attributes and/or skills apply as to each Trustee in addition to the information set forth in the table above: Ms. Yao, financial and research analysis experience in and covering the Asia region and experience in world affairs; Mr. Malone, legal background and public service leadership experience, board experience with other public and private companies, and executive and business consulting experience; Mr. Sievwright, banking and accounting experience and experience as a board member of public companies; Mr. Takian, product development, marketing and management experience in investment management industry; and Mr. Bird, Chief Executive Officer of abrdn and prior Chief Executive Officer of other public companies.
The Board believes that the significance of each Trustee's experience, qualifications, attributes or skills is an individual matter (meaning that experience important for one Trustee may not have the same value for another) and that these factors are best evaluated at the Board level, with no single Trustee, or particular factor, being indicative of Board effectiveness. In its periodic self-assessment of the effectiveness of the Board, the Board considers the complementary individual skills and experience of the individual Trustees in the broader context of the Board's overall composition so that the Board, as a body, possesses the appropriate (and appropriately diverse) skills and experience to oversee the business of the Fund. References to the qualifications, attributes and skills of Trustees are presented pursuant to disclosure requirements of the Securities and Exchange Commission ("SEC"). You also may view and do not constitute holding out the Board or obtainany Trustee as having any special expertise or experience, and shall not impose any greater responsibility or liability on any such person or on the foregoing documentsBoard by reason thereof.
OFFICERS
Name, Address and
Year of Birth | | Positions(s) Held
With Fund | | Term of Office
and Length of
Time Served* | | Principal Occupation(s) During at Least the Past Five Years | |
Joseph Andolina**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1978 | | Chief Compliance Officer and Vice President—
Compliance | | Since 2017 | | Currently, Chief Risk Officer—Americas for abrdn Inc. and serves as the Chief Compliance Officer for abrdn Inc. Prior to joining the Risk and Compliance Department, he was a member of abrdn Inc.'s Legal Department, where he served as U.S. Counsel since 2012. | |
Katherine Corey**
c/o abrdn Inc.,
1900 Market St, Suite 200
Philadelphia, PA 19103
Year of Birth: 1985 | | Vice President | | Since 2023 | | Currently, Senior Legal Counsel, Product Governance US for abrdn Inc. Ms. Corey joined abrdn Inc. as U.S. Counsel in 2013. | |
Sharon Ferrari**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1977 | | Treasurer and Chief Financial Officer | | Treasurer and Chief Financial Officer since 2023. Fund officer since 2017 | | Currently, Director, Product Management for abrdn Inc. Ms. Ferrari joined abrdn Inc. as a Senior Fund Administrator in 2008. | |
Katie Gebauer**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1986 | | Vice President | | Since 2023 | | Currently, Chief Compliance Officer—ETFs and serves as the Chief Compliance Officer for abrdn ETFs Advisors LLC. Ms. Gebauer joined abrdn Inc. in 2014. | |
Alan Goodson**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1974 | | Vice President | | Since 2017 | | Currently, Executive Director, Product & Client Solutions—Americas for abrdn Inc., overseeing Product Management and Governance, Product Development and Client Solutions for registered and unregistered investment companies in the U.S., Brazil and Canada. Mr. Goodson is Director and Vice President of abrdn Inc. and joined abrdn Inc. in 2000. | |
Heather Hasson**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1982 | | Vice President | | Since 2022 | | Currently, Senior Product Solutions and Implementation Manager, Product Governance US for abrdn Inc. Ms. Hasson joined abrdn Inc. in 2006. | |
Robert Hepp**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1986 | | Vice President | | Since 2022 | | Currently. Senior Product Governance Manager, Product Governance US at abrdn Inc. Mr. Hepp joined abrdn Inc. in 2016. | |
Name, Address and
Year of Birth | | Positions(s) Held
With Fund | | Term of Office
and Length of
Time Served* | | Principal Occupation(s) During at Least the Past Five Years | |
Matthew Kence
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1974 | | Vice President | | Since 2022 | | Currently an Investment Director on the Fixed Income team at abrdn Inc. Mr. Kence joined abrdn Inc. in 2010. | |
Megan Kennedy**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1974 | | Vice President, Secretary | | Since 2017 | | Currently, Senior Director, Product Governance for abrdn Inc. Ms. Kennedy joined abrdn Inc. in 2005. | |
Andrew Kim**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1983 | | Vice President | | Since 2022 | | Currently. Senior Product Governance Manager, Product Governance US for abrdn. Mr. Kim joined abrdn Inc. in 2013. | |
Brian Kordeck**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1978 | | Vice President | | Since 2022 | | Currently, Senior Product Manager- US for abrdn Inc. Mr. Kordeck joined abrdn Inc. in 2013. | |
Michael Marsico**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1980 | | Vice President | | Since 2022 | | Currently, Senior Product Manager- US for abrdn Inc. Mr. Marsico joined abrdn Inc. in 2014. | |
Ben Pakenham
c/o abrdn Investments Limited
280 Bishopsgate
London EC2M 4AG
United Kingdom
Year of Birth: 1973 | | Vice President | | Since 2017 | | Currently, Head of European High Yield and Global Loans. Mr. Pakenham joined abrdn in 2011. | |
Christian Pittard**
c/o abrdn Investments Limited
280 Bishopsgate
London EC2M 4AG
United Kingdom
Year of Birth: 1973 | | President | | Since 2017 | | Currently, Head of Closed End Funds & Managing Director—Corporate Finance Mr. Pittard joined abrdn from KPMG in 1999. | |
Name, Address and
Year of Birth | | Positions(s) Held
With Fund | | Term of Office
and Length of
Time Served* | | Principal Occupation(s) During at Least the Past Five Years | |
Lucia Sitar**
c/o abrdn Inc.,
1900 Market Street, Suite 200
Philadelphia, PA 19103
Year of Birth: 1971 | | Vice President | | Since 2017 | | Currently, Vice President and Head of Product Management and Governance for abrdn Inc.—since 2020. Previously, Ms. Sitar was Managing U.S. Counsel for abrdn Inc.. Ms. Sitar joined abrdn Inc. as U.S. Counsel in July 2007. | |
George Westervelt**
abrdn Inc.
28 State Street
17th floor
Boston, MA 02109
Year of Birth: 1977 | | Vice President | | Since 2023 | | Currently, Head of Global High Yield and Head of U.S. High Yield Research for abrdn Inc. | |
* Officers hold their positions with the SEC:
By e-mail: publicinfo@sec.gov (duplicating fee required)
By Internet: www.sec.gov
This Proxy Statement sets forth concisely the information that shareholdersFund until a successor has been duly elected and qualifies. Officers are appointed annually at a meeting of the Fund should know before voting on the Proposal. Please read it carefully and retain it for future reference. No person has been authorized to give any informationBoard.
** Each Officer may hold officer position(s) in one or make any representation not contained in this Proxy Statement and, if so given or made, such information or representation must not be relied upon as having been authorized.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE FUND'S SHARES TO BE ISSUED IN THE REORGANIZATION OR PASSED UPON THE ADEQUACY OF THIS PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROPOSAL
To approve the issuance of additional common shares of beneficial interestmore other funds which are part of the Fund Complex.
Ownership of Securities
Set forth in connection with the reorganizationtable below is the dollar range of First Trust High Income Long/Short Fund and First Trust/abrdn Global Opportunity Income Fund, each a closed-end fund, with and into the Fund
General
The proposed Reorganizations seek to combine each Acquired Fund with and into the Fund (collectively, the "Funds") to ensure the viability of the Funds, increasing scale, liquidity and marketability. The consolidation of each Acquired Fund with the Fund would be effected pursuant to the respective Agreements and Plans of Reorganization betweenequity securities in the Fund and the aggregate dollar range of equity securities in the abrdn Family of Investment Companies (as defined below) beneficially owned by each Acquired Fund (each, a "Reorganization Agreement" and, collectively, the "Reorganization Agreements"), and is subject to the approval of each Acquired Fund's shareholders. Each ReorganizationTrustee or nominee.
Name of Trustee or Nominee | | Dollar Range of Equity
Securities Owned in the Fund(1) | | Aggregate Dollar Range of Equity
Securities in All Funds Overseen by
Trustee or Nominee in the Family of
Investment Companies(2) | |
Independent Trustees/Nominees: | |
Nancy Yao | | $1-$10,000 | | $50,001-$100,000 | |
P. Gerald Malone | | $10,001-$50,000 | | $50,001-$100,000 | |
John Sievwright | | $50,001-$100,000 | | $50,001-$100,000 | |
Randolph Takian | | $10,001-$50,000 | | $10,001-$50,000 | |
Interested Trustee: | |
Stephen Bird | | $1-$10,000 | | $50,001-$100,000 | |
(1) This information has been approvedfurnished by each Trustee as of October 31, 2023. "Beneficial ownership" is determined in accordance with Rule 16a-1(a)(2) promulgated under the Securities Exchange Act of 1934, as amended (the "1934 Act").
(2) "Family of Investment Companies" means those registered investment companies that are advised by the Investment Adviser or an affiliate and that hold themselves out to investors as related companies for purposes of investment and investor services.
As of October 31, 2023, the Trustees and officers, in the aggregate, owned less than 1% of the Fund's outstanding equity securities. As of October 31, 2023, none of the Independent Trustees or their immediate family members owned any shares of the Investment Adviser or Sub-Adviser or of any person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with the Investment Adviser or Sub-Adviser.
Mr. Pittard and Ms. Ferrari serve as executive officers of the Fund. As of October 31, 2023, Mr. Pittard and Ms. Ferrari did not own shares of the Fund.
BOARD AND COMMITTEE STRUCTURE
The Board butis currently composed of four Independent Trustees and one Interested Trustee, Stephen Bird. The Fund's Charter provides that the Board shall be divided into three classes: Class I, Class II and Class III. The terms of office of the Trustees in each class expire at the annual meeting of shareholders in the year indicated or thereafter in each case when their respective successors are elected and qualified: II in 2025, Class III in 2026 and Class I (if elected) in 2027.
The Board has appointed Mr. Malone, an Independent Trustee, as Chair. The Chair presides at meetings of the Trustees, participates in the preparation of the agenda for meetings of the Board, and acts as a liaison between the Trustees and management between Board meetings. Except for any duties specified herein, the designation of the Chair does not require approval byimpose on such Trustee any duties, obligations or liability that is greater than the Fund's shareholders. Shareholdersduties, obligations or liability imposed on such person as a member of the Board, generally.
The Board holds regular quarterly meetings each year to consider and address matters involving the Fund. The Board also may hold special meetings to address matters arising between regular meetings. The Independent Trustees also meet outside the presence of management in executive session at least quarterly and have engaged separate, independent legal counsel to assist them in performing their oversight responsibilities.
The Board has established a committee structure that includes an Audit Committee and a Nominating and Corporate Governance Committee (each discussed in more detail below) to assist the Board in the oversight and direction of the business affairs of the Fund, however, are being askedand from time to approvetime may establish informal ad hoc committees or working groups to review and address the Proposal to enable the Fund to issue the shares necessary to complete each Reorganization. Although the Fund will continue its legal existence and operations after each Reorganization, the rules of the NYSE (on which the Fund's common shares are listed) require the Fund's shareholders to approve the issuance of additional common shares in connection with each Reorganization.
Following the Reorganizations, shareholderspractices of the Fund will experience an increase inwith respect to specific matters. The Committee system facilitates the assets under management. The Reorganizations are expected to benefittimely and efficient consideration of matters by the Trustees and facilitates effective oversight of compliance with legal and regulatory requirements and of the Fund's shareholdersactivities and associated risks. The standing Committees currently conduct an annual review of their charters, which includes a review of their responsibilities and operations. The Nominating and Corporate Governance Committee and the Board as a whole also conduct an annual self-assessment of the performance of the Board, including consideration of the effectiveness of the Board's Committee structure. Each Committee is comprised entirely of Independent Trustees. Each Committee member is also "independent" within the meaning of the New York Stock Exchange ("NYSE") listing standards. The Board reviews its structure regularly and believes that its leadership structure, including having a super-majority of Independent Trustees, coupled with an Independent Trustee as Chair, is appropriate because it allows the Board to exercise informed and independent judgment over the matters under its purview and it allocates areas of responsibility among the Committees and the full Board in a numbermanner that enhances efficient and effective oversight.
Audit Committee
The Audit Committee, established in accordance with Section 3(a)(58)(A) of important ways. The Reorganizations are expected to provide greater opportunities to realize economiesthe 1934 Act, is responsible for the selection and engagement of scale by combining the Fund's assets withindependent registered public accounting firm (subject to ratification by the assetsIndependent Trustees), pre-approves and reviews both the audit and non-audit work of the Acquired Funds resultingFund's independent registered public accounting firm, and reviews compliance of the Fund with regulations of the SEC and the Internal Revenue Service, and other related matters. The members of the Fund's Audit Committee are Ms. Nancy Yao and Messrs. P. Gerald Malone, Randolph Takian and John Sievwright.
The Board has adopted an Audit Committee Charter for its Audit Committee, the current copy of which is available on the Fund's website at http://www.abrdnacp.com.
Nominating and Corporate Governance Committee; Consideration of Potential Trustee Nominees
The Nominating and Corporate Governance Committee recommends nominations for membership on the Board and reviews and evaluates the effectiveness of the Board in a larger fund.
There are no proposedits role in governing the Fund and overseeing the management of the Fund. It evaluates candidates' qualifications for Board membership and, with respect to nominees for positions as Independent Trustees, their independence from the Investment Adviser and Sub-Adviser, as appropriate, and other principal service providers. The Nominating and Corporate Governance Committee generally meets twice annually to identify and evaluate nominees for trustee and makes its recommendations to the Board at the time of the Board's December meeting. The Nominating and Corporate Governance Committee also periodically reviews trustee compensation and will recommend any appropriate changes to the current investment objective, strategies, structure or policiesBoard. The Nominating and Corporate Governance Committee also reviews and may make recommendations to the Board relating to the effectiveness of the Fund as a result ofBoard in carrying out its responsibilities in governing the Reorganizations, including the Fund's monthly distribution policy. The Fund as it would exist after each Reorganization is referred to as the "Combined Fund."
Subject to shareholder approval of each Reorganization Agreement by the shareholders of the respective Acquired Fund and ofoverseeing the issuance of Fund common shares by the shareholders of the Fund, each Reorganization Agreement provides for:
• the transfer of all of the assets of the Acquired Fund to the Fund, in exchange solely for shares of the Fund (although cash may be distributed in lieu of fractional shares of the Fund);
• the assumption by the Fund of all liabilities of the Acquired Fund;
3
• the distribution of common shares of the Fund to the shareholders of the Acquired Fund; and
• the complete liquidation of the Acquired Fund.
It is currently expected that each Reorganization will occur in the first quarter of 2024.
The aggregate net asset value (not the market value) of Fund common shares received by the shareholders of each Acquired Fund in the Reorganization would equal the aggregate net asset value (not the market value) of the Acquired Funds common shares held immediately prior to each Reorganization (although shareholders may receive cash for fractional shares of the Fund). The market value of the common shares of the Fund after the Reorganizations may be more or less than the market value of the common shares of the Fund prior to the Reorganizations.
The Reorganization of an Acquired Fund is not contingent on the approval of the other Acquired Fund's shareholders (i.e., a Reorganization of one of the Acquired Funds, if approved by that Acquired Fund's shareholders, may still proceed if the other Reorganization is not approved by the other Acquired Fund's shareholders).
At the closing of each Reorganization, each Reorganization Agreement sets forth that the Acquired Fund assets will be valued in accordance with the Acquired Fund's valuation procedures as approved by the Board of the Acquired Fund. Upon the consummation of the Reorganization, the assets transferred to the Fund will be valued pursuant to the Fund's valuation procedures as approved by the Board of Trusteesmanagement of the Fund. The valuation procedures for the Acquired Funds, on the one hand, and the Fund, on the other hand, differ in certain respects.
For purposes of determining an Acquired Fund's net asset value, corporate, sovereign, government, foreign, mortgage backed, and capital preferred fixed income securities and senior floating rate bank loans are priced at the mean of evaluated bid and asked prices provided by third-party pricing vendors on the valuation date. In contrast, the Fund values such securities at the bid price provided by third-party pricing vendors.
If a Reorganization is approved by shareholders and assuming that FSD's and FAM's fixed income holdings are not sold in advance of the respective Reorganization, this difference in valuation procedures will have a negative impact on the value of a shareholder's investment immediately after the respective Reorganization is consummated, and all else being equal, the net asset value per share of the Fund will be less than the net asset value per share of the respective Acquired Fund. For example, if ACP's valuation procedures were used to value FSD and FAM's fixed income security holdings as of September 29, 2023, the value of the Combined Fund's shares is estimated to be reduced by approximately $1,052,639 (0.13% of the Combined Fund as of September 29, 2023) or $0.009 per share of the Combined Fund.
Following each Reorganization, the Combined Fund expects to realign its portfolio in a manner consistent with its investment strategies and policies, which will be the same as the Fund's current strategies and policies. The Combined Fund may not be invested consistent with its investment strategies or aIL's investment approach while such realignment occurs. The realignment is anticipated to take approximately one week following the closing of the Reorganizations, based on current market conditions and assuming that the Acquired Funds' holdings are the same as of September 21, 2023. Sales and purchases of less liquid securities could take longer. Based on the FSD and FAM holdings as of September 21, 2023, the Combined Fund expects to sell approximately 99% of FAM's portfolio following the closing of the Reorganization. As of September 21, 2023, the expected cost to sell 99% of FAM's holdings following the closing of the Reorganizations, which is estimated to equal 7.7% of the Combined Fund's portfolio, would be approximately $315,300 (or 0.04% of the estimated NAV of the Combined Fund as of September 21, 2023) or $0.0026 per share. The Combined Fund currently does not expect to sell any of FSD's portfolio following the closing of the Reorganization. To the extent there are any transaction costs (including brokerage commissions, transaction charges and related fees) associated with the sales and purchases made in connection with the respective Reorganization, these will be borne by the respective Acquired Fund with respect
4
to the portfolio transitioning conducted before the Reorganizations and borne by the Combined Fund with respect to the portfolio transitioning conducted after the Reorganizations. To the extent an Acquired Fund has holdings in France, Spain and/or Italy, such countries may impose an additional foreign transfer tax on the transfer of such securities to the Fund. These taxes are in addition to the transaction costs disclosed above and would be borne by the applicable Acquired Fund. The portfolio transitioning pre- and post-Reorganizations may result in capital gains or losses, which may have federal income tax consequences for shareholders of the Acquired Funds and the Combined Fund.
The actual tax consequences as a result of portfolio repositioning after the closing of a Reorganization is dependent on the portfolio composition of the relevant Acquired Fund at the time of closing and market conditions. Any net capital gain resulting from the realignment coupled with the resultsmembers of the Fund's normal operations duringNominating and Corporate Governance Committee are Ms. Nancy Yao and Messrs. P. Gerald Malone, Randolph Takian and John Sievwright.
The Board has adopted a Nominating and Corporate Governance Committee Charter, a copy of which is available on the tax year followingFund's website at http://www.abrdnacp.com.
The Nominating and Corporate Governance Committee may take into account a wide variety of factors in considering prospective trustee candidates, including (but not limited to): (i) availability (including availability to attend to Board business on short notice) and commitment of a candidate to attend meetings and perform his or her responsibilities on the closeBoard; (ii) relevant industry and related experience; (iii) educational background; (iv) reputation; (v) financial expertise; (vi) the candidate's ability, judgment and expertise; (vii) overall diversity of the Reorganization would be distributedBoard's composition; and (viii) commitment to the shareholder baserepresentation of the Combined Fund post-Reorganization in connection with the annual distribution requirements under U.S. federal tax laws.
Each Fund is a closed-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"). FSD and FAM are Massachusetts business trusts and diversified closed-end management investment companies. The Fund is a Delaware statutory trust and a diversified closed-end management investment company. Each Fund's common shares are listed on the New York Stock Exchange. The Acquired Funds and the Fund have different investment advisers. First Trust Advisors L.P. ("First Trust") is the investment manager of each Acquired Fund. MacKay Shields LLC ("MacKay") is the sub-adviser of FSD and abrdn Inc. is the sub-adviser of FAM. aIL is the investment adviserinterests of the Fund and abrdn Inc. isits shareholders. The Nominating and Corporate Governance Committee also considers the investment sub-advisereffect of any relationships beyond those delineated in the Fund.1940 Act that might impair independence, such as business, financial or family relationships with the Investment Adviser or Sub-Adviser or their affiliates, as appropriate. The Funds have similar investment objectives, principal investment strategiesNominating and principal risks, with some differences. The investment objectives, principal investment strategies, principal risks and distribution procedures ofCorporate Governance Committee will consider potential trustee candidates, if any, recommended by Fund shareholders provided that the Combined Fund will be the same as those of the Fund.
FSD's primary investment objective is to provide current income, with a secondary objective of capital appreciation. Each of FAM's and the Fund's primary investment objective is to is to seek a high level of current income with a secondary objective of capital appreciation.
For federal income tax purposes, each Reorganization is intended to be structured as a tax-free transaction.
Board Considerations
The Board requests that, at the Meeting, shareholdersproposed candidates: (i) satisfy any minimum qualifications of the Fund approve the issuance of additional common shares of the Fund in connection with the Reorganizations.
Atfor its special telephonic meeting held on October 20, 2023, the Board, including a majority of the Trustees whotrustees; (ii) are not "interested persons" of the Fund, as that term is defined in the 1940 Act (the "Independent Trustees"), approvedAct; and (iii) are "independent" as defined in the issuancelisting standards of additional commonany exchange on which the Fund's shares are listed.
While the Nominating and Corporate Governance Committee has not adopted a particular definition of diversity or a particular policy with regard to the consideration of diversity in identifying candidates, when considering a candidate's and the Board's diversity, the Committee generally considers the manner in which each candidate's leadership, independence, interpersonal skills, financial acumen, integrity and professional ethics, educational and professional background, prior trustee or executive experience, industry knowledge, business judgment and specific experiences or expertise would complement or benefit the Board and, as a whole, contribute to the ability of the Board to oversee the Fund. The Committee may also consider other factors or attributes as they may determine appropriate in their judgment. The Committee believes that the significance of each candidate's background, experience, qualifications, attributes or skills must be considered in the context of the Board as a whole.
Pursuant to the Fund's bylaws, for any business to be properly brought before an annual meeting by a shareholder, including the nominating of persons for election as Trustees, the shareholder must have given timely notice thereof in writing to the Secretary of the Fund and such business must otherwise be a proper matter for action by the shareholders. To be timely, a shareholder's notice must be delivered to the Secretary of the Fund at the principal executive offices of the Fund not later than the close of business on the ninetieth (90th) day, nor earlier than the close of business on the one
hundred twentieth (120th) day, prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the shareholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Fund. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a shareholder's notice as described above.
Any shareholder may obtain a copy of the Fund's Charter or bylaws by calling the Investor Relations department of abrdn Inc. toll-free at 1-800-522-5465, or by sending an e-mail to abrdn Inc. at Investor.Relations@abrdn.com.
Board Oversight of Risk Management
The Fund is subject to a number of risks, including, among others, investment, compliance, operational and valuation risks. Risk oversight forms part of the Board's general oversight of the Fund and is addressed as part of various Board and Committee activities. The Board has adopted, and periodically reviews, policies and procedures designed to address these risks. Different processes, procedures and controls are employed with respect to different types of risks. Day-to-day risk management functions are subsumed within the responsibilities of the Investment Adviser, who carries out the Fund's investment advisory and business affairs, and also by abrdn Inc. and other service providers in connection with the Reorganizations and the Reorganization Agreements. In approving the issuance of additional common shares in connection with the Reorganizations and the Reorganization Agreements, the Board determined that the issuance of additional common shares in connection with the Reorganizations may benefit the Fund and its shareholders. The Board considered a number of factors in reaching its determinations, including, but not limitedservices they provide to the following:
• the representation by aIL and abrdn Inc. that the investment objectives, principal investment strategies, principal risks and distribution proceduresFund. Each of the Combined Fund will beInvestment Adviser and Sub-Adviser, as applicable, the same as those of the Fund;
• that aILFund's administrator and abrdn Inc.other service providers have their own, independent interest in risk management, and their affiliatespolicies and First Trustmethods of risk management will depend on their functions and business models. As part of its affiliates will bear expenses incurred in connection with the Reorganizations, except as otherwise disclosed in the proxy statements to Acquired Fund and Acquiring Fund shareholders including portfolio transaction costs and certain taxes, whether or not a Reorganization is consummated. To the extent there are any transaction costs (including brokerage commissions, transaction charges and related fees) associated with the sales and purchases made in connection with the Reorganizations, these will be borne
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by the applicable Acquired Fund with respect to the portfolio transitioning conducted before the Reorganizations and borne by the Combined Fund with respect to the portfolio transitioning conducted after the Reorganizations;
• the potential effect of the Reorganizations on the total annual operating expense ratio of the Combined Fund following the Reorganizations. The Board noted that, following the consummation of the Reorganizations, the total annual operating expense ratio (excluding interest expense) of the Combined Fund is expected to be the same as the current total annual operating expense ratio (excluding interest expense)regular oversight of the Fund, the Board, directly and/or through a Committee, interacts with and that the total annual operating expense ratios, net of waiver, of the Combined Fund, based both on net assetsreviews reports from, among others, Investment Adviser and on managed assets, are expected to be lower than the current total annual operating expenses ratios, net of waiver, of the Fund.
• that aIL, the investment adviser of the Fund, has entered into a written contract (the "Expense Limitation Agreement") with the Fund that is effective through October 31, 2024. In connection with the Reorganizations, aIL has contractually agreed to limit total "Other Expenses" of the Combined Fund (excluding any interest, taxes, brokerage fees, short sale dividendSub-Adviser, as applicable, and interest expenses and non-routine expenses) as a percentage of net assets attributable to common shares of the Combined Fund to 0.25% per annum of the Combined Fund's average daily net assets for twelve months following the closing of the Reorganization and 0.35% per annum of the Fund's average daily net assets until June 30, 2025.
•other service providers (including the differences in valuation policies betweenFund's transfer agent), the Acquired Fund andFund's Chief Compliance Officer, the Fund.
• the existence of a separate agreement between First Trust, abrdn Inc. and, for the purposes specified therein, abrdn plc. (the "Purchase Agreement") pursuant to which abrdn Inc. will acquire certain assets related to First Trust's business of providing investment management services with respect to the assets of the Acquired Funds and certain otherFund's independent registered investment companies (the "Business") if the Reorganizations are approved, and upon satisfaction or waiver of certain other conditions. More specifically, under the Purchase Agreement, First Trust has agreed to transfer to abrdn Inc., for a cash payment at the closing of the Asset Transfer (as defined below) and subject to certain exceptions, (i) all right, title and interest of First Trust in and to the books and records relating to the Business; (ii) all records required to be maintained to substantiate the track record of the Business; and (iii) all goodwill of the Business as a going concern; and
• that the Fund would be thepublic accounting and performance survivor of each Reorganization.
The Board's determination to approve the Reorganization Agreements and the issuance of common shares was made on the basis of each Trustee's business judgment after consideration of all the factors taken as a whole with respectfirm, legal counsel to the Fund, and its shareholders, although individual Trustees may have placed different weight and assigned different degrees of materialityinternal auditors, as appropriate, relating to various factors.
Information about the Reorganization
Pursuant to each Reorganization Agreement (a form of which is attached as Appendix A to this Proxy Statement), eachoperations of the Acquired Funds will transferFund. The Board also requires the Investment Adviser to report to the Board on other matters relating to risk management on a regular and as-needed basis. The Board recognizes that it may not be possible to identify all of the risks that may affect the Fund or to develop processes and controls to eliminate or mitigate their occurrence or effects. The Board may, at any time and in its assetsdiscretion, change the manner in which it conducts risk oversight.
Board and Committee Meetings in Fiscal Year 2023
During the Fund's fiscal year ended October 31, 2023, the Board held seven meetings; the Audit Committee held three meetings; and the Nominating and Corporate Governance Committee held one meeting. During such period, each incumbent Trustee attended at least 75% of the aggregate number of meetings of the Board and of Committees of the Board on which he or she served.
Communications with the Board of Trustees
Shareholders who wish to communicate with Trustee(s) with respect to matters relating to the Fund may address their written correspondence to the Board as a whole or to individual Trustee(s) c/o abrdn Inc. (the "Administrator"), the Fund's administrator, at 1900 Market Street, Suite 200, Philadelphia, PA 19103, or via e-mail to the Trustee(s) c/o abrdn Inc. at Investor.Relations@abrdn.com.
Trustee Attendance at Annual Meetings of Shareholders
The Fund has not established a policy with respect to Trustees attendance at annual meetings of shareholders.
REPORTS OF THE AUDIT COMMITTEE; INFORMATION REGARDING THE FUND'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected, and the Fund will assume all liabilitiesIndependent Trustees have ratified the selection of, KPMG LLP ("KPMG"), 1601 Market Street, Philadelphia, PA 19103, an independent registered public accounting firm, to audit the respective Acquired Fund in exchange solely for newly issued common shares of the Fund (although shareholders will receive cash for fractional shares of the Fund), which will be distributed by the Acquired Funds to their shareholders in the form of a liquidating distribution. Fund common shares issued to the Acquired Funds' shareholders will have an aggregate net asset value equal to the aggregate net asset value of the Acquired Funds' outstanding common shares immediately prior to the Reorganization. Each shareholder of the Acquired Funds will receive the number of Fund common shares corresponding to his or her proportionate interest in the common shares of the respective Acquired Fund (although cash may be issued lieu of fractional shares of the Fund). The
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Reorganization, together with related acts necessary to consummate the same, is anticipated to occur in the first quarter of 2024 (the "Closing Date") As soon as practicable after the Closing Date, each Acquired Fund will dissolve pursuant to Massachusetts law.
The distribution of Fund common shares to the Acquired Funds' shareholders will be accomplished by, to the extent that shareholders do not have accounts on the books of the Fund, opening new accounts on the books of the Fund in the names of the shareholders of the Acquired Funds, and transferring to those shareholder accounts Fund common shares. Each newly-opened account on the booksfinancial statements of the Fund for the former shareholdersfiscal year ending October 31, 2023. Representatives from KPMG are not expected to be present at the Meeting to make a statement or respond to questions from shareholders. If requested by any shareholder by two (2) business days before the Meeting, a representative from KPMG will be present by telephone at the Meeting to respond to appropriate questions and will have an opportunity to make a statement if he or she chooses to do so.
The Audit Committee has received from KPMG the written disclosures and the letter required by the Public Company Accounting Oversight Board ("PCAOB") regarding KPMG's communications with the Audit Committee concerning independence and has discussed with KPMG its independence. The Audit Committee has also reviewed and discussed the audited financial statements with Fund management and KPMG and discussed matters with KPMG required to be discussed by the applicable requirements of the Acquired Funds will representPCAOB and the respective pro rata number of Fund common shares dueSEC. Based on the foregoing, the Audit Committee recommended to such shareholder.the Board that the Fund's audited financial statements be included in the Fund's annual report to shareholders for the fiscal year ended October 31, 2023.
Summary of Certain AspectsThe following table sets forth the aggregate fees billed for professional services rendered by KPMG during the Fund's two most recent fiscal years ended October 31:
| | | 2023 | | 2022 | |
Audit Fees(1) | | $ | 129,000 | | | $ | 94,740 | | |
Audit-Related Fees(2) | | $ | 0 | | | $ | 0 | | |
Tax Fees(3) | | $ | 0 | | | $ | 0 | | |
All Other Fees(4) | | $ | 0 | | | $ | 0 | | |
(1) "Audit Fees" are the aggregate fees billed for professional services for the audit of the Delaware Control Share StatuteFund's annual financial statements and services provided in connection with statutory and regulatory filings or engagements.
Because(2) "Audit Related Fees" are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements that are not reported under "Audit Fees". These fees include offerings related to the Fund's common shares.
(3) "Tax Fees" are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. These fees include: federal and state income tax returns, review of excise tax distribution calculations and federal excise tax return.
(4) "All Other Fees" are the aggregate fees billed for products and services other than "Audit Fees," "Audit-Related Fees" and "Tax Fees."
All of the services described in the table above were pre-approved by the Audit Committee.
The Audit Committee is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent registered public accounting firm to the Fund and (ii) all permissible non-audit services to be provided by the independent registered public accounting firm to the Fund's Investment Adviser, and any service provider to the Fund controlling, controlled by or under common control with the Fund's Investment Adviser that provided ongoing services to the Fund ("Covered Service Provider"), if the engagement relates directly to the operations and
financial reporting of the Fund. The following table shows the amount of fees that KPMG billed during the Fund's last two fiscal years for non-audit services to the Fund, the Investment Adviser, and Covered Service Providers:
Fiscal Year Ended | | Total Non-Audit Fees
Billed to the Fund* | | Total Non-Audit Fees
billed to the Investment
Adviser and Covered Service
Providers (engagements
related directly to the
operations and financial
reporting of the Fund) | | Total Non-Audit Fees
billed to the Investment
Adviser and Covered Service
Providers (all other
engagements) | | Total | |
October 31, 2023 | | $ | 0 | | | $ | 0 | | | $ | 1,171,994 | | | $ | 1,171,994 | | |
October 31, 2022 | | $ | 0 | | | $ | 0 | | | $ | 1,108,929 | | | $ | 1,108,929 | | |
* "Total Non-Audit Fees billed to Fund" for both fiscal years represent "Tax Fees" and "All Other Fees" billed to the Fund in their respective amounts from the previous table.
The Audit Committee has adopted an Audit Committee Charter that provides that the Audit Committee shall annually select, retain or terminate, and recommend to the Audit Committee members of the Board and ratified by the entire Board, who are not "interested persons" (as that term is defined in Section 2(a)(19) of the 1940 Act), of the Fund for their ratification, the selection, retention or termination, the Fund's independent auditor and, in connection therewith, evaluate the terms of the engagement (including compensation of the auditor) and the qualifications and independence of the independent auditor, including whether the independent auditor provides any consulting, auditing or tax services to the Investment Adviser or Sub-Adviser, if applicable, and receive the independent auditor's specific representations as to its independence, delineating all relationships between the independent auditor and the Fund, consistent with the Independent Standards Board ("ISB") Standard No. 1. The Audit Committee Charter also provides that the Committee shall review in advance, and consider approval of, any and all proposals by Fund management or the Investment Adviser that the Fund, Investment Adviser or their affiliated persons, employ the independent auditor to render "permissible non-audit services" to the Fund and to consider whether such services are consistent with the independent auditor's independence.
The Audit Committee has considered whether the provision of non-audit services that were rendered to the Investment Adviser or Sub-Adviser, if applicable, and any entity controlling, controlled by, or under common control with these entities that provides ongoing services to the Fund that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the accountant's independence and has concluded that it is independent.
COMPENSATION
The following table sets forth information regarding compensation of Trustees by the Fund and by the Fund Complex of which the Fund is organized as a Delaware statutory trust, it is subject topart for the control share acquisition statute (the "Control Share Statute") contained in Subchapter III of the Delaware Statutory Trust Act (the "DSTA"). The Control Share Statute provides for a series of voting power thresholds above which shares are considered "control beneficial interests" (referred to here as "control shares"). Once a threshold is reached, an acquirer has no voting rights under the DSTA or the governing documentsfiscal year ended October 31, 2023. Officers of the Fund with respect to shares acquired in excess of that threshold (i.e., the "control shares") unless approved by shareholders ofdo not receive any compensation directly from the Fund or exempted byany other fund in the Board. The Control Share Statute provides proceduresFund Complex for an acquirer to request a shareholder meetingperforming their duties as officers.
Name of Trustee | | Aggregate Compensation
from Fund for
Fiscal Year Ended
October 31, 2023 | | Total Compensation
From Fund and Fund
Complex Paid
To Trustees* | |
Nancy Yao | | $ | 79,660 | | | $ | 323,120 | | |
P. Gerald Malone | | $ | 97,369 | | | $ | 610,191 | | |
John Sievwright | | $ | 87,993 | | | $ | 279,114 | | |
Name of Trustee | | Aggregate Compensation
from Fund for
Fiscal Year Ended
October 31, 2023 | | Total Compensation
From Fund and Fund
Complex Paid
To Trustees* | |
Randolph Takian | | $ | 79,660 | | | $ | 79,660 | | |
Stephen Bird | | $ | 0 | | | $ | 0 | | |
* See the "Trustees" table for the purposenumber of considering whether voting rights shall be accorded to control shares. The Board is permitted, but not obligated, to exempt specific acquisitions or classesfunds within the Fund Complex that each Trustee serves.
Delinquent Section 16(a) Reports
Section 16(a) of acquisitionsthe 1934 Act and Section 30(h) of control shares, either in advance or retroactively.
Some uncertainty around the general application under the 1940 Act, of state control share statutes exists as a result of recent federal and state court decisions that have found that certain control share by-laws adopted by Massachusetts business trusts violated the 1940 Act, although one of such judgments is currently on appeal. Additionally, in some circumstances uncertainty may also exist in how to enforce the control share restrictions contained in state control share statutes against beneficial owners who hold their shares through financial intermediaries. With respectapplied to the Special Meeting, all shares will be counted for purposes of determining quorum atFund, require the MeetingFund's officers and on the vote required to pass the Proposal.
Outstanding Shares
AsTrustees, certain officers and directors of the Record Date, the Fund had 52,109,950 common shares outstandingInvestment Adviser, Sub-Adviser, affiliates thereof, and 1,600,000 Preferred Shares outstanding.
Board Recommendation
The Board recommends that shareholders of the Fund vote "FOR" the Proposal.
TERMS OF THE REORGANIZATION AGREEMENTS
The following is a summary of the significant terms of the Reorganization Agreements. The below discussion applies to the Reorganization Agreements pertaining to FSD and FAM, respectively. A form of each Reorganization Agreement is attached as Appendix A to the Proxy Statement.
Calculation of Number of Fund Shares
As of the Effective Time, each Acquired Fund share outstanding immediately prior to the Effective Time shall be converted into Fund shares in an amount equal to the ratio of the NAV per share of the respective Acquired Fund to the NAV per share of the Fund. Cash may be issued in lieu of fractional shares of the Fund. In the event Acquired Fund shareholders would be entitled to receive fractional Fund Shares, the Fund's transfer agent will aggregate such fractional shares and sell the resulting whole shares on the exchange on which such shares are listed for the account of all such Acquired Fund shareholders, and each such Acquired Fund shareholder will be entitled to a pro rata share of the proceeds from such sale. With respect to the aggregation and sale of fractional Fund shares, the
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