December 12,
2019
William J. Bielefeld, Esq.
Dechert LLP
1900 K Street, NW
Washington, DC 20006
Re: Angel Oak Dynamic Financial Strategies Income Term Trust
File Nos. 333-234743 and 811-23491
Dear Mr. Bielefeld:
On November 15, 2019, you filed a registration statement on Form N-2
for Angel Oak
Dynamic Financial Strategies Income Term Trust (the "Fund"). Our comments are
set forth
below. For convenience, we generally organized our comments using the headings,
defined
terms and page numbers from the registration statement. Where a comment is made
with respect
to the disclosure in one location of the filing, it applies to all similar
disclosure found elsewhere.
PROSPECTUS
Cover page
1. Investment Strategies. This paragraph states that the Fund will invest 80%
of its assets in the
securities of financial institutions. It also explains that these companies
include business
development companies ("BDCs") and real estate investment trusts ("REITs").
Please
explain to us why it is appropriate to consider BDCs and REITs to be
financial institutions
for purposes of the Fund's 80% test.
2. This paragraph also states that the Fund may invest in securities of
brokerage and advisory
firms. Section 12(d)(3) of the Investment Company Act of 1940 (the "1940
Act") prohibits
registered investment companies from investing in the securities of brokers
and registered
investment advisers, except in limited circumstances. Similarly, Rule 12d3-1
under the 1940
Act imposes limitations and conditions on registered funds investing in
brokers and
investment advisers. Please explain to us how the Fund will invest in
brokers and advisory
firms consistent with Section 12(d)(3) and Rule 12d3-1 thereunder. For
example, has the
Fund adopted investment policies consistent with these provisions to ensure
compliance with
them?
3. Limited Term. This paragraph is 26 lines of unbroken text. Please consider
revising the
paragraph to enhance readability. See A Plain English Handbook: How to
Create Clear SEC
Disclosure Documents 48 (1998) (www.sec.gov/pdf/handbook.pdf) ("Plain
English
Handbook"). The prospectus also contains excessively long paragraphs
elsewhere. Please
William J. Bielefeld, Esq.
Page 2
December 12, 2019
revise lengthy paragraphs, particularly those appearing on the front and
back cover pages,
and in the summary and risk factor sections, to enhance readability.
4. Leverage. This paragraph explains that the Fund may use leverage in an
aggregate amount of
up to 40% of the Fund's Managed Assets. Please also express the amount of
leverage the
Fund may use in terms of the Fund's net assets.
Prospectus Summary Investment Strategies (pages 1-2)
5. Much of the information in this section is duplicated in the "Investment
Strategies" section
on pages 18-19. The Commission's Plain English Handbook encourages issuers
to eliminate
redundant disclosure, noting that "[m]ost readers skip over paragraphs if
they think they have
read them before." (Plain English Handbook at 12.) Please revise these
sections to avoid
repetition. Similarly, please try to eliminate repetition between the
Prospectus Summary and
other parts of the prospectus.
Prospectus Summary Market Opportunity (page 2)
6. The third paragraph of this section states that in selecting investments,
the Adviser considers
certain ESG factors. Please identify these factors, either here or elsewhere
in the prospectus.
Prospectus Summary Portfolio Composition Trust preferred securities (page
4)
7. The third paragraph of this section states that many trust preferred
securities ("TruPS") are
issued by trusts or other special purpose entities established by financial
institutions and are
not direct obligations of banks and other financial institutions. Please
explain whether TruPS
will be treated as securities of financial institutions for purposes of the
Fund's 80% policy
and, if so, why that would be appropriate.
Prospectus Summary Closed-End, Limited Term Fund Structure and Eligible
Tender
Offer (page 5)
8. The third paragraph of this section states that beginning one year before
the Termination
Date, the Fund may begin liquidating all or a portion of the Fund's
portfolio, and may deviate
from its investment policies. Please inform us whether the Fund would change
its name if it
were unable to comply with its policy to invest at least 80% of its assets
in financial
institutions.
Prospectus Summary Management Fee (page 6)
9. The second paragraph of this section states that the Adviser has voluntarily
agreed to waive
its management fee to __% of the Fund's Managed Assets for the first year of
the Fund's
operations. Please disclose whether the Adviser may terminate the voluntary
waiver during
the first year of operations. Please also confirm that the Fund will base
the management fee
in the fee table on the contractual amount of the advisory fee without
consideration of the
voluntary waiver.
William J. Bielefeld, Esq.
Page 3
December 12, 2019
Prospectus Summary Summary of Fees and Expenses Example (page 17)
10. The third sentence of the introduction to the example to the fee table
states that the example
does not reflect the impact of any fee waivers. A cross-reference is
provided to the
discussion of fee waivers in the "Management Fee" section, which discusses
the voluntary
fee waiver. Please clarify, if true, that the example does not reflect the
impact of either the
voluntary or contractual fee waivers.
STATEMENT OF ADDITIONAL INFORMATION
Investment Restrictions (page 18)
11. Investment restriction 7 sets forth the Fund's concentration policy with
respect to the group
of industries related to banks and diversified financials. Please disclose
also the Fund's
concentration policy with respect to other industries and groups of
industries.
GENERAL COMMENTS
12. We note that many portions of your filing are incomplete or to be updated
by amendment
(e.g., financial statements). We may have additional comments on such
portions when you
complete them in pre-effective amendments, on disclosures made in response
to this letter,
on information supplied supplementally, or on exhibits added in any
pre-effective
amendment.
13. If you intend to omit certain information from the form of prospectus
included with the
registration statement that is declared effective in reliance on Rule 430A
under the Securities
Act of 1933 ("Securities Act"), please identify the omitted information to
us supplementally,
preferably before filing the pre-effective amendment.
14. Please advise us if you have submitted or expect to submit any exemptive
applications or no-
action requests in connection with your registration statement.
15. Please tell us if you have presented any test the waters materials to
potential investors in
connection with this offering. If so, please provide us with copies of such
materials.
16. Response to this letter should be in the form of a pre-effective amendment
filed pursuant to
Rule 472 under the Securities Act. Where no change will be made in the
filing in response to
a comment, please indicate this fact in a supplemental letter and briefly
state the basis for
your position.
* * * * *
In closing, we remind you that the Fund and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
William J. Bielefeld, Esq.
Page 4
December 12, 2019
absence of action by the staff.
If you have any questions prior to filing a pre-effective amendment,
please call me at
(202) 551-6945.
Sincerely,
/s/ John M. Ganley
John M. Ganley
Senior Counsel
cc: William J. Kotapish, Assistant Director
Sally Samuel, Branch Chief