0001124959falseNoIn order to compute the Corresponding Return to Common Shares Shareholders, the Assumed Portfolio Return is multiplied by the total value of the Fund's assets at the beginning of the Fund's fiscal year to obtain an assumed return to the Fund. From this amount, all interest accrued during the year is subtracted to determine the return available to shareholders. The return available to shareholders is then divided by the total value of the Fund's net assets attributable to Common Shares as of the beginning of the fiscal year to determine the Corresponding Return to Common Shareholders.The Distributor will pay a dealer reallowance for Class A Common Shares from the sales charge. The Distributor will pay a sales commission for Class C Common Shares to authorized dealers from its own assets.Reduced for purchases of $100,000 and over for Class A Common Shares, please see “Sales Charges.”There is no front-end sales charge if you purchase Class A Common Shares in the amount of $500,000 or more. Class A Common Shares purchased in an amount of $500,000 or more are subject to a 1.00% EWC if repurchased by the Fund within 12 months of purchase. Class C Common Shares repurchased by the Fund within the first year after purchase will incur a 1.00% EWC. See “Sales Charges - Early Withdrawal Charge.” No EWC will be charged on redemptions that are due to the closing of shareholder accounts having a value of less than $1,000.Pursuant to the investment management agreement with the Fund, the Investment Adviser is paid a fee of 0.80% of the Fund's Managed Assets. For the description of “Managed Assets,” please see “Description of the Fund – Investment Adviser/Sub-Adviser” earlier in this Prospectus.Because the distribution fees payable by Class C Common Shares may be considered an asset-based sales charge, long-term shareholders in that class of the Fund may pay more than the economic equivalent of the maximum front-end sales charges permitted by the Financial Industry Regulatory Authority.Other Operating Expenses are estimated amounts for the current fiscal year.The Investment Adviser is contractually obligated to limit expenses of the Fund through July 1, 2025 to the following: Class A Common Shares - 0.90% of Managed Assets plus 0.45% of average daily net assets; Class C Common Shares - 0.90% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets; and Class W Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets. The obligation is subject to possible recoupment by the Investment Adviser within 36 months of the waiver or reimbursement. The Investment Adviser is contractually obligated to further limit expenses of the Fund through July 1, 2025 to the following: Class A Common Shares - 0.80% of Managed Assets plus 0.45% of average daily net assets; Class C Common Shares - 0.80% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.80% of Managed Assets plus 0.20% of average daily net assets; and Class W Common Shares - 0.80% of Managed Assets plus 0.20% of average daily net assets. These limitations do not extend to interest, taxes, investment-related costs, leverage expenses, extraordinary expenses, and Acquired Fund Fees and Expenses. Termination or modification of these obligations requires approval by the Fund’s Board.If the expenses of the Fund are calculated on the Managed Assets of the Fund (assuming that the Fund has used leverage by borrowing an amount equal to 25% of the Fund’s Managed Assets), the Net Annual Expenses for the Fund would be lower than the expenses shown in the table. Such lower Net Annual Expense ratios would be as follows: 2.99%, 3.49%, 2.74%, and 2.74% for Class A, Class C, Class I, and Class W shares, respectively. 0001124959 2024-06-27 2024-06-27 0001124959 vcif:OtherInvestmentCompanieMember 2024-06-27 2024-06-27 0001124959 vcif:CompanyMember 2024-06-27 2024-06-27 0001124959 vcif:CreditsMember 2024-06-27 2024-06-27 0001124959 vcif:CreditDefaultSwapsMember 2024-06-27 2024-06-27 0001124959 vcif:ValuationOfLoansMember 2024-06-27 2024-06-27 0001124959 vcif:WhenissuedDelayedDeliveryAndForwardCommitmentTransactionsMember 2024-06-27 2024-06-27 0001124959 vcif:MarketMember 2024-06-27 2024-06-27 0001124959 vcif:MarketDisruptionAndGeopoliticalMember 2024-06-27 2024-06-27 0001124959 vcif:PrepaymentAndExtensionMember 2024-06-27 2024-06-27 0001124959 vcif:SecuritiesLendingMember 2024-06-27 2024-06-27 0001124959 vcif:SpecialSituationsMember 2024-06-27 2024-06-27 0001124959 vcif:TemporaryDefensivePositionsMember 2024-06-27 2024-06-27 0001124959 vcif:InterestRateForFloatingRateLoansMember 2024-06-27 2024-06-27 0001124959 vcif:InterestRateSwapsMember 2024-06-27 2024-06-27 0001124959 vcif:CovenantliteLoansMember 2024-06-27 2024-06-27 0001124959 vcif:LimitedLiquidityForInvestorsMember 2024-06-27 2024-06-27 0001124959 vcif:LimitedSecondaryMarketForLoansMember 2024-06-27 2024-06-27 0001124959 vcif:LiquidityMember 2024-06-27 2024-06-27 0001124959 vcif:FloatingRateLoansMember 2024-06-27 2024-06-27 0001124959 vcif:ForeignNonu.s.InvestmentsMember 2024-06-27 2024-06-27 0001124959 vcif:ForeignNonu.s.AndNoncanadianIssuersMember 2024-06-27 2024-06-27 0001124959 vcif:HighyieldSecuritiesMember 2024-06-27 2024-06-27 0001124959 vcif:InterestInLoansMember 2024-06-27 2024-06-27 0001124959 vcif:InterestRateMember 2024-06-27 2024-06-27 0001124959 vcif:CreditFacilityMember 2024-06-27 2024-06-27 0001124959 vcif:CreditLoansMember 2024-06-27 2024-06-27 0001124959 vcif:CurrencyMember 2024-06-27 2024-06-27 0001124959 vcif:DemandForLoansMember 2024-06-27 2024-06-27 0001124959 vcif:DerivativeInstrumentsMember 2024-06-27 2024-06-27 0001124959 vcif:DurationMember 2024-06-27 2024-06-27 0001124959 vcif:LeverageMember 2024-06-27 2024-06-27 0001124959 vcif:ClassACommonSharesMember 2024-06-27 2024-06-27 0001124959 vcif:ClassCCommonSharesMember 2024-06-27 2024-06-27 0001124959 vcif:ClassICommonSharesMember 2024-06-27 2024-06-27 0001124959 vcif:ClassWCommonSharesMember 2024-06-27 2024-06-27 0001124959 vcif:CommonSharesMember 2024-06-27 2024-06-27 0001124959 vcif:PreferredSharesMember 2024-06-27 2024-06-27 0001124959 dei:BusinessContactMember 2024-06-27 2024-06-27 0001124959 vcif:ClassACommonSharesWithRepurchasesAtPeriodEndMember 2024-06-27 2024-06-27 0001124959 vcif:ClassCCommonSharesWithRepurchasesAtPeriodEndEndMember 2024-06-27 2024-06-27 0001124959 vcif:ClassICommonSharesWithRepurchasesAtPeriodEndMember 2024-06-27 2024-06-27 0001124959 vcif:ClassWCommonSharesWithRepurchasesAtPeriodEndMember 2024-06-27 2024-06-27 0001124959 vcif:ClassACommonSharesNoRepurchasesMember 2024-06-27 2024-06-27 0001124959 vcif:ClassCCommonSharesNoRepurchasesMember 2024-06-27 2024-06-27 0001124959 vcif:ClassICommonSharesNoRepurchasesMember 2024-06-27 2024-06-27 0001124959 vcif:ClassWCommonSharesNoRepurchasesMember 2024-06-27 2024-06-27 xbrli:shares xbrli:pure iso4217:USD
  
As filed with the U.S. Securities and Exchange Commission on June 27, 2024 
Securities Act File No. 333-219011 
Investment Company Act File No. 811-10223 
  
           
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549 
FORM N-2 
(Check appropriate box or boxes) 
  
[X]
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 
[   ]
Pre-Effective Amendment No. 
[X]
Post-Effective Amendment No. 12 
and 
[X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 
[X]
Amendment No. 53 
VOYA CREDIT INCOME FUND
(Exact Name of Registrant as Specified in Charter) 
7337 E. Doubletree Ranch Road, Suite 100 
Scottsdale, Arizona 85258 
(Address of Principal Executive Offices) 
(Number, Street, City, State, Zip Code) 
(800) 992-0180 
(Registrant’s Telephone Number, including Area Code) 
Huey P. Falgout, Jr.
Voya Investments, LLC 
7337 E Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258 
(Name and Address (Number, Street, City, State, Zip Code) of Agent for Service)
 
Copies of Communications to: 
Elizabeth J. Reza
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, Massachusetts 02199-3600 
Approximate Date of Proposed Public Offering: 
As soon as practicable after the effective date of this Registration Statement. 
  
¨
 
Check box if the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans. 
X 
Check box if any securities being registered on this Form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933 (“Securities Act”), other than securities offered in connection with a dividend reinvestment plan. 
¨
 
Check box if this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment thereto. 
¨
 
Check box if this Form is a registration statement pursuant to General Instruction B or a post-effective amendment thereto that will become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act. 
¨
 
Check box if this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act. 
 It is proposed that this filing will become effective (check appropriate box):   
¨
 
when declared effective pursuant to Section 8(c), or as follows: 
  
The following boxes should only be included and completed if the registrant is making this filing in accordance with Rule 486 under the Securities Act. 
  
¨
 
immediately upon filing pursuant to paragraph (b) of Rule 486. 
X
on June 28, 2024 pursuant to paragraph (b) of Rule 486. 
¨
 
60 days after filing pursuant to paragraph (a) of Rule 486. 
¨
 
on (date) pursuant to paragraph (a) of Rule 486
.
 

If appropriate, check the following box: 
 
¨
 
This [post-effective amendment] designates a new effective date for a previously filed [post-effective amendment] [registration statement]. 
 
¨
 
This Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: ______. 
 
¨
 
This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: ______. 
 
¨
 
This Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: ______. 
 Check each box that appropriately characterizes the Registrant: 
 
X
 
Registered Closed-End Fund (closed-end company that is registered under the Investment Company Act of 1940 (“Investment Company Act”)). 
 
¨
 
Business Development Company (closed-end company that intends or has elected to be regulated as a business development company under the Investment Company Act). 
 
X
 
Interval Fund (Registered Closed-End Fund or a Business Development Company that makes periodic repurchase offers under Rule 23c-3 under the Investment Company Act). 
 
¨
 
A.2 Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form). 
 
¨
 
Well-Known Seasoned Issuer (as defined by Rule 405 under the Securities Act). 
 
¨
 
Emerging Growth Company (as defined by Rule 12b-2 under the Securities Exchange Act of 1934 (“Exchange Act”). 
 
¨
 
If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. 
 
¨
 
New Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months preceding this filing). 
  
  
  

EXPLANATORY NOTE
This Post-Effective Amendment No. 12 (the “Amendment”) to the Registration Statement on Form N-2 of Voya Credit Income
Fund (the “Registrant”) is being filed pursuant to Rule 486(b) under the Securities Act of 1933, as amended, finalizing the
disclosure in compliance with annual updating requirements to the Registrant’s Prospectus and Statement of Additional
Information.
This registration statement incorporates a combined prospectus pursuant to Rule 429, which relates to earlier registration
statements filed by the Registrant on June 28, 2017 (see File No. 333-219011), November 22, 2013 (see File No. 333-192499),
June 27, 2013 (see File No. 333-189639), June 26, 2012 (see File No. 333-175174), June 28, 2011 (see File No. 333-175174),
April 14, 2008 (see File No. 333-150236), June 28, 2007 (see File No. 333-144159), June 30, 2006 (see File No. 333-135548),
June 29, 2005 (see File No. 333-126224), December 6, 2004 (see File No. 333-121014), June 28, 2004 (see File No. 333-116936),
February 23, 2004 (see File No. 333-113012), November 7, 2003 (see File No. 333-110317), September 22, 2003 (see File No.
333-109005), August 15, 2003 (see File No. 333-108020), July 17, 2003 (see File No. 333-107124), July 1, 2002 (see File No.
333-91662) and March 30, 2001 (see File No. 333-54910). This prospectus will also be used in connection with sales of securities
registered by the Registrant under those registration statements.
This Amendment is organized as follows: (a) Prospectus; (b) Statement of Additional Information; and (c) Part C Information
relating to the Registrant.

Prospectus
June 28, 2024
Voya Credit Income Fund

 
Class/Ticker:
A/
XSIAX;
C/
XSICX;
I/
XSIIX;
W/
XSIWX
 
Common Shares
Voya Credit Income Fund (the
“
Fund
”
) is a Delaware Statutory trust that is registered under the Investment Company Act
of 1940, as amended (the
“
1940 Act
”
), as a continuously-offered, diversified, closed-end management investment company.
The Fund’s investment objective is to provide investors with a high level of monthly income.
The Fund allocates its assets among a broad range of credit sectors, including corporate debt securities, loans, high yield
debt securities, and collateralized loan obligations (
“
CLOs
”
). The Fund seeks to achieve its investment objective by investing,
under normal market conditions, at least 80% of its net assets (plus borrowings for investment purposes) in floating-rate
obligations, fixed-income securities, and derivative instruments intended to provide economic exposure to such credit sectors.
The Fund may invest in securities of any credit quality, duration, or maturity and may invest without limit in securities rated
below investment grade. The Fund expects that under normal market conditions its investments in high yield bonds, loans,
CLOs and similar instruments will typically comprise at least half, and potentially substantially all of the investment exposure
of its portfolio.
Debt instruments
in which the Fund invests may include senior or subordinated fixed or floating rate instruments,
unitranche debt, unsecured debt, and structurally subordinated instruments. The Fund may also invest in special situations
investments, such as non-performing
debt instruments
, or
debt instruments
issued by companies undergoing a bankruptcy
or restructuring process. Some of the loans in which the Fund invests may be loans originated directly by the Fund. The
Fund may invest in equity securities: (i) as an incident to the purchase or ownership of loans or fixed rate debt instruments;
or (ii) in connection with a restructuring of a borrower or issuer or its debt.
To seek to increase the yield on the Common
Shares, the Fund employs financial leverage by borrowing money and may also issue preferred shares. See
“
Risk Factors
and Special Considerations - Leverage
”
and
“
Description of the Capital Structure
”
later in the Fund’s prospectus.
This Prospectus applies to the offering of four separate classes of shares of beneficial interest (
“
Common Shares
”
) in the
Fund, designated as Class A Common Shares, Class C Common Shares, Class I Common Shares, and Class W Common
Shares.
The Fund has an interval fund structure and conducts monthly repurchase offers for its Common Shares at net asset value
(
“
NAV
”
) per Common Share in an amount not less than 5% of its outstanding Common Shares each month nor more than
25% of its outstanding Common Shares in any calendar quarter, subject to applicable law, approval of the Fund’s Board of
Trustees, and in accordance with the Fund’s repurchase policy established pursuant to Rule 23c-3 under the 1940 Act.
See
“
Repurchase Offers
”
and
“
Risk Factors and Special Considerations – Limited Liquidity for Investors
”
later in this Prospectus
for further discussion on the Fund’s repurchase policies and related risks.
There is no assurance that you will be able to tender your Common Shares when or in the amount that you desire. Common
Shares are speculative and illiquid securities involving substantial risk of loss. An investment in the Fund is subject to, among
others, the following risks:
•
The Fund’s Common Shares are not listed on any national securities exchange and it is not anticipated that a secondary
market for the Common Shares will develop. You should generally not expect to be able to sell your Common Shares
(other than through the repurchase process). Thus, an investment in the Fund may not be suitable for investors who may
need the money they invest in a specified timeframe.
•
Even though the Fund will offer to repurchase Common Shares on a monthly basis, only a limited number of Common
Shares will be eligible for repurchase by the Fund, so you should consider the Common Shares to be illiquid. Common
Shares will not be redeemable at a shareholder’s option nor will they be exchangeable for shares of any other fund. As a
result, there is no guarantee that you will be able to sell your Common Shares at any given time or in the quantity that
you desire.
•
Common Shares are appropriate only for those investors who can tolerate a high degree of risk and do not require a
liquid investment and for whom an investment in the Fund does not constitute a complete investment program.
 
•
Common Shares are speculative and involve a high degree of risk, including the risk of a substantial loss of investment.
See
“
Risk Factors and Special Considerations
”
later in this Prospectus to read about the risks you should consider before
buying Common Shares.
•
The amount of distributions that the Fund may pay, if any, is uncertain.
•
The Fund may pay distributions in significant part from sources that may not be available in the future and that are unrelated
to the Fund’s performance, such as from offering proceeds and borrowings.
•
With respect to Class A Common Shares, an investor will pay a sales load of up to 2.50% on the amount invested.
If you
pay the maximum aggregate 2.50% sales load, you must experience a total return on your net investment of 2.56% in
order to recover such sales charges.
•
The Fund may invest in below investment grade investments (
“
junk
”
instruments), securities which are at risk of default
as to the repayment of principal and/or interest at the time of acquisition by the Fund or are rated in the lower rating
categories or are unrated. These investments may be difficult to value and may be illiquid. See
“
Risk Factors and Special
Considerations –Liquidity and High-Yield Securities
”
later in this Prospectus.
 
This Prospectus provides important information that you should know about the Fund before investing. You should read
this Prospectus carefully and retain it for future reference. Additional information about the Fund, including the Statement
of Additional Information (
“
SAI
”
), dated June 28, 2024, has been filed with the SEC. The SAI is incorporated by reference
in its entirety into this Prospectus. You may make shareholder inquiries or obtain a free copy of the SAI, annual shareholder
report, and unaudited semi-annual shareholder report by contacting the Fund at 1-800-992-0180 or by writing to the Fund
at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258-2034. The Fund's SAI, annual shareholder
report, and unaudited semi-annual shareholder report are also available free of charge on the Fund's website at
www.voyainvestments.com. The Prospectus, SAI, and other information about the Fund are also available on the SEC's
website (www.sec.gov).
The Fund’s investment objective is to provide investors with a high level of monthly income. Market fluctuations and general
economic conditions can adversely affect the Fund. There is no guarantee that the Fund will achieve its investment objective.
Investment in the Fund involves certain risks and special considerations, including risks associated with the Fund's use of
leverage.
See
“
Risk Factors and Special Considerations
”
later in this Prospectus for a discussion of any factors that make
an investment in the Fund speculative or high risk.
Neither the SEC nor any state securities commission has approved or disapproved these securities or determined that this
Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Table of Contents
 
1
1
9
11
14
16
28
29
30
33
34
38
40
41
43
43
43
43
44
46
46
46
47
47
47
47
48
48
48
49
51
52
54
55
55
Voya Credit Income Fund
 
The following synopsis is qualified in its entirety by reference to the more detailed information appearing elsewhere in this
Prospectus.
DESCRIPTION OF THE FUND
The Fund
The Fund is a continuously-offered, diversified, closed-end management investment company registered under the Investment
Company Act of 1940, as amended, and the rules, regulations and applicable exemptive orders thereunder (the
“
1940 Act
”
).
It was organized as a Delaware statutory trust on December 14, 2000. The Fund offers four separate classes of Common
Shares in this Prospectus: Class A, Class C, Class I, and Class W. See
“
Classes of Shares
”
later in this Prospectus.
Investment Objective
To provide investors with a high level of monthly income. There is no assurance that the Fund will achieve its investment
objective. The investment objective is fundamental and may not be changed without a majority vote of the shareholders of
the Fund. See
“
Description of the Fund – Fundamental and Non-Fundamental Investment Policies of the Fund
”
later in this
Prospectus.
Investment Adviser/Sub-Adviser
Voya Investments, LLC (
“
Voya Investments
”
or the
“
Investment Adviser
”
), an Arizona limited liability company, is registered
with the SEC as an investment adviser. Voya Investments serves as the investment adviser to, and has overall responsibility
for the management of the Fund. Voya Investments oversees all investment advisory and portfolio management services and
assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund,
including, but not limited to, the following: custodial, transfer agency, dividend disbursing, accounting, auditing, compliance,
and related services.
Voya Investments began business as an investment adviser in 1994 and currently serves as investment adviser to certain
registered investment companies, consisting of open- and closed-end registered investment companies and collateralized
loan obligations. Voya Investments is an indirect subsidiary of Voya Financial, Inc. Voya Financial, Inc. is a U.S.-based financial
institution whose subsidiaries operate in the retirement, investment, and insurance industries.
Voya Investments' principal business address is 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258.
The Investment Adviser receives an annual fee, payable monthly, in an amount equal to 0.80% of the Fund's average daily
gross asset value, minus the sum of the Fund's accrued and unpaid dividends on any outstanding preferred shares and
accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued
by the Fund and the liquidation preference of any outstanding preferred shares) (
“
Managed Assets
”
). This definition includes
assets acquired through the Fund's use of leverage.
Voya Investment Management Co. LLC (
“
Voya IM
”
or the
“
Sub-Adviser
”
) serves as sub-adviser to the Fund. Voya IM is an
affiliate of the Investment Adviser.
See
“
Investment Management and Other Service Providers - Sub-Adviser and Portfolio Managers
”
later in this Prospectus.
Distributions
Income dividends on Common Shares accrue and are declared daily and paid monthly. Income dividends will be automatically
reinvested in additional shares of the Fund at the Fund's net asset value (
“
NAV
”
) with no sales charge, unless a shareholder
elects to receive distributions in cash or to purchase shares of another Voya mutual fund. The Fund may make one or more
annual payments from any realized capital gains.
Principal Investment Strategies
The Fund allocates its assets among a broad range of credit sectors, including corporate debt securities, loans, high yield
debt securities, and CLOs. The Fund seeks to achieve its investment objective by investing, under normal market conditions,
at least 80% of its net assets (plus borrowings for investment purposes) in floating-rate obligations, fixed-income securities,
and derivative instruments intended to provide economic exposure to such credit sectors. The Fund will provide shareholders
with at least 60 days’ prior notice of any change in this investment policy.
The Fund may invest in securities of any credit quality, duration, or maturity and may invest without limit in securities rated
below investment grade (securities rated Ba1 or below by Moody’s Investors Service, Inc. (
“
Moody’s
”
), or BB+ or below by
S&P Global Ratings (
“
S&P
”
), or Fitch Ratings, Inc. (
“
Fitch
”
) or unrated securities judged by the Sub-Adviser to be of comparable
quality. Investments rated below investment grade (or similar quality if unrated) are commonly known as high-yielding, high
risk investments or as
“
junk
”
investments.
1
Voya Credit Income Fund
The Fund expects that under normal market conditions its investments in high yield bonds, loans, CLOs and similar instruments
will typically comprise at least half, and potentially substantially all of the investment exposure of its portfolio.
Debt instruments
in which the Fund invests may include senior or subordinated fixed or floating rate instruments, unitranche debt, unsecured
debt, and structurally subordinated instruments. The Fund may also invest in special situations investments, such as non-performing
debt instruments
, or
debt instruments
issued by companies undergoing a bankruptcy or restructuring process. Some of the
loans in which the Fund invests may be loans originated directly by the Fund. The Fund may invest in equity securities: (i) as
an incident to the purchase or ownership of loans or fixed rate debt instruments; or (ii) in connection with a restructuring of
a borrower or issuer or its debt.
Investment in the Fund involves certain risks and special considerations, including risks
associated with the Fund's use of leverage. See
“
Risk Factors and Special Considerations
”
later in this Prospectus for a
discussion of any factors that make an investment in the Fund speculative or high risk.
The Fund intends to invest across multiple credit sectors and employ multiple strategies, and the Fund’s asset allocations
will change in response to changing market, financial, economic, and political factors and events that the Fund’s Sub-Adviser
believes may affect the values of the Fund’s investments. The allocation of the Fund’s assets to different sectors and issuers
will change over time, potentially rapidly, and the Fund may invest without limit in a single sector or a small number of sectors
of the corporate credit universe. The Fund is not required to invest in each credit sector at all times.
Most of the Fund’s investments will be denominated in the U.S. dollar, although the Fund may invest in securities of non-U.S.
companies, and non-U.S. dollar credit instruments and securities.
The Fund may invest in derivative instruments,
including but not limited to, the following:
credit-linked notes, options, futures
contracts, options on futures,
forward contracts,
debt swap agreements, credit default swap agreements,
interest rate swaps,
total return swaps, and currency related derivatives, including currency forwards and currency swaps, subject to applicable
law. The Fund typically uses derivatives to seek to reduce exposures or other risks such as interest rate or currency risk, to
substitute for taking a position in the underlying asset, and/or to enhance returns in the Fund. The Fund may seek to obtain
market exposure to the instruments in which it primarily invests by entering into a series of purchase and sale contracts or
by using other investment techniques (such as buy backs or dollar rolls and reverse repurchase agreements).
The Sub-Adviser may sell securities for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into
opportunities believed to be more promising.
The Fund may lend portfolio securities on a short-term or long-term basis, up to 33
 1
∕
3
% of its total assets.
Other Investment Strategies and Policies
Loans in which the Fund invests typically have multiple interest rate reset periods at the same time, with each reset period
applicable to a designated portion of the loan. The maximum duration of an interest rate reset on any loan in which the Fund
may invest is one year. In order to achieve overall reset balance, the Fund will ordinarily maintain a dollar-weighted average
time until the next interest rate adjustment on its loans of 90 days or less.
To seek to increase the yield on the Common Shares, the Fund may engage in lending its portfolio securities. Such lending
will be fully secured by investment-grade collateral held by an independent agent.
The Fund may engage in executing repurchase agreements and reverse repurchase agreements.
Leverage
To seek to increase the yield on the Common Shares, the Fund employs financial leverage by borrowing money and may also
issue preferred shares. The timing and terms of leverage will be determined by the Investment Adviser or Sub-Adviser under
the supervision of the Fund's Board of Trustees (the
“
Board
”
). See
“
Risk Factors and Special Considerations - Leverage
”
later in this Prospectus.
Borrowings
The Fund may borrow money in an amount permitted under the 1940 Act, including the rules and regulations thereunder, and
under the terms of applicable no-action relief or exemptive orders granted thereunder. The Fund's obligation to holders of its
debt will be senior to its ability to pay dividends on, or repurchase, Common Shares (and preferred shares, if any), or to pay
holders of Common Shares (and preferred shares, if any) in the event of liquidation.
Preferred Shares
The Fund is authorized to issue an unlimited number of shares of a class of preferred stock in one or more series (
“
Preferred
Shares
”
). The Fund's obligations to holders of any outstanding Preferred Shares will be senior to its ability to pay dividends
on, or repurchase, Common Shares, or to pay holders of Common Shares in the event of liquidation. Under the 1940 Act,
the Fund may issue Preferred Shares so long as immediately after any issuance of Preferred Shares the value of the Fund's
total assets (less all Fund liabilities and indebtedness that is not senior indebtedness) is at least twice the amount of the
Fund's senior indebtedness plus the involuntary liquidation preference of all outstanding Preferred Shares.
Voya Credit Income Fund
2
The 1940 Act also requires that the holders of any Preferred Shares of the Fund, voting as a separate class, have the right
to:
•
elect at least two trustees at all times; and
•
elect a majority of the trustees at any time when dividends on any series of Preferred Shares are unpaid for two full years.
As of June 6, 2024 the Fund had
no
Preferred Shares outstanding. The Fund may consider issuing Preferred Shares during
the current fiscal year or in the future.
Diversification
The Fund maintains a diversified investment portfolio through an investment strategy which seeks to limit exposure to any
one issuer or industry.
The Fund is diversified, as such term is defined in the 1940 Act. The Fund’s policy to be diversified is a fundamental policy
that may not be changed without shareholder approval. A diversified fund may not, as to 75% of its total assets, invest more
than 5% of its total assets in any one issuer and may not purchase more than 10% of the outstanding voting securities of
any one issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities,
or other investment companies). The Fund will consider a borrower on a loan, including a loan participation, to be the issuer
of that loan. In addition, with respect to a loan under which the Fund does not have privity with the borrower or would not
have a direct cause of action against the borrower in the event of the failure of the borrower to make payment of scheduled
principal or interest, the Fund will separately meet the foregoing requirements and consider each interpositioned bank (a
lender from which the Fund acquires a loan) to be an issuer of the loan. With respect to no more than 25% of its total assets,
the Fund may make investments that are not subject to the foregoing restrictions.
Concentration
In addition, a maximum of 25% of the Fund's total assets, measured at the time of investment, may be invested in any one
industry. This investment strategy is also a fundamental policy that may not be changed without shareholder approval.
Continuous Offering
The Fund continuously offers its Common Shares for sale. Sales are made through selected broker-dealers and financial
services firms which enter into agreements with Voya Investments Distributor, LLC (the
“
Distributor
”
), the Fund's principal
underwriter. Common Shares are sold at a public offering price equal to their NAV per share. The Fund and the Distributor
reserve the right to reject any purchase order. Please note that cash, traveler's checks, third party checks, money orders,
and checks drawn on non-U.S. banks (even if payment may be effected through a U.S. bank) generally will not be accepted
for purchase of Common Shares.
Repurchase Offers
To maintain a measure of liquidity, the Fund will offer to repurchase not less than 5% of its outstanding Common Shares on
a monthly basis (
“
Repurchase Offers
”
). This is a fundamental policy that can not be changed without shareholder approval.
The Fund currently anticipates offerings to repurchase not less than 5% of its outstanding Common Shares each month. The
Fund may not offer to repurchase more than 25% of its outstanding Common Shares in any calendar quarter. Other than the
Fund's monthly repurchase offers, no market for the Fund's Common Shares is expected to exist. The applicable early withdrawal
charge (
“
EWC
”
) will be imposed on certain repurchased Class A Common Shares and Class C Common Shares. See
“
Sales
Charges
”
and
“
Repurchase Offers
”
later in this Prospectus for important information relating to the acceptance of Fund offers
to repurchase Common Shares.
Principal Risks
Company:
 The price of a company’s stock could decline or underperform for many reasons, including, among others, poor
management, financial problems, reduced demand for the company’s goods or services, regulatory fines and judgments, or
business challenges. If a company is unable to meet its financial obligations, declares bankruptcy, or becomes insolvent, its
stock could become worthless.
Covenant-Lite Loans:
 Loans in which the Fund may invest or to which the Fund may gain exposure indirectly through its investments
in collateralized debt obligations, CLOs or other types of structured securities may be considered
“
covenant-lite
”
loans. Covenant-lite
refers to loans which do not incorporate traditional performance-based financial maintenance covenants. Covenant-lite does
not refer to a loan’s seniority in a borrower’s capital structure nor to a lack of the benefit from a legal pledge of the borrower’s
assets and does not necessarily correlate to the overall credit quality of the borrower. Covenant-lite loans generally do not
include terms which allow a lender to take action based on a borrower’s performance relative to its covenants. Such actions
may include the ability
to
renegotiate and/or re-set the credit spread on the loan with a borrower, and even to declare a
default or force the borrower into bankruptcy restructuring if certain criteria are breached. Covenant-lite loans typically still
provide lenders with other covenants that restrict a borrower from incurring additional debt or engaging in certain actions.
Such covenants can only be breached by an affirmative action of the borrower, rather than by a deterioration in the borrower’s
Voya Credit Income Fund
3
financial condition. Accordingly, the Fund may have fewer rights against a borrower when it invests in, or has exposure to,
covenant-lite loans and, accordingly, may have a greater risk of loss on such
investments
as compared to investments in, or
exposure to, loans with additional or more conventional covenants.
Credit:
 The Fund could lose money if the issuer or guarantor of a debt instrument in which the Fund invests, or the counterparty
to a derivative contract the Fund entered into, is unable or unwilling, or is perceived (whether by market participants, rating
agencies, pricing services, or otherwise) as unable or unwilling, to meet its financial obligations.
Asset-backed (including
mortgage-backed) securities that are not issued by U.S. government agencies may have a greater risk of default because
they are not guaranteed by either the U.S. government or an agency or instrumentality of the U.S. government. The credit
quality of typical asset-backed securities depends primarily on the credit quality of the underlying assets and the structural
support (if any) provided to the securities.
Credit Default Swaps:
 The Fund may enter into credit default swaps, either as a buyer or a seller of the swap. A buyer of a
credit default swap is generally obligated to pay the seller an upfront or a periodic stream of payments over the term of the
contract until a credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller
generally must pay the buyer the
“
par value
”
(full notional value) of the swap in exchange for an equal face amount of deliverable
obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount
if the swap is cash settled. As a seller of a credit default swap, the Fund would effectively add leverage to its portfolio because,
in addition to its total net assets, the Fund would be subject to investment exposure on the full notional value of the swap.
Credit default swaps are particularly subject to counterparty, credit, valuation, liquidity, and leveraging risks, and the risk that
the swap may not correlate with its reference obligation as expected. Certain standardized credit default swaps are subject
to mandatory central clearing. Central clearing is expected to reduce counterparty credit risk and increase liquidity; however,
there is no assurance that it will achieve that result, and in the meantime, central clearing and related requirements expose
the Fund to different kinds of costs and risks. In addition, credit default swaps expose the Fund to the risk of improper valuation.
Credit Facility:
The Fund has a policy of borrowing for cash management and liquidity purposes and for the purpose of investment.
The Fund currently is a party to a credit facility with
The Bank of Nova Scotia
that permits the Fund to borrow up to an aggregate
amount of $
40
million. There is no guarantee that the Fund will continue to be a party to a credit facility or a party to a credit
facility upon similar terms and conditions as currently in place for the Fund. In such cases, the Fund may be limited in its
ability to utilize leverage for investment purposes and this may negatively impact performance. The lender under the credit
facility has a security interest in all assets of the Fund. As of June 6, 2024 the Fund had $
20.0
million in outstanding borrowings
under its credit facility.
Interest is payable on the amounts borrowed under the credit facility at a benchmark rate or the federal funds rate, plus a
facility fee on unused commitments. Under the credit facility, the lender has the right to liquidate Fund assets in the event
of default by the Fund, and the Fund may be prohibited from paying dividends in the event of a material adverse event or
condition regarding the Fund, Investment Adviser, or Sub-Adviser until outstanding debts are paid or until the event or condition
is cured.
Credit (Loans):
Prices of the Fund’s investments are likely to fall if the actual or perceived financial health of the borrowers
on, or issuers of, such investments deteriorates, whether because of broad economic or issuer-specific reasons, or if the
borrower or issuer is late (or defaults) in paying interest or principal. The Fund's investments in U.S. dollar-denominated floating
rate secured senior loans are expected to be rated below investment grade. Below investment grade loans commonly known
as high-yielding, high risk investments or as
“
junk
”
investments involve a greater risk that borrowers may not make timely
payment of the interest and principal due on their loans and are subject to greater levels of credit and liquidity risks. They
also involve a greater risk that the value of such loans could decline significantly. If borrowers do not make timely payments
of the interest due on their loans, the yield on the Common Shares will decrease. If borrowers do not make timely payment
of the principal due on their loans, or if the value of such loans decreases, the net asset value will decrease.
Currency:
To the extent that the Fund invests directly or indirectly in foreign (non-U.S.) currencies or in securities denominated
in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those foreign (non-U.S.) currencies will decline
in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the
currency being hedged by the Fund through foreign currency exchange transactions.
Demand for Loans:
An increase in demand for loans may benefit the Fund by providing increased liquidity for such loans and
higher sales prices, but it may also adversely affect the rate of interest payable on such loans and the rights provided to the
Fund under the terms of the applicable loan agreement, and may increase the price of loans in the secondary market. A
decrease in the demand for loans may adversely affect the price of loans in the Fund’s portfolio, which could cause the
Fund’s net asset value to decline and reduce the liquidity of the Fund’s loan holdings.
Voya Credit Income Fund
4
Derivative Instruments:
Derivative instruments are subject to a number of risks, including the risk of changes in the market
price of the underlying asset, reference rate, or index credit risk with respect to the counterparty, risk of
loss
due to changes
in market interest rates, liquidity risk, valuation risk, and volatility risk. The amounts required to purchase certain derivatives
may be small relative to the magnitude of exposure assumed by the Fund. Therefore, the purchase of certain derivatives may
have an economic leveraging effect on the Fund and exaggerate any increase or decrease in the net asset value. Derivatives
may not perform as expected, so the Fund may not realize the intended benefits. When used for hedging purposes, the change
in value of a derivative may not correlate as expected with the asset, reference rate, or index being hedged. When used as
an alternative or substitute for direct cash investment, the return provided by the derivative may not provide the same return
as direct cash investment.
Duration:
One measure of risk for debt instruments is duration. Duration measures the sensitivity of a bond’s price to market
interest rate movements and is one of the tools used by a portfolio manager in selecting debt instruments. Duration measures
the average life of a bond on a present value basis by incorporating into one measure a bond’s yield, coupons, final maturity
and call features. As a point of reference, the duration of a non-callable 7% coupon bond with a remaining maturity of 5 years
is approximately 4.5 years and the duration of a non-callable 7% coupon bond with a remaining maturity of 10 years is approximately
8 years. Material changes in market interest rates may impact the duration calculation. For example, the price of a bond with
an average duration of 5 years would be expected to fall approximately 5% if market interest rates rose by 1%. Conversely,
the price of a bond with an average duration of 5 years would be expected to rise approximately 5% if market interest rates
dropped by 1%.
Floating Rate Loans:
In the event a borrower fails to pay scheduled interest or principal payments on a floating rate loan
(which can include certain bank loans), the Fund will experience a reduction in its income and a decline in the market value
of such floating rate loan. If a floating rate loan is held by the Fund through another financial institution, or the Fund relies
upon another financial institution to administer the loan, the receipt of scheduled interest or principal payments may be subject
to the credit risk of such financial institution. Investors in floating rate loans may not be afforded the protections of the anti-fraud
provisions of the Securities Act of 1933,
as amended,
and the Securities Exchange Act of 1934,
as amended,
because loans
may not be considered
“
securities
”
under such laws. Additionally, the value of collateral, if any, securing a floating rate loan
can decline or may be insufficient to meet the borrower’s obligations under the loan, and such collateral may be difficult to
liquidate. No active trading market may exist for many floating rate loans and many floating rate loans are subject to restrictions
on resale. Transactions in loans typically settle on a delayed basis and may take longer than 7 days to settle. As a result,
the Fund may not receive the proceeds from a sale of a floating rate loan for a significant period of time. Delay in the receipts
of settlement proceeds may impair the ability of the Fund to meet its redemption obligations, and may limit the ability of the
Fund to repay debt, pay dividends, or to take advantage of new investment opportunities.
Foreign (Non-U.S.) Investments:
Investing in foreign (non-U.S.) securities may result in the Fund experiencing more rapid and
extreme changes in value than a fund that invests exclusively in securities of U.S. companies due, in part, to: smaller markets;
differing reporting, accounting, auditing and financial reporting standards and practices; nationalization, expropriation, or
confiscatory taxation; foreign currency fluctuations, currency blockage, or replacement; potential for default on sovereign debt;
and political changes or diplomatic developments, which may include the imposition of economic sanctions (or the threat of
new or modified sanctions) or other measures by the U.S. or other governments and supranational organizations. Markets
and economies throughout the world are becoming increasingly interconnected, and conditions or events in one market, country
or region may adversely impact investments or issuers in another market, country or region.
Foreign (Non-U.S.) and Non-Canadian Issuers:
Investment in foreign (non-U.S.) borrowers involves special risks, including
that foreign (non-U.S.) borrowers may be subject to: less rigorous regulatory, accounting, and reporting requirements than
U.S. borrowers; differing legal systems and laws relating to creditors’ rights; the potential inability to enforce legal judgments;
economic adversity that would result if the value of the borrower’s foreign (non-U.S.) dollar denominated revenues and assets
were to fall because of fluctuations in currency values; and the potential for political, social, and economic adversity in the
foreign (non-U.S.) borrower’s country.
High-Yield Securities:
Lower-quality securities (including securities that are or have fallen below investment grade and are
classified as
“
junk bonds
”
or
“
high-yield securities
”
) have greater credit risk and liquidity risk than higher-quality (investment
grade) securities, and their issuers' long-term ability to make payments is considered speculative. Prices of lower-quality bonds
or other debt instruments are also more volatile, are more sensitive to negative news about the economy or the issuer, and
have greater liquidity risk and price volatility.
Interest in Loans:
The value and the income streams of interests in loans (including participation interests in lease financings
and assignments in secured variable or floating rate loans) will decline if borrowers delay payments or fail to pay altogether.
A significant rise in market interest rates could increase this risk. Although loans may be fully collateralized when purchased,
such collateral may become illiquid or decline in value.
Voya Credit Income Fund
5
Interest Rate:
Changes in short-term market interest rates will directly affect
the
yield on Common Shares. If short-term
market interest rates fall, the yield on Common Shares will also fall. To the extent that the interest rate spreads on loans in
the Fund’s portfolio experience a general decline, the yield on the Common Shares will fall and the value of the Fund’s assets
may decrease, which will cause the Fund’s net asset value to decrease. Conversely, when short-term market interest rates
rise, because of the lag between changes in such short-term rates and the resetting of the floating rates on assets
in
the
Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. In the case of inverse securities, the
interest rate paid by such securities generally will decrease when the market rate of interest to which the inverse security is
indexed increases. With respect to investments in fixed rate instruments, a rise in market interest rates generally causes
values of such instruments to fall. The values of fixed rate instruments with longer maturities or duration are more sensitive
to changes in market interest rates.
As of the date of this Prospectus, the United States has recently experienced a rising market interest rate environment, which
may increase the Fund’s exposure to risks associated with rising market interest rates. Rising market interest rates could
have unpredictable effects on the markets and may expose debt and related markets to heightened volatility, which could
reduce liquidity for certain investments, adversely affect values, and increase costs. If dealer capacity in debt and related
markets is insufficient for market conditions, it may further inhibit liquidity and increase volatility in the debt and related
markets. Further, recent and potential changes in government policy may affect interest rates.
Interest Rate for Floating Rate Loans:
Changes in short-term market interest rates will directly affect the yield on investments
in floating rate loans. If short-term market interest rates fall, the yield on the Fund’s shares will also fall. To the extent that
the interest rate spreads on loans in the Fund’s portfolio experience a general decline, the yield on the Fund’s shares will
fall and the value of the Fund’s assets may decrease, which will cause the Fund’s net asset value to decrease. Conversely,
when short-term market interest rates rise, because of the lag between changes in such short-term rates and the resetting
of the floating rates on assets in the Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. The
impact of market interest rate changes on the Fund’s yield will also be affected by whether, and the extent to which, the
floating rate loans in the Fund’s portfolio are subject to floors on the secured overnight funding rate (
“
SOFR
”
) base rate on
which interest is calculated for such loans (a
“
benchmark floor
”
). So long as the base rate for a loan remains under the
applicable benchmark floor, changes in short-term market interest rates will not affect the yield on such loans. In addition,
to the extent that changes in market interest rates are reflected not in a change to a base rate such as SOFR but in a change
in the spread over the base rate which is payable on the floating rate loans of the type and quality in which the Fund invests,
the Fund’s net asset value could also be adversely affected. With respect to investments in fixed rate instruments, a rise in
market interest rates generally causes values of such instruments to fall. The values of fixed rate instruments with longer
maturities or duration are more sensitive to changes in market interest rates. As of the date of this Prospectus, the U.S has
recently experienced a rising market interest rate environment, which may increase the Fund’s exposure to risks associated
with rising market interest rates. Rising market interest rates have unpredictable effects on the markets and may expose
debt and related markets to heightened volatility, which could reduce liquidity for certain investments, adversely affect values,
and increase costs. Increased redemptions may cause the Fund to liquidate portfolio positions when it may not be advantageous
to do so and may lower returns. If dealer capacity in debt and related markets is insufficient for market conditions, it may
further inhibit liquidity and increase volatility in the debt and related markets. Further, recent and potential future changes in
government policy may affect interest rates.
Interest Rate Swaps:
An interest rate swap is an agreement that obligates two parties to exchange a series of cash flows
for a specified period of time based upon or calculated by reference to a specified interest rate(s) for a specified amount.
Interest rate swaps involve the risk that changes in market conditions may affect the value of the contract or the cash flows,
and the possible inability or unwillingness of the counterparty to fulfill its obligations under the agreement. An interest rate
swap arrangement may not fully offset adverse changes in interest rates. Interest rate swaps are also subject to liquidity risk
and interest rate risk.
Leverage:
The use of leverage through borrowings or the issuance of Preferred Shares can adversely affect the yield on the
Common Shares. To the extent that the Fund is unable to invest the proceeds from the use of leverage in assets which pay
interest at a rate which exceeds the rate paid on the leverage, the yield on the Common Shares will decrease. In addition,
in the event of a general market decline in the value of assets such as those in which the Fund invests, the effect of that
decline will be magnified in the Fund because of the additional assets purchased with the proceeds of the leverage. Further,
because the fee paid to the Investment Adviser will be calculated on the basis of Managed Assets, the fee will be higher when
leverage is utilized, giving the Investment Adviser an incentive to utilize leverage. The Fund is subject
to
certain restrictions
imposed by lenders to the Fund and may be subject to certain restrictions imposed by guidelines of one or more rating agencies
which may issue ratings for debt or the Preferred Shares issued by the Fund. These restrictions are expected to impose asset
coverage, fund composition requirements and limits on investment techniques, such as the use of financial derivative products
Voya Credit Income Fund
6
that are more stringent than those imposed on the Fund by the 1940 Act. These restrictions could impede the manager from
fully managing the Fund’s portfolio in accordance with the Fund’s investment objective and policies. As of June 6, 2024 the
Fund had $
20.0
million in outstanding borrowings under its credit facility.
Limited Liquidity For Investors:
The Fund does not repurchase its shares on a daily basis and no market for the Common
Shares is expected to exist. To provide a measure of liquidity, the Fund will normally make monthly repurchase offers for not
less than 5% of its outstanding Common Shares. If more than 5% of Common Shares are tendered, investors may not be
able to completely liquidate their holdings in any one month. Shareholders also will not have liquidity between these monthly
repurchase dates.
Limited Secondary Market for Loans:
Because of the limited secondary market for loans, the Fund may be limited in its
ability to sell loans in its portfolio in a timely fashion and/or at a favorable price. Transactions in loans typically settle on a
delayed basis and typically take longer than 7 days to settle. As a result the Fund may not receive the proceeds from a sale
of a floating rate loan for a significant period of time. Delay in the receipts of settlement proceeds may impair the ability of
the Fund to meet its repurchase obligations and may increase the amounts the Fund may be required to borrow. It may also
limit the ability of the Fund to repay debt, pay dividends, or to take advantage of new investment opportunities.
Liquidity:
If a security is illiquid, the Fund might be unable to sell the security at a time when the Fund’s manager might wish
to sell, or at all. Further, the lack of an established secondary market may make it more difficult to value illiquid securities,
exposing the Fund to the risk that the prices at which it sells illiquid securities will be less than the prices at which they were
valued when held by the Fund, which could cause the Fund to lose money. The prices of illiquid securities may be more volatile
than more liquid securities, and the risks associated with illiquid securities may be greater in times of financial stress.
Certain
securities that are liquid when purchased may later become illiquid, particularly in times of overall economic distress or due
to geopolitical events such as sanctions, trading halts, or wars.
Market:
The market values of securities will fluctuate, sometimes sharply and unpredictably, based on overall economic conditions,
governmental actions or intervention, market disruptions caused by trade disputes or other factors, political developments,
and other factors. Prices of equity securities tend to rise and fall more dramatically than those of debt instruments. Additionally,
legislative, regulatory or tax policies or developments may adversely impact the investment techniques available to a manager,
add to costs, and impair the ability of the Fund to achieve its investment objectives.
Market Disruption and Geopolitical:
The Fund is subject to the risk that geopolitical events will disrupt securities markets
and adversely affect global economies and markets. Due to the increasing interdependence among global economies and
markets, conditions in one country, market, or region might adversely impact markets, issuers and/or foreign exchange rates
in other countries, including the United States. Wars, terrorism, global health crises and pandemics, and other geopolitical
events that have led, and may continue to lead, to increased market volatility and may have adverse short- or long-term effects
on U.S. and global economies and markets, generally. For example, the COVID-19 pandemic resulted in significant market
volatility, exchange suspensions and closures, declines in global financial markets, higher default rates, supply chain disruptions,
and a substantial economic downturn in economies throughout the world. The economic impacts of COVID-19 have created
a unique challenge for real estate markets. Many businesses have either partially or fully transitioned to a remote-working
environment and this transition may negatively impact the occupancy rates of commercial real estate over time. Natural and
environmental disasters and systemic market dislocations are also highly disruptive to economies and markets. In addition,
military action by Russia in Ukraine has, and may continue to, adversely affect global energy and financial markets and therefore
could affect the value of the Fund’s investments, including beyond the Fund’s direct exposure to Russian issuers or nearby
geographic regions. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible
to predict and could be substantial. A number of U.S. domestic banks and foreign (non-U.S.) banks have recently experienced
financial difficulties and, in some cases, failures. There can be no certainty that the actions taken by regulators to limit the
effect of those financial difficulties and failures on other banks or other financial institutions or on the U.S. or foreign (non-U.S.)
economies generally will be successful. It is possible that more banks or other financial institutions will experience financial
difficulties or fail, which may affect adversely other U.S. or foreign (non-U.S.) financial institutions and economies. These
events as well as other changes in foreign (non-U.S.) and domestic economic, social, and political conditions also could adversely
affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment,
and other factors affecting the value of the Fund’s investments. Any of these occurrences could disrupt the operations of the
Fund and of the Fund’s service providers.
Other Investment Companies:
The main risk of investing in other investment companies, including ETFs, is the risk that the
value of an investment company’s underlying investments might decrease. Shares of investment companies that are listed
on an exchange may trade at a discount or premium from their net asset value. You will pay a proportionate share of the
expenses of those other investment companies (including management fees, administration fees, and custodial fees) in addition
to the Fund’s expenses. The investment policies of the other investment companies may not be the same as those of the
Voya Credit Income Fund
7
Fund; as a result, an investment in the other investment companies may be subject to additional or different risks than those
to which the Fund is typically subject. In addition, shares of ETFs may trade at a premium or discount to net asset value and
are subject to secondary market trading risks. Secondary markets may be subject to irregular trading activity, wide bid/ask
spreads, and extended trade settlement periods in times of market stress because market makers and authorized participants
may step away from making a market in an ETF’s shares, which could cause a material decline in the ETF’s net asset value.
Prepayment and Extension:
Many types of debt instruments are subject to prepayment and extension risk. Prepayment risk
is the risk that the issuer of a debt instrument will pay back the principal earlier than expected. This risk is heightened in a
falling market interest rate environment. Prepayment may expose the Fund to a lower rate of return upon reinvestment of
principal. Also, if a debt instrument subject to prepayment has been purchased at a premium, the value of the premium would
be lost in the event of prepayment. Extension risk is the risk that the issuer of a debt instrument will pay back the principal
later than expected. This risk is heightened in a rising market interest rate environment. This may negatively affect performance,
as the value of the debt instrument decreases when principal payments are made later than expected. Additionally, the Fund
may be prevented from investing proceeds it would have received at a given time at the higher prevailing interest rates.
Loans
typically have a 6-12 month call protection and may be prepaid partially or in full after the call protection period without penalty.
Securities Lending:
Securities lending involves two primary risks:
“
investment risk
”
and
“
borrower default risk.
”
When lending
securities, the Fund will receive cash or U.S. government securities as collateral. Investment risk is the risk that the Fund
will lose money from the investment of the cash collateral received from the borrower. Borrower default risk is the risk that
the Fund will lose money due to the failure of a borrower to return a borrowed security. Securities lending may result in leverage.
The use of
leverage
may exaggerate any increase or decrease in the net asset value, causing the Fund to be more volatile.
The use of leverage may increase expenses and increase the impact of the Fund’s other risks.
Special Situations:
A
“
special situation
”
arises when, in a manager’s opinion, securities of a particular company will appreciate
in value within a reasonable period because of unique circumstances applicable to the company. Special situations investments
often involve much greater risk than is inherent in ordinary investments. Investments in special situation companies may not
appreciate and the Fund’s performance could suffer if an anticipated development does not occur or does not produce the
anticipated result.
Temporary Defensive Positions:
When market conditions make it advisable, the Fund may hold a portion of its assets in
cash and short-term interest bearing instruments. Moreover, in periods when, in the opinion of the manager, a temporary
defensive position is appropriate, up to 100% of the Fund’s assets may be held in cash, short-term interest bearing instruments
and/or any other securities the manager considers consistent with a temporary defensive position. The Fund may not achieve
its investment objective when pursuing a temporary defensive position.
Valuation of Loans:
The Fund values its assets every day the New York Stock Exchange is open for regular trading. However,
because the secondary market for floating rate loans is limited, it may be difficult to value loans, exposing the Fund to the
risk that the price at which it sells loans will be less than the price at which they were valued when held by the
Fund
. Reliable
market value quotations may not be readily available for some loans, and determining the fair valuation of such loans may
require more research than for securities that trade in a more active secondary market. In addition, elements of judgment
may play a greater role in the valuation of loans than for more securities that trade in a more developed secondary market
because there is less reliable, objective market value data available. If the Fund purchases a relatively large portion of a
loan, the limitations of the secondary market may inhibit the Fund from selling a portion of the loan and reducing its exposure
to a borrower when the manager deems it advisable to do so. Even if the Fund itself does not own a relatively large portion
of a particular loan, the Fund, in combination with other similar accounts under management by the same portfolio managers,
may own large portions of loans. The aggregate amount of holdings could create similar risks if and when the portfolio managers
decide to sell those loans. These risks could include, for example, the risk that the sale of an initial portion of the loan could
be at a price lower than the price at which the loan was valued by the Fund, the risk that the initial sale could adversely impact
the price at which additional portions of the loan are sold, and the risk that the foregoing events could warrant a reduced
valuation being assigned to the remaining portion of the loan still owned by the Fund.
When-Issued, Delayed Delivery, and Forward Commitment
Transactions
:
When-issued, delayed delivery, and forward commitment
transactions involve the risk that the security the Fund buys will lose value prior to its delivery. These transactions may result
in leverage. The use of leverage may exaggerate any increase or decrease in the net asset value,
causing
the Fund to be
more volatile. The use of leverage may increase expenses and increase the impact of the Fund’s other risks. There also is
the risk that the security will not be issued or that the other party will not meet its obligation. If this occurs, the Fund loses
both the investment opportunity for the assets it set aside to pay for the security and any gain in the security’s price.
Voya Credit Income Fund
8
WHAT YOU PAY TO INVEST - FUND EXPENSES
This table is intended to assist investors in understanding the various costs and expenses directly or indirectly associated
with investing in the Fund. The cost you pay to invest in the Fund varies depending upon which class of Common
Shares you purchase. In accordance with SEC requirements, the table below shows the expenses of the Fund, including
interest expense on borrowings, as a percentage of the average net assets of the Fund and not as a percentage of
gross assets or Managed Assets. By showing expenses as a percentage of the average net assets, expenses are not
expressed as a percentage of all of the assets that are invested for the Fund. The table below assumes that the Fund
has borrowed an amount equal to 25% of its Managed Assets. For information about the Fund’s expense ratios if the
Fund had not borrowed, see
“
Risk Factors and Special Considerations - Annual Expenses Without Borrowings.
”
Investors
investing in the Fund through an intermediary should consult the Appendix to this Prospectus, which includes information
regarding financial intermediary specific sales charges and related discount policies that apply to purchases through
certain specified intermediaries.
Fees and Expenses of the Fund
 
Class
Class A
Class C
Class I
Class W
Shareholder Transaction Expenses
 
 
 
Maximum sales charge on your investment (as a percentage of offering price)
1
2.50%
2
None
None
None
Dividend Reinvestment and Cash Purchase Plan Fees
None
None
None
None
Early Withdrawal Charge
None
3
1.00%
3
None
None
Exchange Fee
None
None
None
None
Annual Expenses (as a percentage of average net assets attributable to Common Shares)
 
 
 
Management Fees
4
1.07%
1.07%
1.07%
1.07%
Service Fee
0.25%
0.25%
None
None
Distribution Fee
5
None
0.50%
None
None
Interest Expense on Borrowed Funds
2.38%
2.38%
2.38%
2.38%
Other Operating Expenses
6
0.50%
0.50%
0.50%
0.50%
Total Annual Expenses
4.20%
4.70%
3.95%
3.95%
Fee Waivers/Reimbursements/Recoupment
7
(0.31)%
(0.31)%
(0.31)%
(0.31)%
Net Annual Expenses
8
3.89%
4.39%
3.64%
3.64%
1
The Distributor will pay a dealer reallowance for Class A Common Shares from the sales charge. The Distributor will pay a sales commission for Class C Common Shares to
authorized dealers from its own assets.
2
Reduced for purchases of $100,000 and over for Class A Common Shares, please see
“
Sales Charges.
”
3
There is no front-end sales charge if you purchase Class A Common Shares in the amount of $500,000 or more. Class A Common Shares purchased in an amount of $500,000
or more are subject to a 1.00% EWC if repurchased by the Fund within 12 months of purchase. Class C Common Shares repurchased by the Fund within the first year after
purchase will incur a 1.00% EWC. See
“
Sales Charges - Early Withdrawal Charge.
”
No EWC will be charged on redemptions that are due to the closing of shareholder accounts
having a value of less than $1,000.
4
Pursuant to the investment management agreement with the Fund, the Investment Adviser is paid a fee of 0.80% of the Fund's Managed Assets. For the description of
“
Managed
Assets,
”
please see
“
Description of the Fund – Investment Adviser/Sub-Adviser
”
earlier in this Prospectus.
5
Because the distribution fees payable by Class C Common Shares may be considered an asset-based sales charge, long-term shareholders in that class of the Fund may pay
more than the economic equivalent of the maximum front-end sales charges permitted by the Financial Industry Regulatory Authority.
6
Other Operating Expenses are estimated amounts for the current fiscal year.
7
The Investment Adviser is contractually obligated to limit expenses of the Fund through
July 1, 2025
to the following: Class A Common Shares - 0.90% of Managed Assets
plus 0.45% of average daily net assets; Class C Common Shares - 0.90% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.90% of
Managed Assets plus 0.20% of average daily net assets; and Class W Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets. The obligation is
subject to possible recoupment by the Investment Adviser within 36 months of the waiver or reimbursement. The Investment Adviser is contractually obligated to further limit
expenses of the Fund through
July 1, 2025
to the following: Class A Common Shares - 0.80% of Managed Assets plus 0.45% of average daily net assets; Class C Common
Shares - 0.80% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.80% of Managed Assets plus 0.20% of average daily net assets; and
Class W Common Shares - 0.80% of Managed Assets plus 0.20% of average daily net assets. These limitations do not extend to interest, taxes, investment-related costs,
leverage expenses, extraordinary expenses, and Acquired Fund Fees and Expenses. Termination or modification of these obligations requires approval by the Fund’s Board.
8
If the expenses of the Fund are calculated on the Managed Assets of the Fund (assuming that the Fund has used leverage by borrowing an amount equal to 25% of the Fund’s
Managed Assets), the Net Annual Expenses for the Fund would be lower than the expenses shown in the table. Such lower Net Annual Expense ratios would be as follows:
2.99
%,
3.49
%,
2.74
%, and
2.74
% for Class A, Class C, Class I, and Class W shares, respectively.
9
WHAT YOU PAY TO INVEST - FUND EXPENSES
(continued)
Examples
The following Examples show the amount of the expenses that an investor in the Fund would bear on a $1,000 investment
in the Fund that is held for the different time periods in the table. In the first table, it is assumed that the $1,000
remains invested over the entire 10-year period. As a result, no EWCs are included in the listed expense amounts.
The second table assumes that the $1,000 investment is tendered and repurchased at the end of each period shown.
As a result, EWCs are imposed on certain of those repurchases.
The Examples assume that all dividends and other distributions are reinvested at NAV and that the percentage amounts
listed under Net Annual Expenses in the previous table remain the same in the years shown (except that the Fee
Waivers/Reimbursements only apply for the first year). The tables and the assumption in the Examples of a 5% annual
return are required by regulations of the SEC applicable to all investment companies. The assumed 5% annual return
is not a prediction of, and does not represent, the projected or actual performance of the Fund's Common Shares.
For more complete descriptions of certain of the Fund's costs and expenses, see
“
Classes of Shares,
”
“
Sales Charges,
”
and
“
Investment Management and Other Service Providers.
”
 
Example #1
—
No Repurchases
 
 
1 Year
3 Years
5 Years
10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return and borrowings by the
Fund in an amount equal to 25% of its Managed Assets.
Class A Common Shares
 
$
64
151
241
481
Class C Common Shares
 
$
47
149
253
527
Class I Common Shares
 
$
37
120
206
436
Class W Common Shares
 
$
37
120
206
436
 
 
Example #2
—
With Repurchases at Period End
 
 
1 Year
3 Years
5 Years
10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return, borrowings by the
Fund in an amount equal to 25% of its Managed Assets, and the tender and repurchase of the entire investment at
the end of each period shown.
Class A Common Shares
 
$
64
151
241
481
Class C Common Shares
 
$
57
149
253
527
Class I Common Shares
 
$
37
120
206
436
Class W Common Shares
 
$
37
120
206
436
The purpose of each table is to assist you in understanding the various costs and expenses that an investor in the
Fund will bear directly or indirectly. See
“
Classes of Shares - Choosing a Share Class.
”
The foregoing Examples should not be considered a representation of future expenses and actual expenses may be
greater or less than those shown.
10
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's financial performance for the periods shown. Certain
information reflects the financial results for a single share. The total returns in the table represent the rate of return that an
investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and/or distributions).
The information
has been audited by
Ernst
&
Young LLP
, whose report, along with the Fund’s financial statements, is included
in the Fund’s Annual Report, which is available upon request.
The information for the prior fiscal year or period was audited by
a different independent public accounting firm.
11
FINANCIAL HIGHLIGHTS
(continued)
Selected data for a share of beneficial interest outstanding throughout each year or period.
 
 
 
Per Share Operating Performance
 
 
Ratios to average

net assets after

reimbursement/

recoupment
Ratios to average

net assets before

reimbursement/

recoupment
Supplemental data
 
Net asset value,

beginning of year

or period
Net investment

income (loss)
Net realized and

unrealized

gain (loss)
Total from investment

operations
Distributions from net

investment income
Distributions from net

realized gains on

investments
Distributions from return

of capital
Total distributions
Net asset value,

end of year or period
Total Investment

Return
(1)
Expenses (before interest

and other fees related to

revolving credit facility)
(2)(3)
Expenses (with interest

and other fees related to

revolving credit facility)
(2)(3)
Net investment

income (loss)
(2)(3)
Expenses (before interest

and other fees related to

revolving credit facility)
(3)
Expenses (with interest

and other fees related to

revolving credit facility)
(3)
Net investment

income (loss)
(3)
Net assets,

end of year or period
Portfolio Turnover
Borrowings at end

of year or period
Asset coverage per $1,000 of debt
Average borrowings
(4)
Shares outstanding

at end of year

or period
Year or period
ended
($)
($)
($)
($)
($)
($)
($)
($)
($)
(%)
(%)
(%)
(%)
(%)
(%)
(%)
($000's)
(%)
($000's)
($)
($000's)
(000's)
Class A
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2/29/2024
9.57
0.83*
0.05
0.88
(0.80)
—
—
(0.80)
9.65
9.60
1.38
2.50
8.59
1.68
2.80
8.28
100,272
66
21,100
6,460
18,760
10,389
2/28/2023
10.79
0.67*
(1.22)
(0.55)
(0.67)
—
—
(0.67)
9.57
(5.01)
1.51
2.54
6.71
1.81
2.84
6.41
106,819
68
16,800
8,390
43,588
11,163
2/28/2022
10.91
0.44*
(0.13)
0.31
(0.43)
—
—
(0.43)
10.79
2.92
1.55
2.01
4.02
1.70
2.16
3.87
127,411
76
56,200
3,780
63,085
11,805
2/28/2021
11.51
0.40*
(0.60)
(0.20)
(0.40)
—
—
(0.40)
10.91
(1.39)
1.66
2.20
3.91
1.83
2.37
3.74
134,440
44
72,900
3,500
69,828
12,327
2/29/2020
12.19
0.64*
(0.63)
0.01
(0.69)
—
—
(0.69)
11.51
0.06
1.69
2.88
5.36
1.83
3.02
5.22
173,654
45
101,800
3,370
106,324
15,092
2/28/2019
12.61
0.64
(0.38)
0.26
(0.68)
—
—
(0.68)
12.19
2.14
1.72
3.03
5.21
1.80
3.11
5.14
122,868
60
118,500
3,650
149,594
10,082
2/28/2018
12.85
0.57*
(0.17)
0.40
(0.50)
—
(0.14)
(0.64)
12.61
3.22
1.69
2.55
4.50
1.73
2.59
4.46
164,285
88
169,300
3,370
173,235
13,026
2/28/2017
11.85
0.67
1.02
1.69
(0.69)
—
—
(0.69)
12.85
14.56
1.63
2.12
5.34
1.68
2.17
5.28
207,989
69
154,800
4,200
149,897
16,188
2/29/2016
13.15
0.70
(1.30)
(0.60)
(0.70)
—
—
(0.70)
11.85
(4.77)
1.65
2.07
5.48
1.75
2.17
5.38
196,812
44
160,900
3,970
188,201
16,602
2/28/2015
13.50
0.65*
(0.28)
0.37
(0.72)
—
—
(0.72)
13.15
2.81
1.66
2.09
4.90
1.69
2.12
4.87
264,305
63
224,500
3,870
276,481
20,093
Class C
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2/29/2024
9.54
0.77*
0.07
0.84
(0.76)
—
—
(0.76)
9.62
9.09
1.88
3.00
8.05
2.18
3.30
7.75
4,666
66
21,100
6,460
18,760
485
2/28/2023
10.77
0.60*
(1.21)
(0.61)
(0.62)
—
—
(0.62)
9.54
(5.56)
2.01
3.04
6.03
2.31
3.34
5.73
6,678
68
16,800
8,390
43,588
700
2/28/2022
10.89
0.38*
(0.12)
0.26
(0.38)
—
—
(0.38)
10.77
2.41
2.05
2.51
3.49
2.20
2.66
3.34
11,854
76
56,200
3,780
63,085
1,101
2/28/2021
11.48
0.35*
(0.59)
(0.24)
(0.35)
—
—
(0.35)
10.89
(1.80)
2.16
2.70
3.46
2.33
2.87
3.29
27,248
44
72,900
3,500
69,828
2,503
2/29/2020
12.16
0.60*
(0.65)
(0.05)
(0.63)
—
—
(0.63)
11.48
(0.44)
2.19
3.38
5.02
2.33
3.52
4.88
40,876
45
101,800
3,370
106,324
3,560
2/28/2019
12.59
0.58
(0.39)
0.19
(0.62)
—
—
(0.62)
12.16
1.56
2.22
3.53
4.72
2.30
3.61
4.64
145,198
60
118,500
3,650
149,594
11,940
2/28/2018
12.82
0.50
(0.15)
0.35
(0.44)
—
(0.14)
(0.58)
12.59
2.79
2.19
3.05
4.00
2.23
3.09
3.96
175,929
88
169,300
3,370
173,235
13,977
2/28/2017
11.83
0.61
1.01
1.62
(0.63)
—
—
(0.63)
12.82
13.93
2.13
2.62
4.84
2.18
2.67
4.79
214,361
69
154,800
4,200
149,897
16,715
2/29/2016
13.13
0.63
(1.29)
(0.66)
(0.64)
—
—
(0.64)
11.83
(5.27)
2.15
2.57
4.98
2.25
2.67
4.88
220,899
44
160,900
3,970
188,201
18,667
2/28/2015
13.47
0.59*
(0.28)
0.31
(0.65)
—
—
(0.65)
13.13
2.38
2.16
2.59
4.42
2.19
2.62
4.39
294,011
63
224,500
3,870
276,481
22,392
Class I
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2/29/2024
9.53
0.85*
0.05
0.90
(0.83)
—
—
(0.83)
9.60
9.81
1.13
2.25
8.84
1.43
2.55
8.53
7,121
66
21,100
6,460
18,760
742
2/28/2023
10.75
0.68*
(1.21)
(0.53)
(0.69)
—
—
(0.69)
9.53
(4.82)
1.26
2.29
6.89
1.56
2.59
6.59
7,486
68
16,800
8,390
43,588
786
2/28/2022
10.86
0.46*
(0.11)
0.35
(0.46)
—
—
(0.46)
10.75
3.28
1.30
1.76
4.26
1.45
1.91
4.11
9,671
76
56,200
3,780
63,085
900
2/28/2021
11.46
0.43*
(0.60)
(0.17)
(0.43)
—
—
(0.43)
10.86
(1.14)
1.41
1.95
4.17
1.58
2.12
4.00
11,783
44
72,900
3,500
69,828
1,085
2/29/2020
12.15
0.68*
(0.65)
0.03
(0.72)
—
—
(0.72)
11.47
0.22
1.44
2.63
5.73
1.57
2.76
5.60
13,974
45
101,800
3,370
106,324
1,219
2/28/2019
12.57
0.68
(0.39)
0.29
(0.71)
—
—
(0.71)
12.15
2.41
1.47
2.78
5.47
1.53
2.84
5.42
29,733
60
118,500
3,650
149,594
2,448
2/28/2018
12.81
0.60*
(0.17)
0.43
(0.53)
—
(0.14)
(0.67)
12.57
3.49
1.44
2.30
4.74
1.45
2.31
4.73
34,324
88
169,300
3,370
173,235
2,730
2/28/2017
11.82
0.69
1.03
1.72
(0.73)
—
—
(0.73)
12.81
14.79
1.38
1.87
5.57
1.41
1.90
5.55
46,319
69
154,800
4,200
149,897
3,615
2/29/2016
13.12
0.72
(1.29)
(0.57)
(0.73)
—
—
(0.73)
11.82
(4.54)
1.40
1.82
5.71
1.48
1.90
5.63
33,210
44
160,900
3,970
188,201
2,809
2/28/2015
13.47
0.68*
(0.28)
0.40
(0.75)
—
—
(0.75)
13.12
3.09
1.41
1.84
5.14
1.41
1.84
5.14
53,877
63
224,500
3,870
276,481
4,106
 
12
FINANCIAL HIGHLIGHTS
(continued)
 
 
Per Share Operating Performance
 
 
Ratios to average

net assets after

reimbursement/

recoupment
Ratios to average

net assets before

reimbursement/

recoupment
Supplemental data
 
Net asset value,

beginning of year

or period
Net investment

income (loss)
Net realized and

unrealized

gain (loss)
Total from investment

operations
Distributions from net

investment income
Distributions from net

realized gains on

investments
Distributions from return

of capital
Total distributions
Net asset value,

end of year or period
Total Investment

Return
(1)
Expenses (before interest

and other fees related to

revolving credit facility)
(2)(3)
Expenses (with interest

and other fees related to

revolving credit facility)
(2)(3)
Net investment

income (loss)
(2)(3)
Expenses (before interest

and other fees related to

revolving credit facility)
(3)
Expenses (with interest

and other fees related to

revolving credit facility)
(3)
Net investment

income (loss)
(3)
Net assets,

end of year or period
Portfolio Turnover
Borrowings at end

of year or period
Asset coverage per $1,000 of debt
Average borrowings
(4)
Shares outstanding

at end of year

or period
Class W
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
02-29-24
9.58
0.85*
0.06
0.91
(0.83)
—
—
(0.83)
9.66
9.87
1.13
2.25
8.85
1.43
2.55
8.54
3,093
66
21,100
6,460
18,760
320
02-28-23
10.80
0.66*
(1.18)
(0.52)
(0.70)
—
—
(0.70)
9.58
(4.76)
1.26
2.29
6.57
1.56
2.59
6.26
3,097
68
16,800
8,390
43,588
323
02-28-22
10.92
0.47*
(0.13)
0.34
(0.46)
—
—
(0.46)
10.80
3.17
1.30
1.76
4.26
1.45
1.91
4.11
7,220
76
56,200
3,780
63,085
669
02-28-21
11.52
0.43*
(0.60)
(0.17)
(0.43)
—
—
(0.43)
10.92
(1.13)
1.41
1.95
4.19
1.58
2.12
4.02
8,850
44
72,900
3,500
69,828
811
02-29-20
12.20
0.68
(0.64)
0.04
(0.72)
—
—
(0.72)
11.52
0.31
1.44
2.63
5.68
1.58
2.77
5.54
13,215
45
101,800
3,370
106,324
1,148
02-28-19
12.62
0.67
(0.38)
0.29
(0.71)
—
—
(0.71)
12.20
2.40
1.47
2.78
5.44
1.55
2.86
5.36
16,250
60
118,500
3,650
149,594
1,332
02-28-18
12.86
0.60
(0.17)
0.43
(0.53)
—
(0.14)
(0.67)
12.62
3.47
1.44
2.30
4.76
1.48
2.34
4.72
27,431
88
169,300
3,370
173,235
2,173
02-28-17
11.86
0.70*
1.03
1.73
(0.73)
—
—
(0.73)
12.86
14.83
1.38
1.87
5.59
1.43
1.92
5.54
27,161
69
154,800
4,200
149,897
2,113
02-29-16
13.16
0.73
(1.30)
(0.57)
(0.73)
—
—
(0.73)
11.86
(4.52)
1.40
1.82
5.73
1.50
1.92
5.63
26,306
44
160,900
3,970
188,201
2,218
02-28-15
13.51
0.69*
(0.29)
0.40
(0.75)
—
—
(0.75)
13.16
3.08
1.41
1.84
5.15
1.44
1.87
5.12
31,608
63
224,500
3,870
276,481
2,401
 
(1)
Total investment return has been calculated assuming a purchase at the beginning of each period and a sale at the end of each period and assumes reinvestment of dividends, capital gain distributions, and return
of capital distributions/allocations, if any, on the dividend/distribution date. Total investment return does not include sales load.
(2)
The Investment Adviser has agreed to limit expenses excluding interest, taxes, brokerage commissions, leverage expenses, other investment related costs and extraordinary expenses, subject to possible recoupment
by the Investment Adviser within three years.
(3)
Annualized for periods less than one year.
(
4
)
Based on the active days of borrowing.
*
Calculated using average amount of shares outstanding throughout the period.
13
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The Fund's investment objective is to provide investors with a high level of monthly
income
. The investment objective
is fundamental and may not be changed without a majority vote of the shareholders of the Fund. See
“
Description of
the Fund – Fundamental and Non-Fundamental Investment Policies of the Fund
”
later in this Prospectus. The Fund
seeks to achieve this investment objective by investing in the types of assets described below:
The Fund allocates its assets among a broad range of credit sectors, including corporate debt securities, loans, high
yield debt securities, and collateralized loan obligations. The Fund seeks to achieve its investment objective by investing,
under normal market conditions, at least 80% of its net assets (plus borrowings for investment purposes) in floating-rate
obligations, fixed-income securities, and derivative instruments intended to provide economic exposure to such credit
sectors. The Fund will provide shareholders with at least 60 days’ prior notice of any change in this investment policy.
Fundamental Policies
1.
Industry Concentration.
The Fund may invest in any industry. The Fund may not invest more than 25% of its total
assets, measured at the time of investment, in any single industry.
2.
Borrower Diversification.
The Fund is diversified, as such term is defined in the 1940 Act. A diversified fund may
not, as to 75% of its total assets, invest more than 5% of its total assets in any one issuer and may not purchase
more than 10% of the outstanding voting securities of any one issuer (other than securities issues or guaranteed
by the U.S. government or any of its agencies or instrumentalities, or other investment companies). The Fund will
consider the borrower on a loan, including a loan participation, to be the issuer of such loan. With respect to no
more than 25% of its total assets, the Fund may make investments that are not subject to the foregoing restrictions.
These fundamental policies may only be changed with approval by a majority of all shareholders. See
“
Description of
the Fund – Fundamental and Non-Fundamental Investment Policies of the Fund
”
later in this Prospectus.
Investment Policies
The Investment Adviser and Sub-Adviser follow certain investment policies set by the Fund's Board. Some of those
policies are set forth below. Please refer to the SAI for additional information on these and other investment policies.
Use of Leverage.
The Fund may borrow money and issue Preferred Shares to the fullest extent permitted by the 1940
Act. See
“
Investment Objective and Policies - Policy on Borrowing
”
and
“
Investment Objective and Policies - Policy on
Issuance of Preferred Shares.
”
Policy on Borrowing
The Fund has a policy of borrowing for investment purposes. The Fund seeks to use proceeds from borrowing to acquire
loans and other investments which pay interest at a rate higher than the rate the Fund pays on borrowings. Accordingly,
borrowing has the potential to increase the Fund's total income available to holders of its Common Shares. The Fund
may also borrow to finance the repurchase of its Common Shares or to meet cash requirements.
The Fund may issue notes, commercial paper, or other evidences of indebtedness and may be required to secure
repayment by mortgaging, pledging, or otherwise granting a security interest in the Fund's assets. The terms of any
such borrowings will be subject to the provisions of the 1940 Act and they will also be subject to the more restrictive
terms of any credit agreements relating to borrowings and, to the extent the Fund seeks a rating for borrowings, to
additional guidelines imposed by rating agencies, which are expected to be more restrictive than the provisions of
the 1940 Act. The Fund is permitted to borrow an amount up to 33
 1
∕
3
%, or such other percentage permitted by law,
of its total assets (including the amount borrowed) less all liabilities other than borrowings. See
“
Risk Factors and
Special Considerations - Leverage
”
and
“
Risk Factors and Special Considerations - Restrictive Covenants and 1940
Act Restrictions.
”
Policy on Issuance of Preferred Shares
The Fund has a policy which permits it to issue Preferred Shares for investment purposes. The Fund seeks to use the
proceeds from Preferred Shares to acquire loans and other investments which pay interest at a rate higher than the
dividends payable on Preferred Shares. The terms of the issuance of
Preferred
Shares are subject to the 1940 Act
and to additional guidelines imposed by rating agencies, which are more restrictive than the provisions of the 1940
Act. Under the 1940 Act, the Fund may issue Preferred Shares so long as immediately after any issuance of Preferred
14
INVESTMENT OBJECTIVE AND
POLICIES
(
continued
)
Shares the value of the Fund's total assets (less all Fund liabilities and indebtedness that is not senior indebtedness)
is at least twice the amount of the Fund's senior indebtedness plus the involuntary liquidation preference of all outstanding
Preferred Shares. See
“
Risk Factors and Special Considerations - Leverage.
”
As of June 6, 2024 the Fund had
no
Preferred Shares outstanding.
15
RISK FACTORS AND SPECIAL CONSIDERATIONS
Risk is inherent in all investing. The following discussion summarizes some of the risks that you should consider before
deciding whether to invest in the Fund. For additional information about the risks associated with investing in the Fund,
please see the SAI.
Asset-Backed Securities:
Defaults on, or low credit quality or liquidity of, the underlying assets of the asset-backed
securities may impair the value of these securities and result in losses. There may be limitations on the enforceability
of any security interest or collateral granted with respect to those underlying assets, and the value of collateral may
not satisfy the obligation upon default. These securities also present a higher degree of prepayment and extension
risk and interest rate risk than do other types of debt instruments.
Small movements in interest rates (both increases
and decreases) may quickly and significantly reduce the value of certain asset-backed securities. The value of longer-term
securities generally changes more in response to changes in market interest rates than shorter-term securities.
These securities may be affected significantly by government regulation, market interest rates, market perception of
the creditworthiness of an issuer servicer, and loan-to-value ratio of the underlying assets. During an economic downturn,
the mortgages, commercial or consumer loans, trade or credit card receivables, installment purchase obligations,
leases, or other debt obligations underlying an asset-backed security may experience an increase in defaults as borrowers
experience difficulties in repaying their loans which may cause the valuation of such securities to be more volatile
and may reduce the value of such securities. These risks are particularly heightened for investments in asset-backed
securities that contain sub-prime loans, which are loans made to borrowers with weakened credit histories and often
have higher default rates. In addition, certain types of real estate may be adversely affected by changing usage trends,
such as office buildings as a result of work-from-home practices and commercial facilities as a result of an increase
in online shopping, which could in turn result in defaults and declines in value of mortgage-backed securities secured
by such properties.
Bank Instruments:
Bank instruments include certificates of deposit, fixed time deposits, bankers’ acceptances, and
other debt and deposit-type obligations issued by banks. Changes in economic, regulatory, or political conditions, or
other events that affect the banking industry may have an adverse effect on bank instruments or banking institutions
that serve as counterparties in transactions with the Fund. In the event of a bank insolvency or failure, the Fund may
be considered a general creditor of the bank, and it might lose some or all of the funds deposited with the bank. Even
where it is recognized that a bank might be in danger of insolvency or failure, the Fund might not be able to withdraw
or transfer its money from the bank in time to avoid any adverse effects of the insolvency or failure.
Volatility in the
banking system may impact the viability of banking and financial services institutions. In the event of failure of any
of the financial institutions where the Fund maintains its cash and cash equivalents, there can be no assurance that
the Fund would be able to access uninsured funds in a timely manner or at all and the Fund may incur losses. Any
such event could adversely affect the business, liquidity, financial position and performance of the Fund.
Company:
The price of a company’s stock could decline or underperform for many reasons, including, among others,
poor management, financial problems, reduced demand for the company’s goods or services, regulatory fines and
judgments, or business challenges. If a company is unable to meet its financial obligations, declares bankruptcy, or
becomes insolvent, its stock could become worthless.
Corporate Debt Instruments:
Corporate debt instruments are subject to the risk of the issuer’s inability or unwillingness
to meet principal and interest payments on the obligation. The value of corporate debt instruments may be subject
to price volatility due to such factors as market interest rates, market perception of the creditworthiness of the issuer,
and general market liquidity. When market interest rates decline, the value of corporate debt instruments can be expected
to rise, and when market interest rates rise, the value of corporate debt instruments can be expected to decline.
Corporate debt instruments with longer maturities tend to be more sensitive to market interest rate movements than
those with shorter maturities.
Covenant-Lite Loans:
Loans in which the Fund may invest or to which the Fund may gain exposure indirectly through
its investments in collateralized debt obligations, CLOs or other types of structured securities may be considered
“
covenant-lite
”
loans. Covenant-lite refers to loans which do not incorporate traditional performance-based financial
maintenance covenants. Covenant-lite does not refer to a loan’s seniority in a borrower’s capital structure nor to a
lack of the benefit from a legal pledge of the borrower’s assets and does not necessarily correlate to the overall credit
quality of the borrower. Covenant-lite loans generally do not include terms which allow a lender to take action based
on a borrower’s performance relative to its covenants. Such actions may include the ability to renegotiate and/or
re-set the credit spread on the loan with a borrower, and even to declare a default or force the borrower into bankruptcy
16
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
restructuring if certain criteria are breached. Covenant-lite loans typically still provide lenders with other covenants
that restrict a borrower from incurring additional debt or engaging in certain actions. Such covenants can only be
breached by an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition.
Accordingly, the Fund may have fewer rights against a borrower when it invests in, or has exposure to, covenant-lite
loans and, accordingly, may have a greater risk of loss on such investments as compared to investments in, or exposure
to, loans with additional or more conventional covenants.
Credit:
The Fund could lose money if the issuer or guarantor of a debt instrument in which the Fund invests, or the
counterparty to a derivative contract the Fund entered into, is unable or unwilling, or is perceived (whether by market
participants, rating agencies, pricing services, or otherwise) as unable or unwilling, to meet its financial obligations.
Asset-backed (including mortgage-backed) securities that are not issued by U.S. government agencies may have a
greater risk of default because they are not guaranteed by either the U.S. government or an agency or instrumentality
of the U.S. government. The credit quality of typical asset-backed securities depends primarily on the credit quality
of the underlying assets and the structural support (if any) provided to the securities.
Credit Default Swaps:
The Fund may enter into credit default swaps, either as a buyer or a seller of the swap. A buyer
of a credit default swap is generally obligated to pay the seller an upfront or a periodic stream of payments over the
term of the contract until a credit event, such as a default, on a reference obligation has occurred. If a credit event
occurs, the seller generally must pay the buyer the
“
par value
”
(full notional value) of the swap in exchange for an
equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required
to deliver the related net cash amount if the swap is cash settled. As a seller of a credit default swap, the Fund would
effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment
exposure on the full notional value of the swap. Credit default swaps are particularly subject to counterparty, credit,
valuation, liquidity, and leveraging risks, and the risk that the swap may not correlate with its reference obligation as
expected. Certain standardized credit default swaps are subject to mandatory central clearing. Central clearing is
expected to reduce counterparty credit risk and increase liquidity; however, there is no assurance that it will achieve
that result, and in the meantime, central clearing and related requirements expose the Fund to different kinds of
costs and risks. In addition, credit default swaps expose the Fund to the risk of improper valuation.
Credit Facility:
The Fund has a policy of borrowing for cash management and liquidity purposes and for the purpose
of investment. The Fund currently is a party to a credit facility with
The Bank of Nova Scotia
that permits the Fund to
borrow up to an aggregate amount of $
40
million. There is no guarantee that the Fund will continue to be a party to
a credit facility or a party to a credit facility upon similar terms and conditions as currently in place for the Fund. In
such cases, the Fund may be limited in its ability to utilize leverage for investment purposes and this may negatively
impact performance. The lender under the credit facility has a security interest in all assets of the Fund. As of June
6, 2024 the Fund had $
20.0
million in outstanding borrowings under its credit facility.
Interest is payable on the amounts borrowed under the credit facility at a benchmark rate or the federal funds rate,
plus a facility fee on unused commitments. Under the credit facility, the lender has the right to liquidate Fund assets
in the event of default by the Fund, and the Fund may be prohibited from paying dividends in the event of a material
adverse event or condition regarding the Fund, Investment Adviser, or Sub-Adviser until outstanding debts are paid or
until the event or condition is cured.
Credit (Loans):
Prices of the Fund’s investments are likely to fall if the actual or perceived financial health of the
borrowers on, or issuers of, such investments deteriorates, whether because of broad economic or issuer-specific
reasons, or if the borrower or issuer is late (or defaults) in paying interest or principal. The Fund's investments in U.S.
dollar-denominated floating rate secured senior loans are expected to be rated below investment grade. Below investment
grade loans commonly known as high-yielding, high risk investments or as
“
junk
”
investments involve a greater risk
that borrowers may not make timely payment of the interest and principal due on their loans and are subject to greater
levels of credit and liquidity risks. They also involve a greater risk that the value of such loans could decline significantly.
If borrowers do not make timely payments of the interest due on their loans, the yield on the Common Shares will
decrease. If borrowers do not make timely payment of the principal due on their loans, or if the value of such loans
decreases, the net asset value will decrease.
The Fund’s ability to pay dividends and repurchase its Common Shares
is dependent upon the performance of the assets in its portfolio.
17
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
The Fund may invest in loans that are senior in the capital structure of the borrower or issuer, hold an equal ranking
with other senior debt, or have characteristics (such as a senior position secured by liens on a borrower’s assets)
that the manager believes justify treatment as senior debt. Loans that are senior and secured generally involve less
risk than unsecured or subordinated debt and equity instruments of the same borrower because the payment of principal
and interest on senior loans is an obligation of the borrower that, in most instances, takes precedence over the payment
of dividends or the return of capital to the borrower’s shareholders, and payments to bond holders. Loans that are
senior and secured also may have collateral supporting the repayment of the debt instrument. However, the value of
the collateral may not equal the Fund’s investment when the debt instrument is acquired or may decline below the
principal amount of the debt instrument subsequent to the Fund’s investment. Also, to the extent that collateral consists
of stocks of the borrower, or its subsidiaries or affiliates, the Fund bears the risk that the stocks may decline in value,
be relatively illiquid, or may lose all or substantially all of their value, causing the Fund’s investment to be undercollateralized.
Therefore, the liquidation of the collateral underlying a loan in which the Fund has invested, may not satisfy the borrower’s
obligation to the Fund in the event of non-payment of scheduled interest or principal, and the collateral may not be
able to be readily liquidated. In addition, it is possible that disputes as to the nature or identity of the collateral securing
a loan may delay the Fund's ability to realize on the collateral or, if the dispute is resolved adversely to the Fund, may
prevent the Fund from realizing on assets it had considered to constitute collateral.
In the event of the bankruptcy of a borrower or issuer, the Fund could experience delays and limitations on its ability
to realize the benefits of the collateral securing the investment. Among the risks involved in a bankruptcy are assertions
that the pledge of collateral to secure a loan constitutes a fraudulent conveyance or preferential transfer that would
have the effect of nullifying or subordinating the Fund’s rights to the collateral.
The Senior Loans in which the Fund invests are generally rated lower than investment grade credit quality, i.e., rated
lower than Baa by Moody’s Investors Service, Inc. (
“
Moody’s
”
) or BBB by S&P Global Ratings (
“
S&P
”
), or have been
issued by issuers who have issued other debt instruments which, if unrated, would be rated lower than investment
grade credit quality. The Fund's investments in lower than investment grade loans will generally be rated at the time
of purchase between B3 and Ba1 by Moody's, B- and BB+ by S&P or, if not rated, would be of similar credit quality.
Lower quality securities (including securities that are or have fallen below investment grade and are classified as
“
junk bonds
”
or
“
high yield securities
”
) have greater credit risk and liquidity risk than higher quality (investment grade)
securities, and their issuers’ long-term ability to make payments is considered speculative. Prices of lower quality
bonds or other debt instruments are also more volatile, are more sensitive to negative news about the economy or
the issuer, and have greater liquidity risk and price volatility. Investment decisions are based largely on the credit
analysis performed by the manager, and not on rating agency evaluation. This analysis may be difficult to perform.
Information about a loan and its borrower generally is not in the public domain. Investors in loans may not be afforded
the protections of the anti-fraud provisions of the Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended, because loans may not be considered
“
securities
”
under such laws. In addition, many
borrowers have not issued securities to the public and are not subject to reporting requirements under federal securities
laws. Generally, however, borrowers are required to provide financial information to lenders and information may be
available from other loan market participants or agents that originate or administer loans.
Currency:
To the extent that the Fund invests directly or indirectly in foreign (non-U.S.) currencies or in securities denominated
in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those foreign (non-U.S.) currencies will
decline in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value
relative to the currency being hedged by the Fund through foreign currency exchange transactions.
Demand for Loans:
An increase in demand for loans may benefit the Fund by providing increased liquidity for such
loans and higher sales prices, but it may also adversely affect the rate of interest payable on such loans and the
rights provided to the Fund under the terms of the applicable loan agreement, and may increase the price of loans in
the secondary market. A decrease in the demand for loans may adversely affect the price of loans in the Fund’s
portfolio, which could cause the Fund’s net asset value to decline and reduce the liquidity of the Fund’s loan holdings.
Derivative Instruments:
Derivative instruments are subject to a number of risks, including the risk of changes in the
market price of the underlying asset, reference rate, or index credit risk with respect to the counterparty, risk of loss
due to changes in market interest rates, liquidity risk, valuation risk, and volatility risk. The amounts required to purchase
certain derivatives may be small relative to the magnitude of exposure assumed by the Fund. Therefore, the purchase
of certain derivatives may have an economic leveraging effect on the Fund and exaggerate any increase or decrease
18
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
in the net asset value. Derivatives may not perform as expected, so the Fund may not realize the intended benefits.
When used for hedging purposes, the change in value of a derivative may not correlate as expected with the asset,
reference rate, or index being hedged. When used as an alternative or substitute for direct cash investment, the return
provided by the derivative may not provide the same return as direct cash investment.
Generally, derivatives are sophisticated
financial instruments whose performance is derived, at least in part, from the performance of an underlying asset,
reference rate, or index. Derivatives include, among other things, swap agreements, options, forward foreign currency
exchange contracts, and futures. Certain derivatives in which the Fund may invest may be negotiated over-the-counter
with a single counterparty and as a result are subject to credit risks related to the counterparty’s ability or willingness
to perform its obligations; any deterioration in the counterparty’s creditworthiness could adversely affect the value
of the derivative. In addition, derivatives and their underlying instruments may experience periods of illiquidity which
could cause the Fund to hold a position it might otherwise sell, or to sell a position it otherwise might hold at an
inopportune time or price. A manager might imperfectly judge the direction of the market. For instance, if a derivative
is used as a hedge to offset investment risk in another security, the hedge might not correlate to the market’s movements
and may have unexpected or undesired results such as a loss or a reduction in gains. The U.S. government has enacted
legislation that provides for regulation of the derivatives market, including clearing, margin, reporting, and registration
requirements. The European Union (and other jurisdictions outside of the European Union, including the United Kingdom)
has implemented or is in the process of implementing similar requirements, which may affect the Fund when it enters
into a derivatives transaction with a counterparty organized in that jurisdiction or otherwise subject to that jurisdiction’s
derivatives regulations. Because these requirements are relatively new and evolving (and some of the rules are not
yet final), their ultimate impact remains unclear. Central clearing is expected to reduce counterparty credit risk and
increase liquidity; however, there is no assurance that it will achieve that result, and, in the meantime, central clearing
and related requirements expose the Fund to different kinds of costs and risks.
Duration:
One measure of risk for debt instruments is duration. Duration measures the sensitivity of a bond’s price
to market interest rate movements and is one of the tools used by a portfolio manager in selecting debt instruments.
Duration measures the average life of a bond on a present value basis by incorporating into one measure a bond’s
yield, coupons, final maturity and call features. As a point of reference, the duration of a non-callable 7% coupon bond
with a remaining maturity of 5 years is approximately 4.5 years and the duration of a non-callable 7% coupon bond
with a remaining maturity of 10 years is approximately 8 years. Material changes in market interest rates may impact
the duration calculation. For example, the price of a bond with an average duration of 5 years would be expected to
fall approximately 5% if market interest rates rose by 1%. Conversely, the price of a bond with an average duration of
5 years would be expected to rise approximately 5% if market interest rates dropped by 1%.
Equity Securities Incidental to Investments in Loans:
Investments in equity securities incidental to investments in
loans entail certain risks in addition to those associated with investments in loans. The value of such equity securities
may change more rapidly, and to a greater extent, than debt instruments issued by the same issuer in response to
company-specific developments and general market conditions. The Fund’s holdings of equity securities may increase
fluctuations in the Fund’s net asset value. The Fund may frequently possess material non-public information about a
borrower as a result of its ownership of a loan of such borrower. Because of prohibitions on trading in securities of
issuers while in possession of such information, the Fund might be unable to enter into a transaction in a security of
such a borrower when it would otherwise be advantageous to do so.
Floating Rate Loans:
In the event a borrower fails to pay scheduled interest or principal payments on a floating rate
loan (which can include certain bank loans), the Fund will experience a reduction in its income and a decline in the
market value of such floating rate loan. If a floating rate loan is held by the Fund through another financial institution,
or the Fund relies upon another financial institution to administer the loan, the receipt of scheduled interest or principal
payments may be subject to the credit risk of such financial institution. Investors in floating rate loans may not be
afforded the protections of the anti-fraud provisions of the Securities Act of 1933,
as amended,
and the Securities
Exchange Act of 1934,
as amended,
because loans may not be considered
“
securities
”
under such laws. Additionally,
the value of collateral, if any, securing a floating rate loan can decline or may be insufficient to meet the borrower’s
obligations under the loan, and such collateral may be difficult to liquidate. No active trading market may exist for
many floating rate loans and many floating rate loans are subject to restrictions on resale. Transactions in loans typically
settle on a delayed basis and may take longer than 7 days to settle. As a result, the Fund may not receive the proceeds
19
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
from a sale of a floating rate loan for a significant period of time. Delay in the receipts of settlement proceeds may
impair the ability of the Fund to meet its redemption obligations, and may limit the ability of the Fund to repay debt,
pay dividends, or to take advantage of new investment opportunities.
Foreign (Non-U.S.) Investments:
Investing in foreign (non-U.S.) securities may result in the Fund experiencing more
rapid and extreme changes in value than a fund that invests exclusively in securities of U.S. companies due, in part,
to: smaller markets; differing reporting, accounting, auditing and financial reporting standards and practices; nationalization,
expropriation, or confiscatory taxation; foreign currency fluctuations, currency blockage, or replacement; potential for
default on sovereign debt; and political changes or diplomatic developments, which may include the imposition of
economic sanctions (or the threat of new or modified sanctions) or other measures by the U.S. or other governments
and supranational organizations. Markets and economies throughout the world are becoming increasingly interconnected,
and conditions or events in one market, country or region may adversely impact investments or issuers in another
market, country or region.
High-Yield Securities:
Lower-quality securities (including securities that are or have fallen below investment grade
and are classified as
“
junk bonds
”
or
“
high-yield securities
”
) have greater credit risk and liquidity risk than higher-quality
(investment grade) securities, and their issuers' long-term ability to make payments is considered speculative. Prices
of lower-quality bonds or other debt instruments are also more volatile, are more sensitive to negative news about
the economy or the issuer, and have greater liquidity risk and price volatility.
Interest in Loans:
The value and the income streams of interests in loans (including participation interests in lease
financings and assignments in secured variable or floating rate loans) will decline if borrowers delay payments or fail
to pay altogether. A significant rise in market interest rates could increase this risk. Although loans may be fully collateralized
when purchased, such collateral may become illiquid or decline in value.
Interest Rate:
Changes in short-term market interest rates will directly affect the yield on Common Shares. If short-term
market interest rates fall, the yield on Common Shares will also fall. To the extent that the interest rate spreads on
loans in the Fund’s portfolio experience a general decline, the yield on the Common Shares will fall and the value of
the Fund’s assets may decrease, which will cause the Fund’s net asset value to decrease. Conversely, when short-term
market interest rates rise, because of the lag between changes in such short-term rates and the resetting of the
floating rates on assets in the Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. In
the case of inverse securities, the interest rate paid by such securities generally will decrease when the market rate
of interest to which the inverse security is indexed increases. With respect to investments in fixed rate instruments,
a rise in market interest rates generally causes values of such instruments to fall. The values of fixed rate instruments
with longer maturities or duration are more sensitive to changes in market interest rates.
As of the date of this Prospectus, the United States has recently experienced a rising market interest rate environment,
which may increase the Fund’s exposure to risks associated with rising market interest rates. Rising market interest
rates could have unpredictable effects on the markets and may expose debt and related markets to heightened volatility,
which could reduce liquidity for certain investments, adversely affect values, and increase costs. If dealer capacity in
debt and related markets is insufficient for market conditions, it may further inhibit liquidity and increase volatility in
the debt and related markets. Further, recent and potential changes in government policy may affect interest rates.
Market interest rate changes also may cause the Fund’s net asset value to experience moderate volatility. This is
because the value of a loan asset held by the Fund is partially a function of whether it is paying what the market
perceives to be a market rate of interest for the particular loan, given its individual credit and other characteristics.
If market interest rates change, a loan’s value could be affected to the extent the interest rate paid on that loan does
not reset at the same time. As discussed above, the Fund will ordinarily maintain a dollar-weighted average time until
the next interest rate adjustment on its loans of 90 days or less. Therefore, the impact of the lag between a change
in market interest rates and the change in the overall rate on the portfolio is expected to be minimal.
To the extent that changes in market rates of interest are reflected not in a change to a base rate but in a change in
the spread over the base rate which is payable on loans of the type and quality in which the Fund invests, the Fund’s
net asset value could also be adversely affected. However, unlike changes in market rates of interest for which there
is only a temporary lag before the portfolio reflects those changes, changes in a loan’s value based on changes in
the market spread on loans in the Fund’s portfolio may be of longer duration.
20
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
Finally, substantial increases in interest rates may cause an increase in loan defaults as borrowers may lack the
resources to meet higher debt service requirements. In the case of inverse securities, the interest rate paid by the
securities is a floating rate, which generally will decrease when the market rate of interest to which the inverse security
is indexed increases and will increase when the market rate of interest to which the inverse security is indexed decreases.
Interest Rate for Floating Rate Loans:
Changes in short-term market interest rates will directly affect the yield on
investments in floating rate loans. If short-term market interest rates fall, the yield on the Fund’s shares will also fall.
To the extent that the interest rate spreads on loans in the Fund’s portfolio experience a general decline, the yield
on the Fund’s shares will fall and the value of the Fund’s assets may decrease, which will cause the Fund’s net asset
value to decrease. Conversely, when short-term market interest rates rise, because of the lag between changes in
such short-term rates and the resetting of the floating rates on assets in the Fund’s portfolio, the impact of rising
rates will be delayed to the extent of such lag. The impact of market interest rate changes on the Fund’s yield will
also be affected by whether, and the extent to which, the floating rate loans in the Fund’s portfolio are subject to
floors on the secured overnight funding rate (
“
SOFR
”
) base rate on which interest is calculated for such loans (a
“
benchmark
floor
”
). So long as the base rate for a loan remains under the applicable benchmark floor, changes in short-term
market interest rates will not affect the yield on such loans. In addition, to the extent that changes in market interest
rates are reflected not in a change to a base rate such as SOFR but in a change in the spread over the base rate
which is payable on the floating rate loans of the type and quality in which the Fund invests, the Fund’s net asset
value could also be adversely affected. With respect to investments in fixed rate instruments, a rise in market interest
rates generally causes values of such instruments to fall. The values of fixed rate instruments with longer maturities
or duration are more sensitive to changes in market interest rates. As of the date of this Prospectus, the U.S has
recently experienced a rising market interest rate environment, which may increase the Fund’s exposure to risks associated
with rising market interest rates. Rising market interest rates have unpredictable effects on the markets and may
expose debt and related markets to heightened volatility, which could reduce liquidity for certain investments, adversely
affect values, and increase costs. Increased redemptions may cause the Fund to liquidate portfolio positions when
it may not be advantageous to do so and may lower returns. If dealer capacity in debt and related markets is insufficient
for market conditions, it may further inhibit liquidity and increase volatility in the debt and related markets. Further,
recent and potential future changes in government policy may affect interest rates.
Interest Rate Swaps:
An interest rate swap is an agreement that obligates two parties to exchange a series of cash
flows for a specified period of time based upon or calculated by reference to a specified interest rate(s) for a specified
amount. Interest rate swaps involve the risk that changes in market conditions may affect the value of the contract
or the cash flows, and the possible inability or unwillingness of the counterparty to fulfill its obligations under the
agreement. An interest rate swap arrangement may not fully offset adverse changes in interest rates. Interest rate
swaps are also subject to liquidity risk and interest rate risk.
Leverage:
The use of leverage through borrowings or the issuance of Preferred Shares can adversely affect the yield
on the Common Shares. To the extent that the Fund is unable to invest the proceeds from the use of leverage in
assets which pay interest at a rate which exceeds the rate paid on the leverage, the yield on the Common Shares will
decrease. In addition, in the event of a general market decline in the value of assets such as those in which the Fund
invests, the effect of that decline will be magnified in the Fund because of the additional assets purchased with the
proceeds of the leverage. Further, because the fee paid to the Investment Adviser will be calculated on the basis of
Managed Assets, the fee will be higher when leverage is utilized, giving the Investment Adviser an incentive to utilize
leverage. The Fund is subject to certain restrictions imposed by lenders to the Fund and may be subject to certain
restrictions imposed by guidelines of one or more rating agencies which may issue ratings for debt or the Preferred
Shares issued by the Fund. These restrictions are expected to impose asset coverage, fund composition requirements
and limits on investment techniques, such as the use of financial derivative products that are more stringent than
those imposed on the Fund by the 1940 Act. These restrictions could impede the manager from fully managing the
Fund’s portfolio in accordance with the Fund’s investment objective and policies. As of June 6, 2024 the Fund had
$
20.0
million in outstanding borrowings under its credit facility.
The Fund is permitted to borrow an amount up to 33
 1
∕
3
%, or such other percentage permitted by law, of its total assets
(including the amount borrowed) less all liabilities other than borrowings. The Fund may also issue Preferred Shares
so long as immediately after any issuance of Preferred Shares, the value of the Fund’s total assets (less all Fund
liabilities and indebtedness that is not senior indebtedness for 1940 Act purposes) is at least twice the amount of
the Fund’s senior indebtedness plus the involuntary liquidation preference of all outstanding shares. As of the date
21
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
of this Prospectus, the Fund had no Preferred Shares outstanding. Borrowings and the issuance of Preferred Shares
are referred to in this Prospectus collectively as
“
leverage.
”
The Fund may use leverage for investment purposes, to
finance the repurchase of its Common Shares, and to meet other cash requirements. The use of leverage for investment
purposes increases both investment opportunity and investment risk.
Capital raised through leverage will be subject to interest and other costs, and these costs could exceed the income
earned by the Fund on the proceeds of such leverage. There can be no assurance that the Fund’s income from the
proceeds of leverage will exceed these costs. The manager seeks to use leverage for the purposes of making additional
investments only if they believe, at the time of using leverage, that the total return on the assets purchased with such
funds will exceed interest payments and other costs on the leverage.
The Fund currently uses leverage by borrowing money on a floating rate basis. The current rate on borrowings as of
June 6, 2024 is
6.40
%.
The Fund’s leveraged capital structure creates special risks not associated with unleveraged funds having similar
investment objectives and policies. The funds borrowed pursuant to the credit facilities or obtained through any issuance
of Preferred Shares may constitute a substantial lien and burden by reason of their prior claim against the income of
the Fund and against the net assets of the Fund in liquidation.
The Fund is not permitted to declare dividends or other distributions, including dividends and distributions with respect
to Common Shares or Preferred Shares, or to purchase Common Shares or Preferred Shares unless: (i) at the time
thereof the Fund meets certain asset coverage requirements; and (ii) there is no event of default under any credit
facility program that is continuing. See
“
Risk Factors and Special Considerations - Restrictive Covenants and 1940
Act Restrictions
”
later in this Prospectus. In the event of a default under a credit facility program, the lenders have
the right to cause a liquidation of the collateral (
i.e
., sell assets of the Fund) and, if any such default is not cured,
the lenders may be able to control the liquidation as well.
In addition, the Fund is not permitted to pay dividends on, or redeem or repurchase, Common Shares unless all accrued
dividends on any Preferred Shares and all accrued interest on borrowings have been paid or set aside for payment.
Effect of Leverage
To cover the annual interest payments on the borrowings for the current fiscal year (assuming that the current rate
remains in effect for the entire fiscal year and assuming that the Fund borrows an amount equal to 25% of its Managed
Assets as of June 6, 2024) the Fund would need to experience an annual return of
1.62
% on its portfolio (including
the assets purchased with the assumed leverage) to cover such annual interest.
The following table is designed to illustrate the effect on return to a holder of the Fund's Common Shares of the
leverage created by the Fund's use of borrowing, using the average annual interest rate of
7.15
% for the fiscal year
ended February 29, 2024, assuming the Fund has used leverage by borrowing an amount equal to 25% of the Fund's
Managed Assets and assuming hypothetical annual returns on the Fund's portfolio of minus 10% to plus 10%. As
can be seen, leverage generally increases the return to shareholders when portfolio return is positive and decreases
return when the portfolio return is negative. Actual returns may be greater or less than those appearing in the table.
 
Assumed Portfolio Return, net of expenses
1
-
10
%
-
5
%
0
%
5
%
10
%
Corresponding Return to Common Shareholders
2
-15.72%
-9.05%
-2.38%
4.28%
10.95%
1
The Assumed Portfolio Return is required by regulation of the SEC and is not a prediction of, and does not represent, the projected or actual performance of the Fund.
2
In order to compute the Corresponding Return to Common Shares Shareholders, the Assumed Portfolio Return is multiplied by the total value of the Fund's assets at the
beginning of the Fund's fiscal year to obtain an assumed return to the Fund. From this amount, all interest accrued during the year is subtracted to determine the return
available to shareholders. The return available to shareholders is then divided by the total value of the Fund's net assets attributable to Common Shares as of the beginning
of the fiscal year to determine the Corresponding Return to Common Shareholders.
LIBOR Transition and Reference Benchmarks:
The London Interbank Offered Rate (
“
LIBOR
”
) was the offered rate
for short-term Eurodollar deposits between major international banks. The terms of investments, financings or other
transactions (including certain derivatives transactions) to which the Fund may be a party have historically been tied
to LIBOR. In connection with the global transition away from LIBOR led by regulators and market participants, LIBOR
was last published on a representative basis at the end of June 2023. Alternative reference rates to LIBOR have been
22
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
established in most major currencies and markets in these new rates are continuing to develop. The transition away
from LIBOR to the use of replacement rates has gone relatively smoothly but the full impact of the transition on the
Fund or the financial instruments in which the Fund invests cannot yet be fully determined.
In addition, interest rates or other types of rates and indices which are classed as
“
benchmarks
”
have been the subject
of ongoing national and international regulatory reform, including under the European Union regulation on indices
used as benchmarks in financial instruments and financial contracts (known as the
“
Benchmarks Regulation
”
). The
Benchmarks Regulation has been enacted into United Kingdom law by virtue of the European Union (Withdrawal) Act
2018 (as amended), subject to amendments made by the Benchmarks (Amendment and Transitional Provision) (EU
Exit) Regulations 2019 (SI 2019/657) and other statutory instruments. Following the implementation of these reforms,
the manner of administration of benchmarks has changed and may further change in the future, with the result that
relevant benchmarks may perform differently than in the past, the use of benchmarks that are not compliant with the
new standards by certain supervised entities may be restricted, and certain benchmarks may be eliminated entirely.
Such changes could cause increased market volatility and disruptions in liquidity for instruments that rely on or are
impacted by such benchmarks. Additionally, there could be other consequences which cannot be predicted.
Limited Secondary Market for Loans:
Because of the limited secondary market for loans, the Fund may be limited
in its ability to sell loans in its portfolio in a timely fashion and/or at a favorable price. Transactions in loans typically
settle on a delayed basis and typically take longer than 7 days to settle. As a result the Fund may not receive the
proceeds from a sale of a floating rate loan for a significant period of time. Delay in the receipts of settlement proceeds
may impair the ability of the Fund to meet its repurchase obligations and may increase the amounts the Fund may be
required to borrow. It may also limit the ability of the Fund to repay debt, pay dividends, or to take advantage of new
investment opportunities.
Although the re-sale, or secondary market for loans has grown substantially in recent years,
both in overall size and number of market participants, there is no organized exchange or board of trade on which
loans are traded. Instead, the secondary market for loans is a private, unregulated inter-dealer or inter-bank re-sale
market.
Loans usually trade in large denominations and trades can be infrequent and the market for loans may experience
volatility. The market has limited transparency so that information about actual trades may be difficult to obtain. Accordingly,
some loans will be relatively illiquid.
In addition, loans may require the consent of the borrower and/or the agent prior to sale or assignment. These consent
requirements can delay or impede the Fund’s ability to sell loans and can adversely affect the price that can be obtained.
These considerations may cause the Fund to sell assets at lower prices than it would otherwise consider to meet
cash needs or cause the Fund to maintain a greater portion of its assets in cash equivalents than it would otherwise,
which could negatively impact performance. The Fund may seek to avoid the necessity of selling assets to meet such
needs by the use of borrowings.
From time to time, the occurrence of one or more of the factors described above may create a cascading effect where
the market for debt instruments (including the market for loans) first experiences volatility and then decreased liquidity.
Such conditions, or other similar conditions, may then adversely affect the value of loans and other instruments,
widening spreads against higher-quality debt instruments, and making it harder to sell loans at prices at which they
have historically or recently traded, thereby further reducing liquidity.
For example, during the global liquidity crisis in
the second half of 2008, the average price of loans in the Morningstar
®
LSTA
®
US Leveraged Loan Index (which includes
loans of the type in which the Fund invests) declined by 32% (which included a decline of 3.06% on a single day).
Additionally, during the recent COVID-19 pandemic, the same index declined by 12.37% in March 2020 (which included
a decline of 3.74% on a single day).
Declines in the Fund's share price or other market developments (which may be more severe than these prior declines)
may lead to increased repurchases, which could cause the Fund to have to sell loans and other instruments at disadvantageous
prices and inhibit the ability of the Fund to retain its assets in the hope of greater stabilization in the secondary markets.
In addition, these or similar circumstances could cause the Fund to sell its highest quality and most liquid loans and
other investments in order to satisfy an initial wave of repurchases while leaving the Fund with a remaining portfolio
of lower-quality and less liquid investments. In anticipation of such circumstances, the Fund may also need to maintain
a larger portion of its assets in liquid instruments than usual. However, there can be no assurance that the Fund will
foresee the need to maintain greater liquidity or that actual efforts to maintain a larger portion of assets in liquid
investments would successfully mitigate the foregoing risks.
23
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
During its monthly repurchase offers, the Fund is required to maintain a percentage of its portfolio, equal to the value
of the repurchase amounts, in securities that can be sold or disposed of at approximately the price at which the Fund
has valued the investment, within a period equal to the period between a repurchase request deadline and the repurchase
payment deadline, or of assets that mature by the next repurchase payment deadline. The requirement to keep a
portion of the portfolio in liquid securities, however, could negatively impact performance.
Liquidity:
If a security is illiquid, the Fund might be unable to sell the security at a time when the Fund’s manager
might wish to sell, or at all. Further, the lack of an established secondary market may make it more difficult to value
illiquid securities, exposing the Fund to the risk that the prices at which it sells illiquid securities will be less than the
prices at which they were valued when held by the Fund, which could cause the Fund to lose money. The prices of
illiquid securities may be more volatile than more liquid securities, and the risks associated with illiquid securities
may be greater in times of financial stress.
Certain securities that are liquid when purchased may later become illiquid,
particularly in times of overall economic distress or due to geopolitical events such as sanctions, trading halts, or
wars.
Manager:
The Fund is subject to manager risk because it is an actively managed investment portfolio. The Investment
Adviser, the Sub-Adviser, or each individual portfolio manager will make judgments and apply investment techniques
and risk analyses in making investment decisions, but there can be no guarantee that these decisions will produce
the desired results. The Fund’s portfolio may fail to produce the intended results, and the Fund’s portfolio may underperform
other comparable funds because of portfolio management decisions related to, among other things, the selection of
investments, portfolio construction, risk assessments, and/or the outlook on market trends and opportunities.
Market:
The market values of securities will fluctuate, sometimes sharply and unpredictably, based on overall economic
conditions, governmental actions or intervention, market disruptions caused by trade disputes or other factors, political
developments, and other factors. Prices of equity securities tend to rise and fall more dramatically than those of debt
instruments. Additionally, legislative, regulatory or tax policies or developments may adversely impact the investment
techniques available to a manager, add to costs, and impair the ability of the Fund to achieve its investment objectives.
Market Disruption and Geopolitical:
The Fund is subject to the risk that geopolitical events will disrupt securities
markets and adversely affect global economies and markets. Due to the increasing interdependence among global
economies and markets, conditions in one country, market, or region might adversely impact markets, issuers and/or
foreign exchange rates in other countries, including the United States. Wars, terrorism, global health crises and pandemics,
and other geopolitical events that have led, and may continue to lead, to increased market volatility and may have
adverse short- or long-term effects on U.S. and global economies and markets, generally. For example, the COVID-19
pandemic resulted in significant market volatility, exchange suspensions and closures, declines in global financial
markets, higher default rates, supply chain disruptions, and a substantial economic downturn in economies throughout
the world. The economic impacts of COVID-19 have created a unique challenge for real estate markets. Many businesses
have either partially or fully transitioned to a remote-working environment and this transition may negatively impact
the occupancy rates of commercial real estate over time. Natural and environmental disasters and systemic market
dislocations are also highly disruptive to economies and markets. In addition, military action by Russia in Ukraine
has, and may continue to, adversely affect global energy and financial markets and therefore could affect the value
of the Fund’s investments, including beyond the Fund’s direct exposure to Russian issuers or nearby geographic regions.
The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict
and could be substantial. A number of U.S. domestic banks and foreign (non-U.S.) banks have recently experienced
financial difficulties and, in some cases, failures. There can be no certainty that the actions taken by regulators to
limit the effect of those financial difficulties and failures on other banks or other financial institutions or on the U.S.
or foreign (non-U.S.) economies generally will be successful. It is possible that more banks or other financial institutions
will experience financial difficulties or fail, which may affect adversely other U.S. or foreign (non-U.S.) financial institutions
and economies. These events as well as other changes in foreign (non-U.S.) and domestic economic, social, and
political conditions also could adversely affect individual issuers or related groups of issuers, securities markets,
interest rates, credit ratings, inflation, investor sentiment, and other factors affecting the value of the Fund’s investments.
Any of these occurrences could disrupt the operations of the Fund and of the Fund’s service providers.
24
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
Foreign (Non-U.S.) and Non-Canadian Issuers:
Investment in foreign (non-U.S.) borrowers involves special risks, including
that foreign (non-U.S.) borrowers may be subject to: less rigorous regulatory, accounting, and reporting requirements
than U.S. borrowers; differing legal systems and laws relating to creditors’ rights; the potential inability to enforce
legal judgments; economic adversity that would result if the value of the borrower’s foreign (non-U.S.) dollar denominated
revenues and assets were to fall because of fluctuations in currency values; and the potential for political, social,
and economic adversity in the foreign (non-U.S.) borrower’s country.
The Fund may invest up to 15% of its total assets
in investments denominated in OECD currencies (including the euro), other than the U.S. dollar.
The Fund will engage in currency exchange transactions to seek to hedge, as closely as practicable, 100% of the
economic impact to the Fund arising from foreign currency fluctuations.
Operational:
The
Fund, its service providers, and other market participants increasingly depend on complex information
technology and communications systems to conduct business functions. These systems are subject to a number of
different threats or risks that could adversely affect the Fund and its shareholders, despite the efforts of the Fund
and its service providers to adopt technologies, processes, and practices intended to mitigate these risks. Cyber-attacks,
disruptions, or failures that affect the Fund’s service providers, counterparties, market participants, or issuers of
securities held by the Fund may adversely affect the Fund and its shareholders, including by causing losses or impairing
the Fund’s operations. Information relating to the Fund’s investments has been and will in the future be delivered
electronically, which can give rise to a number of risks, including, but not limited to, the risks that such communications
may not be secure and may contain computer viruses or other defects, may not be accurately replicated on other
systems, or may be intercepted, deleted or interfered with, without the knowledge of the sender or the intended recipient.
Other Investment Companies:
The main risk of investing in other investment companies, including ETFs, is the risk
that the value of an investment company’s underlying investments might decrease. Shares of investment companies
that are listed on an exchange may trade at a discount or premium from their net asset value. You will pay a proportionate
share of the expenses of those other investment companies (including management fees, administration fees, and
custodial fees) in addition to the Fund’s expenses. The investment policies of the other investment companies may
not be the same as those of the Fund; as a result, an investment in the other investment companies may be subject
to additional or different risks than those to which the Fund is typically subject.
ETFs are exchange-traded investment companies that are, in many cases, designed to provide investment results
corresponding to an index. Additional risks of investments in ETFs include that: (i) an active trading market for an
ETF’s shares may not develop or be maintained; or (ii) trading may be halted if the listing exchanges’ officials deem
such action appropriate, the shares are delisted from an exchange, or the activation of market-wide
“
circuit breakers
”
(which are tied to large decreases in stock prices) halts trading of an ETF’s shares. Other investment companies
include Holding Company Depositary Receipts (
“
HOLDRs
”
). Because HOLDRs concentrate in the stocks of a particular
industry, trends in that industry may have a dramatic impact on their value. In addition, shares of ETFs may trade at
a premium or discount to net asset value and are subject to secondary market trading risks. Secondary markets may
be subject to irregular trading activity, wide bid/ask spreads, and extended trade settlement periods in times of market
stress because market makers and authorized participants may step away from making a market in an ETF’s shares,
which could cause a material decline in the ETF’s net asset value.
Prepayment and Extension:
Many types of debt instruments are subject to prepayment and extension risk. Prepayment
risk is the risk that the issuer of a debt instrument will pay back the principal earlier than expected. This risk is heightened
in a falling market interest rate environment. Prepayment may expose the Fund to a lower rate of return upon reinvestment
of principal. Also, if a debt instrument subject to prepayment has been purchased at a premium, the value of the
premium would be lost in the event of prepayment. Extension risk is the risk that the issuer of a debt instrument will
pay back the principal later than expected. This risk is heightened in a rising market interest rate environment. This
may negatively affect performance, as the value of the debt instrument decreases when principal payments are made
later than expected. Additionally, the Fund may be prevented from investing proceeds it would have received at a given
time at the higher prevailing interest rates.
Loans typically have a 6-12 month call protection and may be prepaid
partially or in full after the call protection period without penalty.
Ranking of Senior Indebtedness:
The rights of lenders to receive payments of interest and repayments of principal
of any borrowings made by the Fund under the credit facility program are senior to the rights of holders of Common
Shares and Preferred Shares with respect to the payment of dividends or upon liquidation.
25
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
Repurchase Agreements:
In the event that the other party to a repurchase agreement defaults on its obligations,
the Fund would generally seek to sell the underlying security serving as collateral for the repurchase agreement. However,
the value of collateral may be insufficient to satisfy the counterparty's obligation and/or the Fund may encounter
delay and incur costs before being able to sell the security. Such a delay may involve loss of interest or a decline in
price of the security, which could result in a loss. In addition, if the Fund is characterized by a court as an unsecured
creditor, it would be at risk of losing some or all of the principal and interest involved in the transaction.
Restrictive Covenants and 1940 Act Restrictions:
The credit agreements governing the credit facility program (
“
Credit
Agreements
”
) include usual and customary covenants for this type of transaction, including limits on the Fund’s ability
to: (i) issue Preferred Shares; (ii) incur liens or pledge portfolio securities; (iii) change its investment objective or
fundamental investment restrictions without the approval of lenders; (iv) make changes in any of its business objectives,
purposes, or operations that could result in a material adverse effect; (v) make any changes in its capital structure;
(vi) amend Fund documents in a manner which could adversely affect the rights, interests, or obligations of any of the
lenders; (vii) engage in any business other than the businesses currently engaged in; (viii) create, incur, assume, or
permit to exist certain debt except for certain specified types of debt; and (ix) permit any of its Employee Retirement
Income Security Act of 1974 (
“
ERISA
”
) affiliates to cause or permit to occur an event that could result in the imposition
of a lien under the Internal Revenue Code of 1986, as amended (the
“
Code
”
) or ERISA. In addition, the Credit Agreements
do not permit the Fund’s asset coverage ratio (as defined in the Credit Agreements) to fall below 300% at any time
(
“
Credit Agreement Asset Coverage Test
”
). These covenants or guidelines could impede the manager from fully managing
the Fund's portfolio in accordance with the investment objectives and policies.
Under the requirements of the 1940 Act, the Fund must have asset coverage of at least 300% immediately after any
borrowing under a credit facility program. For this purpose, asset coverage means the ratio which the value of the
total assets of the Fund, less liabilities and indebtedness not represented by senior securities, bears to the aggregate
amount of borrowings represented by senior securities issued by the Fund.
The Credit Agreements limit the Fund’s ability to pay dividends or make other distributions on the Common Shares,
or purchase or redeem Common Shares, unless the Fund complies with the Credit Agreement Asset Coverage Test.
In addition, the Credit Agreements do not permit the Fund to declare dividends or other distributions or purchase or
redeem Common Shares: (i) at any time that an event of default under the credit agreement has occurred and is
continuing; or (ii) if, after giving effect to such declaration, the Fund would not meet the Credit Agreement Asset Coverage
Test set forth in the Credit Agreements.
Securities Lending:
To generate additional income, the Fund may lend portfolio securities, on a short- or long-term
basis, in an amount up to 33
 1
∕
3
% of the Fund’s total assets, to broker-dealers, major banks, or other recognized
domestic institutional borrowers of securities. When the Fund lends its securities, it is responsible for investing the
cash collateral it receives from the borrower of the securities, and the Fund could incur losses in connection with the
investment of such cash collateral. As with other extensions of credit, there are risks of delay in recovery or even loss
of rights in the collateral should the borrower default or fail financially. The Fund intends to engage in lending portfolio
securities only when such lending is fully secured by investment grade collateral held by an independent agent.
Securities Lending:
Securities lending involves two primary risks:
“
investment risk
”
and
“
borrower default risk.
”
When
lending securities, the Fund will receive cash or U.S. government securities as collateral. Investment risk is the risk
that the Fund will lose money from the investment of the cash collateral received from the borrower. Borrower default
risk is the risk that the Fund will lose money due to the failure of a borrower to return a borrowed security. Securities
lending may result in leverage. The use of leverage may exaggerate any increase or decrease in the net asset value,
causing the Fund to be more volatile. The use of leverage may increase expenses and increase the impact of the
Fund’s other risks.
Short-Term Debt Instruments and Cash:
Some of the Senior Loans in which the Fund invests are in the form of revolving
credits. In order to permit the Fund to meet its obligations under such loans and to advance additional funds on short
notice, the Fund normally maintains unused borrowing capacity that equals or exceeds the total of all unfunded portions
of loans in its portfolio. Short-term debt instruments are subject to the risk of the issuer’s inability or unwillingness
to meet principal and interest payments on the debt obligation and also may be subject to price volatility due to such
factors as market interest rates, market perception of the creditworthiness of the issuer, and general market liquidity.
26
RISK FACTORS AND SPECIAL CONSIDERATIONS
(continued)
Because short-term debt instruments pay interest at a fixed-rate, when market interest rates decline, the value of
the Fund’s short-term debt instruments can be expected to rise, and when market interest rates rise, the value of
short-term debt instruments can be expected to decline.
Special Situations:
A
“
special situation
”
arises when, in a manager’s opinion, securities of a particular company will
appreciate in value within a reasonable period because of unique circumstances applicable to the company. Special
situations investments often involve much greater risk than is inherent in ordinary investments. Investments in special
situation companies may not appreciate and the Fund’s performance could suffer if an anticipated development does
not occur or does not produce the anticipated result.
Temporary Defensive Positions:
When market conditions make it advisable, the Fund may hold a portion of its assets
in cash and short-term interest bearing instruments. Moreover, in periods when, in the opinion of the manager, a
temporary defensive position is appropriate, up to 100% of the Fund’s assets may be held in cash, short-term interest
bearing instruments and/or any other securities the manager considers consistent with a temporary defensive position.
The Fund may not achieve its investment objective when pursuing a temporary defensive position.
Unsecured Debt Instruments and Subordinated Loans:
Unsecured loans and subordinated loans share the same
credit risks as those discussed under
“
Risk Factors and Special Considerations - Credit for Loans
”
except that unsecured
loans are not secured by any collateral of the borrower and subordinated loans are not the most senior debt in a
borrower’s capital structure. Unsecured loans do not enjoy the security associated with collateralization and may pose
a greater risk of nonpayment of interest or loss of principal than do secured loans. The primary additional risk in a
subordinated loan is the potential loss in the event of default by the issuer of the loan. Subordinated loans in an
insolvency bear an increased share, relative to senior secured lenders, of the ultimate risk that the borrower’s assets
are insufficient to meet its obligations to its creditors.
Valuation of Loans:
The Fund values its assets every day the New York Stock Exchange is open for regular trading.
However, because the secondary market for floating rate loans is limited, it may be difficult to value loans, exposing
the Fund to the risk that the price at which it sells loans will be less than the price at which they were valued when
held by the Fund. Reliable market value quotations may not be readily available for some loans, and determining the
fair valuation of such loans may require more research than for securities that trade in a more active secondary market.
In addition, elements of judgment may play a greater role in the valuation of loans than for more securities that trade
in a more developed secondary market because there is less reliable, objective market value data available. If the
Fund purchases a relatively large portion of a loan, the limitations of the secondary market may inhibit the Fund from
selling a portion of the loan and reducing its exposure to a borrower when the manager deems it advisable to do so.
Even if the Fund itself does not own a relatively large portion of a particular loan, the Fund, in combination with other
similar accounts under management by the same portfolio managers, may own large portions of loans. The aggregate
amount of holdings could create similar risks if and when the portfolio managers decide to sell those loans. These
risks could include, for example, the risk that the sale of an initial portion of the loan could be at a price lower than
the price at which the loan was valued by the Fund, the risk that the initial sale could adversely impact the price at
which additional portions of the loan are sold, and the risk that the foregoing events could warrant a reduced valuation
being assigned to the remaining portion of the loan still owned by the Fund.
When-Issued, Delayed Delivery, and Forward Commitment Transactions:
When-issued, delayed delivery, and forward
commitment transactions involve the risk that the security the Fund buys will lose value prior to its delivery. These
transactions may result in leverage. The use of leverage may exaggerate any increase or decrease in the net asset
value, causing the Fund to be more volatile. The use of leverage may increase expenses and increase the impact of
the Fund’s other risks. There also is the risk that the security will not be issued or that the other party will not meet
its obligation. If this occurs, the Fund loses both the investment opportunity for the assets it set aside to pay for the
security and any gain in the security’s price.
27
CLASSES OF SHARES
Choosing a Share Class
When choosing between classes of Common Shares , you should carefully consider: (1) how long you plan to hold
shares of the Fund; (2) the amount of your investment; (3) the expenses you will pay for each class, including ongoing
annual expenses along with the initial sales charge or the EWC; and (4) whether you qualify for any sales charge
discounts. Please review the disclosure about all of the available share classes carefully. Before investing, you should
discuss with your financial intermediary which share class may be right for you.
The tables below summarize the features of the classes of shares available through this Prospectus. Fund charges
may vary so you should review the Fund's fee table as well as the section entitled
“
Sales Charges
”
in this Prospectus.
 
Class A Common Shares
 
Initial Sales Charge
Up to 2.50% (reduced for purchases of $100,000 or more and
eliminated for purchases of $500,000 or more)
Early Withdrawal Charge
None (except that a charge of 1.00% applies to certain
repurchases by the Fund made within 12 months of purchase)
Distribution and/or Shareholder Services (12b-1) Fees
0.25% annually
Purchase Maximum
None
Minimum Initial Purchase/Minimum Account Size
$1,000 ($250 for IRAs)/$1,000 ($250 for IRAs)
Minimum Subsequent Purchases
None (At least $100/month for Pre-Authorized Investment Plan)
Conversion
None
 
Class C Common Shares
 
Initial Sales Charge
None
Early Withdrawal Charge
1.00% on shares sold within one year of purchase
Distribution and/or Shareholder Services (12b-1) Fees
0.75% annually
Purchase Maximum
$1,000,000
Minimum Initial Purchase/Minimum Account Size
$1,000 ($250 for IRAs)/$1,000 ($250 for IRAs)
Minimum Subsequent Purchases
None (At least $100/month for Pre-Authorized Investment Plan)
Conversion
Automatic conversion to Class A Common Shares at net asset
value (without the imposition of a sales charge) after 8 years
 
Class I Common Shares
 
Initial Sales Charge
None
Early Withdrawal Charge
None
Distribution and/or Shareholder Services (12b-1) Fees
None
Purchase Maximum
None
Minimum Initial Purchase
1
/Minimum Account Size
$250,000/$250,000
Minimum Subsequent Purchases
None (At least $100/month for Pre-Authorized Investment Plan)
Conversion
None
 
Class W Common Shares
 
Initial Sales Charge
None
Early Withdrawal Charge
None
Distribution and/or Shareholder Services (12b-1) Fees
None
Purchase Maximum
None
Minimum Initial Purchase/Minimum Account Size
$1,000/$1,000
Minimum Subsequent Purchases
None
Conversion
None
1
There is no minimum investment requirement for: (i) qualified retirement plans or other defined contribution plans and defined benefit plans that invest in the Voya funds
through omnibus arrangements; (ii) employees of Voya IM who are eligible to participate in
“
notional
”
bonus programs sponsored by Voya IM; or (iii) (a) investors transacting
28
CLASSES OF SHARES
(continued)
in Class I Common Shares through brokerage platforms that invest in the Voya funds’ Class I Common Shares through omnibus accounts and have agreements with the
Distributor to offer such shares and (b) such brokerage platforms’ omnibus accounts.
The relative impact of the initial sales charge, if applicable, and ongoing annual expenses will depend on the length
of time a share is held. Higher distribution fees mean a higher expense ratio, so Class C Common Shares pay correspondingly
lower dividends and may have a lower net asset value (
“
NAV
”
) than Class A Common Shares, Class I Common Shares,
or Class W Common Shares.
Because the Fund may not be able to identify an individual investor’s trading activities when investing through omnibus
account arrangements, you and/or your financial intermediary are responsible for ensuring that your investment in
Class C Common Shares does not exceed $1,000,000. The Fund cannot ensure that it will identify purchase orders
that would cause your investment in Class C Common Shares to exceed the maximum allowed amount. When investing
through such arrangements, you and/or your financial intermediary should be diligent in determining that you have
selected the appropriate share class for you.
You and/or your financial intermediary should also take care to assure that you are receiving any sales charge reductions
or other benefits to which you may be entitled. As an example, as is discussed below, you may be able to reduce a
Class A sales charge payable by aggregating purchases to achieve breakpoint discounts. The Fund uses the net amount
invested when determining whether a shareholder has reached the required investment amount in order to be eligible
for a breakpoint discount. In order to ensure that you are receiving any applicable sales charge reduction, it may be
necessary for you to inform the Fund or your financial intermediary of the existence of other accounts that may be
eligible to be aggregated. The SAI discusses specific classes of investors who may be eligible for a reduced sales
charge. In addition, investors investing in the Fund through an intermediary should consult Appendix A to this Prospectus,
which includes information regarding financial intermediary specific sales charges and related discount policies that
apply to purchases through certain specified intermediaries. Before investing you should discuss which share class
may be right for you with your financial intermediary.
Distribution and Service (12b-1) Fees
The Fund pays fees to the Distributor on an ongoing basis as compensation for the services the Distributor provides
and the expenses it bears in connection with the sale and distribution of Fund shares (
“
distribution fees
”
) and/or in
connection with personal services rendered to Fund shareholders and the maintenance of shareholder accounts (
“
service
fees
”
). These payments are made pursuant to distribution and/or shareholder servicing plans adopted by the Fund
pursuant to Rule 12b-1 of the 1940 Act (
“
12b-1 Plan
”
). Because these distribution and service fees are paid on an
ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying
other types of sales charges.
The Fund has adopted a 12b-1 Plan for Class A and/or Class C Common Shares. The following table lists the maximum
annual rates at which the distribution and/or servicing fees may be paid under a 12b-1 Plan (calculated as a percentage
of the Fund's average daily net assets attributable to the particular class of shares):
 
Fund
Class A
Class C
Voya Credit Income Fund
0.25%
0.75%
29
SALES CHARGES
The Fund makes available in a clear and prominent format, free of charge, on its website,
(
https://individuals.voya.com/product/share-classes-and-expenses
), information regarding applicable sales loads, reduced
sales charges (
i.e
., breakpoint discounts), sales load waivers, eligibility minimums and purchases of the Fund's Common
Shares. The website includes hyperlinks that facilitate access to the information.
Class A Common Shares
This section includes important information about sales charges and sales charge reduction programs available to
investors in the Fund's Class A Common Shares and describes the information or records you may need to provide
to the Distributor or your financial intermediary in order to be eligible for sales charge reduction programs.
Unless you are eligible for a waiver, the public offering price you pay when you buy Class A Common Shares is the
NAV of the shares at the time of purchase, plus an initial sales charge. The initial sales charge varies depending on
the size of your purchase, as set forth in the following tables. No sales charge is imposed when Class A Common
Shares are issued to you pursuant to the automatic reinvestment of income dividends or capital gains distributions.
For investors investing in Class A Common Shares through a financial intermediary, it is the responsibility of the financial
intermediary to ensure that the investor obtains the proper breakpoint discount, if any.
Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage
of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower
depending on whether downward or upward rounding was required during the calculation process.
Class A Common Shares are sold subject to the following sales charge:
 
Your Investment
As a % of

the offering price
As a % of net

asset value
Less than $100,000
2.50
2.56
$100,000 - $499,999
2.00
2.04
$500,000 or more
1
N/A
N/A
1
See Early Withdrawal Charge below.
Former Class C Common Shareholders that were converted to Class A Common Shareholders are not subject to sales
charges for the life of their account on purchases made directly with the Fund.
Early Withdrawal Charge
Class A Common Shares
There is no front-end sales charge if you purchase Class A Common Shares in an amount of $500,000 or more.
However, the shares will be subject to a 1.00% EWC if they are repurchased by the Fund within 12 months of purchase.
Former Class C Common Shareholders that were converted to Class A Common Shareholders are not subject to an
EWC for the life of their account on purchases made directly with the Fund.
Class C Common Shares
Class C Common Shares are offered at their NAV per share without any initial sales charge. However, you may be
charged an EWC on Class C Common Shares that you offer to the Fund for repurchase (and are repurchased) within
a certain period of time after you bought them. The amount of the EWC is based on the NAV of the Common Shares
at the time of purchase. The EWCs are as follows:
30
SALES CHARGES
(continued)
Class C Common Shares
 
Sold during
EWC on shares

being repurchased
1st year
1.00%
After 1st year
none
To keep your EWC as low as possible, each time you offer your Common Shares for repurchase, the Fund will first
repurchase Common Shares in your account that are not subject to an EWC and then will repurchase Common Shares
that have the lowest EWC.
Sales Charge Reductions and Waivers
Reduced Sales Charges.
  The sales charge and EWC waiver categories described in this section do not apply to customers
purchasing Common Shares of the Fund through any of the financial intermediaries specified in the Appendix A to this
Prospectus (each a
“
Specified Intermediary
”
). In all instances, it is the investor’s responsibility to notify the Fund or
the investor’s financial intermediary at the time of purchase of any relationship or other facts qualifying the purchaser
for sales charge waivers or discounts.
Different financial intermediaries may apply different sales charge or EWC waivers. Please refer to the Appendix A for
the sales charge or EWC waivers that are applicable to each Specified Intermediary.
Investors in the Fund could reduce or eliminate sales charges applicable to the purchase of Class A Common Shares
through utilization of the Letter of Intent, Rights of Accumulation, or Combination Privilege. These programs are summarized
below and are described in greater detail in the SAI.
•
Letter of Intent
—
lets you purchase shares over a 13 month period and pay the same sales charge as if the
shares had all been purchased at once.
•
Rights of Accumulation
—
lets you add the value of shares of any open-end Voya mutual fund (excluding Voya Government
Money Market Fund) you already own to the amount of your next purchase for purposes of calculating the sales
charge.
•
Combination Privilege
—
shares held by investors in the Voya mutual funds which impose a contingent deferred
sales charge (
“
CDSC
”
) may be combined with Class A Common Shares for a reduced sales charge.
See the Account Application or the SAI for details, or contact your financial intermediary or a Shareholder Services
Representative for more information.
EWC Waivers.
 The EWC for Class A and Class C Common Shares will be waived in the following cases (in determining
whether an EWC is applicable, it will be assumed that Common Shares held in the shareholder's account that are not
subject to such charge are repurchased first):
•
The EWC on shares will be waived in the case of repurchase following the death or permanent disability of a
shareholder. The waiver is available for total or partial repurchases of shares of the Fund owned by an individual
or an individual in joint tenancy (with rights of survivorship), but only for those Common Shares held at the time
of death or initial determination of permanent disability.
•
The EWC will also be waived in the case of a total or partial repurchase of Common Shares of the Fund in
connection with any mandatory distribution from a tax-deferred retirement plan or an IRA. The shareholder must
have attained the age of 70½ to qualify for the EWC waiver relating to mandatory distributions. This waiver does
not apply in the case of a tax-free rollover or transfer of assets, other than one following a separation of service,
except that an EWC may be waived in certain circumstances involving repurchases in connection with a distribution
from a qualified employer retirement plan in connection with termination of employment or termination of the
employer's plan and the transfer to another employer's plan or to an IRA. The shareholder must notify the Transfer
Agent either directly or through the Distributor, at the time of repurchase, that the shareholder is entitled to a
waiver of the EWC. The EWC Waiver Form included in the New Account Application must be completed and provided
to the Transfer Agent at the time of the repurchase request. The waiver will be granted subject to confirmation
of the grounds for the waiver. The foregoing waivers may be changed at any time.
•
Reinvestment of dividends and capital gains distributions.
31
SALES CHARGES
(continued)
•
The EWC which may be imposed on Class A Common Shares purchased in excess of $500,000, may also be
waived for registered investment advisors, trust companies and bank trust departments investing on their own
behalf or on behalf of their clients. These waivers may be changed at any time.
In addition, the EWC will be waived on the redemption of Common Shares held through an intermediary if the intermediary
has entered into an agreement with the Distributor to waive the EWC.
Reinstatement Privilege.
 Shareholders who have had their Class A and Class C Common Shares repurchased within
the previous 90 days may purchase Class A and Class C Common Shares at NAV (at the time of reinstatement) in an
amount up to the repurchase proceeds. Reinstated Class A and Class C Common Shares will retain their original
purchase date for purposes of the EWC. The amount of any EWC also will be reinstated.
To exercise this privilege, a written order for the purchase of new Class A and Class C Common Shares must be
received by the transfer agent or be postmarked within 90 days after the date of repurchase pursuant to the repurchase
offer. This privilege can be used only once per calendar year. If a loss is incurred on the repurchase and the reinstatement
privilege is used, some or all of the loss may not be allowed as a tax deduction.
32
HOW SHARES ARE PRICED
The Fund is open for business every day the New York Stock Exchange (the
“
NYSE
”
) opens for regular trading (each
such day, a
“
Business Day
”
). The NAV per Common Share of each class of the Fund is determined each Business
Day as of the close of the regular trading session (
“
Market Close
”
), as determined by the Consolidated Tape Association
(the
“
CTA
”
), the central distributor of transaction prices for exchange-traded securities (normally 4:00 p.m. Eastern
Time unless otherwise designated by the CTA). The data reflected on the consolidated tape provided by the CTA is
generated by various market centers, including all securities exchanges, electronic communications networks, and
third-market broker-dealers. The NAV per Common Share of each class of the Fund is calculated by dividing the value
of the Fund’s loan assets plus all cash and other assets (including accrued expenses but excluding capital and surplus)
attributable to that class of Common Shares by the number of Common Shares outstanding. The NAV per Common
Share is made available for publication. On days when the Fund is closed for business, Fund Common Shares will not
be priced and the Fund does not transact purchase and redemption orders. To the extent the Fund’s assets are traded
in other markets on days when the Fund does not price its Common Shares, the value of the Fund’s assets will likely
change and you will not be able to purchase or redeem shares of the Fund.
Portfolio holdings for which market quotations are readily available are valued at market value. Investments in open-end
registered investment companies that do not trade on an exchange are valued at the end
-
of
-
day NAV per share. The
prospectuses of the open-end registered investment companies in which the Fund may invest explain the circumstances
under which they will use fair value pricing and the effects of using fair value pricing. Foreign (non-U.S.) securities’
prices are converted into U.S. dollar amounts using the applicable exchange rates as of Market Close.
When a market quotation for a portfolio security is not readily available or is deemed unreliable (for example, when
trading has been halted or there are unexpected market closures or other material events that would suggest that
the market quotation is unreliable) and for purposes of determining the value of other portfolio holdings, the portfolio
holding is priced at its fair value. The Board has designated the Investment Adviser, as the valuation designee, to
make fair value determinations in good faith. In determining the fair value of the Fund’s portfolio holdings, the Investment
Adviser, pursuant to its fair valuation policy, may consider inputs from pricing service providers, broker-dealers, or the
Fund’s Sub-Adviser(s). Issuer specific events, transaction price, position size, nature and duration of restrictions on
disposition of the security, market trends, bid/ask quotes of brokers, and other market data may be reviewed in the
course of making a good faith determination of the fair value of a portfolio holding. Because trading hours for certain
foreign (non-U.S.) securities end before Market Close, closing market quotations may become unreliable. The prices
of foreign (non-U.S.) securities will generally be adjusted based on inputs from a third-party pricing service that are
intended to reflect valuation changes through Market Close. Because of the inherent uncertainties of fair valuation,
the values used to determine the Fund’s NAV may materially differ from the value received upon actual sale of those
investments. Thus, fair valuation may have an unintended dilutive or accretive effect on the value of shareholders’
investments in the Fund.
33
HOW TO BUY SHARES
Customer Identification
To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial
institutions to obtain, verify, and record information that identifies each person that opens an account, and to determine
whether such person’s name appears on government lists of known or suspected terrorists and terrorist organizations.
What this means for you: the Fund, the Distributor, or a third-party selling you the Fund, must obtain the following
information for each person that opens an account:
•
Name;
•
Date of birth (for individuals);
•
Physical residential address (although post office boxes are still permitted for mailing); and
•
Social Security number, taxpayer identification number, or other identifying number.
You may also be asked to show your driver’s license, passport, or other identifying documents in order to verify your
identity. In addition, it may be necessary to verify your identity by cross-referencing your identification information with
a consumer report or other electronic database. Additional information may be required to open accounts for corporations
and other non-natural persons.
Federal law prohibits the Fund, the Distributor, and other financial institutions from opening accounts unless they receive
the minimum identifying information listed above. They also may be required to close your account if they are unable
to verify your identity within a reasonable time.
The Fund and the Distributor reserve the right to reject any purchase order. Please note that cash, traveler's checks,
third-party checks, money orders, and checks drawn on non-U.S. banks (even if payment may be effected through a
U.S. bank) generally will not be accepted. The Fund and the Distributor reserve the right to waive minimum investment
amounts. Waiver of the minimum investment amount can increase operating expenses of the Fund. The Fund and the
Distributor reserve the right to liquidate sufficient shares to recover annual transfer agent fees or to close your account
and redeem your shares should you fail to maintain your account value minimum.
The Fund reserves the right to suspend the offering of shares.
Class A and Class C Common Shares
Class A and Class C Common Shares may be purchased from certain financial services firms that have sales agreements
with Voya Investments Distributor, LLC (
“
Authorized Dealers
”
). Investors may be charged a fee for transactions made
through a broker or agent.
A shareholder’s Class C Common Shares will automatically convert to Class A Common Shares on the second calendar
day of the following month in which the 8th anniversary of the issuance of the Class C Common Shares occurs, together
with a
pro rata
portion of all Class C Common Shares representing dividends and other distributions paid in additional
Class C Common Shares.
Class I Common Shares
Class I Common Shares may be purchased without a sales charge by: (1) qualified retirement plans such as 401(a),
401(k), or other defined contribution plans and defined benefit plans; (2) 529 college savings plans; (3) insurance
companies and foundations investing for their own account; (4) wrap programs offered by broker-dealers and financial
institutions; (5) accounts of, or managed by, trust departments; (6) individuals whose accounts are managed by an
investment adviser representative; (7) employees of Voya IM who are eligible to participate in
“
notional
”
bonus programs
sponsored by Voya IM; (8) retirement plans affiliated with Voya Financial, Inc.; (9) Voya Financial, Inc. affiliates for
purposes of corporate cash management; (10) other registered investment companies; and (11) (a) investors purchasing
Class I shares through brokerage platforms that invest in the Voya funds’ Class I shares through omnibus accounts
and have agreements with the Distributor to offer such shares and (b) such brokerage platforms’ omnibus accounts.
An investor transacting in Class I shares on such brokerage platforms may be required to pay a commission and/or
other forms of compensation to the broker.
Class W Common Shares
Class W Common Shares may be purchased without a sales charge by: (1) qualified retirement plans such as 401(a),
401(k), or other defined contribution plans and defined benefit plans; (2) insurance companies and foundations investing
for their own account; (3) wrap programs offered by broker-dealers and financial institutions; (4) accounts of, or managed
34
HOW TO BUY SHARES
(continued)
by, trust departments; (5) individuals whose accounts are managed by an investment adviser representative; (6) retirement
plans affiliated with Voya Financial, Inc.; (7) Voya Financial, Inc. affiliates for purposes of corporate cash management;
and (8) by other Voya mutual funds in the Voya family of funds.
In addition, Class W Common Shares are available to the following persons through direct investment (not through
broker-dealers that are not approved by Voya) into a Voya mutual fund or through a Voya approved broker-dealer (currently,
Voya Financial Advisors, Inc.): (1) current and retired officers and directors/trustees of the Voya mutual funds; (2)
current and retired officers, directors, and full-time employees of Voya Investments, LLC, Directed Services LLC; any
Voya mutual fund's sub-adviser; Voya Investments Distributor, LLC; and any of their affiliates; (3) family members of
the foregoing persons (defined as current spouse, children, parents, grandparents, grandchildren, uncles, aunts, siblings,
nephews, nieces, step-relations, relations at-law, and cousins); (4) any trust, pension, profit-sharing, or other benefit
plan for such persons (including family members); (5) discretionary advisory accounts of Voya Investments, LLC, Directed
Services LLC, any Voya mutual fund's sub-adviser, or Voya Investments Distributor, LLC; and (6) qualifying investments
made through Voya promotional programs as determined by Voya Investments Distributor, LLC.
Price of Shares
Purchase and exchange orders for Common Shares of the Fund are effected at NAV, determined after the order is
received by the Transfer Agent in proper form. A purchase order will be deemed to be in proper form when all of the
required steps set forth above have been completed. In the case of an investment by wire, however, the order will be
deemed to be in proper form after the telephone notification and the federal funds wire have been received. A shareholder
who purchases by wire must submit an application form in a timely fashion. If an order or payment by wire is received
after the close of regular trading on the NYSE (normally 4:00 p.m. Eastern Time), the shares will not be credited until
the next business day.
You will receive a confirmation of each new transaction in your account, which also will show you the number of Fund
Common Shares you own including the number of shares being held in safekeeping by the Transfer Agent for your
account. You may rely on these confirmations in lieu of certificates as evidence of your ownership. Certificates representing
Common Shares of the Fund will not be issued unless you request them in writing.
The Fund may, on occasion, suspend the continuous offering of its Common Shares. If this occurs, shareholders will
still be permitted to reinvest dividends in additional Common Shares, and qualified plan investors will be permitted
to continue making automatic contributions for additional Common Shares.
Pre-Authorized Investment Plan
You may establish a pre-authorized investment plan to purchase Common Shares with automatic bank account debiting.
For further information on pre-authorized investment plans, see the New Account Application or contact a Shareholder
Services Representative at 1-800-992-0180.
Retirement Plans
The Fund has available prototype qualified retirement plans for corporations and self-employed individuals. The Fund
also has available prototype IRA, Roth IRA and Simple IRA plans (for both individuals and employers), Simplified Employee
Pension Plans and Pension and Profit Sharing Plans. BNY Mellon Investment Servicing Trust Company acts as the
custodian under these plans. For further information, contact a Shareholder Services Representative at 1-800-992-0180.
BNY Mellon Investment Servicing Trust Company currently receives a $12 custodial fee annually for the maintenance
of each such account.
Make your investment using the purchase minimum guidelines in the following table.
35
HOW TO BUY SHARES
(continued)
 
Minimum Investments
Class
Initial Purchase
Subsequent Purchases
Non-retirement accounts
A/C/W

I
1
$1,000

$250,000
No minimum
Retirement accounts
A/C

I
1

W
$250

$250,000

$1,000
No minimum
Pre-authorized investment plan
A/C/W

I
1
$1,000

$250,000
At least $100/month
Certain omnibus accounts
A/C
$250
No minimum
1
For Class I Common Shares, there is no minimum initial investment requirement for: (i) qualified retirement plans or other defined contribution plans and defined benefit plans
that invest in the Voya funds through omnibus arrangements; (ii) employees of Voya IM who are eligible to participate in
“
notional
”
bonus programs sponsored by Voya IM; or
(iii) (a) investors transacting in Class I Common Shares through brokerage platforms that invest in the Voya funds’ Class I Common Shares through omnibus accounts and
have agreements with the Distributor to offer such Common Shares and (b) such brokerage platforms’ omnibus accounts.
Make your investment using the methods outlined in the following table.
If you are a participant in a qualified retirement
plan, you should make purchases through your plan administrator or sponsor, who is responsible for transmitting
orders.
 
Buying Shares
Opening an Account
Adding to an Account
By Contacting Your Financial
Intermediary
A financial intermediary with an authorized
firm can help you establish and maintain your
account.
Contact your financial intermediary.
By Mail
Make your check payable to Voya Investment
Management and mail it with a completed
Account Application. Please indicate your
financial intermediary on the New Account
Application.
Fill out the Account Additions form at the
bottom of your account statement and mail it
along with your check payable to Voya
Investment Management to the address on
the account statement. Please write your
account number on the check.
By Wire
Call Shareholder Services at
1-800-992-0180 to obtain an account
number and indicate your financial
intermediary on the account.
Instruct your bank to wire funds to the Fund
in the care of:
Bank of New York Mellon
ABA # 011001234
credit to: BNY Mellon Investment Servicing
(US) Inc. as Agent for Voya mutual funds
A/C #0000733938; for further credit to
Shareholder A/C #
 
 
 
 
 
 
(A/C # you received over the telephone)
Shareholder Name:
      
(Your Name Here)
After wiring funds you must complete the
Account Application and send it to:
Voya Investment Management
P.O. Box 534480
Pittsburgh, PA
15253-4480
Wire the funds in the same manner described
under
“
Opening an Account.
”
36
HOW TO BUY SHARES
(continued)
Execution of Purchase Orders
Purchase orders are executed at the next NAV determined after the order is received in proper form by the Transfer
Agent or the Distributor. A purchase order will be deemed to be in proper form when all of the required steps set forth
under
“
How to Buy Shares
”
have been completed. If you purchase by wire, however, the order will be deemed to be
in proper form after the federal funds wire has been received. If you are opening a new account and you purchase by
wire, you must submit an application form prior to Market Close. If an order or payment by wire is received after Market
Close, your order will not be executed until the next NAV is determined. For your transaction to be counted on the day
you place your order with your broker-dealer or other financial institution, your broker-dealer or financial institution
must receive your order in proper form before Market Close and transmit the order to the Transfer Agent or the Distributor
in a timely manner.
You will receive a confirmation of each new transaction in your account, which also will show you the number of shares
you own including the number of shares being held in safekeeping by the Transfer Agent for your account. You may
rely on these confirmations in lieu of certificates as evidence of your ownership.
37
HOW TO EXCHANGE SHARES
Exchanges Between Shares of the Voya Mutual Funds
You may exchange shares of certain other Voya mutual funds into Common Shares of the Fund. You may also move
your investment in the Common Shares of the Fund into certain other Voya mutual funds in conjunction with monthly
repurchases made by the Fund. In this case, rather than tendering your shares for cash, you would elect to have the
dollar value of those Common Shares accepted for purchases of shares of the other Voya mutual fund.
The total value of shares being exchanged into the Fund must at least equal the minimum investment requirement
applicable to the relevant class of Common Shares of the Fund, and the total value of shares being exchanged out
of the Fund into other Voya mutual funds must meet the minimum investment requirements of those products, as
applicable. The exchange privilege is only available in states where shares of the Fund being acquired may be legally
sold.
Early Withdrawal Charge on Exchanges
You are not required to pay an applicable EWC upon an exchange of Common Shares from the Fund to any Voya mutual
fund. However, if you exchange and subsequently redeem your shares, the EWC from the Fund (not the CDSC schedule
from the fund into which you exchanged your Common Shares) will apply. However, the time period for application of
the EWC will be calculated based on the first date you acquired your Common Shares of the Fund so that you get the
benefit of the full period of time you owned your Common Shares of the Fund.
Exchanges Between Classes of Shares of the Fund
You may exchange Class C and Class W Common Shares of the Fund for Class I Common Shares of the Fund, or you
may exchange Class A Common Shares and Class I Common Shares of the Fund for any other class of the Fund, if
you otherwise meet the eligibility requirements of the class of Common Shares to be received in the exchange, or
you may exchange Class C Common Shares of the Fund for Class A Common Shares of the Fund after you have held
your Class C Common Shares for 8 years or more, except that: (1) you may not exchange Common Shares that are
subject to an EWC until the EWC period has expired, unless the Distributor approves the exchange and determines
that no EWC is payable in connection with the exchange; (2) you may not exchange Class A Common Shares for Class
W Common Shares unless you acquired the Class A Common Shares through a Voya approved broker-dealer (currently,
Voya Financial Advisors, Inc.); and (3) you may not exchange Class C Common Shares for Class A Common Shares
unless your intermediary has agreed to waive its right to receive the front-end sales charge that otherwise would be
applicable to the Class A Common Shares. All exchanges within the Fund are subject to the discretion of the Distributor
to permit or reject such exchanges.
Shareholders generally should not recognize gain or loss for U.S. federal income tax purposes for an exchange between
classes of shares of the same Fund provided that the transaction is undertaken and processed, with respect to any
shareholder, as a direct exchange transaction. Shareholders should consult their tax advisors as to the U.S. federal,
state, local and non-U.S. tax consequences of an exchange between classes of shares of the same Fund.
Exchanges between classes of shares within the Fund are not subject to the frequent trading and market timing policies
of Voya mutual funds.
Additional Information About Exchanges
Fees and expenses differ among Voya mutual funds and among share classes of the same Fund. Please read the
prospectus for the Voya mutual fund and share class you are interested in prior to exchanging into that Voya mutual
fund or share class. Contact your financial intermediary or consult your plan documents for additional information.
An exchange of Common Shares of the Fund for shares of another Voya mutual fund is treated as a sale and purchase
of shares and may result in the recognition of a gain or loss for U.S. federal and state income tax purposes. For
exchanges between Voya mutual funds, you should consult your own tax advisor for advice about the particular U.S.
federal, state, local, and non-U.S. tax consequences to you of such exchange. The total value of shares being exchanged
must at least equal the minimum investment requirement of the Voya mutual fund into which they are being exchanged.
In addition to the Fund, the Distributor offers many other funds. Shareholders exercising the exchange privilege with
any other Voya mutual fund should carefully review the prospectus of that fund before exchanging their shares. Investors
may obtain a copy of a prospectus of any Voya mutual fund not discussed in this Prospectus by calling 1-800-992-0180
or by going to www.voyainvestments.com.
38
HOW TO EXCHANGE SHARES
(continued)
Exchanges between classes of Common Shares of the Fund are not subject to the frequent trading and market timing
policies of Voya mutual funds.
39
FREQUENT TRADING - MARKET TIMING
It is possible that frequent, short-term trading activity may occur in the Fund. Because the Fund conducts repurchase
offers only monthly, the Fund believes that the potential adverse effects from short-term trading are less significant
than in open-end funds, and the Fund does not monitor trading activity of shareholders to attempt to identify market
timers.
The Fund believes that market timing or frequent, short-term trading in any account is not in the best interest of the
Fund or its shareholders. Due to the disruptive nature of this activity, it can adversely affect the ability of the Investment
Adviser or Sub-Adviser to invest assets in an orderly, long-term manner. Frequent trading can raise Fund expenses
through: increased trading and transaction costs; increased administrative costs; and lost opportunity costs. This, in
turn, can have an adverse effect on Fund performance.
It is possible that certain shareholders holding large amounts of shares of the Fund may tender for repurchase all or
some of their shares through the normal monthly offers to repurchase made by the Fund. If more shares are tendered
for repurchase in any monthly repurchase offer than the Fund offered to repurchase that month, repurchases may be
made on a
pro-rata
basis. As a result, shareholders who tender their shares for repurchase may not have their entire
tender accepted by the Fund.
40
PAYMENTS TO FINANCIAL INTERMEDIARIES
Voya mutual funds are distributed by the Distributor. The Distributor is a broker-dealer that is licensed to sell securities.
The Distributor generally does not sell directly to the public but sells and markets its products through intermediaries
such as other broker-dealers. Each Voya mutual fund also has an investment adviser which is responsible for managing
the money invested in each of the mutual funds. Both of these entities or their affiliates (collectively,
“
Voya
”
) may
compensate an intermediary for selling Voya mutual funds.
Persons licensed with the Financial Industry Regulatory Authority (
“
FINRA
”
) as a registered representative (often referred
to as a broker or financial adviser) and associated with a specific broker-dealer may receive compensation from the
Fund for providing services which are primarily intended to result in the sale of Fund shares. The Distributor has an
agreement in place with each broker-dealer selling the Fund defining specifically what that broker-dealer will be paid
for the sale of a particular Voya mutual fund. The broker-dealer then pays the registered representative who sold you
the mutual fund some or all of what they receive from Voya. A registered representative may receive a payment when
the sale is made and in some cases, can continue to receive payments while you are invested in the mutual fund. In
addition, other entities may receive compensation from the Fund for providing services which are primarily intended
to result in the sale of Fund shares, so long as such entities are permitted to receive these fees under applicable
rules and regulations.
The Distributor may pay, from its own resources, additional fees to these broker-dealers or other financial institutions
including affiliated entities. These additional fees paid to intermediaries may take the following forms: (1) a percentage
of that entity’s customer assets invested in Voya mutual funds; (2) a percentage of that entity's gross sales; or (3)
some combination of these payments. Depending on the broker-dealer's satisfaction of the required conditions, these
payments may be periodic and may be up to: (1) 0.30% per annum of the value of the Fund's shares held by the
broker-dealer’s customers; or (2) 0.30% of the value of the Fund's shares sold by the broker-dealer during a particular
period. For example, if that initial investment averages a value of $10,000 over the year, the Distributor could pay a
maximum of $30 on those assets. If you invested $10,000, the Distributor could pay a maximum of $30 for that sale.
Voya, out of its own resources and without additional cost to the Fund or its shareholders, may provide additional
cash or non-cash compensation to intermediaries selling shares of the Fund, including affiliates of Voya. These amounts
would be in addition to the distribution payments made by the Fund under the distribution agreements. Management
personnel of Voya may receive additional compensation if the overall amount of investments in funds advised by Voya
meets certain target levels or increases over time.
Voya may provide additional cash or non-cash compensation to third parties selling our mutual funds including affiliated
companies. This may take the form of cash incentives and non-cash compensation and may include, but is not limited
to: cash; merchandise; trips; occasional entertainment; meals or tickets to a sporting event; client appreciation events;
payment for travel expenses (including meals and lodging) to pre-approved training and education seminars; and payment
for advertising and sales campaigns. The Distributor may also pay concessions in addition to those described above
to broker-dealers so that Voya mutual funds are made available by those broker-dealers for their customers. The Sub-Adviser
of the Fund may contribute to non-cash compensation arrangements.
The compensation paid by Voya to a financial intermediary is typically paid continually over time, during the period
when the intermediary’s clients hold investments in the Voya mutual funds. The amount of continuing compensation
paid by Voya to different financial intermediaries for distribution and/or shareholder services varies. The compensation
is typically a percentage of the value of the financial intermediary’s clients’ investments in Voya mutual funds or a
per account fee. The variation in compensation may, but will not necessarily, reflect enhanced or additional services
provided by the intermediary.
Voya or a Voya mutual fund may pay service fees to intermediaries for administration, recordkeeping, and other shareholder
services. Intermediaries receiving these payments may include, among others, brokers, financial planners or advisers,
banks, and insurance companies. The Voya mutual funds may reimburse Voya for some or all of the payments made
by Voya to intermediaries for these services.
In some cases, a financial intermediary may hold its clients’ mutual fund shares in nominee or street name accounts.
These financial intermediaries may (though they will not necessarily) provide services including, among other things:
processing and mailing trade confirmations; capturing and processing tax data; issuing and mailing dividend checks
to shareholders who have selected cash distributions; preparing record date shareholder lists for proxy solicitations;
collecting and posting distributions to shareholder accounts; and establishing and maintaining systematic withdrawals
and automated investment plans and shareholder account registrations.
41
PAYMENTS TO FINANCIAL INTERMEDIARIES
(continued)
The top firms Voya paid to sell its mutual funds as of the last calendar year are:
Ameriprise Financial Services, LLC
; Broadridge Business Process Outsourcing, LLC; Cetera Financial Holdings, Inc.;
Charles Schwab & Co. Inc.; Directed Services LLC; Empower Financial Services, Inc.; Fidelity Brokerage Services,
LLC
;
J.P. Morgan Securities, LLC; LPL Financial, LLC; Merrill Lynch, Pierce, Fenner & Smith Inc.; Mid Atlantic Clearing
& Settlement Corporation, Inc
.
; Morgan Stanley; Osaic, Inc
.
; Pershing, LLC; Prudential Insurance Company of America;
Raymond James & Associates, Inc.; RBC Capital Markets, LLC; Reliance Trust Company; ReliaStar Life Insurance Company
of New York; Stifel Nicolaus & Company, Inc.; TD Ameritrade Clearing, Inc
.
; UBS Financial Services, Inc
.
; Voya Financial
Advisers, Inc.; Voya Retirement Insurance and Annuity Company; and Wells Fargo Clearing Services, LLC.
Your registered representative or broker-dealer could have a financial interest in selling you a particular mutual fund,
or the mutual funds of a particular company, to increase the compensation they receive. Please make sure you read
fully each mutual fund prospectus and discuss any questions you have with your registered representative.
42
ACCOUNT POLICIES
Telephone Orders
Neither the Fund nor the transfer agent will be responsible for the authenticity of phone instructions or losses, if any,
resulting from unauthorized shareholder transactions if they reasonably believe that such instructions were genuine.
The Fund and the transfer agent have established reasonable procedures to confirm that instructions communicated
by telephone are genuine. These procedures include recording telephone instructions for exchanges and expedited
redemptions, requiring the caller to give certain specific identifying information, and providing written confirmation to
shareholders of record not later than 5 days following any such telephone transactions. If the Fund or the transfer
agent do not employ these procedures, they may be liable for any losses due to unauthorized or fraudulent telephone
instructions.
Small Accounts
Due to the relatively high cost of handling small investments, the Fund reserves the right, upon 30 days’ prior written
notice, to redeem at NAV  (less any applicable deferred sales charge), the shares of any shareholder whose account
(except for IRAs) has a total value that is less than the Fund's minimum. Before the Fund redeems such shares and
sends the proceeds to the shareholder, it will notify the shareholder that the value of the shares in the account is
less than the minimum amount allowed and will allow the shareholder 30 days to make an additional investment in
an amount that will increase the value of the account to the minimum before the redemption is processed. Your account
will not be closed if its drop in value is due to Fund performance.
Account Access
Unless your Fund Common Shares are held through a third-party fiduciary or in an omnibus registration at your bank
or brokerage firm, you will be able to access your account information over the Internet at www.voyainvestments.com
or via telephone by calling 1-800-992-0180. Should you wish to speak with a Shareholder Services Representative,
you may call the toll-free number listed above.
Privacy Policy
The Fund has adopted a policy concerning investor privacy. To review the privacy policy, contact a Shareholder Services
Representative at 1-800-992-0180, obtain a policy over the Internet at www.voyainvestments.com, or see the privacy
promise that accompanies any Prospectus obtained by mail.
Householding
To reduce expenses, we may mail only one copy of the Fund's Prospectus and each annual and semi-annual shareholder
report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents,
please call a Shareholder Services Representative at 1-800-992-0180 or speak to your investment professional. We
will begin sending you individual copies 30 days after receiving your request.
43
REPURCHASE OFFERS
Repurchase Offers
Common Shares are not listed on any securities exchange and it is not anticipated that a secondary market for Common
Shares will develop.
As a fundamental policy, which may not be changed without shareholder approval, the Fund offers
shareholders the opportunity to redeem their Common Shares on a monthly basis. The time and dates by which repurchase
offers must be received in good order (
“
Repurchase Request Deadline
”
) are 4:00 p.m. Eastern Time on the 10th
business day of each month.
The Fund is required to offer to repurchase not less than 5% of its outstanding Common Shares with each Repurchase
Offer and under normal market conditions, the Board expects to authorize a 5% offer. The Fund may not offer to
repurchase more than 25% of its outstanding Common Shares during any calendar quarter. The repurchase price will
be the Fund's NAV determined on the repurchase pricing date, which will be a date not more than 14 calendar days
following the Repurchase Request Deadline (
“
Repurchase Offer Amount
”
). Payment for all Common Shares repurchased
pursuant to these offers will be made not later than 5 business days or 7 calendar days (whichever period is shorter)
after the repurchase pricing date (
“
Repurchase Payment Deadline
”
). Under normal circumstances, it is expected that
the repurchase pricing date will be the Repurchase Request Deadline and that the repurchase price will be the Fund's
NAV determined after close of business on the Repurchase Request Deadline. Payment for Common Shares tendered
will normally be made on the first business day following the repurchase pricing date and, in every case, at least five
business days before sending notification of the next monthly repurchase offer. If the tendered shares have been
purchased immediately prior to the tender, the Fund will not release repurchase proceeds until payment for the tendered
shares has settled. During the period the offer to repurchase is open, shareholders may obtain the current NAV by
calling 1-800-992-0180.
At least 7 and no more than 14 days prior to the Repurchase Request Deadline, the Fund will send notice to each
shareholder setting forth: (i) the number of Common Shares the Fund will repurchase; (ii) the Repurchase Request
Deadline and other terms of the offer to repurchase; and (iii) the procedures for shareholders to follow to request a
repurchase. Shareholders and financial intermediaries must submit repurchase requests in good order by the Repurchase
Request Deadline. The Repurchase Request Deadline will be strictly observed. Shareholders and financial intermediaries
failing to submit repurchase requests in good order by such deadline will be unable to liquidate Common Shares until
a subsequent repurchase offer.
If more Common Shares are tendered for repurchase than the Fund has offered to repurchase, the Board may, but
is not obligated to, increase the number of Common Shares to be repurchased by up to 2% of the Fund's Common
Shares outstanding per quarter, subject to the 25% limitation on the repurchase of the Fund's outstanding Common
Shares during any calendar quarter. If there are still more Common Shares tendered than are offered for repurchase,
Common Shares will be repurchased on a
pro-rata
basis. However, the Fund may determine to alter the
pro-rata
allocation
and the Fund may accept all Common Shares tendered by persons who own, in the aggregate, fewer than 100 Common
Shares and who tender all of their Common Shares, before prorating shares tendered by others.
Because of the foregoing, shareholders may be unable to liquidate all, or a given percentage, of their Common Shares
and some shareholders may tender more Common Shares than they wish to have repurchased in order to ensure
repurchase of at least a specific number of shares. Shareholders may withdraw Common Shares tendered for repurchase
at any time prior to the Repurchase Request Deadline.
The Fund does not presently intend to deduct any repurchase fees, other than any applicable EWC, from the repurchase
amount. However, in the future, the Board may determine to charge a repurchase fee payable to the Fund, to reasonably
compensate it for its expenses directly related to the repurchase. These fees could be used to compensate the Fund
for, among other things, its costs incurred in disposing of securities or in borrowing in order to make payment for
repurchased shares. Any repurchase fees will never exceed 2% of the proceeds of the repurchase. It should be noted
that the Board may implement repurchase fees without a shareholder vote.
Repurchase offers and the need to fund repurchase obligations may affect the ability of the Fund's portfolio to be
fully invested, which may reduce returns. Moreover, diminution in the size of the Fund's portfolio through repurchases
without offsetting new sales, may result in untimely sales of portfolio securities and a higher expense ratio, and may
limit the ability of the Fund to participate in new investment opportunities. Repurchases resulting in portfolio turnover
will result in additional expenses being borne by the Fund. The Fund may also sell portfolio securities to meet repurchase
obligations which, in certain circumstances, may adversely affect the market for Senior Loans and reduce the Fund's
44
REPURCHASE OFFERS
(continued)
value. Notwithstanding the foregoing, it is the Investment Adviser's or Sub-Adviser's intention to fund repurchases
with the proceeds of borrowings whenever practical. Use of the borrowing facility entails certain risks and costs. See
“
Repurchase Offers - Liquidity Requirements.
”
See
“
Tax Matters
”
for a general summary for U.S. shareholders. Investors should rely on their own tax adviser for
advice about the particular U.S. federal, state and local tax consequences of investing in the Fund and participating
in the Fund's repurchase offer program.
Suspension or Postponement of a Repurchase Offer
The Fund may suspend or postpone a repurchase offer only: (i) if making or effecting the repurchase offer would
cause the Fund to lose its status as a regulated investment company under the Code; (ii) for any period during which
the NYSE or any market in which the securities owned by the Fund are principally traded is closed, other than customary
weekend and holiday closings, or during which trading in such market is restricted; (iii) for any period during which an
emergency exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable, or
during which it is not reasonably practicable for the Fund fairly to determine the value of its net assets; or (iv) for such
other periods as the SEC may by order permit for the protection of shareholders of the Fund.
Liquidity Requirements
From the time that the notification is sent to shareholders until the Repurchase Payment Deadline, the Fund will ensure
that a percentage of its net assets equal to at least 100% of the Repurchase Offer Amount consists of assets: (i)
that can be sold or disposed of in the ordinary course of business at approximately the price at which the Fund has
valued the investment within the time period between the Repurchase Request Deadline and the Repurchase Payment
Deadline; or (ii) that mature by the Repurchase Payment Deadline.
The Board has adopted procedures that are reasonably designed to ensure that the Fund's assets are sufficiently
liquid so that the Fund can comply with the repurchase policy and the liquidity requirements described in the previous
paragraph.
The Fund intends to finance repurchase offers with cash on hand, cash raised through borrowings, or the liquidation
of portfolio securities. There is some risk that the need to sell Senior Loans to fund repurchase offers may affect the
market for those Senior Loans. In turn, this could diminish the Fund's NAV.
Redemption of Senior Securities
In order to permit the Fund to repurchase Common Shares, the borrowing or other indebtedness issued by the Fund,
as well as the terms of any Preferred Shares, must either mature by the next Repurchase Request Deadline or provide
for their redemption, call or repayment by the next Repurchase Request Deadline without penalty or premium. Although
the Fund ordinarily does not expect to redeem any senior security, including Preferred Shares, it may be required to
redeem such securities if, for example, the Fund does not meet an asset coverage ratio required by law or correct a
failure to meet a rating agency guideline in a timely manner.
45
INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS
The business and affairs of the Fund, including supervision of the duties performed by the Fund's Investment Adviser
and Sub-Adviser, are managed under the direction of the Board. The names and business addresses of the Trustees
and Officers of the Fund and their principal occupations and other affiliations during the past five years are set forth
under
“
Management of the Fund
”
in the SAI.
Investment Adviser
Voya Investments, an Arizona limited liability company, is registered with the SEC as an investment adviser. Voya Investments
serves as the investment adviser to, and has overall responsibility for the management of, the Fund. Voya Investments
oversees all investment advisory and portfolio management services and assists in managing and supervising all
aspects of the general day-to-day business activities and operations of the Fund, including, but not limited to, the
following: custodial, transfer agency, dividend disbursing, accounting, auditing, compliance, and related services.
Voya Investments began business as an investment adviser in 1994 and currently serves as investment adviser to
certain registered investment companies, consisting of open- and closed-end registered investment companies and
collateralized loan obligations. Voya Investments is an indirect subsidiary of Voya Financial, Inc. Voya Financial, Inc.
is a U.S.-based financial institution whose subsidiaries operate in the retirement, investment, and insurance industries.
Voya Investments' principal business address is 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona
85258.
Management Fee
The Investment Adviser bears the expenses of providing the services described above. The Investment Adviser currently
receives from the Fund an annual fee of 0.80% of the Fund’s Managed Assets.
The Investment Adviser is responsible for all of its own costs, including costs of its personnel required to carry out
its duties.
For information regarding the basis for the Board’s approval of the investment advisory and investment sub-advisory
relationships, please refer to the Fund’s annual shareholder report which covers the one-year period ended
February
29, 2024
.
Sub-Adviser
The Investment Adviser has engaged a sub-adviser to provide the day-to-day management of the Fund's portfolio.
The
sub-adviser is an affiliate of the Investment Adviser. The Investment Adviser is responsible for monitoring the investment
program and performance of the sub-adviser. Under the terms of the sub-advisory agreement, the agreement can be
terminated by either the Investment Adviser or the Board. In the event the sub-advisory agreement is terminated, the
sub-adviser may be replaced subject to any regulatory requirements or the Investment Adviser may assume day-to-day
investment management of the Fund.
Voya Investment Management Co. LLC
Voya IM, a Delaware limited liability company, was founded in 1972 and is registered with the SEC as an investment
adviser. Voya IM has acted as an investment adviser or sub-adviser to mutual funds since 1994 and has managed
institutional accounts since 1972. Voya IM is an indirect subsidiary of Voya Financial, Inc. and is an affiliate of the
Investment Adviser. Voya IM's principal business address is 230 Park Avenue, New York, New York, 10169.
The Sub-Adviser currently receives an annual fee, paid by the Investment Adviser, of 0.36% of the Fund’s Managed
Assets.
Portfolio Management
. The following individuals are jointly responsible for the day-to-day management of the Fund's
portfolio.
Mohamed Basma, CFA, Portfolio Manager, serves as a managing director and head of leveraged credit at Voya Investment
Management and also chairs the leveraged credit investment committee. Mr. Basma is currently a member of the
board of directors of the Loan Syndications and Trading Association. Previously at Voya, Mr. Basma served as head
of senior loans and global CLOs for leveraged credit where he was responsible for all aspects of the team’s senior
loan and global CLO business and the team’s CLO investing strategies. Prior to joining Voya, Mr. Basma was a senior
auditor and consultant in the audit and business advisory group with Arthur Andersen, LLP, where he was responsible
for executing corporate audits and financial consulting engagements.
46
INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS
(continued)
Randall Parrish, CFA, is a managing director and head of public credit at Voya IM, overseeing the investment grade,
emerging market and leveraged credit teams. Previously at Voya IM, Randy was head of high yield and served as a
portfolio manager and analyst on the high yield team. Prior to joining Voya IM, he was a corporate banker in leveraged
finance with SunTrust Bank and predecessors to Bank of America. Randy earned a BBA in business administration
from the University of Georgia and is a CFA
®
Charterholder.
Additional Information Regarding the Portfolio Managers
The SAI provides additional information about each portfolio manager’s compensation, other accounts managed by
each portfolio manager, and the securities each portfolio manager owns in the Fund(s) the portfolio manager manages.
The Transfer Agent, Dividend Disbursing Agent, and Registrar
BNY Mellon Investment Servicing (US) Inc. (
“
Transfer Agent
”
) serves as the transfer agent, dividend disbursing agent,
and registrar for the Common Shares of the Fund. Its principal office is located at 301 Bellevue Parkway, Wilmington,
Delaware 19809.
The Custodian
The Fund's securities and cash are held and maintained under a Custody Agreement with The Bank of New York Mellon
(
“
Custodian
”
). Its principal office is located at 225 Liberty Street, New York, New York 10286.
The Distributor
Voya Investments Distributor, LLC (the
“
Distributor
”
), a Delaware limited liability company, is the principal underwriter
and distributor of the Fund. The Distributor is an indirect subsidiary of Voya Financial, Inc. and is an affiliate of the
Investment Adviser. The Distributor’s principal office is located at 7337 East Doubletree Ranch Road, Suite 100,
Scottsdale, Arizona 85258. See
“
Principal Underwriter
”
in the SAI.
The Distributor is a member of FINRA. To obtain information about FINRA member firms and their associated persons,
you may contact FINRA at www.finra.org or the Public Disclosure Hotline at 800-289-9999.
Contractual Arrangements
The Fund has contractual arrangements with various service providers, which may include, among others, investment
advisers, distributors, custodians and fund accounting agents, shareholder service providers, and transfer agents,
who provide services to the Fund. Shareholders are not parties to, or intended (
“
third-party
”
) beneficiaries of, any of
those contractual arrangements, and those contractual arrangements are not intended to create in any individual
shareholder or group of shareholders any right to enforce them against the service providers or to seek any remedy
under them against the service providers, either directly or on behalf of the Fund. This paragraph is not intended to
limit any rights granted to shareholders under federal or state securities laws.
47
DIVIDENDS AND DISTRIBUTIONS
Distribution Policy
Income dividends on Common Shares are calculated and declared daily and paid monthly under guidelines approved
by the Board. The Fund may make one or more annual payments from any realized capital gains.
Dividend Reinvestment
Unless you instruct the Fund to pay you dividends in cash, dividends and distributions paid by the Fund will be reinvested
in additional shares of the Fund.
You may, upon written request or by completing the appropriate section of the Account
Application, elect to have all dividends and other distributions paid on Common Shares of the Fund invested in another
Voya mutual fund that offers the same class of shares.
Plan of Distribution
The Fund has entered into a distribution agreement with the Distributor (
“
Distribution Agreement
”
). Subject to the
terms and conditions of the Distribution Agreement, the Fund may issue and sell Common Shares of the Fund from
time to time through certain broker-dealers which have entered into dealer agreements with the Distributor. The Common
Shares will be offered on a continuous basis and may be purchased at NAV.
In connection with the sale of Class A Common Shares, the Distributor will reallow to broker-dealers participating in
the offering from the sales charge depending on the amount of the sale as follows: 2.50% for amounts less than
$100,000; and 2.00% for amounts of $100,000 to $499,999. For purchases of Class A Common Shares that are
subject to a 1.00% EWC, the Distributor may compensate broker-dealers participating in the offering at the rate of
1.00% for amounts of $500,000 or more.
The Distributor will compensate broker-dealers participating in the offering at a rate of 1.00% of the gross sales price
per share for Class C Common Shares purchased from the Fund by such broker-dealer.
Settlements of sales of Common Shares will occur on the third business day following the date on which any such
sales are made. Unless otherwise indicated in a prospectus supplement, the Distributor will act as underwriter on a
reasonable efforts basis.
In addition, the Distributor will compensate broker-dealers participating in the offering on a quarterly basis at rates
that are based on the average daily net assets of shares that are registered in the name of such broker-dealer as
nominee or held in a shareholder account that designates such broker-dealer as the dealer of record. The rates, on
an annual basis, are as follows: 0.25% for Class A and 0.50% for Class C Common Shares. Rights to these ongoing
payments generally begin accruing in the 13th month following a purchase of Class A or Class C Common Shares,
although the Distributor may, in its discretion, make payments prior to the 13th month.
Use of Proceeds
It is expected that 100% of the net proceeds of Common Shares issued pursuant to the offering will be invested in
securities consistent with the Fund's investment objective and policies within three months. Pending investments,
the proceeds will be used to pay down the Fund's outstanding borrowings under its credit facilities or to fund redemptions.
See
“
Investment Objective and Policies - Policy on Borrowing.
”
As of June 6, 2024 the Fund had outstanding borrowings of $
20.0
million under its credit facility. By paying down the
Fund's borrowings, the Fund can avoid adverse impacts on yields pending investment of such proceeds. As investment
opportunities are subsequently identified, it is expected that the Fund will reborrow amounts previously repaid and
invest such amounts or to fund redemptions.
48
DESCRIPTION OF THE FUND
The Fund is a Delaware statutory trust organized on December 14, 2000 and is registered with the SEC as a
continuously-offered, diversified, closed-end management investment company that makes monthly repurchase offers
for its Common Shares, subject to certain conditions. The business and affairs of the Fund, including supervision of
the duties performed by the Fund's Investment Adviser and Sub-Adviser are managed under the direction of its Board.
The names and business addresses of the Trustees and Officers of the Fund and their principal occupations and
other affiliations during the past five years are set forth under
“
Management of the Fund
”
in the SAI. The Trustees
are experienced executives who oversee the Fund's activities, review contractual arrangements with companies that
provide services to the Fund, and review the Fund's performance.
The Fund's Agreement and Declaration of Trust (
“
Declaration of Trust
”
) authorizes the issuance of an unlimited number
of shares of beneficial interest classified as Common Shares, and an unlimited number of shares of beneficial interest
classified as Preferred Shares.
Under Delaware law, Fund shareholders are entitled to the same limitation of personal liability extended to stockholders
of private corporations organized under the general corporation law of Delaware. As an added protection, the Fund's
Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund. The Fund's Declaration of Trust
provides for indemnification out of the Fund's property for all losses and expenses of any shareholder held liable on
account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund would be unable to meet its obligations wherein the
complaining party was held not to be bound by the disclaimer.
The Fund will send unaudited reports at least semi-annually and audited financial statements annually to all of its
shareholders.
The Declaration of Trust provides that obligations of the Fund are not binding upon Trustees individually but only upon
the property of the Fund. It also provides that the Trustees will not be liable for errors of judgment or mistakes of fact
or law, but nothing in the Declaration of Trust protects a Trustee against any liability to which he or she would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved
in the conduct of his or her office.
The Fund is responsible for paying all of the expenses of its operations, including, without limitation, the management
fee payable and extraordinary expenses, such as litigation expenses.
Dividends, Voting and Liquidation Rights
Each Common Share of the Fund has one vote and shares equally in dividends and distributions, when and if, declared
by the Fund, and in the Fund's net assets upon liquidation.
 Matters such as approval of new advisory agreements
and changes in a fundamental policy of the Fund require the affirmative vote of all shareholders. Matters affecting a
certain class of the Fund will be voted on by shareholders of that particular class.
All Common Shares, when issued, are fully paid and are non-assessable by the Fund.
There are no preemptive or
conversion rights applicable to any of the Common Shares.
 Common Shares do not have cumulative voting rights and,
as such, holders of more than 50% of the Common Shares voting for trustees representing the holder of Common
Shares can elect all trustees representing the holders of Common Shares and the remaining shareholders would not
be able to elect any such trustees.
In the event Preferred Shares are outstanding, holders of Preferred Shares, voting as a separate class, are entitled
to elect: (i) two trustees of the Fund at all times; and (ii) a majority of the trustees if, at any time, dividends on Preferred
Shares are unpaid in an amount equal to two years' dividends thereon, and to continue to be so represented until all
dividends in arrears have been paid or otherwise provided for. In all other cases, trustees will be elected by holders
of Common Shares voting separately as a single class.
Subject to the voting rights described above, the Fund may not, among other things, without the approval of the holders
of a majority of the outstanding Preferred Shares voting as a separate class, approve any plan of reorganization adversely
affecting Preferred Shares. In addition, the Fund may not, without the affirmative vote of the holders of at least a
majority of the outstanding Preferred Shares voting as a separate class: (i) authorize, create, or issue additional Preferred
Shares or classes or series of Preferred Shares ranking prior to or on a parity with Preferred Shares with respect to
the payment of dividends or the distribution of assets upon liquidation; (ii) amend, alter, or repeal the provisions of
49
DESCRIPTION OF THE FUND
(continued)
the Declaration of Trust, the Bylaws of the Fund or any Certificate of Designation, whether by merger, consolidation
or otherwise, so as to materially affect any preference, right or power of such Preferred Shares or the holders thereof;
or (iii) change or adjust any investment restrictions of the Fund that are designated as fundamental in the Prospectus
or SAI.
When the Fund has any Preferred Shares outstanding, the Fund may not pay any dividend or distribution (other than
a dividend or distribution paid in shares of a series of, or in options, warrants, or rights to subscribe for or purchase,
Common Shares) in respect of Common Shares or call for redemption, redeem, purchase or otherwise acquire for
consideration any Common Shares (except by conversion into or exchange for shares of the Fund ranking junior to
the Preferred Shares as to the payment of dividends and the distribution of assets upon liquidation), unless: (i) it has
paid all cumulative dividends on Preferred Shares; (ii) it has redeemed any Preferred Shares that it has called for
mandatory redemption; and (iii) after paying the dividend, the Fund meets asset coverage requirements set forth in
the Declaration of Trust or any Certificate of Designation.
Status of Shares
The following table sets forth information about the Fund's outstanding Common Shares as of June 6, 2024:
 
Title of Class
Number Authorized
Number Held By

the Fund or for its

Own Account
Number

Outstanding
Class A Common Shares
Unlimited
0
10,274,029.217
Class C Common Shares
Unlimited
0
444,231.714
Class I Common Shares
Unlimited
0
730,442.925
Class W Common Shares
Unlimited
0
320,955.397
Fundamental and Non-Fundamental Investment Policies of the Fund
The investment objective of the Fund, certain policies of the Fund specified herein as fundamental, and the investment
restrictions of the Fund described in the SAI are fundamental policies of the Fund and may not be changed without a
majority vote of the shareholders of the Fund. The term majority vote means the affirmative vote of: (i) more than 50%
of the outstanding shares of the Fund; or (ii) 67% or more of the shares present at a meeting if more than 50% of
the outstanding shares of the Fund are represented at the meeting in person or by proxy, whichever is less. All other
policies of the Fund may be modified by resolution of the Board.
50
DESCRIPTION OF THE CAPITAL STRUCTURE
Common Shares
The Fund's Declaration of Trust authorizes the issuance of an unlimited number of Common Shares of beneficial interest, with par value of $0.01 per share.
All Common Shares have equal rights to the payment of dividends and the distribution
of assets upon liquidation.
 Common Shares will, when issued, be fully paid and non-assessable and will have no
pre-emptive or conversion rights or rights to cumulative voting.
Whenever Preferred Shares are outstanding, holders of Common Shares will not be entitled to receive any distributions
from the Fund, unless at the time of such declaration: (i) all accrued dividends on Preferred Shares or accrued interest
on borrowings have been paid; and (ii) the value of the Fund's total assets (determined after deducting the amount
of such dividend or other distribution), less all liabilities and indebtedness of the Fund not represented by senior
securities, is at least 300% of the aggregate amount of such securities representing indebtedness and at least 200%
of the aggregate amount of securities representing indebtedness plus the aggregate liquidation value of the outstanding
Preferred Shares. In addition to the requirements of the 1940 Act, the Fund would be required to comply with other
asset coverage requirements as a condition of the Fund obtaining a rating of the Preferred Shares from a rating agency.
These requirements include asset coverage tests more stringent than under the 1940 Act. See
“
Description of the
Capital Structure - Preferred Shares.
”
Borrowings
The Fund's Declaration of Trust authorizes the Fund, without the prior approval of holders of Common Shares, to
borrow money. In this connection, the Fund may issue notes or other evidence of indebtedness (including bank borrowings
or commercial paper) and may secure any such borrowings by mortgaging, pledging, or otherwise granting a security
interest in the Fund's assets. See
“
Risk Factors and Special Considerations.
”
Preferred Shares
The Fund's Declaration of Trust authorizes the issuance of an unlimited number of shares of a class of beneficial
interest with preference rights, including Preferred Shares as may be authorized from time to time by the Trustees,
in one or more series, with rights as determined by the Board, by action of the Board without the approval of the
holders of Common Shares or other series of outstanding Preferred Shares. The Preferred Shares will have such
preferences, voting powers, terms of redemption, if any, and special or relative rights or privileges (including conversion
rights, if any) as the Board may determine and would be set forth in the Fund's Certificate of Designation establishing
the terms of the Preferred Shares.
Any decision to offer Preferred Shares is subject to market conditions and to the Board and the Investment Adviser's
or Sub-Adviser's continuing belief that leveraging the Fund's capital structure through the issuance of Preferred Shares
is likely to achieve the benefits to the Common Shares described in this Prospectus for long-term investors. The terms
of the Preferred Shares will be determined by the Board in consultation with the Investment Adviser or Sub-Adviser
(subject to applicable law and the Fund's Declaration of Trust) if and when it authorizes a Preferred Shares offering.
It is expected, at least initially, that the Preferred Shares would likely pay cumulative dividends at rates determined
over relatively shorter-term periods (such as 7 days) and would provide for the periodic redetermination of the dividend
rate through an auction or remarketing procedure.  The preference on distribution, preference on liquidation, voting
rights, and redemption provisions of the Preferred Shares will likely be as stated below.
Under the 1940 Act, the Fund may issue Preferred Shares so long as immediately after any issuance of Preferred
Shares the value of the Fund's total assets (less all Fund liabilities and indebtedness that is not senior indebtedness)
is at least twice the amount of the Fund's senior indebtedness plus the involuntary liquidation preference of all outstanding
shares. In addition, the Fund is not permitted to declare any cash dividend or other distribution on its Common Shares
unless the liquidation value of the Preferred Shares is less than one-half of the value of the Fund's total net assets
(determined after deducting the amount of such dividend or distribution) immediately after the distribution.
The Preferred Shares would have complete priority over the Common Shares as to distribution of assets.
In the event
of any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Fund, holders of Preferred
Shares would be entitled to receive a preferential liquidating distribution (expected to equal the original purchase
price per share plus accumulated and unpaid dividends thereon, whether or not earned or declared) before any distribution
of assets is made to holders of Common Shares.
51
TAX MATTERS
The following information is meant as a general summary for U.S. shareholders. Please see the SAI for additional
information. The Investment Adviser is not obligated to consider the tax consequences related to its management of
the Fund’s investments or other activities. It is possible that the actions taken by the Fund or the Investment Adviser
on the Fund’s behalf could be disadvantageous to shareholders that hold shares through a taxable account. However,
such actions likely will have no tax effect to shareholders that invest through a tax-advantaged account. Investors
should rely on their own tax adviser for advice about the particular U.S, federal, state, and local tax consequences to
them of investing in the Fund.
Distributions.
The Fund will distribute all or substantially all of its net investment income and net realized capital gains,
if any, to its shareholders each year. Although the Fund will not be taxed on amounts it distributes, most shareholders
will be taxed on amounts they receive. A particular distribution generally will be taxable as either ordinary income or
long-term capital gain. It generally does not matter how long a shareholder has held the Fund's Common Shares or
whether the shareholder elects to receive distributions in cash or reinvest them in additional Common Shares. For
example, if the Fund properly reports a particular distribution as a capital gain dividend, it will be taxable to a shareholder
at his or her long-term capital gains rate.
Dividends from the Fund are not expected to be eligible for the reduced rate of tax that may apply to distributions
attributable to certain qualifying dividends on corporate stocks. Distributions attributable to non-qualifying dividends,
interest income, other types of ordinary income, and short-term capital gains will be taxed at the ordinary income tax
rate applicable to the shareholder.
Dividends declared by the Fund and payable to shareholders of record in October, November, or December and paid
during the following January will be treated as having been received by shareholders in the year the distributions were
declared.
Each shareholder will receive an annual statement summarizing the shareholder's dividend and capital gains distributions.
Tax-Advantaged Accounts.
If a shareholder invests through a tax-advantaged account such as a retirement plan, the
shareholder generally will not have to pay tax on dividends, at least until they are distributed from the account. These
accounts are subject to complex tax rules and shareholders should consult a tax adviser about investment through
a tax-advantaged account.
Sales, Redemptions and Exchanges.
There may be tax consequences to a shareholder if the shareholder sells the
Fund's Common Shares. If, pursuant to an offer by the Fund to repurchase its those Common Shares, a shareholder
tenders all Common Shares of the Fund that he or she owns or is considered to own, the shareholder may realize a
taxable gain or loss. This gain or loss will be treated as capital gain or loss if the Fund’s Common Shares are held as
capital assets and will be long-term or short-term, generally depending on how long the shareholder has held those
Common Shares. If a shareholder exchanges shares, the shareholder may be treated as if he or she sold them. Any
capital loss incurred on the sale or exchange of Fund shares held for six months or less will be treated as long-term
loss to the extent of capital gain dividends received with respect to such shares. Additionally, any loss realized on a
sale, redemption, or exchange of shares of the Fund may be disallowed under
“
wash sale
”
rules to the extent the
shares disposed of are replaced with other shares of the Fund within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of, including pursuant to a dividend reinvestment plan. If disallowed,
the loss will be reflected as an adjustment to the tax basis of the shares acquired. You are responsible for any tax
liabilities generated by your transactions. If, pursuant to an offer by the Fund to repurchase its Common Shares, a
shareholder tenders fewer than all of the Common Shares of the Fund that he or she owns or is considered to own,
the redemption may not qualify as a sale or exchange, and the proceeds received may be treated as a dividend, return
of capital or capital gain, depending on the Fund's earnings and profits and the shareholder's basis in the tendered
Common Shares. If that occurs, there is a risk that non-tendering shareholders may be considered to have received
a deemed distribution as a result of the Fund's purchase of tendered Common Shares, and all or a portion of that
deemed distribution may be taxable as a dividend.
Backup Withholding.
The Fund generally is required to withhold U.S. federal income tax on all taxable distributions
payable to a shareholder if the shareholder fails to provide the Fund with his or her correct taxpayer identification
number or to make required certifications, or if the shareholder has been notified by the Internal Revenue Service
(
“
IRS
”
) that he or she is subject to backup withholding. Backup withholding is not an additional tax; rather, it is a way
in which the IRS ensures it will collect taxes otherwise due. Any amounts withheld may be credited against a shareholder's
U.S. federal income tax liability.
52
TAX MATTERS
(continued)
Tax Status of the Fund
. The Fund intends to qualify and be eligible for treatment each year as a regulated investment
company. A regulated investment company generally is not subject to tax at the fund level on income and gains from
investments that are timely distributed to shareholders. However, the Fund’s failure to qualify as a regulated investment
company would result in fund level taxation and therefore, a reduction in income available for distribution.
Cost Basis Reporting.
The IRS requires mutual fund companies and brokers to report on Form 1099-B the cost basis
on the sale or exchange of Fund shares acquired on or after January 1, 2012 (
“
covered shares
”
). If you acquire and
hold shares directly through the Fund and not through a financial intermediary, the Fund will use an average cost
single category methodology for tracking and reporting your cost basis on covered shares, unless you request, in
writing, another cost basis reporting methodology. Information regarding the methods available for cost basis reporting
is included in the SAI.
Net Investment Income Tax.
An additional 3.8% Medicare tax is imposed on certain net investment income (including
ordinary dividends and capital gain distributions received from the Fund and net gains from redemptions, sales, exchanges
or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s
“
modified adjusted gross income
”
(in the case of an individual) or
“
adjusted gross income
”
(in the case of an estate
or trust) exceeds certain threshold amounts.
Buying a Dividend.
Unless your investment is in a tax-advantaged account, you may want to avoid buying shares shortly
before the Fund makes a distribution as doing so can increase your tax liability. If you buy shares when the Fund has
declared but not distributed a dividend of ordinary income or capital gains, you will pay the full price for the shares
and later receive a portion of the price back in the form of a taxable dividend. This is known as
“
buying a dividend.
”
To avoid buying a dividend, you may want to consult your tax advisor or check the Fund’s distribution schedule before
you invest.
53
MORE INFORMATION ABOUT THE FUND
Legal Matters
The validity of the Common Shares offered hereby will be passed upon for the Fund by Ropes & Gray LLP, Prudential
Tower, 800 Boylston Street, Boston Massachusetts 02199-3600, counsel to the Fund.
Independent Registered Public Accounting Firm
Ernst
& Young LLP
serves as the independent registered public accounting firm for the Fund. The principal address
of
Ernst
&
Young LLP is 200 Clarendon Street
, Boston
,
Massachusetts 02116
.
54
APPENDIX A
Financial Intermediary Specific Sales Charge Waiver and Related Discount Policy
Information
As described in the Prospectus, Class A Common Shares may be subject to an initial sales charge and an EWC and
Class C Common Shares may be subject to an EWC. Certain financial intermediaries may impose different initial
sales charges or waive the initial sales charge or EWC in certain circumstances. This Appendix details the variations
in sales charge waivers by financial intermediary. You should consult your financial representative for assistance in
determining whether you may qualify for a particular sales charge waiver.
AMERIPRISE FINANCIAL
Class A Common Shares Front-End Sales Charge Waivers Available at Ameriprise Financial:
The following information applies to Class A Common Shares purchases if you have an account with or otherwise
purchase Fund shares through Ameriprise Financial:
Shareholders purchasing Fund shares through an Ameriprise Financial brokerage account are eligible for the following
front-end sales charge waivers and discounts, and EWC waivers, which may differ from those disclosed elsewhere in
this Fund’s prospectus or SAI:
•
Employer-sponsored retirement plans (
e.g.
, 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit
sharing and money purchase pension plans and defined benefit plans). For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
•
Common Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when
purchasing shares of the same Fund (but not any other fund within the same fund family).
•
Common Shares exchanged from Class C Common Shares of the same fund in the month of or following the
7-year anniversary of the purchase date. To the extent that this prospectus elsewhere provides for a waiver with
respect to such shares following a shorter holding period, that waiver will apply.
•
Employees and registered representatives of Ameriprise Financial or its affiliates and their immediate family
members.
•
Common Shares purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts,
401(k)s, 403(b) TSCAs subject to ERISA and defined benefit plans) that are held by a covered family member,
defined as an Ameriprise financial advisor and/or the advisor’s spouse, advisor’s lineal ascendant (mother,
father, grandmother, grandfather, great grandmother, great grandfather), advisor’s lineal descendant (son, step-son,
daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse of a
covered family member who is a lineal descendant.
•
Common Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same
account, and (3) redeemed Common Shares were subject to a front-end or deferred sales load (
i.e.
Rights of
Reinstatement).
ROBERT W. BAIRD & CO. INC. (
“
BAIRD
”
)
Shareholders purchasing fund shares through a Baird platform or account will only be eligible for the following sales
charge waivers (front-end sales charge waivers and EWC waivers) and discounts, which may differ from those disclosed
elsewhere in this Prospectus or the SAI.
Front-End Sales Charge Waivers on Class A Common Shares Available at Baird
•
Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing
share of the same Fund.
•
Shares purchased by employees and registered representatives of Baird or its affiliates and their family members
as designated by Baird.
•
Shares purchased from the proceeds of redemptions from another Voya fund, provided (1) the repurchase occurs
within 90 days following the redemption, (2) the redemption and purchase occur in the same accounts, and (3)
redeemed shares were subject to a front-end or deferred sales charge (known as rights of reinstatement).
55
APPENDIX A
(continued)
•
A shareholder in the Fund’s Class C Common Shares will have their shares converted at net asset value to
Class A Common Shares of the Fund if the shares are no longer subject to EWC and the conversion is in line
with the policies and procedures of Baird.
•
Employer-sponsored retirement plans or charitable accounts in a transactional brokerage account at Baird, including
401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans
and defined benefit plans. For purposes of this provision, employer-sponsored retirement plans do not include
SEP IRAs, Simple IRAs or SAR-SEPs.
CDSC Waivers on Class A and C Common Shares Available at Baird
•
Shares sold due to death or disability of the shareholder.
•
Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
•
Shares bought due to returns of excess contributions from an IRA Account.
•
Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder
reaching age 72 as described in the Fund’s Prospectus.
•
Shares sold to pay Baird fees but only if the transaction is initiated by Baird.
•
Shares acquired through a right of reinstatement.
Front-End Sales Charge Discounts Available at Baird: Breakpoints and/or Rights of Accumulations
•
Breakpoints as described in this Prospectus.
•
Rights of accumulations which entitles shareholders to breakpoint discounts will be automatically calculated
based on the aggregated holding of fund assets held by accounts within the purchaser’s household at Baird.
Eligible fund assets not held at Baird may be included in the rights of accumulations calculation only if the
shareholder notifies his or her financial advisor about such assets.
•
Letters of Intent (
“
LOI
”
) allow for breakpoint discounts based on anticipated purchases of fund shares through
Baird, over a 13-month period of time.
D.A. DAVIDSON & CO. (
“
D.A. DAVIDSON
”
)
Shareholders purchasing Fund shares, including existing Fund shareholders, through a D.A. Davidson &. Co. (
“
D.A.
Davidson
”
) platform or account, or through an introducing broker-dealer or independent registered investment advisor
for which D.A. Davidson provides trade execution, clearance, and/or custody services, will be eligible for the following
sales charge waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and
discounts, which may differ from those disclosed elsewhere in this Prospectus or the Fund’s SAI.
Front-End Sales Charge Waivers on Class A Common Shares available at D.A. Davidson
•
Shares purchased within the same fund family through a systematic reinvestment of capital gains and dividend
distributions.
•
Employees and registered representatives of D.A. Davidson or its affiliates and their family members as designated
by D.A. Davidson.
•
Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase
occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account,
and (3) redeemed shares were subject to a front-end or deferred sales charge (known as Rights of Reinstatement).
•
A shareholder in the Fund’s Class C Common Shares will have their shares converted at net asset value to
Class A Common Shares (or the appropriate share class) of the Fund after 6 years from the date of first purchase
of the Class C Common Shares and if the shares are no longer subject to a EWC and the conversion is consistent
with D.A. Davidson’s policies and procedures.
EWC Waivers on Class A and Class C Common Shares available at D.A. Davidson
•
Death or disability of the shareholder.
•
Common Shares sold as part of a systematic withdrawal plan as described in the Fund’s prospectus.
•
Return of excess contributions from an IRA account.
56
APPENDIX A
(continued)
•
Common Shares sold as part of a required minimum distribution for IRA or other qualifying retirement accounts
pursuant to the Code.
•
Common Shares acquired through a right of reinstatement.
Front-end sales charge discounts available at D.A. Davidson: breakpoints, rights of accumulation and/or letters of intent
•
Breakpoints as described in this Prospectus.
•
Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based
on the aggregated holding of fund family assets held by accounts within the purchaser’s household at D.A.
Davidson. Eligible fund family assets not held at D.A. Davidson may be included in the calculation of rights of
accumulation only if the shareholder notifies his or her financial advisor about such assets.
•
Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over
a 13-month time period. Eligible fund family assets not held at D.A. Davidson may be included in the calculation
of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
EDWARD D. JONES & CO., L.P. (
“
EDWARD JONES
”
)
Policies Regarding Transactions Through Edward Jones
The following information has been provided by Edward Jones:
The following information supersedes prior information with respect to transactions and positions held in Fund Common
Shares through an Edward Jones system. Clients of Edward Jones (also referred to as
“
shareholders
”
) purchasing
Fund Common Shares on the Edward Jones commission and fee-based platforms are eligible only for the following
sales charge discounts (also referred to as
“
breakpoints
”
) and waivers, which can differ from discounts and waivers
described elsewhere in the this Prospectus or the SAI or through another broker-dealer. In all instances, it is the shareholder's
responsibility to inform Edward Jones at the time of purchase of any relationship, holdings of Voya funds and Voya
529 Plans or other facts qualifying the purchaser for discounts or waivers. Edward Jones can ask for documentation
of such circumstance. Shareholders should contact Edward Jones if they have questions regarding their eligibility for
these discounts and waivers.
Breakpoints
•
Breakpoint pricing, otherwise known as volume pricing, at dollar thresholds as described in this Prospectus.
Rights of Accumulation (
“
ROA
”
)
•
The applicable sales charge on a purchase of Class A Common Shares is determined by taking into account
all share classes (except certain money market funds and any assets held in group retirement plans) of the
Voya funds and Voya 529 Plans held by the shareholder or in an account grouped by Edward Jones with other
accounts for the purpose of providing certain pricing considerations (
“
pricing groups
”
). If grouping assets as a
shareholder, this includes all share classes held on the Edward Jones platform and/or held on another platform.
The inclusion of eligible fund family assets in the ROA calculation is dependent on the shareholder notifying
Edward Jones of such assets at the time of calculation. Money market funds are included only if such shares
were sold with a sales charge at the time of purchase or acquired in exchange for shares purchased with a
sales charge.
•
The employer maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or change ROA for the
IRA accounts associated with the plan to a plan-level grouping as opposed to including all share classes at a
shareholder or pricing group level.
•
ROA is determined by calculating the higher of cost minus redemptions or market value (current shares x NAV).
Letter of Intent (
“
LOI
”
)
57
APPENDIX A
(continued)
•
Through a LOI, shareholders can receive the sales charge and breakpoint discounts for purchases shareholders
intend to make over a 13-month period from the date Edward Jones receives the LOI. The LOI is determined by
calculating the higher of cost or market value of qualifying holdings at LOI initiation in combination with the
value that the shareholder intends to buy over a 13-month period to calculate the front-end sales charge and
any breakpoint discounts. Each purchase the shareholder makes during that 13-month period will receive the
sales charge and breakpoint discount that applies to the total amount. The inclusion of eligible fund family
assets in the LOI calculation is dependent on the shareholder notifying Edward Jones of such assets at the
time of calculation. Purchases made before the LOI is received by Edward Jones are not adjusted under the LOI
and will not reduce the sales charge previously paid. Sales charges will be adjusted if LOI is not met.
•
If the employer maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or change ROA for
the IRA accounts associated with the plan to a plan-level grouping, LOIs will also be at the plan-level and may
only be established by the employer.
Sales Charge Waivers
Sales charges are waived for the following shareholders and in the following situations:
•
Associates of Edward Jones and its affiliates and other accounts in the same pricing group (as determined by
Edward Jones under its policies and procedures) as the associate. This waiver will continue for the remainder
of the associate's life if the associate retires from Edward Jones in good-standing and remains in good standing
pursuant to Edward Jones' policies and procedures.
•
Common Shares purchased in an Edward Jones fee-based program.
•
Common Shares purchased through reinvestment of capital gains distributions and dividend reinvestment.
•
Common Shares purchased from the proceeds of redeemed
Common Shares
of the same fund family so long
as the following conditions are met: the proceeds are from the sale of
Common Shares
within 60 days of the
purchase, the sale and purchase are made from a share class that charges a front-end sales charge and one
of the following:
○
The redemption and repurchase occur in the same account.
○
The redemption proceeds are used to process an: IRA contribution, excess contributions, conversion,
recharacterizing of contributions, or distribution, and the repurchase is done in an account within the
same Edward Jones grouping for ROA.
•
Common Shares exchanged into Class A Common Shares from another share class so long as the exchange
is into the same fund and was initiated at the discretion of Edward Jones. Edward Jones is responsible for any
remaining EWC due to the fund company, if applicable. Any future purchases are subject to the applicable sales
charge as disclosed in the prospectus.
•
Exchanges from Class C Common Shares to Class A Common Shares of the same fund, generally, in the 84th
month following the anniversary of the purchase date or earlier at the discretion of Edward Jones.
•
Purchases of Class 529-A Common Shares through a rollover from either another education savings plan or a
security used for qualified distributions.
•
Purchases of Class 529 Common Shares made for recontribution of refunded amounts.
Early Withdrawal Charge (
“
EWC
”
) Waivers
If the shareholder purchases Common Shares that are subject to an EWC and those Common Shares are redeemed
before the EWC is expired, the shareholder is responsible to pay the EWC except in the following conditions:
•
The death or disability of the shareholder
•
Systematic withdrawals with up to 10% per year of the account value
•
Return of excess contributions from an Individual Retirement Account (IRA)
•
Common Shares sold as part of a required minimum distribution for IRA and retirement accounts if the redemption
is taken in or after the year the shareholder reaches qualified age based on applicable IRS regulations
•
Common Shares redeemed to pay Edward Jones fees or costs in such cases where the transaction is initiated
by Edward Jones
58
APPENDIX A
(continued)
•
Common Shares exchanged in an Edward Jones fee-based program
•
Common Shares acquired through NAV reinstatement
•
Common Shares redeemed at the discretion of Edward Jones for Minimum Balances, as described below.
Other Important Information Regarding Transactions Through Edward Jones
Minimum Purchase Amounts
•
Initial purchase minimum: $250
•
Subsequent purchase minimum: none
Minimum Balances
•
Edward Jones has the right to redeem at its discretion fund holdings with a balance of $250 or less. The following
are examples of accounts that are not included in this policy:
○
A fee-based account held on an Edward Jones platform
○
A 529 account held on an Edward Jones platform
○
An account with an active systematic investment plan or LOI
Exchanging Share Classes
•
At any time it deems necessary, Edward Jones has the authority to exchange at NAV a shareholder's holdings
in a fund to Class A Common Shares of the same fund.
E*TRADE FRONT-END SALES CHARGE WAIVER
Shareholders purchasing Fund shares through an E*TRADE brokerage account will be eligible for a waiver of the front-end
sales charge with respect to Class A Common Shares (or the equivalent). This includes shares purchased through
the reinvestment of dividends and capital gains distributions.
JANNEY MONTGOMERY SCOTT LLC
Shareholders purchasing Fund Common Shares through a Janney Montgomery Scott LLC (
“
Janney
”
) account will be
eligible only for the following load waivers (front-end sales charge waivers and early withdrawal charge (
“
EWC
”
), or
back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in the Fund’s Prospectus
or SAI.
EWC waivers on Class A Common Shares available at Janney
•
Common Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when
purchasing shares of the Fund (but not any other fund within the fund family).
•
Common Shares purchased by employees and registered representatives of Janney or its affiliates and their
family members as designated by Janney.
•
Common Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within ninety (90) days following the redemption, (2) the redemption and purchase occur in
the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (
i.e.,
right of
reinstatement).
•
Class C Common Shares that are no longer subject to a contingent deferred sales charge and are converted
to Class A Common Shares of the Fund pursuant to Janney’s policies and procedures.
Sales charge waivers on Class A and C Common Shares available at Janney
•
Common Shares sold upon the death or disability of the shareholder.
•
Common Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
•
Common Shares purchased in connection with a return of excess contributions from an IRA account.
•
Common Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the
shareholder reaching age 70½ as described in the Fund’s Prospectus.
•
Common Shares sold to pay Janney fees but only if the transaction is initiated by Janney.
59
APPENDIX A
(continued)
•
Common Shares acquired through a right of reinstatement.
Front-end load discounts available at Janney: breakpoints, and/or rights of accumulation
•
Breakpoints as described in the Fund’s Prospectus.
•
Rights of accumulation (
“
ROA
”
), which entitle shareholders to breakpoint discounts, will be automatically calculated
based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at
Janney. Eligible fund family assets not held at Janney may be included in the ROA calculation only if the shareholder
notifies his or her financial advisor about such assets.
J.P. MORGAN SECURITIES LLC
If you purchase or hold fund shares through an applicable J.P. Morgan Securities LLC brokerage account, you will be
eligible for the following sales charge waivers (front-end sales charge waivers and contingent deferred sales charge
(
“
CDSC
”
), or back-end sales charge, waivers), share class conversion policy and discounts, which may differ from
those disclosed elsewhere in this fund’s prospectus or Statement of Additional Information.
Front-end sales charge waivers on Class A Common Shares available at J.P. Morgan Securities LLC
•
Shares exchanged from Class C (
i.e
. level-load) Common Shares that are no longer subject to a CDSC and are
exchanged into Class A Common Shares of the same fund pursuant to J.P. Morgan Securities LLC’s share class
exchange policy.
•
Qualified employer-sponsored defined contribution and defined benefit retirement plans, nonqualified deferred
compensation plans, other employee benefit plans and trusts used to fund those plans.  For purposes of this
provision, such plans do not include SEP IRAs, SIMPLE IRAs, SAR-SEPs or 501(c)(3) accounts.
•
Shares of funds purchased through J.P. Morgan Securities LLC Self-Directed Investing accounts.
•
Shares purchased through rights of reinstatement.
•
Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing
shares of the same fund (but not any other fund within the fund family).
•
Shares purchased by employees and registered representatives of J.P. Morgan Securities LLC or its affiliates
and their spouse or financial dependent as defined by J.P. Morgan Securities LLC.
Class C to Class A Common Shares conversion
•
A shareholder in the fund’s Class C Common Shares will have their shares converted to Class A Common Shares
(or the appropriate share class) of the same fund if the shares are no longer subject to a CDSC and the conversion
is consistent with J.P. Morgan Securities LLC’s policies and procedures.
CDSC waivers on Class A and C Common Shares available at J.P. Morgan Securities LLC
•
Shares sold upon the death or disability of the shareholder.
•
Shares sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
•
Shares purchased in connection with a return of excess contributions from an IRA account.
•
Shares sold as part of a required minimum distribution for IRA and retirement accounts pursuant to the Internal
Revenue Code.
•
Shares acquired through a right of reinstatement.
Front-end load discounts available at J.P. Morgan Securities LLC: breakpoints, rights of accumulation & letters of intent
•
Breakpoints as described in the prospectus.
•
Rights of Accumulation (
“
ROA
”
) which entitle shareholders to breakpoint discounts as described in the fund’s
prospectus will be automatically calculated based on the aggregated holding of fund family assets held by accounts
within the purchaser’s household at J.P. Morgan Securities LLC. Eligible fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be included in the ROA calculation only
if the shareholder notifies their financial advisor about such assets.
•
Letters of Intent (
“
LOI
”
) which allow for breakpoint discounts based on anticipated purchases within a fund
family, through J.P. Morgan Securities LLC, over a 13-month period of time (if applicable).
60
APPENDIX A
(continued)
MERRILL LYNCH (
“
Merrill
”
)
Purchases or sales of front-end (i.e.
,
Class A) or level-load (i.e., Class C) mutual fund shares through a Merrill platform
or account will be eligible only for the following sales load waivers (front-end, contingent deferred, or back-end waivers)
and discounts, which differ from those disclosed elsewhere in this Fund’s Prospectus. Purchasers will have to buy
mutual fund shares directly from the mutual fund company or through another intermediary to be eligible for waivers
or discounts not listed below.
It is the shareholder’s responsibility to notify Merrill at the time of purchase or sale of any relationship or other facts
that qualify the transaction for a waiver or discount. A Merrill representative may ask for reasonable documentation
of such facts and Merrill may condition the granting of a waiver or discount on the timely receipt of such documentation.
Additional information on waivers and discounts is available in the Merrill Sales Load Waiver and Discounts Supplement
(the
“
Merrill SLWD Supplement
”
) and in the Mutual Fund Investing at Merrill pamphlet at ml.com/funds. Shareholders
are encouraged to review these documents and speak with their financial advisor to determine whether a transaction
is eligible for a waiver or discount.
Front-End Sales Charge Waivers on Class A Common Shares Available at Merrill
•
Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings
accounts) and trusts used to fund those plans provided that the Common Shares are not held in a commission-based
brokerage account and Common Shares are held for the benefit of the plan. For purposes of this provision,
employer-sponsored retirement plans do not include Simplified Employee Pension IRAs (
“
SEP IRA
”
), Simple IRAs,
SAR-SEPs or Keogh plans.
•
Common Shares purchased through a Merrill investment advisory program.
•
Brokerage class Common Shares exchanged from advisory class shares due to the holdings moving from a
Merrill investment advisory program to a Merrill brokerage account.
•
Common Shares of Funds purchased through the Merrill Edge Self-Directed platform.
•
Common Shares purchased through the systematic reinvestment of capital gains distributions and dividend
reinvestment when purchasing shares of the same mutual fund in the same account.
•
Common Shares exchanged from level-load shares to front-end sales charge Common Shares of the same Fund
in accordance with the description in the Merrill SLWD Supplement.
•
Common Shares purchased by eligible employees of Merrill or its affiliates and their family members who purchase
Common Shares in accounts within the employee’s Merrill Household (as defined in the Merrill SLWD Supplement).
•
Trustees of the Fund, and employees of the Investment Adviser or any of its affiliates, as described in this
Prospectus.
•
Common Shares purchased from the proceeds of the Fund’s redemption in front-end sales charge shares provided:
(1) the repurchase is in a mutual fund within the same fund family; (2) the repurchase occurs within 90 calendar
days from the redemption trade date, and (3) the redemption and purchase occur in the same account
(known
as Rights of Reinstatement). Automated transactions (i.e. systematic purchases and withdrawals) and purchases
made after Common Shares are automatically sold to pay Merrill’s account maintenance fees are not eligible
for Rights of Reinstatement.
CDSC Waivers on Class A and Class C Common Shares Available at Merrill
•
Common Shares sold due to shareholder’s death or disability (as defined by Internal Revenue Code Section
22e(3)).
•
Common Shares sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic
withdrawal limits as described in the Merrill SLWD Supplement.
•
Common Shares sold due to return of excess contributions from an IRA account.
•
Common Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the
investor reaching the qualified age based on applicable IRS regulation.
61
APPENDIX A
(continued)
•
Front-end or level-load Common Shares held in commission-based, non-taxable retirement brokerage accounts
(e.g. traditional, Roth, rollover, SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based
accounts or platforms and exchanged for a lower cost share class of the same Fund.
Front-End Load Discounts Available at Merrill: Breakpoints, ROA & LOI
•
Breakpoints as described in this Prospectus, where the sales charge is at or below the maximum sales charge
that Merrill permits to be assessed to a front-end load purchase, as described in the Merrill SLWD Supplement.
•
ROA, as described in the Merrill SLWD Supplement, which entitle shareholders to breakpoint discounts based
on the aggregated holdings of mutual fund family assets held in accounts in their Merrill Household.
•
LOI: which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases
within a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill
SLWD Supplement.
MORGAN STANLEY WEALTH MANAGEMENT
Shareholders purchasing Fund shares through a Morgan Stanley Wealth Management transactional brokerage account
will be eligible only for the following front-end sales charge waivers with respect to Class A Common Shares, which
may differ from and may be more limited than those disclosed elsewhere in this Fund’s Prospectus or SAI.
Front-end Sales Charge Waivers on Class A Common Shares available at Morgan Stanley Wealth Management
•
Employer-sponsored retirement plans (
e.g.
, 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit
sharing and money purchase pension plans and defined benefit plans). For purposes of this provision,
employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans
•
Morgan Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules
•
Common Shares purchased through reinvestment of dividends and capital gains distributions when purchasing
Common Shares of the same fund
•
Common Shares purchased through a Morgan Stanley self-directed brokerage account
•
Class C Common Shares (
i.e.
, level-load) shares that are no longer subject to an EWC and are converted to
Class A Common Shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion
program – Common Shares purchased from the proceeds of redemptions within the same fund family, provided
(i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in
the same account, and (iii) redeemed shares were subject to a frontend or deferred sales charge.
OPPENHEIMER & CO. (
“
OPCO
”
)
Shareholders purchasing Fund shares through an OPCO platform or account are eligible only for the following load
waivers (front-end sales charge waivers and early withdrawal, or back-end, sales charge waivers) and discounts, which
may differ from those disclosed elsewhere in this Fund's Prospectus or SAI.
Front-end Sales Load Waivers on Class A Common Shares available at OPCO
•
Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings
accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based
brokerage account and shares are held for the benefit of the plan.
•
Common Shares purchased through an OPCO affiliated investment advisory program.
•
Common Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when
purchasing shares of the same fund (but not any other fund within the fund family).
•
Common Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same
amount, and (3) redeemed shares were subject to a front-end or deferred sales load (known as
“
Rights of Restatement
”
).
•
A shareholder in the Fund’s Class C Common Shares will have their shares converted at net asset value to
Class A Common Shares (or the appropriate share class) of the Fund after 5 years from the date of first purchase
of the Class C Common Shares and if the shares are no longer subject to an EWC and the conversion is in line
with the policies and procedures of OPCO.
62
APPENDIX A
(continued)
•
Employees and registered representatives of OPCO or its affiliates and their family members.
•
Directors or Trustees of the Fund, and employees of the Fund’s investment adviser or any of its affiliates, as
described in the Fund’s Prospectus.
EWC Waivers on Class A and C Common Shares available at OPCO
•
Death or disability of the shareholder
•
Common Shares sold as part of a systematic withdrawal plan as described in the Fund's prospectus
•
Return of excess contributions from an IRA Account
•
Common Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the
shareholder reaching age 70½ as described in the Fund’s Prospectus
•
Common Shares sold to pay OPCO fees but only if the transaction is initiated by OPCO
•
Common Shares acquired through a right of reinstatement
Front-end load Discounts Available at OPCO: Breakpoints, Rights of Accumulation & Letters of Intent
•
Breakpoints as described in the Fund’s Prospectus.
•
Rights of Accumulation (
“
ROA
”
) which entitle shareholders to breakpoint discounts will be automatically calculated
based on the aggregated holding of fund family assets held by accounts within the purchaser's household at
OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder
notifies his or her financial advisor about such assets
RAYMOND JAMES & ASSOCIATES, INC., RAYMOND JAMES FINANCIAL SERVICES, INC. and each entity’s affiliates (
“
RAYMOND
JAMES
”
)
Shareholders purchasing fund shares through a Raymond James platform or account, or through an introducing broker-dealer
or independent registered investment adviser for which Raymond James provides trade execution, clearance, and/or
custody services, will be eligible only for the following load waivers (front-end sales charge waivers and contingent
deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in this
Fund’s Prospectus or SAI.
Front-end sales load waivers on Class A Common Shares available at Raymond James
•
Common Shares purchased in an investment advisory program.
•
Common Shares purchased within the same fund family through a systematic reinvestment of capital gains and
dividend distributions.
•
Employees and registered representatives of Raymond James or its affiliates and their family members as designated
by Raymond James.
•
Common Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same
account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement).
•
A shareholder in the Fund’s Class C Common Shares will have their shares converted at net asset value to
Class A Common Shares (or the appropriate share class) of the Fund if the shares are no longer subject to an
EWC and the conversion is in line with the policies and procedures of Raymond James.
EWC Waivers on Classes A and C Common Shares available at Raymond James
•
Death or disability of the shareholder.
•
Common Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
•
Return of excess contributions from an IRA Account.
•
Common Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the
shareholder reaching age 70½ as described in the Fund’s Prospectus.
•
Common Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
•
Common Shares acquired through a right of reinstatement.
63
APPENDIX A
(continued)
Front-end load discounts available at Raymond James: breakpoints, rights of accumulation, and/or letters of intent
•
Breakpoints as described in this Prospectus.
•
Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based
on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond
James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of
accumulation calculation only if the shareholder notifies his or her financial advisor about such assets.
•
Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over
a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation
of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
STIFEL, NICOLAUS & COMPANY, INCORPORATED (
“
STIFEL
”
)
The following information applies to shareholders purchasing Class C Common Shares of the Fund through a Stifel
platform or account or who own Class C Common Shares for which Stifel or an affiliate is the broker-dealer of record.
This information may differ from information about Class C Common Shares disclosed elsewhere in this Fund’s Prospectus
or SAI.
Class C Conversion to Class A; Class A Common Shares Front-End Sales Waiver Available at Stifel:
•
A Class C Common Shares shareholder of the Fund will have such shareholder’s Class C Common Shares converted
at net asset value to Class A Common Shares of the Fund in accordance with Stifel’s policies and procedures.
Stifel has informed the Fund that its policies and procedures currently provide for such a conversion following
the seventh (7th) anniversary of the shareholder’s purchase of the Class C Common Shares.
64
 
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Voya Credit Income Fund

7337 East Doubletree Ranch Road, Suite 100

Scottsdale, Arizona 85258-2034

1-800-992-0180
FUND ADVISERS AND SERVICE PROVIDERS
 
Investment Adviser

Voya Investments, LLC

7337 East Doubletree Ranch Road, Suite 100

Scottsdale, Arizona 85258
Sub-Adviser

Voya Investment Management Co. LLC

230 Park Avenue

New York, New York 10169
Custodian

The Bank of New York Mellon

225 Liberty Street,

New York, New York 10286
Independent Registered Public Accounting Firm

Ernst
&
Young LLP

200 Clarendon Street
, Boston
,
Massachusetts 02116
Distributor

Voya Investments Distributor, LLC

7337 East Doubletree Ranch Road, Suite 100

Scottsdale, Arizona 85258
Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

301 Bellevue Parkway

Wilmington, Delaware 19809
Legal Counsel

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston Massachusetts 02199-3600
Institutional Investors and Analysts

Call 1-800-336-3436
The Fund has not authorized any person to provide you with any information or to make any representations other than those contained
in this Prospectus in connection with this offer. You should rely only on the information in this Prospectus or other information to which we
have referred you. This Prospectus is not an offer to sell, or the solicitation of any offer to buy, any security other than the Common Shares
offered by this Prospectus; nor does it constitute an offer to sell, or a solicitation of any offer to buy, the Common Shares by anyone in
any jurisdiction in which such offer or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified
to do so, or to any person to whom it is unlawful to make such an offer or solicitation. The delivery of this Prospectus or any sale made
pursuant to this Prospectus does not imply that the information contained in this Prospectus is correct as of any time after the date of
this Prospectus. However, if any material change occurs while this Prospectus is required by law to be delivered, this Prospectus will be
amended or supplemented.
 
Reports and other information about the Funds are available on the EDGAR Database on the SEC's Internet website at
https://www.sec.gov
, and copies of this information may be obtained, upon payment of a duplicating fee, by electronic
request at the following e-mail address:
publicinfo@sec.gov
.
When contacting the SEC, you will want to refer to the Fund's SEC file number. The file number is as follows:
 
1940 Act File No.
811-10223
163281
(0624-062824)
 


STATEMENT OF ADDITIONAL INFORMATION
June 28, 2024
Voya Credit Income Fund
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258-2034
1-800-992-0180
Class/Ticker: A/XSIAX; C/XSICX; I/XSIIX; W/XSIWX Common Shares
  
This Statement of Additional Information (the “SAI”) contains additional information about the fund listed above (the “Fund”). This SAI is not a prospectus and should be read in conjunction with the Fund’s prospectus dated June 28, 2024, as supplemented or revised from time to time (the “Prospectus”). The Fund’s financial statements for the fiscal year ended February 29, 2024, including the independent registered public accounting firm’s report thereon found in the Fund’s most recent annual report to shareholders, are incorporated into this SAI by reference. The Fund’s Prospectus and annual or unaudited semi-annual shareholder reports may be obtained free of charge by contacting the Fund at the address and phone number written above or by visiting our website at https://individuals.voya.com/product/mutual-fund/prospectuses-reports.
Bloomberg Index Data Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or its licensors own all proprietary rights in the Bloomberg Indices. Bloomberg does not approve or endorse this material, or guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, as to the results to be obtained.
1
Table of Contents 
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74
A-1
INTRODUCTION AND GLOSSARY
This SAI is designed to elaborate upon information contained in the Fund’s Prospectus, including the discussion of certain securities and investment techniques. The more detailed information contained in this SAI is intended for investors who have read the Prospectus and are interested in a more detailed explanation of certain aspects of some of the Fund’s securities and investment techniques. Some investment techniques are described only in the Prospectus and are not repeated here.
Capitalized terms used, but not defined, in this SAI have the same meaning as in the Prospectus and some additional terms are defined particularly for this SAI.
Following are definitions of general terms that may be used throughout this SAI:
1933 Act: Securities Act of 1933, as amended
1934 Act: Securities Exchange Act of 1934, as amended
1940 Act: Investment Company Act of 1940, as amended, including the rules and regulations thereunder, and the terms of applicable no-action relief or exemptive orders granted thereunder
Affiliated Fund: A fund within the Voya family of funds
Board: The Board of Trustees for the Trust
Business Day: Each day the NYSE opens for regular trading
CDSC: Contingent deferred sales charge
CFTC: United States Commodity Futures Trading Commission
Code: Internal Revenue Code of 1986, as amended
Distributor: Voya Investments Distributor, LLC
Distribution Agreement: The Distribution Agreement for the Fund, as described herein
ETF: Exchange-Traded Fund
EU: European Union
Expense Limitation Agreement: The Expense Limitation Agreement(s) for the Fund, as described herein
FDIC: Federal Deposit Insurance Corporation
FHLMC: Federal Home Loan Mortgage Corporation
FINRA: Financial Industry Regulatory Authority, Inc.
Fiscal Year End of the Fund: February 28 or 29, as applicable
Fitch: Fitch Ratings
FNMA: Federal National Mortgage Association
Fund: One or more of the investment management companies listed on the front cover of this SAI
GNMA: Government National Mortgage Association
Independent Trustees: The Trustees of the Board who are not “interested persons” (as defined in the 1940 Act) of the Fund
Investment Adviser: Voya Investments, LLC or Voya Investments
Investment Management Agreement: The Investment Management Agreement for the Fund, as described herein
IPO: Initial Public Offering
IRA: Individual Retirement Account
IRS: United States Internal Revenue Service
LIBOR: London Interbank Offered Rate
MLPs: Master Limited Partnerships
Moody’s: Moody’s Investors Service, Inc.
NAV: Net Asset Value
NRSRO: Nationally Recognized Statistical Rating Organization
NYSE: New York Stock Exchange
1
OTC: Over-the-counter
Principal Underwriter: Voya Investments Distributor, LLC or the “Distributor”
Prospectus: One or more prospectuses for the Fund
REIT: Real Estate Investment Trust
REMICs: Real Estate Mortgage Investment Conduits
RIC: A “Regulated Investment Company,” pursuant to the Code
Rule 12b-1: Rule 12b-1 (under the 1940 Act)
Rule 12b-1 Plan: A Distribution and/or Shareholder Service Plan adopted under Rule 12b-1
Rule 144A: Rule 144A under the 1933 Act
S&L: Savings & Loan Association
S&P: S&P Global Ratings
SEC: United States Securities and Exchange Commission
SOFR: Secured Overnight Financing Rate
Sub-Adviser: One or more sub-advisers for the Fund, as described herein
Sub-Advisory Agreement: The Sub-Advisory Agreement(s) for the Fund, as described herein
UK: United Kingdom
Underlying Funds: Unless otherwise stated, other mutual funds or ETFs in which the Fund may invest
Voya family of funds or the “funds”: All of the registered investment companies managed by Voya Investments
Voya IM: Voya Investment Management Co. LLC
The Trust: Voya Credit Income Fund
HISTORY OF the Trust
Effective March 26, 2001, the Trust changed its name from “ING Pilgrim Senior Income Fund” to “Pilgrim Senior Income Fund.” Effective March 1, 2002, the Trust changed its name from “Pilgrim Senior Income Fund” to “ING Senior Income Fund.” Effective May 1, 2014, the Trust changed its name from “ING Senior Income Fund to Voya Senior Income Fund.” Effective June 30, 2022, the Trust changed its name from “Voya Senior Income Fund” to “Voya Credit Income Fund.”
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Some of the different types of securities in which the Fund may invest, subject to its investment objective, policies, and restrictions, are described in the Prospectus under “Investment Objective and Policies.” Additional information concerning certain of the Fund’s investments and investment techniques is set forth below.
SUPPLEMENTAL DESCRIPTION OF Fund INVESTMENTS AND RISKS
EQUITY SECURITIES
Commodities: Commodities include equity securities of “hard assets companies” and derivative securities and instruments whose value is linked to the price of a commodity or a commodity index. The term “hard assets companies” includes companies that directly or indirectly (whether through supplier relationship, servicing agreements or otherwise) primarily derive their revenue or profit from exploration, development, production, distribution or facilitation of processes relating to precious metals (including gold), base and industrial metals, energy, natural resources and other commodities. Commodities values may be highly volatile, and may decline rapidly and without warning. The values of commodity issuers will typically be substantially affected by changes in the values of their underlying commodities. Securities of commodity issuers may experience greater price fluctuations than the relevant hard asset. In periods of rising hard asset prices, such securities may rise at a faster rate and, conversely, in times of falling commodity prices, such securities may suffer a greater price decline. Some hard asset issuers may be subject to the risks generally associated with extraction of natural resources, such as fire, drought, increased regulatory and environmental costs, and others. Because many commodity issuers have significant operations in many countries worldwide (including emerging markets), their securities may be more exposed than those of other issuers to unstable political, social and economic conditions, including expropriation and disruption of licenses or operations.
Common Stocks: Common stock represents an equity or ownership interest in an issuer. A common stock may decline in value due to an actual or perceived deterioration in the prospects of the issuer, an actual or anticipated reduction in the rate at which dividends are paid, or other factors affecting the value of an investment, or due to a decline in the values of stocks generally or of stocks of issuers in a particular industry or market sector. The values of common stocks may be highly volatile. If an issuer of common stock is liquidated or declares bankruptcy, the claims of owners of debt instruments and preferred stock take precedence over the claims of those who own common stock, and as a result the common stock could become worthless.
Convertible Securities: Convertible securities are securities that combine the investment characteristics of debt instruments and common stocks. Convertible securities typically consist of debt instruments or preferred stock that may be converted (on a voluntary or mandatory basis) within a specified period of time (normally for the entire life of the security) into a certain amount of common stock or other equity security of the same or a different issuer at a predetermined price. Convertible securities also include debt instruments with warrants or common stock attached and derivatives combining the features of debt instruments and equity securities. Other convertible securities with additional or different features and risks may become available in the future. Convertible securities involve risks similar to those of both debt instruments and equity securities. In a corporation’s capital structure, convertible securities are senior to common stock but are usually subordinated to senior debt instruments of the issuer.
The market value of a convertible security is a function of its “investment value” and its “conversion value.” A security’s “investment value” represents the value of the security without its conversion feature (i.e., a nonconvertible debt instrument). The investment value may be determined by reference to its credit quality and the current value of its yield to maturity or probable call date. At any given time, investment value is dependent upon such factors as the general level of interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer, and the seniority of the security in the issuer’s capital structure. A security’s “conversion value” is determined by multiplying the number of shares the holder is entitled to receive upon conversion or exchange by the current price of the underlying security. If the conversion value of a convertible security is significantly below its investment value, the convertible security will trade like a nonconvertible debt instruments or preferred stock and its market value will not be influenced greatly by fluctuations in the market price of the underlying security. In that circumstance, the convertible security takes on the characteristics of a debt instrument, and the price moves in the opposite direction from interest rates. Conversely, if the conversion value of a convertible security is near or above its investment value, the market value of the convertible security will be more heavily influenced by fluctuations in the market price of the underlying security. In that case, the convertible security’s price may be as volatile as that of common stock. Because both interest rates and market movements can influence its value, a convertible security generally is not as sensitive to interest rates as a similar debt instrument, nor is it as sensitive to changes in share price as its underlying equity security. Convertible securities are often rated below investment grade or are not rated, and they are generally subject to greater levels of credit risk and liquidity risk.
Contingent Convertible Securities (“CoCos”): CoCos are a form of hybrid debt instrument. They are subordinated instruments that are designed to behave like bonds or preferred equity in times of economic health for the issuer, yet absorb losses when a pre-determined trigger event affecting the issuer occurs. CoCos are either convertible into equity at a predetermined share price or written down if a pre-specified trigger event occurs. Trigger events vary by individual security and are defined by the documents governing the contingent convertible security. Such trigger events may include a decline in the issuer’s capital below a specified threshold level, an increase in the issuer’s risk-weighted assets, the share price of the issuer falling to a particular level for a certain period of time, and certain regulatory events. CoCos are subject to credit, interest rate, high-yield securities, foreign investments and market risks associated with both debt instruments and equity securities. In addition, CoCos have no stated maturity and have fully discretionary coupons.  If the CoCos are converted into the issuer’s underlying equity securities following a conversion event, each holder will be subordinated due to their conversion from being the holder of a debt instrument to being the holder of an equity instrument, hence worsening the holder’s standing in a bankruptcy proceeding.
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Initial Public Offerings: The value of an issuer’s securities may be highly unstable at the time of its IPO and for a period thereafter due to factors such as market psychology prevailing at the time of the IPO, the absence of a prior public market, the small number of shares available, and limited availability of investor information. Securities purchased in an IPO may be held for a very short period of time. As a result, investments in IPOs may increase portfolio turnover, which increases brokerage and administrative costs and may result in additional distributions to shareholders. Investors in IPOs can be adversely affected by substantial dilution of the value of their shares due to sales of additional shares, and by concentration of control in existing management and principal shareholders.
Investments in IPOs may have a substantial beneficial effect on investment performance. Investment returns earned during a period of substantial investment in IPOs may not be sustained during other periods of more-limited, or no, investments in IPOs. In addition, as an investment portfolio increases in size, the impact of IPOs on performance will generally decrease. Investment in securities offered in an IPO may lose money. There can be no assurance that investments in IPOs will be available or improve performance. Investments in secondary public offerings may be subject to certain of the foreign risks. The Fund will not necessarily participate in an IPO in which other mutual funds or accounts managed by the Investment Adviser or Sub-Adviser participate.
Master Limited Partnerships: MLPs typically are characterized as “publicly traded partnerships” that qualify to be treated as partnerships for U.S. federal income tax purposes and are typically engaged in one or more aspects of the exploration, production, processing, transmission, marketing, storage or delivery of energy-related commodities, such as natural gas, natural gas liquids, coal, crude oil or refined petroleum products. Generally, an MLP is operated under the supervision of one or more managing general partners. Limited partners are not involved in the day-to-day management of the partnership.
Investments in MLPs are generally subject to many of the risks that apply to partnerships. For example, holders of the units of MLPs may have limited control and limited voting rights on matters affecting the partnership. There may be fewer corporate protections afforded investors in an MLP than investors in a corporation. Conflicts of interest may exist among unit holders, subordinated unit holders, and the general partner of an MLP, including those arising from incentive distribution payments. MLPs that concentrate in a particular industry or region are subject to risks associated with such industry or region. MLPs holding credit-related investments are subject to interest rate risk and the risk of default on payment obligations by debt issuers. Investments held by MLPs may be illiquid. MLP units may trade infrequently and in limited volume, and they may be subject to more abrupt or erratic price movements than securities of larger or more broadly based issuers.
The manner and extent of direct and indirect investments in MLPs and limited liability companies may be limited by the Fund’s intention to qualify as a RIC under the Code, and any such investments may adversely affect the ability of the Fund to so qualify.
Other Investment Companies and Pooled Investment Vehicles: Securities of other investment companies and pooled investment vehicles, including shares of closed-end investment companies, unit investment trusts, ETFs, open-end investment companies, and private investment funds represent interests in managed portfolios that may invest in various types of instruments. Investing in another investment company or pooled investment vehicle exposes the Fund to all the risks of that other investment company or pooled investment vehicle as well as additional expenses at the other investment company or pooled investment vehicle-level, such as a proportionate share of portfolio management fees and operating expenses. Such expenses are in addition to the expenses the Fund pays in connection with its own operations. Investing in a pooled investment vehicle involves the risk that the vehicle will not perform as anticipated. The amount of assets that may be invested in another investment company or pooled investment vehicle or in other investment companies or pooled investment vehicles generally may be limited by applicable law.
The securities of other investment companies, particularly closed-end funds, may be leveraged and, therefore, will be subject to the risks of leverage. The securities of closed-end investment companies and ETFs carry the risk that the price paid or received may be higher or lower than their NAV. Closed-end investment companies and ETFs are also subject to certain additional risks, including the risks of illiquidity and of possible trading halts due to market conditions or other factors.
In making decisions on the allocation of the assets in other investment companies, the Investment Adviser and Sub-Adviser are subject to several conflicts of interest when they serve as the investment adviser and sub-adviser to one or more of the other investment companies. These conflicts could arise because the Investment Adviser or Sub-Adviser or their affiliates earn higher net advisory fees (the advisory fee received less any sub-advisory fee paid and fee waivers or expense subsidies) on some of the other investment companies than others. For example, where the other investment companies have a sub-adviser that is affiliated with the Investment Adviser, the entire advisory fee is retained by a Voya company. Even where the net advisory fee is not higher for other investment companies sub-advised by an affiliate of the Investment Adviser or Sub-Adviser, the Investment Adviser and Sub-Adviser may have an incentive to prefer affiliated sub-advisers for other reasons, such as increasing assets under management or supporting new investment strategies, which in turn would lead to increased income to Voya. Further, the Investment Adviser and Sub-Adviser may believe that redemption from another investment company will be harmful to that investment company, the Investment Adviser and Sub-Adviser or an affiliate. Therefore, the Investment Adviser and Sub-Adviser may have incentives to allocate and reallocate in a fashion that would advance its own economic interests, the economic interests of an affiliate, or the interests of another investment company.
The Investment Adviser has informed the Board that its investment process may be influenced by an affiliated insurance company that issues financial products in which the Fund may be offered as an investment option. In certain of those products an affiliated insurance company may offer guaranteed lifetime income or death benefits. The Investment Adviser’s and Sub-Adviser’s investment decisions, including their allocation decisions with respect to the other investment companies, may benefit the affiliated insurance company issuing such benefits. For example, selecting and allocating assets to other investment companies which invest primarily in debt instruments or in a
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more conservative or less volatile investment style, may reduce the regulatory capital requirements which the affiliated insurance company must satisfy to support its guarantees under its products, may help reduce the affiliated insurance company’s risk from the lifetime income or death benefits, or may make it easier for the insurance company to manage its risk through the use of various hedging techniques.
The Investment Adviser and Sub-Adviser have adopted various policies and procedures that are intended to identify, monitor, and address actual or potential conflicts of interest. Nonetheless, investors bear the risk that the Investment Adviser's and Sub-Adviser’s allocation decisions may be affected by their conflicts of interest.
Rule 12d1-4 under the 1940 Act is designed to streamline and enhance the regulatory framework for funds of funds arrangements. Rule 12d1-4 permits acquiring funds to invest in the securities of other registered investment companies beyond certain statutory limits, subject to certain conditions. In connection with this rule, the SEC rescinded Rule 12d1-2 under the 1940 Act and most fund of funds exemptive orders, effective January 19, 2022.
Exchange-Traded Funds: ETFs are investment companies whose shares trade like a stock throughout the day. Certain ETFs use a “passive” investment strategy and will not attempt to take defensive positions in volatile or declining markets. Other ETFs are actively managed (i.e., they do not seek to replicate the performance of a particular index). The value of an ETF’s shares will change based on changes in the values of the investments it holds. The value of an ETF’s shares will also likely be affected by factors affecting trading in the market for those shares, such as illiquidity, exchange or market rules, and overall market volatility. The market price for ETF shares may be higher or lower than the ETF’s NAV. The timing and magnitude of cash flows in and out of an ETF could create cash balances that act as a drag on the ETF’s performance. An active secondary market in an ETF’s shares may not develop or be maintained and may be halted or interrupted due to actions by its listing exchange, unusual market conditions or other reasons. Substantial market or other disruptions affecting ETFs could adversely affect the liquidity and value of the shares of the Fund to the extent it invests in ETFs. There can be no assurance an ETF’s shares will continue to be listed on an active exchange.
Holding Company Depositary Receipts: Holding Company Depositary Receipts (“HOLDRs”) are securities that represent beneficial ownership in a group of common stocks of specified issuers in a particular industry. HOLDRs are typically organized as grantor trusts, and are generally not required to register as investment companies under the 1940 Act. Each HOLDR initially owns a set number of stocks, and the composition of a HOLDR does not change after issue, except in special cases like corporate mergers, acquisitions or other specified events. As a result, stocks selected for those HOLDRs with a sector focus may not remain the largest and most liquid in their industry, and may even leave the industry altogether. If this happens, HOLDRs invested may not provide the same targeted exposure to the industry that was initially expected. Because HOLDRs are not subject to concentration limits, the relative weight of an individual stock may increase substantially, causing the HOLDRs to be less diversified and creating more risk.
Private Funds: Private funds are private investment funds, pools, vehicles, or other structures, including hedge funds and private equity funds. They may be organized as corporations, partnerships, trusts, limited partnerships, limited liability companies, or any other form of business organization (collectively, “Private Funds”). Investments in Private Funds may be highly speculative and highly volatile and may produce gains or losses at rates that exceed those of the Fund’s other holdings and of publicly offered investment pools. Private Funds may engage actively in short selling. Private Funds may utilize leverage without limit and, to the extent the Fund invests in Private Funds that utilize leverage, the Fund will indirectly be exposed to the risks associated with that leverage and the values of its shares may be more volatile as a result.
Many Private Funds invest significantly in issuers in the early stages of development, including issuers with little or no operating history, issuers operating at a loss or with substantial variation in operation results from period to period, issuers with the need for substantial additional capital to support expansion or to maintain a competitive position, or issuers with significant financial leverage. Such issuers may also face intense competition from others including those with greater financial resources or more extensive development, manufacturing, distribution or other attributes, over which the Fund will have no control.
Interests in a Private Fund will be subject to substantial restrictions on transfer and, in some instances, may be non-transferable for a period of years. Private Funds may participate in only a limited number of investments and, as a consequence, the return of a particular Private Fund may be substantially adversely affected by the unfavorable performance of even a single investment. Certain Private Funds may pay their investment managers a fee based on the performance of the Private Fund, which may create an incentive for the manager to make investments that are riskier or more speculative than would be the case if the manager was paid a fixed fee. Many Private Funds are not registered under the 1940 Act and, consequently, such funds are not subject to the restrictions on affiliated transactions and other protections applicable to registered investment companies. The valuations of securities held by Private Funds, which are generally unlisted and illiquid, may be very difficult and will often depend on the subjective valuation of the managers of the Private Funds, which may prove to be inaccurate. Inaccurate valuations of a Private Fund’s portfolio holdings will affect the ability of the Fund to calculate its NAV accurately.
Preferred Stocks: Preferred stock represents an equity interest in an issuer that generally entitles the holder to receive, in preference to the holders of other stocks such as common stocks, dividends and a fixed share of the proceeds resulting from a liquidation of the issuer.
Preferred stocks may pay fixed or adjustable rates of return. Preferred stock dividends may be cumulative or noncumulative, fixed, participating, auction rate or other. If interest rates rise, a fixed dividend on preferred stocks may be less attractive, causing the value of preferred stocks to decline either absolutely or relative to alternative investments. Preferred stock may have mandatory sinking fund provisions, as well as provisions that allow the issuer to redeem or call the stock.
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Preferred stock is subject to issuer-specific and market risks applicable generally to equity securities. In addition, because a substantial portion of the return on a preferred stock may be the dividend, its value may react similarly to that of a debt instrument to changes in interest rates. An issuer’s preferred stock generally pays dividends only after the issuer makes required payments to holders of its debt instruments and other debt. For this reason, the value of preferred stock will usually react more strongly than debt instruments to actual or perceived changes in the issuer’s financial condition or prospects. Preferred stocks of smaller issuers may be more vulnerable to adverse developments than preferred stock of larger issuers.
Private Investments in Public Companies: In a typical private placement by a publicly-held company (“PIPE”) transaction, a buyer will acquire, directly from an issuer seeking to raise capital in a private placement pursuant to Regulation D under the 1933 Act, common stock or a security convertible into common stock, such as convertible notes or convertible preferred stock. The issuer’s common stock is usually publicly traded on a U.S. securities exchange or in the OTC market, but the securities acquired will be subject to restrictions on resale imposed by U.S. securities laws absent an effective registration statement. In recognition of the illiquid nature of the securities being acquired, the purchase price paid in a PIPE transaction (or the conversion price of the convertible securities being acquired) will typically be fixed at a discount to the prevailing market price of the issuer’s common stock at the time of the transaction. As part of a PIPE transaction, the issuer usually will be contractually obligated to seek to register within an agreed upon period of time for public resale under the U.S. securities laws the common stock or the shares of common stock issuable upon conversion of the convertible securities. If the issuer fails to so register the shares within that period, the buyer may be entitled to additional consideration from the issuer (e.g., warrants to acquire additional shares of common stock), but the buyer may not be able to sell its shares unless and until the registration process is successfully completed. Thus PIPE transactions present certain risks not associated with open market purchases of equities.
Among the risks associated with PIPE transactions is the risk that the issuer may be unable to register the shares for public resale in a timely manner or at all, in which case the shares may be saleable only in a privately negotiated transaction at a price less than that paid, assuming a suitable buyer can be found. Disposing of the securities may involve time-consuming negotiation and legal expenses, and selling them promptly at an acceptable price may be difficult or impossible. Even if the shares are registered for public resale, the market for the issuer’s securities may nevertheless be “thin” or illiquid, making the sale of securities at desired prices or in desired quantities difficult or impossible.
While private placements may offer attractive opportunities not otherwise available in the open market, the securities purchased are usually “restricted securities” or are “not readily marketable.” Restricted securities cannot be sold without being registered under the 1933 Act, unless they are sold pursuant to an exemption from registration (such as Rules 144 or 144A under the 1933 Act). Securities that are not readily marketable are subject to other legal or contractual restrictions on resale.
Real Estate Securities and Real Estate Investment Trusts: Investments in equity securities of issuers that are principally engaged in the real estate industry are subject to certain risks associated with the ownership of real estate and with the real estate industry in general. These risks include, among others: possible declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds or other limitations on access to capital; overbuilding; risks associated with leverage; market illiquidity; extended vacancies of properties; increase in competition, property taxes, capital expenditures and operating expenses; changes in zoning laws or other governmental regulation; costs resulting from the clean-up of, and liability to third parties for damages resulting from, other acts that destroy real property; tenant bankruptcies or other credit problems; casualty or condemnation losses; uninsured damages from floods, earthquakes or other natural disasters; limitations on and variations in rents, including decreases in market rates for rents; investment in developments that are not completed or that are subject to delays in completion; and changes in interest rates. To the extent that assets underlying the Fund’s investments are concentrated geographically, by property type or in certain other respects, the Fund may be subject to certain of the foregoing risks to a greater extent. Investments by the Fund in securities of issuers providing mortgage servicing will be subject to the risks associated with refinancing and their impact on servicing rights.
In addition, if the Fund receives rental income or income from the disposition of real property acquired as result of a default on securities the Fund owns, the receipt of such income may adversely affect the Fund’s ability to qualify as a RIC because of certain income source requirements applicable to RICs under the Code.
REITs are pooled investment vehicles that invest primarily in income-producing real estate or real estate-related loans or interests. The affairs of REITs are managed by the REIT's sponsor and, as such, the performance of the REIT is dependent on the management skills of the REIT's sponsor. REITs are not diversified, and are subject to the risks of financing projects. REITs possess certain risks which differ from an investment in common stocks. REITs are financial vehicles that pool investor’s capital to purchase or finance real estate. REITs may concentrate their investments in specific geographic areas or in specific property types, i.e., hotels, shopping malls, residential complexes and office buildings. REITs are subject to management fees and other expenses, and so the Fund that invests in REITs will bear its proportionate share of the costs of the REITs’ operations. There are three general categories of REITs: Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs invest primarily in direct fee ownership or leasehold ownership of real property; they derive most of their income from rents. Mortgage REITs invest mostly in mortgages on real estate, which may secure construction, development or long-term loans; the main source of their income is mortgage interest payments. Hybrid REITs hold both ownership and mortgage interests in real estate.
Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. The market value of REIT shares and the ability of the REITs to distribute income may be adversely affected by several factors, including rising interest rates, changes in the national, state and local economic climate and real estate conditions, perceptions of prospective tenants of the safety, convenience and attractiveness of the properties, the ability of the owners to provide adequate management, maintenance and insurance, the cost of complying with the Americans with Disabilities Act, increased competition from new properties, the impact of
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present or future environmental legislation and compliance with environmental laws, failing to maintain their eligibility for favorable tax-treatment under the Code and for exemptions from registration under the 1940 Act, changes in real estate taxes and other operating expenses, adverse changes in governmental rules and fiscal policies, adverse changes in zoning laws and other factors beyond the control of the issuers of the REITs.
REITs (especially mortgage REITs) are also subject to interest rate risk. Rising interest rates may cause REIT investors to demand a higher annual yield, which may, in turn, cause a decline in the market price of the equity securities issued by a REIT. Rising interest rates also generally increase the costs of obtaining financing, which could cause the value of investments in REITs to decline. During periods when interest rates are declining, mortgages are often refinanced. Refinancing may reduce the yield on investments in mortgage REITs. In addition, since REITs depend on payment under their mortgage loans and leases to generate cash to make distributions to their shareholders, investments in REITs may be adversely affected by defaults on such mortgage loans or leases.
Investing in certain REITs, which often have small market capitalizations, may also involve the same risks as investing in other small-capitalization issuers. REITs may have limited financial resources and their securities may trade less frequently and in limited volume and may be subject to more abrupt or erratic price movements than larger issuer securities. Historically, small capitalization stocks, such as REITs, have been more volatile in price than the larger capitalization stocks such as those included in the S&P 500® Index. The management of a REIT may be subject to conflicts of interest with respect to the operation of the business of the REIT and may be involved in real estate activities competitive with the REIT. REITs may own properties through joint ventures or in other circumstances in which the REIT may not have control over its investments. REITs may involve significant amounts of leverage.
Small- and Mid-Capitalization Issuers: Issuers with smaller market capitalizations, including small- and mid-capitalization issuers, may have limited product lines, markets, or financial resources, may lack the competitive strength of larger issuers, may have inexperienced managers or depend on a few key employees. In addition, their securities often are less widely held and trade less frequently and in lesser quantities, and their market prices are often more volatile, than the securities of issuers with larger market capitalizations. Issuers with smaller market capitalizations may include issuers with a limited operating history (unseasoned issuers). Investment decisions for these securities may place a greater emphasis on current or planned product lines and the reputation and experience of the issuer’s management and less emphasis on fundamental valuation factors than would be the case for more mature issuers. In addition, investments in unseasoned issuers are more speculative and entail greater risk than do investments in issuers with an established operating record. The liquidation of significant positions in small- and mid-capitalization issuers with limited trading volume, particularly in a distressed market, could be prolonged and result in investment losses.
Special Purpose Acquisition Companies: The Fund may invest in stock, rights, and warrants of special purpose acquisition companies (“SPACs”). Also known as a “blank check company,” a SPAC is a company with no commercial operations that is formed solely to raise capital from investors for the purpose of acquiring one or more existing private companies. The typical SPAC IPO involves the sale of units consisting of one share of common stock combined with one or more warrants or fractions of warrants to purchase common stock at a fixed price upon or after consummation of the acquisition. If the Fund purchases shares of a SPAC in an IPO, it will generally bear a sales commission, which may be significant. SPACs often have pre-determined time frames to make an acquisition after going public (typically two years) or the SPAC will liquidate, at which point invested funds are returned to the entity’s shareholders (less certain permitted expenses) and any rights or warrants issued by the SPAC expire worthless. Unless and until an acquisition is completed, a SPAC generally holds its assets in U.S. government securities, money market securities and cash. To the extent the SPAC holds cash or similar securities, this may impact the Fund’s ability to meet its investment objective. SPACs generally provide their investors with the option of redeeming an investment in the SPAC at or around the time of effecting an acquisition. In some cases, the Fund may forfeit its right to receive additional warrants or other interests in the SPAC if it redeems its interest in the SPAC in connection with an acquisition. SPACs are subject to increasing scrutiny, and potential legal challenges or regulatory developments may limit their effectiveness or prevalence. For example, the SEC recently adopted additional disclosure and other rules that apply to SPACs; it is impossible to predict the potential impact of these developments on the use of SPACs.
Because SPACs have no operating history or ongoing business other than seeking acquisitions, the value of a SPAC’s securities is particularly dependent on the ability of the entity’s management to identify and complete a favorable acquisition. Some SPACs may pursue acquisitions only within certain industries or regions, which may increase the volatility of their prices. At the time the Fund invests in a SPAC, there may be little or no basis for the Fund to evaluate the possible merits or risks of the particular industry in which the SPAC may ultimately operate or the target business which the SPAC may ultimately acquire. There is no guarantee that a SPAC in which the Fund invests will complete an acquisition or that any acquisitions that are completed will be profitable.
It is possible that a significant portion of the funds raised by a SPAC for the purpose of identifying and effecting an acquisition or merger may be expended during the search for a target transaction. Attractive acquisition or merger targets may become scarce if the number of SPACs seeking to acquire operating businesses increases. No market, or only a thinly traded market, for shares of or interests in a SPAC may develop, leaving the Fund unable to sell its interest in a SPAC or able to sell its interest only at a price below what the Fund believes is the SPAC security’s value. In addition, the Fund may be delayed in receiving any redemption or liquidation proceeds from a SPAC to which it is entitled, and an investment in a SPAC may be diluted by additional later offerings of interests in the SPAC or by other investors exercising existing rights to purchase shares of the SPAC. The values of investments in SPACs may be highly volatile and may depreciate significantly over time.
Special Situation Issuers: A special situation arises when, in the opinion of the manager, the securities of a particular issuer can be purchased at prices below the anticipated future value of the cash, securities or other consideration to be paid or exchanged for such securities solely by reason of a development applicable to that issuer and regardless of general business conditions or movements of the market
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as a whole. Developments creating special situations might include, among others: liquidations, reorganizations, recapitalizations, mergers, material litigation, technical breakthroughs, and new management or management policies. Investments in special situations often involve much greater risk than is inherent in ordinary investment securities, because of the high degree of uncertainty that can be associated with such events.
If a security is purchased in anticipation of a proposed transaction and the transaction later appears unlikely to be consummated or in fact is not consummated or is delayed, the market price of the security may decline sharply. There is typically asymmetry in the risk/reward payout of special situations strategies – the losses that can occur in the event of deal break-ups can far exceed the gains to be had if deals close successfully. The consummation of a proposed transaction can be prevented or delayed by a variety of factors, including regulatory and antitrust restrictions, political developments, industry weakness, stock specific events, failed financings, and general market declines. Certain special situation investments prevent ownership interest therein from being withdrawn until the special situation investment, or a portion thereof, is realized or deemed realized, which may negatively impact Fund performance.
Trust Preferred Securities: Trust preferred securities have the characteristics of both subordinated debt and preferred stock. Generally, trust preferred securities are issued by a trust that is wholly owned by a financial institution or other corporate entity, typically a bank holding company. The financial institution creates the trust and owns the trust’s common stocks, which may typically represent a small percentage of the trust’s capital structure. The remainder of the trust’s capital structure typically consists of trust preferred securities, which are sold to investors. The trust uses the sale proceeds of its common stocks to purchase subordinated debt instruments issued by the financial institution. The financial institution uses the proceeds from the sale of the subordinated debt instruments to increase its capital while the trust receives periodic interest payments from the financial institution for holding the subordinated debt instruments. The interests of the holders of the trust preferred securities are senior to those of common stockholders in the event that the financial institution is liquidated, although their interests are typically subordinated to those of other holders of other debt instruments issued by the financial institution. The primary advantage of this structure to the financial institution is that the trust preferred securities issued by the trust are treated by the financial institution as debt instruments for U.S. federal income tax purposes, the interest on which is generally a deductible expense for U.S. federal income tax purposes, and as equity for the calculation of capital requirements.
The trust uses interest payments it receives from the financial institution to make dividend payments to the holders of the trust preferred securities. Trust preferred securities typically bear a market rate coupon comparable to interest rates available on debt of a similarly rated issuer. Typical characteristics of trust preferred securities include long-term maturities, early redemption option by the issuer, and maturities at face value. Holders of trust preferred securities have limited voting rights to control the activities of the trust and no voting rights with respect to the financial institution. The market value of trust preferred securities may be more volatile than those of conventional debt instruments. Trust preferred securities may be issued in reliance on Rule 144A and subject to restrictions on resale. There can be no assurance as to the liquidity of trust preferred securities and the ability of holders to sell their holdings. The condition of the financial institution can be considered when seeking to identify the risks of trust preferred securities as the trust typically has no business operations other than to issue the trust preferred securities. If the financial institution defaults on interest payments to the trust, the trust will not be able to make dividend payments to holders of its securities.
DEBT INSTRUMENTS
Asset-Backed Securities: Asset-backed securities are securities backed by assets that may include such items as credit card and automobile finance receivables, home equity sharing agreements or loans, student loans, consumer loans, installment loan contracts, home equity loans, mobile home loans, boat loans, business and small business loans, project finance loans, airplane leases, and leases of various other types of real and personal property (including those relating to railcars, containers, or telecommunication, energy, and/or other infrastructure assets and infrastructure-related assets), and other non‑mortgage related income streams, such as income from renewable energy projects and franchise rights. Asset-backed securities are “pass-through” securities, meaning that principal and interest payments – net of expenses – made by the borrower on the underlying assets (such as credit card receivables) are passed through to the investor. The value of asset-backed securities based on debt instruments, like that of traditional debt instruments, typically increases when interest rates fall and decreases when interest rates rise. However, these asset-backed securities differ from traditional debt instruments because of their potential for prepayment. A home equity sharing agreement is an agreement between a financial services company and a homeowner which allows a homeowner to access some of the equity in their home in exchange for a specified equity stake in the property. Unlike a mortgage, a home equity sharing agreement is not a loan and does not require a monthly payment. Instead, at the conclusion of the agreement term, the homeowner pays back the equity advance and a percentage of any appreciation in the property value. The price paid for asset-backed securities, the yield expected from such securities and the average life of the securities are based on a number of factors, including the anticipated rate of prepayment of the underlying assets. In a period of declining interest rates, borrowers may prepay the underlying assets more quickly than anticipated, thereby reducing the yield to maturity and the average life of the asset-backed security. Moreover, when the proceeds of a prepayment are reinvested in these circumstances, a rate of interest will likely be received that is lower than the rate on the security that was prepaid. To the extent that asset-backed securities are purchased at a premium, prepayments may result in a loss to the extent of the premium paid. If such securities are bought at a discount, both scheduled payments and unscheduled prepayments generally will also result in the recognition of income. In a period of rising interest rates, prepayments of the underlying assets may occur at a slower than expected rate, creating maturity extension risk. This particular risk may effectively change a security that was considered short- or intermediate-term at the time of purchase into a longer term security. Since the value of longer-term asset-backed securities generally fluctuates more widely in response to changes in interest rates than the value of shorter term asset-backed securities maturity extension risk could increase volatility. When interest rates decline, the value of an asset-backed security with prepayment features may not increase as much as that of other debt instruments, and as noted above, changes in market rates of interest may accelerate or retard prepayments and thus affect maturities. During periods of deteriorating economic conditions, such as recessions or periods of rising unemployment, delinquencies and losses generally increase, sometimes dramatically, with respect to securitizations involving loans,
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sales contracts, receivables and other obligations underlying asset-backed securities. The effects of COVID-19, and governmental responses to the effects of the pandemic may result in increased delinquencies and losses and may have other, potentially unanticipated, adverse effects on such investments and the markets for those investments.
The credit quality of asset-backed securities depends primarily on the quality of the underlying assets, the rights of recourse available against the underlying assets and/or the issuer, the level of credit enhancement, if any, provided for the securities, and the credit quality of the credit-support provider, if any. The values of asset-backed securities may be affected by other factors, such as the availability of information concerning the pool of assets and its structure, the market’s perception of the asset backing the security, the creditworthiness of the servicing agent for the pool of assets, the originator of the underlying assets, or the entities providing the credit enhancement. The market values of asset-backed securities also can depend on the ability of their servicers to service the underlying assets and are, therefore, subject to risks associated with servicers’ performance. In some circumstances, a servicer’s or originator’s mishandling of documentation related to the underlying assets (e.g., failure to document a security interest in the underlying assets properly) may affect the rights of the security holders in and to the underlying assets. In addition, the insolvency of an entity that generated the assets underlying an asset-backed security is likely to result in a decline in the market price of that security as well as costs and delays. Asset-backed securities that do not have the benefit of a security interest in the underlying assets present certain additional risks that are not present with asset-backed securities that do have a security interest in the underlying assets. For example, many securities backed by credit card receivables are unsecured.
Collateralized Debt Obligations: Collateralized Debt Obligations (“CDOs”) are a type of asset-backed security and include collateralized bond obligations (“CBOs”), collateralized loan obligations (“CLOs”), and other similarly structured securities. A CBO is an obligation of a trust or other special purpose vehicle backed by a pool of bonds. A CLO is an obligation of a trust or other special purpose vehicle typically collateralized by a pool of loans, which may include senior secured and unsecured loans and subordinate corporate loans, including loans that may be rated below investment grade, or equivalent unrated loans. CDOs may incur management fees and administrative expenses.
For both CBOs and CLOs, the cash flows from the trust are split into two or more portions, called tranches, which vary in risk and yield. The riskier portions are the residual, equity, and subordinate tranches, which bear some or all of the risk of default by the debt instruments or loans in the trust, and therefore protect the other, more senior tranches from default in all but the most severe circumstances. Since they are partially protected from defaults, senior tranches of a CBO trust or CLO trust typically have higher ratings and lower yields than junior tranches. Despite the protection from the riskier tranches, senior CBO or CLO tranches can experience substantial losses due to actual defaults (including collateral default), the total loss of the riskier tranches due to losses in the collateral, market anticipation of defaults, fraud by the trust, and the illiquidity of CBO or CLO securities.
The risks of an investment in a CDO largely depend on the type of underlying collateral securities and the tranche in which there are investments. Typically, CBOs, CLOs, and other CDOs are privately offered and sold, and thus are not registered under the securities laws. As a result, investments in CDOs may be characterized as illiquid. CDOs are subject to the typical risks associated with debt instruments discussed elsewhere in this SAI and the Prospectus, including interest rate risk, prepayment and extension risk, credit risk, liquidity risk and market risk. Additional risks of CDOs include: (i) the possibility that distributions from collateral securities will be insufficient to make interest or other payments; (ii) the possibility that the quality of the collateral may decline in value or default, due to factors such as the availability of any credit enhancement, the level and timing of payments and recoveries on and the characteristics of the underlying collateral, remoteness of those collateral assets from the originator or transferor, the adequacy of and ability to realize upon any related collateral, and the capability of the servicer of the securitized assets; and (iii) market and liquidity risks affecting the price of a structured finance investment, if required to be sold, at the time of sale. In addition, due to the complex nature of a CDO, an investment in a CDO may not perform as expected. An investment in a CDO also is subject to the risk that the issuer and the investors may interpret the terms of the instrument differently, giving rise to disputes.
Bank Instruments: Bank instruments include certificates of deposit (“CDs”), fixed-time deposits, and other debt and deposit-type obligations (including promissory notes that earn a specified rate of return) issued by: (i) a U.S. branch of a U.S. bank; (ii) a non-U.S. branch of a U.S. bank; (iii) a U.S. branch of a non-U.S. bank; or (iv) a non-U.S. branch of a non-U.S. bank. Bank instruments may be structured as fixed-, variable- or floating-rate obligations.
CDs typically are interest-bearing debt instruments issued by banks and have maturities ranging from a few weeks to several years. Yankee dollar certificates of deposit are negotiable CDs issued in the United States by branches and agencies of non-U.S. banks. Eurodollar certificates of deposit are CDs issued by non-U.S. banks with interest and principal paid in U.S. dollars. Eurodollar and Yankee Dollar CDs typically have maturities of less than two years and have interest rates that typically are pegged to SOFR. Bankers’ acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are “accepted” by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on maturity. Bankers’ acceptances are a customary means of effecting payment for merchandise sold in import-export transactions and are a general source of financing. A fixed-time deposit is a bank obligation payable at a stated maturity date and bearing interest at a fixed rate. There are generally no contractual restrictions on the right to transfer a beneficial interest in a fixed-time deposit to a third party, although there is generally no market for such deposits. Typically, there are penalties for early withdrawals of time deposits. Promissory notes are written commitments of the maker to pay the payee a specified sum of money either on demand or at a fixed or determinable future date, with or without interest.
Certain bank instruments, such as some CDs, are insured by the FDIC up to certain specified limits. Many other bank instruments, however, are neither guaranteed nor insured by the FDIC or the U.S. government. These bank instruments are “backed” only by the creditworthiness of the issuing bank or parent financial institution. U.S. and non-U.S. banks are subject to different governmental regulation. They are subject to the risks of investing in the particular issuing bank and of investing in the banking and financial services sector generally.
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Certain obligations of non-U.S. banks, including Eurodollar and Yankee dollar obligations, involve different and/or heightened investment risks than those affecting obligations of U.S. banks, including, among others, the possibilities that: (i) their liquidity could be impaired because of political or economic developments; (ii) the obligations may be less marketable than comparable obligations of U.S. banks; (iii) a non-U.S. jurisdiction might impose withholding and other taxes at high levels on interest income; (iv) non-U.S. deposits may be seized or nationalized; (v) non-U.S. governmental restrictions such as exchange controls may be imposed, which could adversely affect the payment of principal and/or interest on those obligations; (vi) there may be less publicly available information concerning non-U.S. banks issuing the obligations; and (vii) the reserve requirements and accounting, auditing and financial reporting standards, practices and requirements applicable to non-U.S. banks may differ (including those that are less stringent) from those applicable to U.S. banks. Non-U.S. banks generally are not subject to examination by any U.S. government agency or instrumentality.
Commercial Paper: Commercial paper represents short-term unsecured promissory notes issued in bearer form by banks or bank holding companies, corporations and finance companies. Commercial paper may consist of U.S. dollar- or foreign currency-denominated obligations of U.S. or non-U.S. issuers, and may be rated or unrated. The rate of return on commercial paper may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies.
Section 4(a)(2) commercial paper is commercial paper issued in reliance on the so-called “private placement” exemption from registration afforded by Section 4(a)(2) of the 1933 Act (“Section 4(a)(2) paper”). Section 4(a)(2) paper is restricted as to disposition under the U.S. federal securities laws, and generally is sold to investors who agree that they are purchasing the paper for investment and not with a view to public distribution. Any resale by the purchaser must be in an exempt transaction. Section 4(a)(2) paper is normally resold to other investors through or with the assistance of the issuer or dealers who make a market in Section 4(a)(2) paper, thus providing liquidity.
Corporate Debt Instruments: Corporate debt instruments are long and short-term debt instruments typically issued by businesses to finance their operations. Corporate debt instruments are issued by public or private issuers, as distinct from debt instruments issued by a government or its agencies. The issuer of a corporate debt instrument typically has a contractual obligation to pay interest at a stated rate on specific dates and to repay principal periodically or on a specified maturity date. The broad category of corporate debt instruments includes debt issued by U.S. or non-U.S. issuers of all kinds, including those with small-, mid- and large-capitalizations. The category also includes bank loans, as well as assignments, participations and other interests in bank loans. Corporate debt instruments may be rated investment grade or below investment grade and may be structured as fixed-, variable or floating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered. They may also be senior or subordinated obligations. Because of the wide range of types and maturities of corporate debt instruments, as well as the range of creditworthiness of issuers, corporate debt instruments can have widely varying risk/return profiles.
Corporate debt instruments carry both credit risk and interest rate risk. Credit risk is the risk that an investor could lose money if the issuer of a corporate debt instrument is unable to pay interest or repay principal when it is due. Some corporate debt instruments that are rated below investment grade (commonly referred to as “junk bonds”) are generally considered speculative because they present a greater risk of loss, including default, than higher rated debt instruments. The credit risk of a particular issuer’s debt instrument may vary based on its priority for repayment. For example, higher-ranking (senior) debt instruments have a higher priority than lower ranking (subordinated) debt instruments. This means that the issuer might not make payments on subordinated debt instruments while continuing to make payments on senior debt instruments. In addition, in the event of bankruptcy, holders of higher-ranking senior debt instruments may receive amounts otherwise payable to the holders of more junior securities. The market value of corporate debt instruments may be expected to rise and fall inversely with interest rates generally. In general, corporate debt instruments with longer terms tend to fall more in value when interest rates rise than corporate debt instruments with shorter terms. The value of a corporate debt instrument may also be affected by supply and demand for similar or comparable securities in the marketplace. Fluctuations in the value of portfolio securities subsequent to their acquisition will not affect cash income from such securities but will be reflected in NAV. Corporate debt instruments generally trade in the over-the-counter market and can be less liquid that other types of investments, particularly during adverse market and economic conditions.
Credit-Linked Notes: Credit-linked notes are privately negotiated obligations whose returns are linked to the returns of one or more designated securities or other instruments that are referred to as “reference securities,” such as an emerging market bond. A credit-linked note typically is issued by a special purpose trust or similar entity and is a direct obligation of the issuing entity. The entity, in turn, invests in debt instruments or derivative contracts in order to provide the exposure set forth in the credit-linked note. The periodic interest payments and principal obligations payable under the terms of the note typically are conditioned upon the entity’s receipt of payments on its underlying investment. Purchasing a credit-linked note assumes the risk of the default or, in some cases, other declines in credit quality of the reference securities. There is also exposure to the issuer of the credit-linked note in the full amount of the purchase price of the note and the note is often not secured by the reference securities or other collateral.
The market for credit-linked notes may be or may become illiquid. The number of investors with sufficient understanding to support transacting in the notes may be quite limited, and may include only the parties to the original purchase/sale transaction. Changes in liquidity may result in significant, rapid and unpredictable changes in the value for credit-linked notes. In certain cases, a market price for a credit-linked note may not be available and it may be difficult to determine a fair value of the note.
Custodial Receipts and Trust Certificates: Custodial receipts and trust certificates, which may be underwritten by securities dealers or banks, represent interests in instruments held by a custodian or trustee. The instruments so held may include U.S. government securities or other types of instruments. The custodial receipts or trust certificates may evidence ownership of future interest payments, principal payments or both on the underlying instruments, or, in some cases, the payment obligation of a third party that has entered into an interest rate swap or other arrangement with the custodian or trustee. The holder of custodial receipts and trust certificates will bear its
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proportionate share of the fees and expenses charged to the custodial account or trust. There may also be investments in separately issued interests in custodial receipts and trust certificates. Custodial receipts may be issued in multiple tranches, representing different interests in the payment streams in the underlying instruments (including as to priority of payment).
In the event an underlying issuer fails to pay principal and/or interest when due, a holder could be required to assert its rights through the custodian bank, and assertion of those rights may be subject to delays, expenses, and risks that are greater than those that would have been involved if the holder had purchased a direct obligation of the issuer. In addition, in the event that the trust or custodial account in which the underlying instruments have been deposited is determined to be an association taxable as a corporation instead of a non-taxable entity, the yield on the underlying instruments would be reduced by the amount of any taxes paid.
Certain custodial receipts and trust certificates may be synthetic or derivative instruments that pay interest at rates that reset inversely to changing short-term rates and/or have embedded interest rate floors and caps that require the issuer to pay an adjusted interest rate if market rates fall below, or rise above, a specified rate. These instruments include inverse and range floaters. Because some of these instruments represent relatively recent innovations and the trading market for these instruments is less developed than the markets for traditional types of instruments, it is uncertain how these instruments will perform under different economic and interest-rate scenarios. Also, because these instruments may be leveraged, their market values may be more volatile than other types of instruments and may present greater potential for capital gain or loss, including potentially loss of the entire principal investment. The possibility of default by an issuer or the issuer’s credit provider may be greater for these derivative instruments than for other types of instruments. In some cases, it may be difficult to determine the fair value of a derivative instrument because of a lack of reliable objective information, and an established secondary market for some instruments may not exist. In many cases, the IRS has not ruled on the tax treatment of the interest or payments received on such derivative instruments.
Delayed Funding Loans and Revolving Credit Facilities: Delayed funding loans and revolving credit facilities are borrowing arrangements in which the lender agrees to make loans, up to a maximum amount, upon demand by the borrower during a specified term. A revolving credit facility differs from a delayed funding loan in that, as the borrower repays the loan, an amount equal to the repayment may be borrowed again during the term of the revolving credit facility (whereas, in the case of a delayed funding loan, such amounts may not be “re-borrowed”). Delayed funding loans and revolving credit facilities usually provide for floating or variable rates of interest. Agreeing to participate in a delayed fund loan or a revolving credit facility may have the effect of requiring an increased investment in an issuer at a time when such investment might not otherwise have been made (including at a time when the issuer’s financial condition makes it unlikely that such amounts will be repaid). To the extent that there is such a commitment to advancing additional funds, assets that are determined to be liquid by the Investment Adviser or the Sub-Adviser in accordance with procedures established by the Board will at times be segregated, in an amount sufficient to meet such commitments.
Delayed funding loans and revolving credit facilities may be subject to restrictions on transfer and only limited opportunities may exist to resell such instruments. As a result, such investments may not be sold at an opportune time or may have to be resold at less than fair market value.
Event-Linked Bonds: Event-linked exposure typically results in gains or losses depending on the occurrence of a specific “trigger” event, such as a hurricane, earthquake, or other physical or weather-related phenomena. Some event-linked bonds are commonly referred to as “catastrophe bonds.” They may be issued by government agencies, insurance companies, reinsurers, special purpose corporations or other on-shore or off-shore entities. If a trigger event causes losses exceeding a specific amount in the geographic region and time period specified in a bond, there may be a loss of a portion, or all, of the principal invested in the bond. If no trigger event occurs, the principal plus interest will be recovered. For some event-linked bonds, the trigger event or losses may be based on issuer-wide losses, index-portfolio losses, industry indices, or readings of scientific instruments rather than specified actual losses. Event-linked bonds often provide for extensions of maturity that are mandatory, or optional, at the discretion of the issuer, in order to process and audit loss claims in those cases where a trigger event has, or possibly has, occurred.
Floating or Variable Rate Instruments: Variable and floating rate instruments are a type of debt instrument that provides for periodic adjustments in the interest rate paid on the instrument. Variable rate instruments provide for the automatic establishment of a new interest rate on set dates, while floating rate instruments provide for an automatic adjustment in the interest rate whenever a specified interest rate changes. Variable rate instruments will be deemed to have a maturity equal to the period remaining until the next readjustment of the interest rate.
There is a risk that the current interest rate on variable and floating rate instruments may not accurately reflect current market interest rates or adequately compensate the holder for the current creditworthiness of the issuer. Some variable or floating rate instruments are structured with liquidity features such as: (1) put options or tender options that permit holders (sometimes subject to conditions) to demand payment of the unpaid principal balance plus accrued interest from the issuers or certain financial intermediaries; or (2) auction rate features, remarketing provisions, or other maturity-shortening devices designed to enable the issuer to refinance or redeem outstanding debt instruments (market-dependent liquidity features). The market-dependent liquidity features may not operate as intended as a result of the issuer’s declining creditworthiness, adverse market conditions, or other factors or the inability or unwillingness of a participating broker-dealer to make a secondary market for such instruments. As a result, variable or floating rate instruments that include market-dependent liquidity features may lose value and the holders of such instruments may be required to retain them for an extended period of time or indefinitely.
Generally, changes in interest rates will have a smaller effect on the market value of variable and floating rate instruments than on the market value of comparable debt instruments. Thus, investing in variable and floating rate instruments generally allows less potential for capital appreciation and depreciation than investing in comparable debt instruments.
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Guaranteed Investment Contracts: Guaranteed Investment Contracts (“GICs”) are issued by insurance companies. An insurance company issuing a GIC typically agrees, in return for the purchase price of the contract, to pay interest at an agreed upon rate (which may be a fixed or variable rate) and to repay principal. GICs typically guarantee that the interest rate will not be less than a certain minimum rate. The insurance company may assess periodic charges against a GIC for expense and service costs allocable to it, and the charges will be deducted from the value of the deposit fund. A GIC is a general obligation of the issuing insurance company and not a separate account. The purchase price paid for a GIC becomes part of the general assets of the insurance company, and the contract is paid from the insurance company’s general assets. Generally, a GIC is not assignable or transferable without the permission of the issuing insurance company, and an active secondary market in GICs does not currently exist. In addition, the issuer may not be able to pay the principal amount to the Fund on seven days’ notice or less, at which time the investment may be considered illiquid securities. GICs are not backed by the U.S. government nor are they insured by the FDIC. GICs are generally guaranteed only by the insurance companies that issue them.
High-Yield Securities: High-yield securities (commonly referred to as “junk bonds”) are debt instruments that are rated below investment grade. Investing in high-yield securities involves special risks in addition to the risks associated with investments in higher rated debt instruments. While investments in high-yield securities generally provide greater income and increased opportunity for capital appreciation than investments in higher quality securities, investments in high-yield securities typically entail greater price volatility as well as principal and income risk. High-yield securities are regarded as predominantly speculative with respect to the issuer’s continuing ability to meet principal and interest payments. Analysis of the creditworthiness of issuers of high-yield securities may be more complex than for issuers of higher quality debt instruments.
High-yield securities may be more susceptible to real or perceived adverse economic and competitive industry conditions than investment grade securities. The prices of high-yield securities are likely to be sensitive to adverse economic downturns or individual corporate developments. A projection of an economic downturn or of a period of rising interest rates, for example, could cause a decline in high-yield security prices because the advent of a recession could lessen the ability of a highly leveraged issuer to make principal and interest payments on its debt instruments. If an issuer of high-yield securities defaults, in addition to risking payment of all or a portion of interest and principal, additional expenses to seek recovery may be incurred.
The secondary market on which high-yield securities are traded may be less liquid than the market for higher grade securities. Less liquidity in the secondary trading market could adversely affect the price at which a high-yield security could be sold, and could adversely affect daily NAV. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high-yield securities, especially in a thinly traded market. When secondary markets for high-yield securities are less liquid than the market for higher grade securities, it may be more difficult to value lower rated securities because such valuation may require more research, and elements of judgment may play a greater role in the valuation because there is less reliable, objective data available.
Credit ratings issued by credit rating agencies are designed to evaluate the safety of principal and interest payments of rated securities. They do not, however, evaluate the market value risk of lower-quality securities and, therefore, may not fully reflect the true risks of an investment. In addition, credit rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the condition of the issuer that affect the market value of the securities. Consequently, credit ratings are used only as a preliminary indicator of investment quality. Each credit rating agency applies its own methodology in measuring creditworthiness and uses a specific rating scale to publish its ratings. For more information on credit agency ratings, please see Appendix A. Furthermore, high-yield debt instruments may not be registered under the 1933 Act, and, unless so registered, the Fund will not be able to sell such high-yield debt instruments except pursuant to an exemption from registration under the 1933 Act. This may further limit the Fund's ability to sell high-yield debt instruments or to obtain the desired price for such securities.
Special tax considerations are associated with investing in high-yield securities structured as zero-coupon or pay-in-kind instruments. Income accrues on these instruments prior to the receipt of cash payments, which income must be distributed to shareholders when it accrues, potentially requiring the liquidation of other investments, including at times when such liquidation may not be advantageous, in order to comply with the distribution requirements applicable to RICs under the Code.
Inflation-Indexed Bonds: Inflation-indexed bonds are debt instruments whose principal and/or interest value are adjusted periodically according to a rate of inflation (usually a consumer price index). Two structures are most common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the inflation accruals as part of a semi-annual coupon.
U.S. Treasury Inflation Protected Securities (“TIPS”) currently are issued with maturities of five, ten, or thirty years, although it is possible that bonds with other maturities will be issued in the future. The principal amount of TIPS adjusts for inflation, although the inflation-adjusted principal is not paid until maturity. Semi-annual coupon payments are determined as a fixed percentage of the inflation-adjusted principal at the time the payment is made.
If the rate measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these bonds (calculated with respect to a smaller principal amount) will be reduced. At maturity, TIPS are redeemed at the greater of their inflation-adjusted principal or at the par amount at original issue. If an inflation-indexed bond does not provide a guarantee of principal at maturity, the adjusted principal value of the bond repaid at maturity may be less than the original principal.
The value of inflation-indexed bonds is expected to change in response to changes in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. For example, if inflation were to rise at a faster rate than nominal interest rates, real interest rates would likely decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal interest rates increase at a faster rate than inflation, real interest rates would likely rise, leading to a decrease in value of inflation-indexed bonds.
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While these bonds, if held to maturity, are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If nominal interest rates rise due to reasons other than inflation (for example, due to an expansion of non-inflationary economic activity), investors in these bonds may not be protected to the extent that the increase in rates is not reflected in the bond’s inflation measure.
The inflation adjustment of TIPS is tied to the Consumer Price Index for Urban Consumers (“CPI-U”), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of price changes in the cost of living, made up of components such as housing, food, transportation, and energy.
Other issuers of inflation-protected bonds include other U.S. government agencies or instrumentalities, corporations, and foreign governments. There can be no assurance that the CPI-U or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will be correlated to the rate of inflation in the United States. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these bonds may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.
Any increase in principal for an inflation-protected bond resulting from inflation adjustments is considered to be taxable income in the year it occurs. For direct holders of inflation-protected bonds, this means that taxes must be paid on principal adjustments even though these amounts are not received until the bond matures. Similarly, with respect to inflation-protected instruments held by the Fund, both interest income and the income attributable to principal adjustments must currently be distributed to shareholders in the form of cash or reinvested shares.
Inverse Floating Rate Securities: Inverse floaters have variable interest rates that typically move in the opposite direction from movements in prevailing interest rates, most often short-term rates. Accordingly, the values of inverse floaters, or other instruments or certificates structured to have similar features, generally move in the opposite direction from interest rates. The value of an inverse floater can be considerably more volatile than the value of other debt instruments of comparable maturity and quality. Inverse floaters incorporate varying degrees of leverage. Generally, greater leverage results in greater price volatility for any given change in interest rates. Inverse floaters may be subject to legal or contractual restrictions on resale and therefore may be less liquid than other types of instruments.
LIBOR Transition and Reference Benchmarks: The London Interbank Offered Rate was the offered rate for short-term Eurodollar deposits between major international banks. The terms of investments, financings or other transactions (including certain derivatives transactions) to which the Fund may be a party, have historically been tied to LIBOR. In connection with the global transition away from LIBOR led by regulators and market participants, LIBOR was last published on a representative basis at the end of June 2023. Alternative reference rates to LIBOR have been established in most major currencies and markets in these new rates are continuing to develop. The transition away from LIBOR to the use of replacement rates has gone relatively smoothly but the full impact of the transition on the Fund or the financial instruments in which the Fund invests cannot yet be fully determined.
In addition, interest rates or other types of rates and indices which are classed as “benchmarks” have been the subject of ongoing national and international regulatory reform, including under the EU regulation on indices used as benchmarks in financial instruments and financial contracts (known as the “Benchmarks Regulation”). The Benchmarks Regulation has been enacted into UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended), subject to amendments made by the Benchmarks (Amendment and Transitional Provision) (EU Exit) Regulations 2019 (SI 2019/657) and other statutory instruments. Following the implementation of these reforms, the manner of administration of benchmarks has changed and may further change in the future, with the result that relevant benchmarks may perform differently than in the past, the use of benchmarks that are not compliant with the new standards by certain supervised entities may be restricted, and certain benchmarks may be eliminated entirely. Such changes could cause increased market volatility and disruptions in liquidity for instruments that rely on or are impacted by such benchmarks. Additionally, there could be other consequences which cannot be predicted.
Mortgage-Related Securities: Mortgage-related securities are interests in pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Pools of mortgage loans are assembled as securities for sale to investors by various governmental, government-related and private organizations. There may also be investments in debt instruments which are secured with collateral consisting of mortgage-related securities (see “Collateralized Mortgage Obligations”).
Financial downturns (particularly an increase in delinquencies and defaults on residential mortgages, falling home prices, and unemployment) may adversely affect the market for mortgage-related securities. Many so-called sub-prime mortgage pools become distressed during periods of economic distress and may trade at significant discounts to their face value during such periods. In addition, various market and governmental actions may impair the ability to foreclose on or exercise other remedies against underlying mortgage holders, or may reduce the amount received upon foreclosure. These factors may cause certain mortgage-related securities to experience lower valuations and reduced liquidity. There is also no assurance that the U.S. government will take further action to support the mortgage-related securities industry, as it has in the past, should the economy experience another downturn. Further, legislative action and any future government actions may significantly alter the manner in which the mortgage-related securities market functions. Each of these factors could ultimately increase the risk of losses on mortgage-related securities.
Mortgage Pass-Through Securities: Interests in pools of mortgage-related securities differ from other forms of debt instruments, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a “pass-through” of the monthly payments made by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale
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of the underlying property, refinancing or foreclosure, net of fees or costs which may be incurred. Some mortgage-related securities (such as securities issued by GNMA) are described as “modified pass-through.” These securities entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment.
The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. To the extent that unanticipated rates of pre-payment on underlying mortgages increase the effective duration of a mortgage-related security, the volatility of such security can be expected to increase. The residential mortgage market in the United States has in the past experienced difficulties that may adversely affect the performance and market value of certain mortgage-related investments. Delinquencies and losses on residential mortgage loans (especially subprime and second-lien mortgage loans) generally have increased in the past and may continue to increase, and a decline in or flattening of housing values (as has occurred in the past and which may continue to occur in many housing markets) may exacerbate such delinquencies and losses. Borrowers with adjustable rate mortgage loans are more sensitive to changes in interest rates, which affect their monthly mortgage payments, and may be unable to secure replacement mortgages at comparably low interest rates. Also, a number of residential mortgage loan originators have experienced serious financial difficulties or bankruptcy. Due largely to the foregoing, reduced investor demand for mortgage loans and mortgage-related securities and increased investor yield requirements have caused limited liquidity in the secondary market for certain mortgage-related securities, which can adversely affect the market value of mortgage-related securities. It is possible that such limited liquidity in such secondary markets could continue or worsen.
Adjustable Rate Mortgage-Backed Securities: Adjustable rate mortgage-backed securities (“ARM MBSs”) have interest rates that reset at periodic intervals. Acquiring ARM MBSs permits participation in increases in prevailing current interest rates through periodic adjustments in the coupons of mortgages underlying the pool on which ARM MBSs are based. Such ARM MBSs generally have higher current yield and lower price fluctuations than is the case with more traditional debt instruments of comparable rating and maturity. In addition, when prepayments of principal are made on the underlying mortgages during periods of rising interest rates, there can be reinvestment in the proceeds of such prepayments at rates higher than those at which they were previously invested. Mortgages underlying most ARM MBSs, however, have limits on the allowable annual or lifetime increases that can be made in the interest rate that the mortgagor pays. Therefore, if current interest rates rise above such limits over the period of the limitation, there is no benefit from further increases in interest rates. Moreover, when interest rates are in excess of coupon rates (i.e., the rates being paid by mortgagors) of the mortgages, ARM MBSs behave more like debt instruments and less like adjustable rate debt instruments and are subject to the risks associated with debt instruments. In addition, during periods of rising interest rates, increases in the coupon rate of adjustable rate mortgages generally lag current market interest rates slightly, thereby creating the potential for capital depreciation on such securities.
Agency Mortgage-Related Securities: The principal governmental guarantor of mortgage-related securities is GNMA. GNMA is a wholly owned U.S. government corporation within the Department of Housing and Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the U.S. government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of mortgages insured by the Federal Housing Administration (the “FHA”), or guaranteed by the Department of Veterans Affairs (the “VA”). Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. government) include FNMA and FHLMC. FNMA is a government-sponsored corporation. FNMA purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved sellers/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks and credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA, but are not backed by the full faith and mortgage credit for residential housing. It is a government-sponsored corporation that issues Participation Certificates (“PCs”), which are pass-through securities, each representing an undivided interest in a pool of residential mortgages. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the U.S. government.
On September 6, 2008, the Federal Housing Finance Agency (“FHFA”) placed FNMA and FHLMC into conservatorship. As the conservator, FHFA succeeded to all rights, titles, powers and privileges of FNMA and FHLMC and of any stockholder, officer or director of FNMA and FHLMC with respect to FNMA and FHLMC and the assets of FNMA and FHLMC. FHFA selected a new chief executive officer and chairman of the board of directors for each of FNMA and FHLMC.
FNMA and FHLMC are continuing to operate as going concerns while in conservatorship and each remain liable for all of its obligations, including its guaranty obligations, associated with its mortgage-backed securities. The Senior Preferred Stock Purchase Agreement is intended to enhance each of FNMA’s and FHLMC’s ability to meet its obligations. The FHFA has indicated that the conservatorship of each enterprise will end when the director of FHFA determines that FHFA’s plan to restore the enterprise to a safe and solvent condition has been completed.
Under the Federal Housing Finance Regulatory Reform Act of 2008 (the “Reform Act”), which was included as part of the Housing and Economic Recovery Act of 2008, FHFA, as conservator or receiver, has the power to repudiate any contract entered into by FNMA or FHLMC prior to FHFA’s appointment as conservator or receiver, as applicable, if FHFA determines, in its sole discretion, that performance of the contract is burdensome and that repudiation of the contract promotes the orderly administration of FNMA’s or FHLMC’s affairs. The Reform Act requires FHFA to exercise its right to repudiate any contract within a reasonable period of time after its appointment as conservator or receiver.
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FHFA, in its capacity as conservator, has indicated that it has no intention to repudiate the guaranty obligations of FNMA or FHLMC because FHFA views repudiation as incompatible with the goals of the conservatorship. However, in the event that FHFA, as conservator or if it is later appointed as receiver for FNMA or FHLMC, were to repudiate any such guaranty obligation, the conservatorship or receivership estate, as applicable, would be liable for actual direct compensatory damages in accordance with the provisions of the Reform Act. Any such liability could be satisfied only to the extent of FNMA’s or FHLMC’s assets available therefor.
In the event of repudiation, the payments of interest to holders of FNMA or FHLMC mortgage-backed securities would be reduced if payments on the mortgage loans represented in the mortgage loan groups related to such mortgage-backed securities are not made by the borrowers or advanced by the servicer. Any actual direct compensatory damages for repudiating these guaranty obligations may not be sufficient to offset any shortfalls experienced by such mortgage-backed security holders.
Further, in its capacity as conservator or receiver, FHFA has the right to transfer or sell any asset or liability of FNMA or FHLMC without any approval, assignment or consent. Although FHFA has stated that it has no present intention to do so, if FHFA, as conservator or receiver, were to transfer any such guaranty obligation to another party, holders of FNMA or FHLMC mortgage-backed securities would have to rely on that party for satisfaction of the guaranty obligation and would be exposed to the credit risk of that party.
In addition, certain rights provided to holders of mortgage-backed securities issued by FNMA and FHLMC under the operative documents related to such securities may not be enforced against FHFA, or enforcement of such rights may be delayed, during the conservatorship or any future receivership. The operative documents for FNMA and FHLMC mortgage-backed securities may provide (or with respect to securities issued prior to the date of the appointment of the conservator may have provided) that upon the occurrence of an event of default on the part of FNMA or FHLMC, in its capacity as guarantor, which includes the appointment of a conservator or receiver, holders of such mortgage-backed securities have the right to replace FNMA or FHLMC as trustee if the requisite percentage of mortgage-backed securities holders consent. The Reform Act prevents mortgage-backed security holders from enforcing such rights if the event of default arises solely because a conservator or receiver has been appointed. The Reform Act also provides that no person may exercise any right or power to terminate, accelerate or declare an event of default under certain contracts to which FNMA or FHLMC is a party, or obtain possession of or exercise control over any property of FNMA or FHLMC, or affect any contractual rights of FNMA or FHLMC, without the approval of FHFA, as conservator or receiver, for a period of 45 or 90 days following the appointment of FHFA as conservator or receiver, respectively.
To the extent third party entities involved with mortgage-backed securities issued by private issuers are involved in litigation relating to the securities, actions may be taken that are adverse to the interests of holders of the mortgage-backed securities, including the Fund. For example, third parties may seek to withhold proceeds due to holders of the mortgage-related securities, including the Fund, to cover legal or related costs. Any such action could result in losses to the Fund.
Collateralized Mortgage Obligations: Collateralized Mortgage Obligations (“CMOs”) are debt obligations of a legal entity that are collateralized by mortgages and divided into classes. Similar to a bond, interest and prepaid principal is paid, in most cases, on a monthly basis. CMOs may be collateralized by whole mortgage loans or private mortgage bonds, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams. The issuer of a series of mortgage pass-through securities may elect to be treated as a REMIC. REMICs include governmental and/or private entities that issue a fixed pool of mortgages secured by an interest in real property. REMICs are similar to CMOs in that they issue multiple classes of securities, but unlike CMOs, which are required to be structured as debt instruments, REMICs may be structured as indirect ownership interests in the underlying assets of the REMICs themselves. Although CMOs and REMICs differ in certain respects, characteristics of CMOs described below apply in most cases to REMICs as well.
CMOs are structured into multiple classes, often referred to as “tranches,” with each class bearing a different stated maturity and entitled to a different schedule for payments of principal and interest, including pre-payments. Actual maturity and average life will depend upon the pre-payment experience of the collateral. In the case of certain CMOs (known as “sequential pay” CMOs), payments of principal received from the pool of underlying mortgages, including pre-payments, are applied to the classes of CMOs in the order of their respective final distribution dates. Thus, no payment of principal will be made to any class of sequential pay CMOs until all other classes having an earlier final distribution date have been paid in full.
As CMOs have evolved, some classes of CMO bonds have become more common. For example, there may be investments in parallel-pay and planned amortization class (“PAC”) CMOs and multi-class pass-through certificates. Parallel-pay CMOs and multi-class pass-through certificates are structured to provide payments of principal on each payment date to more than one class. These simultaneous payments are taken into account in calculating the stated maturity date or final distribution date of each class, which, as with other CMO and multi-class pass-through structures, must be retired by its stated maturity date or final distribution date but may be retired earlier. PACs generally require payments of a specified amount of principal on each payment date. PACs are parallel-pay CMOs with the required principal amount on such securities having the highest priority after interest has been paid to all classes. Any CMO or multi-class pass through structure that includes PAC securities must also have support tranches—known as support bonds, companion bonds or non-PAC bonds—which lend or absorb principal cash flows to allow the PAC securities to maintain their stated maturities and final distribution dates within a range of actual prepayment experience. These support tranches are subject to a higher level of maturity risk compared to other mortgage-related securities, and usually provide a higher yield to compensate investors. If principal cash flows are received in amounts outside a pre-determined range such that the support bonds cannot lend or absorb sufficient cash flows to the PAC securities as intended, the PAC securities are subject to heightened maturity risk. A manager may invest in various tranches of CMO bonds, including support bonds.
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CMO Residuals: CMO residuals are mortgage securities issued by agencies or instrumentalities of the U.S. government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.
The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses and any management fee of the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and the pre-payment experience on the mortgage assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to pre-payments on the related underlying mortgage assets, in the same manner as an interest-only (“IO”) class of stripped mortgage-backed securities. See “Mortgage-Related Securities—Stripped Mortgage-Backed Securities.” In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in certain circumstances, the initial investment in a CMO residual may never be fully recouped.
CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. Transactions in CMO residuals are generally completed only after careful review of the characteristics of the securities in question. In addition, CMO residuals may, or pursuant to an exemption therefrom may not, have been registered under the 1933 Act. CMO residuals, whether or not registered under the 1933 Act, may be subject to certain restrictions on transferability.
Commercial Mortgage-Backed Securities: Commercial mortgage-backed securities include securities that reflect an interest in, and are secured by, mortgage loans on commercial real property. Many of the risks of investing in commercial mortgage-backed securities reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants. Commercial mortgage-backed securities may be less liquid and exhibit greater price volatility than other types of mortgage- or asset-backed securities.
Reverse Mortgage-Related Securities and Other Mortgage-Related Securities: Reverse mortgage-related securities and other mortgage-related securities include securities other than those described above that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property, including mortgage dollar rolls, or stripped mortgage-backed securities (“SMBS”). Other mortgage-related securities may be equity or debt instruments issued by agencies or instrumentalities of the U.S. government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks, partnerships, trusts and special purpose entities of the foregoing.
Mortgage-related securities include, among other things, securities that reflect an interest in reverse mortgages. In a reverse mortgage, a lender makes a loan to a homeowner based on the homeowner’s equity in his or her home. While a homeowner must be age 62 or older to qualify for a reverse mortgage, reverse mortgages may have no income restrictions. Repayment of the interest or principal for the loan is generally not required until the homeowner dies, sells the home, or ceases to use the home as his or her primary residence.
There are three general types of reverse mortgages: (1) single-purpose reverse mortgages, which are offered by certain state and local government agencies and nonprofit organizations; (2) federally-insured reverse mortgages, which are backed by the U.S. Department of Housing and Urban Development; and (3) proprietary reverse mortgages, which are privately offered loans. A mortgage-related security may be backed by a single type of reverse mortgage. Reverse mortgage-related securities include agency and privately issued mortgage-related securities. The principal government guarantor of reverse mortgage-related securities is GNMA.
Reverse mortgage-related securities may be subject to risks different than other types of mortgage-related securities due to the unique nature of the underlying loans. The date of repayment for such loans is uncertain and may occur sooner or later than anticipated. The timing of payments for the corresponding mortgage-related security may be uncertain. Because reverse mortgages are offered only to persons 62 and older and there may be no income restrictions, the loans may react differently than traditional home loans to market events.
Stripped Mortgage-Backed Securities: SMBS are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.
SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the “IO class”), while the other class will receive all of the principal (the principal-only or “PO class”). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including pre-payments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on a yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated pre-payments of principal, there may be failure to recoup some or all of the initial investment in these securities even if the security is in one of the highest rating categories.
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Privately Issued Mortgage-Related Securities: Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such issuers may be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools created by such non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government or agency guarantees of payments in the former pools. However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit, which may be issued by governmental entities or private insurers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security meets certain investment quality standards. There can be no assurance that insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. Mortgage-related securities without insurance or guarantees may be bought if, through an examination of the loan experience and practices of the originators/servicers and poolers, the Investment Adviser or Sub-Adviser determines that the securities meet certain quality standards. Securities issued by certain private organizations may not be readily marketable.
Privately issued mortgage-related securities are not subject to the same underwriting requirements for the underlying mortgages that are applicable to those mortgage-related securities that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying privately issued mortgage-related securities may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. Mortgage pools underlying privately issued mortgage-related securities more frequently include second mortgages, high loan-to-value ratio mortgages and manufactured housing loans, in addition to commercial mortgages and other types of mortgages where a government or government sponsored entity guarantee is not available. The coupon rates and maturities of the underlying mortgage loans in a privately-issued mortgage-related securities pool may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime mortgage loans. Subprime loans are loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their loans. For these reasons, the loans underlying these securities have had in many cases higher default rates than those loans that meet government underwriting requirements.
The risk of non-payment is greater for mortgage-related securities that are backed by loans that were originated under weak underwriting standards, including loans made to borrowers with limited means to make repayment. A level of risk exists for all loans, although, historically, the poorest performing loans have been those classified as subprime. Other types of privately issued mortgage-related securities, such as those classified as pay-option adjustable rate or Alt-A have also performed poorly. Even loans classified as prime have experienced higher levels of delinquencies and defaults. Market factors that may adversely affect mortgage loan repayment include adverse economic conditions, unemployment, a decline in the value of real property, or an increase in interest rates.
Privately issued mortgage-related securities are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, mortgage-related securities may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans.
Privately issued mortgage-related securities are originated, packaged and serviced by third party entities. It is possible that these third parties could have interests that are in conflict with the holders of mortgage-related securities, and such holders could have rights against the third parties or their affiliates. For example, if a loan originator, servicer or its affiliates engaged in negligence or willful misconduct in carrying out its duties, then a holder of the mortgage-related security could seek recourse against the originator/servicer or its affiliates, as applicable. Also, as a loan originator/servicer, the originator/servicer or its affiliates may make certain representations and warranties regarding the quality of the mortgages and properties underlying a mortgage-related security. If one or more of those representations or warranties is false, then the holders of the mortgage-related securities could trigger an obligation of the originator/servicer or its affiliates, as applicable, to repurchase the mortgages from the issuing trust. Notwithstanding the foregoing, many of the third parties that are legally bound by trust and other documents have failed to perform their respective duties, as stipulated in such trust and other documents, and investors have had limited success in enforcing terms.
Mortgage-related securities that are issued or guaranteed by the U.S. government, its agencies or instrumentalities, are not subject to the investment restrictions related to industry concentration by virtue of the exclusion from that test available to all U.S. government securities. The assets underlying such securities may be represented by a portfolio of residential or commercial mortgages (including both whole mortgage loans and mortgage participation interests that may be senior or junior in terms of priority of repayment) or portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured or guaranteed by the FHA or the VA. In the case of privately issued mortgage-related securities whose underlying assets are neither U.S. government securities nor U.S. government-insured mortgages, to the extent that real properties securing such assets may be located in the same geographical region, the security may be subject to a greater risk of default than other comparable securities in the event of adverse economic, political or business developments that may affect such region and, ultimately, the ability of residential homeowners to make payments of principal and interest on the underlying mortgages.
Tiered Index Bonds: Tiered index bonds are relatively new forms of mortgage-related securities. The interest rate on a tiered index bond is tied to a specified index or market rate. So long as this index or market rate is below a predetermined “strike” rate, the interest rate on the tiered index bond remains fixed. If, however, the specified index or market rate rises above the “strike” rate, the interest rate of the tiered index bond will decrease. Thus, under these circumstances, the interest rate on a tiered index bond, like an inverse floater, will move in the opposite direction of prevailing interest rates, with the result that the price of the tiered index bond may be considerably more volatile than that of a fixed-rate bond.
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Municipal Securities: Municipal securities are debt instruments issued by state and local governments, municipalities, territories and possessions of the United States, regional government authorities, and their agencies and instrumentalities of states, and multi-state agencies or authorities, the interest of which, in the opinion of bond counsel to the issuer at the time of issuance, is exempt from U.S. federal income tax. Municipal securities include both notes (which have maturities of less than one (1) year) and bonds (which have maturities of one (1) year or more) that bear fixed or variable rates of interest.
In general, municipal securities are issued to obtain funds for a variety of public purposes such as the construction, repair, or improvement of public facilities including airports, bridges, housing, hospitals, mass transportation, schools, streets, water and sewer works. Municipal securities may be issued to refinance outstanding obligations as well as to raise funds for general operating expenses and lending to other public institutions and facilities.
The two principal classifications of municipal securities are “general obligation” securities and “revenue” securities. General obligation securities are obligations secured by the issuer’s pledge of its full faith, credit, and taxing power for the payment of principal and interest. Characteristics and methods of enforcement of general obligation bonds vary according to the law applicable to a particular issuer, and the taxes that can be levied for the payment of debt instruments may be limited or unlimited as to rates or amounts of special assessments. Revenue securities are payable only from the revenues derived from a particular facility, a class of facilities or, in some cases, from the proceeds of a special excise tax. Revenue bonds are issued to finance a wide variety of capital projects including, among others: electric, gas, water, and sewer systems; highways, bridges, and tunnels; port and airport facilities; colleges and universities; and hospitals. Conditions in those sectors may affect the overall municipal securities markets.
Some longer-term municipal bonds give the investor the right to “put” or sell the security at par (face value) to the issuer within a specified number of days following the investor’s request. This demand feature enhances a security’s liquidity by shortening its effective maturity and enables it to trade at a price equal to or very close to par. If a demand feature terminates prior to being exercised, the longer-term securities still held could experience substantially more volatility.
Insured municipal debt involves scheduled payments of interest and principal guaranteed by a private, non-governmental or governmental insurance company. The insurance does not guarantee the market value of the municipal debt or the value of the shares.
Municipal securities are subject to credit and market risk. Generally, prices of higher quality issues tend to fluctuate less with changes in market interest rates than prices of lower quality issues and prices of longer maturity issues tend to fluctuate more than prices of shorter maturity issues. The secondary market for municipal bonds typically has been less liquid than that for taxable debt instruments, and this may affect the Fund’s ability to sell particular municipal bonds at then-current market prices, especially in periods when other investors are attempting to sell the same securities.
Prices and yields on municipal bonds are dependent on a variety of factors, including general money-market conditions, the financial condition of the issuer, general conditions of the municipal bond market, the size of a particular offering, the maturity of the obligation and the rating of the issue. A number of these factors, including the ratings of particular issues, are subject to change from time to time. Information about the financial condition of an issuer of municipal bonds may not be as extensive as that which is made available by corporations whose securities are publicly traded.
Securities, including municipal securities, are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the federal Bankruptcy Code (including special provisions related to municipalities and other public entities), and laws, if any, that may be enacted by Congress or state legislatures extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations. There is also the possibility that, as a result of litigation or other conditions, the power, ability or willingness of issuers to meet their obligations for the payment of interest and principal on their municipal securities may be materially affected or their obligations may be found to be invalid or unenforceable. Such litigation or conditions may from time to time have the effect of introducing uncertainties in the market for municipal securities or certain segments thereof, or of materially affecting the credit risk with respect to particular securities. Adverse economic, business, legal or political developments might affect all or a substantial portion of the Fund’s municipal securities in the same manner.
From time to time, proposals have been introduced before Congress that, if enacted, would have the effect of restricting or eliminating the U.S. federal income tax exemption for interest on debt instruments issued by states and their political subdivisions. U.S. federal tax laws limit the types and amounts of tax-exempt bonds issuable for certain purposes, especially industrial development bonds and private activity bonds. Such limits may affect the future supply and yields of these types of municipal securities. Further proposals limiting the issuance of municipal securities may well be introduced in the future.
Industrial Development and Pollution Control Bonds: Industrial development bonds and pollution control bonds, which in most cases are revenue bonds and generally are not payable from the unrestricted revenues of an issuer, are issued by or on behalf of public authorities to raise money to finance privately operated facilities for business, manufacturing, housing, sport complexes, and pollution control. The principal security for these bonds is generally the net revenues derived from a particular facility, group of facilities, or in some cases, the proceeds of a special excise tax or other specific revenue sources. Consequently, the credit quality of these securities is dependent upon the ability of the user of the facilities financed by the bonds and any guarantor to meet its financial obligations.
Moral Obligation Securities: Moral obligation securities are usually issued by special purpose public authorities. A moral obligation security is a type of state issued municipal bond which is backed by a moral, not a legal, obligation. If the issuer of a moral obligation security cannot fulfill its financial responsibilities from current revenues, it may draw upon a reserve fund, the restoration of which is a moral commitment, but not a legal obligation, of the state or municipality that created the issuer.
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Municipal Lease Obligations and Certificates of Participation: Municipal lease obligations and participations in municipal leases are undivided interests in an obligation in the form of a lease or installment purchase or conditional sales contract which is issued by a state, local government, or a municipal financing corporation to acquire land, equipment, and/or facilities (collectively hereinafter referred to as “Lease Obligations”). Generally Lease Obligations do not constitute general obligations of the municipality for which the municipality’s taxing power is pledged. Instead, a Lease Obligation is ordinarily backed by the municipality’s covenant to budget for, appropriate, and make the payments due under the Lease Obligation. As a result of this structure, Lease Obligations are generally not subject to state constitutional debt limitations or other statutory requirements that may apply to other municipal securities.
Lease Obligations may contain “non-appropriation” clauses, which provide that the municipality has no obligation to make lease or installment purchase payments in future years unless money is appropriated for that purpose on a yearly basis. If the municipality does not appropriate in its budget enough to cover the payments on the Lease Obligation, the lessor may have the right to repossess and relet the property to another party. Depending on the property subject to the lease, the value of the property may not be sufficient to cover the debt.
In addition to the risk of “non-appropriation,” municipal lease securities may not have as highly liquid a market as conventional municipal bonds.
Short-Term Municipal Obligations: Short-term municipal securities include tax anticipation notes, revenue anticipation notes, bond anticipation notes, construction loan notes and short-term discount notes. Tax anticipation notes are used to finance working capital needs of municipalities and are issued in anticipation of various seasonal tax revenues, to be payable from these specific future taxes. They are usually general obligations of the issuer, secured by the taxing power of the municipality for the payment of principal and interest when due. Revenue anticipation notes are generally issued in expectation of receipt of other kinds of revenue, such as the revenues expected to be generated from a particular project. Bond anticipation notes normally are issued to provide interim financing until long-term financing can be arranged. The long-term bonds then provide the money for the repayment of the notes. Construction loan notes are sold to provide construction financing for specific projects. After successful completion and acceptance, many such projects may receive permanent financing through another source. Short-term Discount notes (tax-exempt commercial paper) are short-term (365 days or less) promissory notes issued by municipalities to supplement their cash flow. Revenue anticipation notes, construction loan notes, and short-term discount notes may, but will not necessarily, be general obligations of the issuer.
Senior and Other Bank Loans: Investments in variable or floating rate loans or notes (“Senior Loans”) are typically made by purchasing an assignment of a portion of a Senior Loan from a third party, either in connection with the original loan transaction (i.e., the primary market) or after the initial loan transaction (i.e., in the secondary market). The Fund may also make its investments in Senior Loans through the use of derivative instruments as long as the reference obligation for such instrument is a Senior Loan. In addition, the Fund has the ability to act as an agent in originating and administering a loan on behalf of all lenders or as one of a group of co-agents in originating loans.
Investment Quality and Credit Analysis: The Senior Loans in which the Fund may invest generally are rated below investment grade credit quality or are unrated. In acquiring a loan, the manager will consider some or all of the following factors concerning the borrower: ability to service debt from internally generated funds; adequacy of liquidity and working capital; appropriateness of capital structure; leverage consistent with industry norms; historical experience of achieving business and financial projections; the quality and experience of management; and adequacy of collateral coverage. The manager performs its own independent credit analysis of each borrower. In so doing, the manager may utilize information and credit analyses from agents that originate or administer loans, other lenders investing in a loan, and other sources. The manager also may communicate directly with management of the borrowers. These analyses continue on a periodic basis for any Senior Loan held by the Fund.
Senior Loan Characteristics: Senior Loans are loans that are typically made to business borrowers to finance leveraged buy-outs, recapitalizations, mergers, stock repurchases, and internal growth. Senior Loans generally hold the most senior position in the capital structure of a borrower and are usually secured by liens on the assets of the borrowers; including tangible assets such as cash, accounts receivable, inventory, property, plant and equipment, common and/or preferred stocks of subsidiaries; and intangible assets including trademarks, copyrights, patent rights, and franchise value. They may also provide guarantees as a form of collateral. Senior Loans are typically structured to include two or more types of loans within a single credit agreement. The most common structure is to have a revolving loan and a term loan. A revolving loan is a loan that can be drawn upon, repaid fully or partially, and then the repaid portions can be drawn upon again. A term loan is a loan that is fully drawn upon immediately and once repaid it cannot be drawn upon again.
Sometimes there may be two or more term loans and they may be secured by different collateral, have different repayment schedules and maturity dates. In addition to revolving loans and term loans, Senior Loan structures can also contain facilities for the issuance of letters of credit and may contain mechanisms for lenders to pre-fund letters of credit through credit-linked deposits.
By virtue of their senior position and collateral, Senior Loans typically provide lenders with the first right to cash flows or proceeds from the sale of a borrower’s collateral if the borrower becomes insolvent (subject to the limitations of bankruptcy law, which may provide higher priority to certain claims such as employee salaries, employee pensions, and taxes). This means Senior Loans are generally repaid before unsecured bank loans, corporate bonds, subordinated debt, trade creditors, and preferred or common stockholders.
Senior Loans typically pay interest, at least quarterly, at rates which equal a fixed percentage spread over a base rate such as SOFR. For example, if SOFR were 3% and the borrower was paying a fixed spread of 2.50%, the total interest rate paid by the borrower would be 5.50%. Base rates, and therefore the total rates paid on Senior Loans, float, i.e., they change as market rates of interest change.
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Although a base rate such as SOFR can change every day, loan agreements for Senior Loans typically allow the borrower the ability to choose how often the base rate for its loan will change. A single loan may have multiple reset periods at the same time, with each reset period applicable to a designated portion of the loan. Such periods can range from one day to one year, with most borrowers choosing monthly or quarterly reset periods. During periods of rising interest rates, borrowers will tend to choose longer reset periods, and during periods of declining interest rates, borrowers will tend to choose shorter reset periods. The fixed spread over the base rate on a Senior Loan typically does not change.
Agents: Senior Loans generally are arranged through private negotiations between a borrower and several financial institutions represented by an agent who is usually one of the originating lenders. In larger transactions, it is common to have several agents; however, generally only one such agent has primary responsibility for ongoing administration of a Senior Loan. Agents are typically paid fees by the borrower for their services.
The agent is primarily responsible for negotiating the loan agreement which establishes the terms and conditions of the Senior Loan and the rights of the borrower and the lenders. An agent for a loan is required to administer and manage the loan and to service or monitor the collateral. The agent is also responsible for the collection of principal, interest, and fee payments from the borrower and the apportionment of these payments to the credit of all lenders which are parties to the loan agreement. The agent is charged with the responsibility of monitoring compliance by the borrower with the restrictive covenants in the loan agreement and of notifying the lenders of any adverse change in the borrower’s financial condition. In addition, the agent generally is responsible for determining that the lenders have obtained a perfected security interest in the collateral securing the loan.
Loan agreements may provide for the termination of the agent’s agency status in the event that it fails to act as required under the relevant loan agreement, becomes insolvent, enters FDIC receivership or, if not FDIC insured, enters into bankruptcy. Should such an agent, lender or assignor with respect to an assignment inter-positioned between the Fund and the borrower become insolvent or enter FDIC receivership or bankruptcy, any interest in the Senior Loan of such person and any loan payment held by such person for the benefit of the fund should not be included in such person’s or entity’s bankruptcy estate. If, however, any such amount were included in such person’s or entity’s bankruptcy estate, the Fund would incur certain costs and delays in realizing payment or could suffer a loss of principal or interest. In this event, the Fund could experience a decrease in the NAV.
Typically, under loan agreements, the agent is given broad discretion in enforcing the loan agreement and is obligated to use the same care it would use in the management of its own property. The borrower compensates the agent for these services. Such compensation may include special fees paid on structuring and funding the loan and other fees on a continuing basis. The precise duties and rights of an agent are defined in the loan agreement.
When the Fund is an agent it has, as a party to the loan agreement, a direct contractual relationship with the borrower and, prior to allocating portions of the loan to the lenders if any, assumes all risks associated with the loan. The agent may enforce compliance by the borrower with the terms of the loan agreement. Agents also have voting and consent rights under the applicable loan agreement. Action subject to agent vote or consent generally requires the vote or consent of the holders of some specified percentage of the outstanding principal amount of the loan, which percentage varies depending on the relative loan agreement. Certain decisions, such as reducing the amount or increasing the time for payment of interest on or repayment of principal of a loan, or relating collateral therefor, frequently require the unanimous vote or consent of all lenders affected.
Pursuant to the terms of a loan agreement, the agent typically has sole responsibility for servicing and administering a loan on behalf of the other lenders. Each lender in a loan is generally responsible for performing its own credit analysis and its own investigation of the financial condition of the borrower. Generally, loan agreements will hold the agent liable for any action taken or omitted that amounts to gross negligence or willful misconduct. In the event of a borrower’s default on a loan, the loan agreements provide that the lenders do not have recourse against the Fund for its activities as agent. Instead, lenders will be required to look to the borrower for recourse.
At times the Fund may also negotiate with the agent regarding the agent’s exercise of credit remedies under a Senior Loan.
Additional Costs: When the Fund purchases a Senior Loan in the primary market, it may share in a fee paid to the original lender. When the Fund purchases a Senior Loan in the secondary market, it may pay a fee to, or forego a portion of the interest payments from, the lending making the assignment.
The Fund may be required to pay and receive various fees and commissions in the process of purchasing, selling, and holding loans. The fee component may include any, or a combination of, the following elements: arrangement fees, non-use fees, facility fees, letter of credit fees, and ticking fees. Arrangement fees are paid at the commencement of a loan as compensation for the initiation of the transaction. A non-use fee is paid based upon the amount committed but not used under the loan. Facility fees are on-going annual fees paid in connection with a loan. Letter of credit fees are paid if a loan involves a letter of credit. Ticking fees are paid from the initial commitment indication until loan closing or for an extended period. The amount of fees is negotiated at the time of closing.
Loan Participation and Assignments: The Fund’s investment in loan participations typically will result in the fund having a contractual relationship only with the lender and not with the borrower. The Fund will have the right to receive payments of principal, interest, and any fees to which it is entitled only from the lender selling the participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing participation, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any right of set-off against the borrower, and the Fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling the participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower.
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When the Fund is a purchaser of an assignment, it succeeds to all the rights and obligations under the loan agreement of the assigning lender and becomes a lender under the loan agreement with the same rights and obligations as the assigning lender. These rights include the ability to vote along with the other lenders on such matters as enforcing the terms of the loan agreement (e.g., declaring defaults, initiating collection action, etc.). Taking such actions typically requires at least a vote of the lenders holding a majority of the investment in the loan and may require a vote by lenders holding two-thirds or more of the investment in the loan. Because the Fund usually does not hold a majority of the investment in any loan, it will not be able by itself to control decisions that require a vote by the lenders.
Because assignments are arranged through private negotiations between potential assignees and potential assignors, the rights and obligations acquired by the Fund as the purchaser of an assignment may differ from, and be more limited than, those held by the assigning lender. Because there is no liquid market for such assets, the Fund anticipates that such assets could be sold only to a limited number of institutional investors. The lack of a liquid secondary market may have an adverse impact on the value of such assets and the Fund’s ability to dispose of particular assignments or participations when necessary to meet redemption of fund shares, to meet the Fund’s liquidity needs or, in response to a specific economic event such as deterioration in the creditworthiness of the borrower. The lack of a liquid secondary market for assignments and participations also may make it more difficult for the Fund to value these assets for purposes of calculating its NAV.
Additional Information on Loans: The loans in which the Fund may invest usually include restrictive covenants which must be maintained by the borrower. Such covenants, in addition to the timely payment of interest and principal, may include mandatory prepayment provisions arising from free cash flow and restrictions on dividend payments, and usually state that a borrower must maintain specific minimum financial ratios as well as establishing limits on total debt. A breach of covenant, that is not waived by the agent, is normally an event of acceleration, i.e., the agent has the right to call the loan. In addition, loan covenants may include mandatory prepayment provisions stemming from free cash flow. Free cash flow is cash that is in excess of capital expenditures plus debt service requirements of principal and interest. The free cash flow shall be applied to prepay the loan in an order of maturity described in the loan documents. Under certain interests in loans, the Fund may have an obligation to make additional loans upon demand by the borrower. The Fund generally ensures its ability to satisfy such demands by segregating sufficient assets in high quality short-term liquid investments or borrowing to cover such obligations.
A principal risk associated with acquiring loans from another lender is the credit risk associated with the borrower of the underlying loan. Additional credit risk may occur when the Fund acquires a participation in a loan from another lender because the fund must assume the risk of insolvency or bankruptcy of the other lender from which the loan was acquired.
Loans, unlike certain bonds, usually do not have call protection. This means that investments, while having a stated one to ten year term, may be prepaid, often without penalty. The Fund generally holds loans to maturity unless it becomes necessary to sell them to satisfy any shareholder repurchase offers or to adjust the fund’s portfolio in accordance with the manager’s view of current or expected economics or specific industry or borrower conditions.
Loans frequently require full or partial prepayment of a loan when there are asset sales or a securities issuance. Prepayments on loans may also be made by the borrower at its election. The rate of such prepayments may be affected by, among other things, general business and economic conditions, as well as the financial status of the borrower. Prepayment would cause the actual duration of a loan to be shorter than its stated maturity. Prepayment may be deferred by the Fund. Prepayment should, however, allow the Fund to reinvest in a new loan and would require the Fund to recognize as income any unamortized loan fees. In many cases reinvestment in a new loan will result in a new facility fee payable to the Fund.
Because interest rates paid on these loans fluctuate periodically with the market, it is expected that the prepayment and a subsequent purchase of a new loan by the Fund will not have a material adverse impact on the yield of the portfolio.
Bridge Loans: The Fund may acquire interests in loans that are designed to provide temporary or “bridge” financing to a borrower pending the sale of identified assets or the arrangement of longer-term loans or the issuance and sale of debt obligations. Bridge loans often are unrated. The Fund may also invest in loans of borrowers that have obtained bridge loans from other parties. A borrower’s use of bridge loans involves a risk that the borrower may be unable to locate permanent financing to replace the bridge loan, which may impair the borrower’s perceived creditworthiness.
Covenant-Lite Loans: Loans in which the Fund may invest or to which the Fund may gain exposure indirectly through its investments in CDOs, CLOs or other types of structured securities may be considered “covenant-lite” loans. Covenant-lite refers to loans which do not incorporate traditional performance-based financial maintenance covenants. Covenant-lite does not refer to a loan’s seniority in the borrower’s capital structure nor to a lack of the benefit from a legal pledge of the borrower’s assets, and it also does not necessarily correlate to the overall credit quality of the borrower. Covenant-lite loans generally do not include terms which allow the lender to take action based on the borrower’s performance relative to its covenants. Such actions may include the ability to renegotiate and/or re-set the credit spread on the loan with the borrower, and even to declare a default or force a borrower into bankruptcy restructuring if certain criteria are breached. Covenant-lite loans typically still provide lenders with other covenants that restrict a company from incurring additional debt or engaging in certain actions. Such covenants can only be breached by an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly, the Fund may have fewer rights against a borrower when it invests in or has exposure to covenant-lite loans and, accordingly, may have a greater risk of loss on such investments as compared to investments in or exposure to loans with additional or more conventional covenants.
U.S. Government Securities and Obligations: Some U.S. government securities, such as Treasury bills, notes, and bonds and mortgage-backed securities guaranteed by GNMA, are supported by the full faith and credit of the United States; others are supported by the right of the issuer to borrow from the U.S. Treasury; others are supported by the discretionary authority of the U.S. government to purchase the
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agency’s obligations; still others are supported only by the credit of the issuing agency, instrumentality, or enterprise. Although U.S. government-sponsored enterprises may be chartered or sponsored by Congress, they are not funded by Congressional appropriations, and their securities are not issued by the U.S. Treasury, their obligations are not supported by the full faith and credit of the U.S. government, and so investments in their securities or obligations issued by them involve greater risk than investments in other types of U.S. government securities. In addition, certain governmental entities have been subject to regulatory scrutiny regarding their accounting policies and practices and other concerns that may result in legislation, changes in regulatory oversight and/or other consequences that could adversely affect the credit quality, availability or investment character of securities issued or guaranteed by these entities.
The events surrounding the U.S. federal government debt ceiling and any resulting agreement could adversely affect the Fund. On August 5, 2011, S&P lowered its long-term sovereign credit rating on the United States. More recently, Fitch Ratings downgraded the U.S. long-term credit rating on August 1, 2023. The downgrade by S&P and other future downgrades could increase volatility in both stock and bond markets, result in higher interest rates and lower Treasury prices and increase the costs of all kinds of debt. These events and similar events in other areas of the world could have significant adverse effects on the economy generally and could result in significant adverse impacts on the Fund or issuers of securities held by the Fund. The Investment Adviser and Sub-Adviser cannot predict the effects of these or similar events in the future on the U.S. economy and securities markets or on the Fund’s portfolio. The Investment Adviser and Sub-Adviser may not timely anticipate or manage existing, new or additional risks, contingencies or developments.
Government Trust Certificates: Government trust certificates represent an interest in a government trust, the property of which consists of: (i) a promissory note of a foreign government, no less than 90% of which is backed by the full faith and credit guarantee issued by the federal government of the United States pursuant to Title III of the Foreign Operations, Export, Financing and Related Borrowers Programs Appropriations Act of 1998; and (ii) a security interest in obligations of the U.S. Treasury backed by the full faith and credit of the United States sufficient to support the remaining balance (no more than 10%) of all payments of principal and interest on such promissory note; provided that such obligations shall not be rated less than AAA by S&P or less than Aaa by Moody’s or have received a comparable rating by another NRSRO.
Zero-Coupon, Deferred Interest and Pay-in-Kind Bonds: Zero-coupon and deferred interest bonds are debt instruments that do not entitle the holder to any periodic payment of interest prior to maturity or a specified date when the securities begin paying current interest and therefore are issued and traded at a discount from their face amounts or par values. The values of zero-coupon and pay-in-kind bonds are more volatile in response to interest rate changes than debt instruments of comparable maturities that make regular distributions of interest. Pay-in-kind bonds allow the issuer, at its option, to make current interest payments on the bonds either in cash or in additional bonds.
Zero-coupon bonds either may be issued at a discount by a corporation or government entity or may be created by a brokerage firm when it strips the coupons from a bond or note and then sells the bond or note and the coupon separately. This technique is used frequently with U.S. Treasury bonds. Zero-coupon bonds also are issued by municipalities.
Interest income from these types of securities accrues prior to the receipt of cash payments and must be distributed to shareholders when it accrues, potentially requiring the liquidation of other investments, including at times when such liquidation may not be advantageous, in order to comply with the distribution requirements applicable to RICs under the Code.
FOREIGN INVESTMENTS
Investments in non-U.S. issuers (including depositary receipts) entail risks not typically associated with investing in U.S. issuers. Similar risks may apply to instruments traded on a U.S. exchange that are issued by issuers with significant exposure to non-U.S. countries. The less developed a country’s securities market is, the greater the level of risk. In certain countries, legal remedies available to investors may be more limited than those available with regard to U.S. investments. Because non-U.S. instruments are normally denominated and traded in currencies other than the U.S. dollar, the value of the assets may be affected favorably or unfavorably by currency exchange rates, exchange control regulations, and restrictions or prohibitions on the repatriation of non-U.S. currencies. Income and gains with respect to investments in certain countries may be subject to withholding and other taxes. There may be less information publicly available about a non-U.S. issuer than about a U.S. issuer, and many non-U.S. issuers are not subject to accounting, auditing, and financial reporting standards, regulatory framework and practices comparable to those in the United States. The securities of some non-U.S. issuers are less liquid and at times more volatile than securities of comparable U.S. issuers. Foreign (non-U.S.) security trading, settlement, and custodial practices (including those involving securities settlement where the assets may be released prior to receipt of payment) are often less well developed than those in U.S. markets, and may result in increased risk of substantial delays in the event of a failed trade or in insolvency of, or breach of obligation by, a foreign broker-dealer, securities depository, or foreign sub-custodian. Non-U.S. transaction costs, such as brokerage commissions and custody costs, may be higher than in the United States. In addition, there may be a possibility of nationalization or expropriation of assets, imposition of currency exchange controls, imposition of tariffs or other economic and trade sanctions, entering or exiting trade or other intergovernmental agreements, confiscatory taxation, political of financial instability, and diplomatic developments that could adversely affect the values of the investments in certain non-U.S. countries. In certain foreign markets an issuer’s securities are blocked from trading at the custodian or sub-custodian level for a specified number of days before and, in certain instances, after a shareholder meeting where such shares are voted. This is referred to as “share blocking.” The blocking period can last up to several weeks. Share blocking may prevent buying or selling securities during this period, because during the time shares are blocked, trades in such securities will not settle. It may be difficult or impossible to lift blocking restrictions, with the particular requirements varying widely by country. Economic or other sanctions imposed on a foreign country or issuer by the U.S., or on the U.S. by a foreign country, could impair the Fund’s ability to buy, sell, hold, receive, deliver, or otherwise transact in certain securities. Sanctions could also affect the value and/or liquidity of a foreign (non-U.S.) security. The Public Company Accounting Oversight Board, which regulates auditors
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of U.S. public companies, is unable to inspect audit work papers in certain foreign countries. Investors in foreign countries often have limited rights and few practical remedies to pursue shareholder claims, including class actions or fraud claims, and the ability of the SEC, the U.S. Department of Justice and other authorities to bring and enforce actions against foreign issuers or foreign persons is limited.
Depositary Receipts: Depositary receipts are typically trust receipts issued by a U.S. bank or trust company that evince an indirect interest in underlying securities issued by a foreign entity, and are in the form of sponsored or unsponsored American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”) and Global Depositary Receipts (“GDRs”).
Generally, ADRs are publicly traded on a U.S. stock exchange or in the OTC market, and are denominated in U.S. dollars, and the depositaries are usually a U.S. financial institution, such as a bank or trust company, but the underlying securities are issued by a foreign issuer.
GDRs may be traded in any public or private securities markets in U.S dollars or other currencies and generally represent securities held by institutions located anywhere in the world. For GDRs, the depositary may be a foreign or a U.S. entity, and the underlying securities may have a foreign or a U.S issuer.
EDRs are generally issued by a European bank and traded on local exchanges.
Depositary receipts may be sponsored or unsponsored. Although the two types of depositary receipt facilities are similar, there are differences regarding a holder’s rights and obligations and the practices of market participants. With sponsored facilities, the underlying issuer typically bears some of the costs of the depositary receipts (such as dividend payment fees of the depositary), although most sponsored depositary receipt holders may bear costs such as deposit and withdrawal fees. Depositaries of most sponsored depositary receipts agree to distribute notices of shareholder meetings, voting instructions, and other shareholder communications and financial information to the depositary receipt holders at the underlying issuer’s request. Holders of unsponsored depositary receipts, which are created independently of the issuer of the underlying security, generally bear all the costs of the facility. The depositary usually charges fees upon the deposit and withdrawal of the underlying securities, the conversion of dividends into U.S. dollars or other currency, the disposition of non-cash distributions, and the performance of other services. The depositary of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the underlying issuer or to pass through voting rights with respect to the underlying securities to depositary receipt holders. As a result, available information concerning the issuer of an unsponsored depositary receipt may not be as current as for sponsored depositary receipts, and the prices of unsponsored depositary receipts may be more volatile than if such instruments were sponsored by the issuer.
In addition, a depositary or issuer may unwind its depositary receipt program, or the relevant exchange may require depositary receipts to be delisted, which could require the Fund to sell its depositary receipts (potentially at disadvantageous prices) or to convert them into shares of the underlying non-U.S. security (which could adversely affect their value or liquidity). Depositary receipts also may be subject to illiquidity risk, and trading in depositary receipts may be suspended by the relevant exchange.
ADRs, GDRs and EDRs are subject to many of the same risks associated with investing directly in foreign issuers. Investments in depositary receipts may be less liquid and more volatile than the underlying securities in their primary trading market. If a depositary receipt is denominated in a different currency than its underlying securities it will be subject to the currency risk of both the investment in the depositary receipt and the underlying securities. The value of depositary receipts may have limited or no rights to take action with respect to the underlying securities or to compel the issuer of the receipts to take action.
Emerging Markets Investments: Investments in emerging markets are generally subject to a greater risk of loss than investments in developed markets. This may be due to, among other things, the possibility of greater market volatility, lower trading volume and liquidity, greater risk of expropriation, nationalization, and social, political and economic instability, greater reliance on a few industries, international trade or revenue from particular commodities, less developed accounting, legal and regulatory systems, higher levels of inflation, deflation or currency devaluation, greater risk of market shut down, and more significant governmental limitations on investment activity as compared to those typically found in a developed market. In addition, issuers (including governments) in emerging market countries may have less financial stability than in other countries. As a result, there will tend to be an increased risk of price volatility in investments in emerging market countries, which may be magnified by currency fluctuations relative to a base currency. Settlement and asset custody practices for transactions in emerging markets may differ from those in developed markets. Such differences may include possible delays in settlement and certain settlement practices, such as delivery of securities prior to receipt of payment, which increases the likelihood of a “failed settlement.” Failed settlements can result in losses. For these and other reasons, investments in emerging markets are often considered speculative.
Investing through Stock Connect: The Fund may, directly or indirectly (through, for example, participation notes or other types of equity-linked notes), purchase shares in mainland China-based companies that trade on Chinese stock exchanges such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange (“China A-Shares”) through the Shanghai-Hong Kong Stock Connect (“Stock Connect”), a mutual market access program designed to, among other things, enable foreign investment in the People’s Republic of China (“PRC”) via brokers in Hong Kong. There are significant risks inherent in investing in China A-Shares through Stock Connect. The underdeveloped state of PRC’s investment and banking systems subjects the settlement, clearing, and registration of China A-Shares transactions to heightened risks. Stock Connect can only operate when both PRC and Hong Kong markets are open for trading and when banking services are available in both markets on the corresponding settlement days. As such, if either or both markets are closed on a U.S. trading day, the Fund may not be able to dispose of its China A-Shares in a timely manner, which could adversely affect the Fund’s performance. PRC regulations require that the Fund that wishes to sell its China A-Shares pre-deliver the China A-Shares to a broker. If the China A-Shares are not in the broker’s possession before the market opens on the day of sale, the sell order will be rejected. This requirement could also limit the Fund’s ability to dispose of its China A-Shares purchased through Stock Connect in a timely manner. Additionally, Stock Connect is subject to daily quota limitations on purchases of China A Shares. Once the daily quota is reached, orders to purchase additional China A-Shares
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through Stock Connect will be rejected. The Fund’s investment in China A-Shares may only be traded through Stock Connect and is not otherwise transferable. Stock Connect utilizes an omnibus clearing structure, and the Fund’s shares will be registered in its custodian’s name on the Central Clearing and Settlement System. This may limit the ability of the Investment Adviser or Sub-Adviser to effectively manage the Fund, and may expose the Fund to the credit risk of its custodian or to greater risk of expropriation. Investment in China A-Shares through Stock Connect may be available only through a single broker that is an affiliate of the Fund’s custodian, which may affect the quality of execution provided by such broker. Stock Connect restrictions could also limit the ability of the Fund to sell its China A-Shares in a timely manner, or to sell them at all. Further, different fees, costs and taxes are imposed on foreign investors acquiring China A-Shares acquired through Stock Connect, and these fees, costs and taxes may be higher than comparable fees, costs and taxes imposed on owners of other securities providing similar investment exposure. Stock Connect trades are settled in Renminbi (“RMB”), the official currency of PRC, and investors must have timely access to a reliable supply of RMB in Hong Kong, which cannot be guaranteed.
Europe: European financial markets are vulnerable to volatility and losses arising from concerns about the potential exit of member countries from the EU and/or the Economic and Monetary Union of the European Union (the “EMU”) and, in the latter case, the reversion of those countries to their national currencies. Defaults by EMU member countries on sovereign debt, as well as any future discussions about exits from the EMU, may negatively affect the Fund’s investments in the defaulting or exiting country, in issuers, both private and governmental, with direct exposure to that country, and in European issuers generally. The UK left the EU on January 31, 2020 (commonly known as “Brexit”) and entered into an 11-month transition period during which the UK remained part of the EU single market and customs union, the laws of which govern the economic, trade and security relations between the UK and EU. The transition period concluded on December 31, 2020 and the UK left the EU single market and customs union under the terms of a new trade agreement. The agreement governs the relationship between the UK and the EU with respect to trading goods and services, but critical aspects of the relationship remain unresolved and subject to further negotiation and agreement. Brexit has resulted in volatility in European and global markets and could have negative long-term impacts on financial markets in the UK and throughout Europe. There is considerable uncertainty about the potential consequences of Brexit and how the financial markets will be affected. As this process unfolds, markets may be further disrupted. Given the size and importance of the UK’s economy, uncertainty about its legal, political, and economic relationship with the remaining member states of the EU may continue to be a source of instability.
Eurodollar and Yankee Dollar Instruments: Eurodollar instruments are bonds that pay interest and principal in U.S. dollars held in banks outside the United States, primarily in Europe. Eurodollar instruments are usually issued on behalf of multinational companies and foreign governments by large underwriting groups composed of banks and issuing houses from many countries. The Eurodollar market is relatively free of regulations resulting in deposits that may pay somewhat higher interest than onshore markets. Their offshore locations make them subject to political and economic risk in the country of their domicile. Yankee dollar instruments are U.S. dollar-denominated bonds issued in the United States by foreign banks and corporations. These investments involve risks that are different from investments in securities issued by U.S. issuers and may carry the same risks as investing in foreign (non-U.S.) securities.
Foreign Currencies: Investments in issuers in different countries are often denominated in foreign currencies. Changes in the values of those currencies relative to the U.S. dollar may have a positive or negative effect on the values of investments denominated in those currencies. Investments may be made in currency exchange contracts or other currency-related transactions (including derivatives transactions) to manage exposure to different currencies. Also, these contracts may reduce or eliminate some or all of the benefits of favorable currency fluctuations. The values of foreign currencies may fluctuate in response to, among other factors, interest rate changes, intervention (or failure to intervene) by national governments, central banks, or supranational entities such as the International Monetary Fund, the imposition of currency controls, and other political or regulatory developments. Currency values can decrease significantly both in the short term and over the long term in response to these and other developments. Continuing uncertainty as to the status of the Euro and the EMU has created significant volatility in currency and financial markets generally. Any partial or complete dissolution of the EMU, or any continued uncertainty as to its status, could have significant adverse effects on currency and financial markets, and on the values of portfolio investments. Some foreign countries have managed currencies, which do not float freely against the U.S. dollar.
Sovereign Debt: Investments in debt instruments issued by governments or by government agencies and instrumentalities (so called sovereign debt) involve the risk that the governmental entities responsible for repayment may be unable or unwilling to pay interest and repay principal when due. A governmental entity’s willingness or ability to pay interest and repay principal in a timely manner may be affected by a variety of factors, including its cash flow, the size of its reserves, its access to foreign exchange, the relative size of its debt service burden to its economy as a whole, and political constraints. A governmental entity may default on its obligations or may require renegotiation or rescheduling of debt payment. Any restructuring of a sovereign debt obligation will likely have a significant adverse effect on the value of the obligation. In the event of default of sovereign debt, legal action against the sovereign issuer, or realization on collateral securing the debt, may not be possible. The sovereign debt of many non-U.S. governments, including their sub-divisions and instrumentalities, is rated below investment grade. Sovereign debt risk may be greater for debt instruments issued or guaranteed by emerging and/or frontier countries.
Sovereign debt includes Brady bonds, U.S. dollar-denominated bonds issued by an emerging market and collateralized by U.S. Treasury zero-coupon bonds. Brady bonds arose from an effort in the 1980s to reduce the debt held by less-developed countries that frequently defaulted on loans. The bonds are named for Treasury Secretary Nicholas Brady, who helped international monetary organizations institute the program of debt-restructuring. Defaulted loans were converted into bonds with U.S. Treasury zero-coupon bonds as collateral. Because the Brady bonds were backed by zero-coupon bonds, repayment of principal was insured. The Brady bonds themselves are coupon-bearing bonds with a variety of rate options (fixed, variable, step, etc.) with maturities of between 10 and 30 years. Issued at par or at a discount, Brady bonds often include warrants for raw material available in the country of origin or other options.
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Supranational Entities: Obligations of supranational entities include securities designated or supported by governmental entities to promote economic reconstruction or development of international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the “World Bank”), the European Coal and Steel Community, the Asian Development Bank and the Inter-American Development Bank. There is no assurance that participating governments will be able or willing to honor any commitments they may have made to make capital contributions to a supranational entity, or that a supranational entity will otherwise have resources sufficient to meet its commitments.
DERIVATIVE INSTRUMENTS
Derivatives are financial contracts whose values change based on changes in the values of one or more underlying assets or the difference between underlying assets. Underlying assets may include a security or other financial instrument, asset, currency, interest rate, credit rating, commodity, volatility measure, or index. Examples of derivative instruments include swap agreements, forward commitments, futures contracts, and options. Derivatives may be traded on contract markets or exchanges, or may take the form of contractual arrangements between private counterparties. Investing in derivatives involves counterparty risk, particularly with respect to contractual arrangements between private counterparties. Derivatives can be highly volatile and involve risks in addition to, and potentially greater than, the risks of the underlying asset(s). Gains or losses from derivatives can be substantially greater than the derivatives’ original cost and can sometimes be unlimited. Derivatives typically involve leverage. Derivatives can be complex instruments and can involve analysis and processing that differs from that required for other investment types. If the value of a derivative does not correlate well with the particular market or other asset class the derivative is intended to provide exposure to, the derivative may not have the effect intended. Derivatives can also reduce the opportunity for gains or result in losses by offsetting positive returns in other investments. Derivatives can be less liquid than other types of investments. Legislation and regulation of derivatives in the United States and other countries, including margin, clearing, trading, reporting, and position limits, may make derivatives more costly and/or less liquid, limit the availability of certain types of derivatives, cause changes in the use of derivatives, or otherwise adversely affect the use of derivatives.
Certain derivative transactions require margin or collateral to be posted to and/or exchanged with a broker, prime broker, futures commission merchant, exchange, clearing house, or other third party, whether directly or through a segregated custodial account. If an entity holding the margin or collateral becomes bankrupt or insolvent or otherwise fails to perform its obligations due to financial difficulties, there could be delays and/or losses in liquidating open positions purchased or sold through such entity and/or recovering amounts owed, including a loss of all or part of its collateral or margin deposits with such entity.
Some derivatives may be used for “hedging,” meaning that they may be used when the manager seeks to protect investments from a decline in value, which could result from changes in interest rates, market prices, currency fluctuations, and other market factors. Derivatives may also be used when the manager seeks to increase liquidity; implement a cash management strategy; invest in a particular stock, bond, or segment of the market in a more efficient or less expensive way; modify the characteristics of portfolio investments; and/or to enhance return. However, when derivatives are used, their successful use is not assured and will depend upon the manager’s ability to predict and understand relevant market movements.
Derivatives Regulation: The U.S. Congress, various exchanges and regulatory and self-regulatory authorities have undertaken reviews of derivatives trading in recent periods. Among the actions that have been taken or proposed to be taken are new position limits and reporting requirements, and new or more stringent daily price fluctuation limits for futures and options transactions. In response to market events, the SEC and regulatory authorities in other jurisdictions may adopt (and in certain cases, have adopted) bans on, and/or reporting requirements for, short positions on securities acquired through derivative transactions. Additional measures are under active consideration and as a result there may be further actions that adversely affect the regulation of instruments in which the Fund may invest. It is possible that these or similar measures could limit or completely restrict the ability of the Fund to use these instruments as a part of its investment strategy. Limits or restrictions applicable to the counterparties with which the Fund may engage in derivative transactions could also prevent the Fund from using these instruments.
The U.S. government has enacted legislation that provides for regulation of the derivatives market, including clearing, margin, reporting, and registration requirements. The EU, the UK, and some other jurisdictions have implemented or are in the process of implementing similar requirements, which will affect derivatives transactions with a counterparty organized in, or otherwise subject to, the EU’s or other jurisdiction’s derivatives regulations. Clearing rules and other new rules and regulations could, among other things, restrict a registered investment company's ability to engage in, or increase the cost of, derivatives transactions, for example, by eliminating the availability of some types of derivatives, increasing margin or capital requirements, or otherwise limiting liquidity or increasing transaction costs. While these rules and regulations and central clearing of some derivatives transactions are designed to reduce systemic risk (i.e., the risk that the interdependence of large derivatives dealers could cause them to suffer liquidity, solvency, or other challenges simultaneously), there is no assurance that they will achieve that result, and in the meantime, central clearing and related requirements may expose investors to different kinds of costs and risks. For example, in the event of a counterparty's (or its affiliate's) insolvency, the Fund's ability to exercise remedies (such as the termination of transactions, netting of obligations and realization on collateral) could be stayed or eliminated under new special resolution regimes adopted in the United States, the EU, the UK and various other jurisdictions. Such regimes provide government authorities with broad authority to intervene when a financial institution is experiencing financial difficulty. In particular, the liabilities of counterparties who are subject to such proceedings in the EU and the UK could be reduced, eliminated, or converted to equity in such counterparties (sometimes referred to as a “bail in”).
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Additionally, U.S. regulators, the EU, the UK, and certain other jurisdictions have adopted minimum margin and capital requirements for uncleared derivatives transactions. It is expected that these regulations will have a material impact on the use of uncleared derivatives. These rules impose minimum margin requirements on derivatives transactions between a registered investment company and its counterparties and may increase the amount of margin required. They impose regulatory requirements on the timing of transferring margin and the types of collateral that parties are permitted to exchange.
The SEC adopted Rule 18f-4 under the 1940 Act (“Rule 18f-4”), related to the use of derivatives, reverse repurchase agreements, and certain other transactions by registered investment companies. In connection with the adoption of Rule 18f-4, the SEC withdrew prior guidance requiring compliance with an asset segregation framework for covering certain derivative instruments and related transactions. Rule 18f-4, like the prior guidance, provides a mechanism by which the Fund is able to engage in derivatives transactions, even if the derivatives are considered to be “senior securities” for purposes of Section 18 of the 1940 Act, and it is expected that the Fund will continue to rely on that exemption, to the extent applicable. Rule 18f-4, among other things, requires a fund to apply value-at-risk (“VaR”) leverage limits to its investments in derivatives transactions and certain other transactions that create future payment and delivery obligations as well as implement a derivatives risk management program. Generally, these requirements apply unless a fund satisfies Rule 18f-4's “limited derivatives users” exception. When a fund invests in reverse repurchase agreements or similar financing transactions, including certain tender option bonds, Rule 18f-4 requires the fund to either aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the fund’s asset coverage ratio or treat all such transactions as derivatives transactions.
Exclusions of the Investment Adviser from commodity pool operator definition: With respect to the Fund, the Investment Adviser has claimed an exclusion from the definition of “commodity pool operator” (“CPO”) under the Commodity Exchange Act (the “CEA”) and the rules thereunder and, therefore, is not subject to CFTC registration or regulation as a CPO. In addition, with respect to the Fund, the Investment Adviser is relying upon a related exclusion from the definition of “commodity trading advisor” under the CEA and the rules of the CFTC.
The terms of the CPO exclusion require the Fund, among other things, to adhere to certain limits on its investments in “commodity interests.” Commodity interests include commodity futures, commodity options, and swaps, which, in turn, include non-deliverable forward currency contracts, as further described below. Compliance with the terms of the CPO exclusion may limit the ability of the Investment Adviser to manage the investment program of the Fund in the same manner as it would in the absence of the exclusion. The Fund is not intended as a vehicle for trading in the commodity futures, commodity options, or swaps markets. The CFTC has neither reviewed nor approved the Investment Adviser’s reliance on the exclusion, or the Fund, its investment strategies, or this SAI.
Forward Commitments: Forward commitments are contracts to purchase securities for a fixed price at a future date beyond customary settlement time. A forward commitment may be disposed of prior to settlement. Such a disposition would result in the realization of short-term profits or losses.
Payment for the securities pursuant to one of these transactions is not required until the delivery date. However, the purchaser assumes the risks of ownership (including the risks of price and yield fluctuations) and the risk that the security will not be issued or delivered as anticipated. If the Fund makes additional investments while a delayed delivery purchase is outstanding, this may result in a form of leverage. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, or if the other party fails to complete the transaction.
Forward Currency Contracts: A forward currency contract is an obligation to purchase or sell a specified currency against another currency at a future date and price as agreed upon by the parties. Forward contracts usually are entered into with banks and broker-dealers and usually are for less than one year, but may be renewed. Forward contracts may be held to maturity and make the contemplated payment and delivery, or, prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Secondary markets generally do not exist for forward currency contracts, with the result that closing transactions generally can be made for forward currency contracts only by negotiating directly with the counterparty. Thus, there can be no assurance that the Fund would be able to close out a forward currency contract at a favorable price or time prior to maturity.
Forward currency transactions may be used for hedging purposes. For example, the Fund might sell a particular currency forward if it holds bonds denominated in that currency but the Investment Adviser (or Sub-Adviser, if applicable) anticipates, and seeks to protect the Fund against, a decline in the currency against the U.S. dollar. Similarly, the Fund might purchase a currency forward to “lock in” the dollar price of securities denominated in that currency which the Investment Adviser (or Sub-Adviser, if applicable) anticipates purchasing for the Fund.
Hedging against a decline in the value of a currency does not limit fluctuations in the prices of portfolio securities or prevent losses to the extent they arise from factors other than changes in currency exchange rates. In addition, hedging transactions may limit opportunities for gain if the value of the hedged currency should rise. Moreover, it may not be possible to hedge against a devaluation that is so generally anticipated that no contracts are available to sell the currency at a price above the devaluation level it anticipates. The cost of engaging in currency exchange transactions varies with such factors as the currency involved, the length of the contract period, and prevailing market conditions. Because currency exchange transactions are usually conducted on a principal basis, no fees or commissions are involved.
Futures Contracts: A futures contract is an agreement between two parties to buy or sell in the future a specific quantity of an underlying asset at a specific price and time agreed upon when the contract is made. Futures contracts are traded in the U.S. only on commodity exchanges or boards of trade - known as “contract markets” - approved for such trading by the CFTC, and must be executed through a futures commission merchant (also referred to herein as a “broker”) which is a member of the relevant contract market. Futures are subject to the creditworthiness of the futures commission merchant(s) and clearing organizations involved in the transaction.
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Certain futures contracts are physically settled (i.e., involve the making and taking of delivery of a specified amount of an underlying asset). For instance, the sale of physically settled futures contracts on foreign currencies or financial instruments creates an obligation of the seller to deliver a specified quantity of an underlying foreign currency or financial instrument called for in the contract for a stated price at a specified time. Conversely, the purchase of such futures contracts creates an obligation of the purchaser to pay for and take delivery of the underlying asset called for in the contract for a stated price at a specified time. In some cases, the specific instruments delivered or taken, respectively, on the settlement date are not determined until on or near that date. That determination is made in accordance with the rules of the exchange on which the sale or purchase was made.
Some futures contracts are cash settled (rather than physically settled), which means that the purchase price is subtracted from the current market value of the instrument and the net amount, if positive, is paid to the purchaser by the seller of the futures contract and, if negative, is paid by the purchaser to the seller of the futures contract. See, for example, “Index Futures Contracts” below.
The value of a futures contract typically fluctuates in correlation with the increase or decrease in the value of the underlying asset. The buyer of a futures contract enters into an agreement to purchase the underlying asset on the settlement date and is said to be “long” the contract. The seller of a futures contract enters into an agreement to sell the underlying asset on the settlement date and is said to be “short” the contract.
The purchaser or seller of a futures contract is not required to deliver or pay for the underlying asset unless the contract is held until the settlement date. The purchaser or seller of a futures contract is required to deposit “initial margin” with a futures commission merchant when the futures contract is entered into. Initial margin is typically calculated as a percentage of the contract's notional amount. A futures contract is valued daily at the official settlement price of the exchange on which it is traded. Each day cash is paid or received, called “variation margin,” equal to the daily change in value of the futures contract. The minimum margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. Additional margin may be required by the futures commission merchant.
The risk of loss in trading futures contracts can be substantial, because of the low margin required, the extremely high degree of leverage involved in futures pricing, and the potential high volatility of the futures markets. As a result, a relatively small price movement in a futures position may result in immediate and substantial loss (or gain) to the investor. Thus, a purchase or sale of a futures contract may result in unlimited losses. In the event of adverse price movements, an investor would continue to be required to make daily cash payments to maintain its required margin. In addition, on the settlement date, an investor may be required to make delivery of the assets underlying the futures positions it holds.
Futures can be held until their settlement dates, or can be closed out by offsetting purchases or sales of futures contracts before then if a liquid market is available. It may not be possible to liquidate or close out a futures contract at any particular time or at an acceptable price and an investor would remain obligated to meet margin requirements until the position is closed. Moreover, most futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and potentially resulting in substantial losses. The inability to close futures positions could require maintaining a futures positions under circumstances where the manager would not otherwise have done so, resulting in losses.
If the Fund buys or sells a futures contract as a hedge to protect against a decline in the value of a portfolio investment, changes in the value of the futures position may not correlate as expected with changes in the value of the portfolio investment. As a result, it is possible that the futures position will not provide the desired hedging protection, or that money will be lost on both the futures position and the portfolio investment.
Margin Payments: If the Fund purchases or sells a futures contract, it is required to deposit with a futures commission merchant an amount of cash, U.S. Treasury bills, or other permissible collateral equal to a percentage of the amount of the futures contract. This amount is known as “initial margin.” The nature of initial margin is different from that of margin in security transactions in that it does not involve borrowing money to finance transactions. Rather, initial margin is similar to a performance bond or good faith deposit that is returned to the Fund upon termination of the contract, assuming the Fund satisfies its contractual obligations.
Subsequent payments to and from the broker occur on a daily basis in a process known as “marking to market.” These payments are called “variation margin” and are made as the value of the underlying futures contract fluctuates. For example, when the Fund sells a futures contract and the price of the underlying asset rises above the contract price, the Fund’s position declines in value. The Fund then pays the broker a variation margin payment generally equal to the difference between the contract price of the futures contract and the market price of the underlying asset. Conversely, if the price of the underlying asset falls below the contract price of the contract, the Fund’s futures position increases in value. The broker then must make a variation margin payment generally equal to the difference between the contract price of the futures contract and the market price of the underlying asset. If an exchange raises margin rates, the Fund would have to provide additional capital to cover the higher margin rates which could require closing out other positions earlier than anticipated.
If the Fund terminates a position in a futures contract, a final determination of variation margin would be made, additional cash would be paid by or to the Fund, and the Fund would realize a loss or a gain. Such closing transactions involve additional commission costs.
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Index Futures Contracts: An index futures contract is a contract to buy or sell specified units of an index at a specified future date at a price agreed upon when the contract is made. The value of a unit is based on the current value of the index. Under such contracts no delivery of the actual securities or other assets making up the index takes place. Rather, upon expiration of the contract, settlement is made by exchanging cash in an amount equal to the difference between the contract price and the closing price of the index at expiration, net of variation margin previously paid.
Interest Rate Futures Contracts: An interest rate futures contract is an agreement to take or make delivery of either: (i) an amount of cash equal to the difference between the value of a particular interest rate index, debt instrument, or index of debt instruments at the beginning and at the end of the contract period; or (ii) a specified amount of a particular debt instrument at a future date at a price set at the time of the contract. Interest rate futures contracts may be bought or sold in an attempt to protect against the effects of interest rate changes on current or intended investments in debt instruments or generally to adjust the duration and interest rate sensitivity of an investment portfolio. For example, if the Fund owned long-term bonds and interest rates were expected to increase, the Fund might enter into interest rate futures contracts for the sale of debt instruments. Such a sale would have much the same effect as selling some of the long-term bonds in the Fund’s portfolio. If interest rates did increase, the value of the debt instruments in the portfolio would decline, but the value of the interest rate futures contracts would be expected to increase, subject to the correlation risks described below, thereby keeping the NAV of the Fund from declining as much as it otherwise would have.
Similarly, if interest rates were expected to decline, interest rate futures contracts may be purchased to hedge in anticipation of subsequent purchases of long-term bonds at higher prices. Since the fluctuations in the value of the interest rate futures contracts should be similar to that of long-term bonds, an interest rate futures contract may protect against the effects of the anticipated rise in the value of long-term bonds until the necessary cash becomes available or the market stabilizes. At that time, the interest rate futures contracts could be liquidated and cash could then be used to buy long-term bonds on the cash market. Similar results could be achieved by selling bonds with long maturities and investing in bonds with short maturities when interest rates are expected to increase. However, the futures market may be more liquid than the cash market in certain cases or at certain times.
Foreign Currency Futures: Currency futures contracts are similar to currency forward contracts (described above), except that they are traded on exchanges (and always have margin requirements) and are standardized as to contract size and settlement date. Most currency futures call for payment in U.S. dollars. A foreign currency futures contract is a standardized exchange-traded contract for the future sale of a specified amount of a foreign currency at a price set at the time of the contract. Foreign currency futures contracts traded in the U.S. are designed by and traded on exchanges regulated by the CFTC, such as the Chicago Mercantile Exchange, and have margin requirements.
At the maturity of a deliverable currency futures contract, the Fund either may accept or make delivery of the currency specified in the contract, or at or prior to maturity enter into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with respect to futures contracts may be effected only on a commodities exchange or board of trade which provides a market in such contracts. There is no assurance that a liquid market on an exchange or board of trade will exist for any particular contract or at any particular time. In such event, it may not be possible to close a futures position and, in the event of adverse price movements, the Fund would continue to be required to make daily cash payments of variation margin.
Options on Futures Contracts: Options on futures contracts generally operate in the same manner as options purchased or written directly on the underlying assets. A futures option gives the holder, in return for the premium paid, the right, but not the obligation, to assume a position in a futures contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer’s futures margin account which represents the amount by which the market price of the futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the futures. If an option is exercised on the last trading day prior to its expiration date, the settlement will be made entirely in cash. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid.
Like the buyer or seller of a futures contract, the holder or writer of an option has the right to terminate its position prior to the scheduled expiration of the option by selling or purchasing an option of the same series, at which time the person entering into the closing purchase transaction will realize a gain or loss. There is no guarantee that such closing purchase transactions can be effected.
The Fund would be required to deposit initial margin and maintenance margin with respect to put and call options on futures contracts written by it pursuant to brokers’ requirements similar to those described above in connection with the discussion on futures contracts. See “Margin Payments” above.
Risks of transactions in futures contracts and related options: Successful use of futures contracts is subject to the ability of the Investment Adviser (or Sub-Adviser, if applicable) to predict movements in various factors affecting financial markets. Compared to the purchase or sale of futures contracts, the purchase of call or put options on futures contracts involves less potential risk to the Fund because the maximum amount at risk is the premium paid for the options (plus transaction costs). However, there may be circumstances when the purchase of a call or put option on a futures contract would result in a loss when the purchase or sale of a futures contract would not result in a loss, such as when there is no movement in the prices of the underlying futures contracts. The writing of an option on a futures contract involves risks similar to those risks relating to the sale of futures contracts.
The use of futures and related options involves the risk of imperfect correlation among movements in the prices of the assets underlying the futures and options, of the options and futures contracts themselves, and, in the case of hedging transactions, of the underlying assets which are the subject of a hedge. The successful use of these strategies further depends on the ability of the Investment Adviser (or Sub-Adviser, if applicable) to forecast market movements such as movements in interest rates correctly. It is possible that, where the
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Fund has purchased puts on futures contracts to hedge its portfolio against a decline in the market, the securities or index on which the puts are purchased may increase in value and the value of securities held in the portfolio may decline. If this occurred, the Fund would lose money on the puts and also experience a decline in value in its portfolio securities. In addition, the prices of futures, for a number of reasons, may not correlate perfectly with movements in the underlying asset due to certain market distortions. For example, all participants in the futures market are subject to margin deposit requirements. Such requirements may cause investors to close futures contracts through offsetting transactions, which could distort the normal relationship between the underlying asset and futures markets. The margin requirements in the futures markets are less onerous than margin requirements in the securities markets in general, and as a result the futures markets may attract more speculators than the securities markets do. Increased participation by speculators in the futures markets may also cause temporary price distortions.
There is no assurance that higher than anticipated trading activity or other unforeseen events might not, at times, render certain market clearing facilities inadequate, and thereby result in the institution by exchanges of special procedures which may interfere with the timely execution of customer orders.
The ability to establish and close out positions will be subject to the development and maintenance of a liquid market. It is not certain that this market will develop or continue to exist for a particular futures contract or option. The Fund’s futures commission merchant may limit the Fund’s ability to invest in certain futures contracts. Such restrictions may adversely affect the Fund’s performance and its ability to achieve its investment objective.
The CFTC and U.S. futures exchanges have established (and continue to evaluate and monitor) speculative position limits, referred to as “position limits,” on the maximum net long or net short positions which any person may hold or control in particular options and futures contracts. In addition, federal position limits apply to swaps that are economically equivalent to futures contracts that are subject to CFTC set speculative limits. All positions owned or controlled by the same person or entity, even if in different accounts, must be aggregated for purposes of complying with these speculative limits, unless an exemption applies. Thus, even if the Fund’s holding does not exceed applicable position limits, it is possible that some or all of the positions in client accounts managed by the Investment Adviser (or Sub-Adviser, if applicable) and its affiliates may be aggregated for this purpose. It is possible that the trading decisions of the Investment Adviser (or Sub-Adviser, if applicable) may be affected by the sizes of such aggregate positions. The modification of investment decisions or the elimination of open positions, if it occurs, may adversely affect the performance of the Fund. A violation of position limits could also lead to regulatory action materially adverse to the Fund’s investment strategy.
Hybrid Instruments: A hybrid instrument may be a debt instrument, preferred stock, depositary share, trust certificate, warrant, convertible security, certificate of deposit or other evidence of indebtedness on which a portion of or all interest payments, and/or the principal or stated amount payable at maturity, redemption or retirement, is determined by reference to prices, changes in prices, or differences between prices, of securities, currencies, intangibles, goods, commodities, indexes, economic factors or other measures, including interest rates, currency exchange rates, or commodities or securities indices, or other indicators. Thus, hybrid instruments may take a variety of forms, including, but not limited to, debt instruments with interest or principal payments or redemption terms determined by reference to the value of a currency or commodity or securities index at a future point in time, preferred stocks with dividend rates determined by reference to the value of a currency, or convertible securities with the conversion terms related to a particular commodity.
Hybrid instruments can be an efficient means of creating exposure to a particular market, or segment of a market, with the objective of enhancing total return. For example, the Fund may wish to take advantage of expected declines in interest rates in several European countries, but avoid the transaction costs associated with buying and currency-hedging the foreign bond positions. One solution would be to purchase a U.S. dollar-denominated hybrid instrument whose redemption price is linked to the average three-year interest rate in a designated group of countries. The redemption price formula would provide for payoffs of greater than par if the average interest rate was lower than a specified level and payoffs of less than par if rates were above the specified level. Furthermore, the Fund could limit the downside risk of the security by establishing a minimum redemption price so that the principal paid at maturity could not be below a predetermined minimum level if interest rates were to rise significantly. The purpose of this arrangement, known as a structured security with an embedded put option, would be to give the Fund the desired European bond exposure while avoiding currency risk, limiting downside market risk, and lowering transactions costs. Of course, there is no guarantee that the strategy would be successful, and the Fund could lose money if, for example, interest rates do not move as anticipated or credit problems develop with the issuer of the hybrid instrument.
Risks of Investing in Hybrid Instruments: The risks of investing in hybrid instruments reflect a combination of the risks of investing in securities, swaps, options, futures and currencies. An investment in a hybrid instrument may entail significant risks that are not associated with a similar investment in a traditional debt instrument. The risks of a particular hybrid instrument will depend upon the terms of the instrument, but may include the possibility of significant changes in the benchmark(s) or the prices of the underlying assets to which the instrument is linked. Such risks generally depend upon factors unrelated to the operations or credit quality of the issuer of the hybrid instrument, which may not be foreseen by the purchaser, such as economic and political events, the supply and demand profiles of the underlying assets and interest rate movements. Hybrid instruments may be highly volatile.
The return on a hybrid instrument will be reduced by the costs of the swaps, options, or other instruments embedded in the instrument.
Hybrid instruments are potentially more volatile and carry greater market risks than traditional debt instruments. Depending on the structure of the particular hybrid instrument, changes in an underlying asset may be magnified by the terms of the hybrid instrument and have an even more dramatic and substantial effect upon the value of the hybrid instrument. Also, the prices of the hybrid instrument and the underlying asset may not move in the same direction or at the same time.
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Hybrid instruments may bear interest or pay preferred dividends at below market (or even nominal) rates. Alternatively, hybrid instruments may bear interest at above market rates but bear an increased risk of principal loss (or gain). Leverage risk occurs when the hybrid instrument is structured so that a given change in an underlying asset is multiplied to produce a greater value change in the hybrid instrument, thereby magnifying the risk of loss as well as the potential for gain.
If a hybrid instrument is used as a hedge against, or as a substitute for, a portfolio investment, the hybrid instrument may not correlate as expected with the portfolio investment, resulting in losses. While hedging strategies involving hybrid instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other investments.
Hybrid instruments may also carry liquidity risk since the instruments are often “customized” to meet the portfolio needs of a particular investor. The Fund may be prohibited from transferring a hybrid instrument, or the number of possible purchasers may be limited by applicable law or because few investors have an interest in purchasing such a customized product. Because hybrid instruments are typically privately negotiated contracts between two parties, the value of a hybrid instrument will depend on the willingness and ability of the issuer of the instrument to meet its obligations. Hybrid instruments also may not be subject to regulation by the CFTC, which generally regulates the trading of commodity futures, options, and swaps.
Synthetic Convertible Securities: Synthetic convertible securities are derivative positions composed of two or more different securities whose investment characteristics, taken together, resemble those of convertible securities. For example, the Fund may purchase a non-convertible debt instrument and a warrant or option, which enables the Fund to have a convertible-like position with respect to a company, group of companies, or stock index. Synthetic convertible securities are typically offered by financial institutions and investment banks in private placement transactions. Upon conversion, the Fund generally receives an amount in cash equal to the difference between the conversion price and the then-current value of the underlying security. Unlike a true convertible security, a synthetic convertible security comprises two or more separate securities, each with its own market value. Therefore, the market value of a synthetic convertible security is the sum of the values of its debt component and its convertible component. For this reason, the value of a synthetic convertible security and a true convertible security may respond differently to market fluctuations.
Options: An option gives the holder the right, but not the obligation, to purchase (in the case of a call option) or sell (in the case of a put option) a specific amount or value of a particular underlying asset at a specific price (called the “exercise” or “strike” price) at one or more specific times before the option expires. The underlying asset of an option contract can be a security, currency, index, future, swap, commodity, or other type of financial instrument. The seller of an option is called an option writer. The purchase price of an option is called the premium. The potential loss to an option purchaser is limited to the amount of the premium plus transaction costs. This will be the case, for example, if the option is held and not exercised prior to its expiration date.
Options can be traded either through established exchanges (“exchange-traded options”) or privately negotiated transactions OTC options. Exchange-traded options are standardized with respect to, among other things, the underlying asset, expiration date, contract size and strike price. The terms of OTC options are generally negotiated by the parties to the option contract which allows the parties greater flexibility in customizing the agreement, but OTC options are generally less liquid than exchange-traded options.
All option contracts involve credit risk if the counterparty to the option contract (e.g., the clearing house or OTC counterparty) or the third party effecting the transaction in the case of cleared options (e.g., futures commission merchant or broker/dealer) fails to perform. The value of an OTC option that is not cleared is dependent on the credit worthiness of the individual counterparty to the contract and may be greater than the credit risk associated with cleared options.
The purchaser of a put option obtains the right (but not the obligation) to sell a specific amount or value of a particular asset to the option writer at a fixed strike price. In return for this right, the purchaser pays the option premium. The purchaser of a typical put option can expect to realize a gain if the price of the underlying asset falls. However, if the underlying asset’s price does not fall enough to offset the cost of purchasing the option, the purchaser of a put option can expect to suffer a loss (limited to the amount of the premium, plus related transaction costs).
The purchaser of a call option obtains the right (but not the obligation) to purchase a specified amount or value of an underlying asset from the option writer at a fixed strike price. In return for this right, the purchaser pays the option premium. The purchaser of a typical call option can expect to realize a gain if the price of the underlying asset rises. However, if the underlying asset’s price does not rise enough to offset the cost of purchasing the option, the buyer of a call option can expect to suffer a loss (limited to the amount of the premium, plus related transaction costs).
The purchaser of a call or put option may terminate its position by allowing the option to expire, exercising the option or closing out its position by entering into an offsetting option transaction if a liquid market is available. If the option is allowed to expire, the purchaser will lose the entire premium. If the option is exercised, the purchaser would complete the purchase or sale, as applicable, of the underlying asset to the option writer at the strike price.
The writer of a put or call option takes the opposite side of the transaction from the option’s purchaser. In return for receipt of the premium, the writer assumes the obligation to buy or sell (depending on whether the option is a put or a call) a specified amount or value of a particular asset at the strike price if the purchaser of the option chooses to exercise it. A call option written on a security or other instrument held by the Fund (commonly known as “writing a covered call option”) limits the opportunity to profit from an increase in the market price of the underlying asset above the exercise price of the option. A call option written on securities that are not currently held by the Fund is commonly known as “writing a naked call option.” During periods of declining securities prices or when prices are stable, writing these types of call options can be a profitable strategy to increase income with minimal capital risk. However, when securities prices increase, the Fund would be exposed to an increased risk of loss, because if the price of the underlying asset or instrument exceeds the option’s
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exercise price, the Fund would suffer a loss equal to the amount by which the market price exceeds the exercise price at the time the call option is exercised, minus the premium received. Calls written on securities that the Fund does not own are riskier than calls written on securities owned by the Fund because there is no underlying asset held by the Fund that can act as a partial hedge. When such a call is exercised, the Fund must purchase the underlying asset to meet its call obligation or make a payment equal to the value of its obligation in order to close out the option. Calls written on securities that the Fund does not own have speculative characteristics and the potential for loss is theoretically unlimited. There is also a risk, especially with less liquid preferred and debt instruments, that the asset may not be available for purchase.
Generally, an option writer sells options with the goal of obtaining the premium paid by the option purchaser. If an option sold by an option writer expires without being exercised, the writer retains the full amount of the premium. The option writer’s potential loss is equal to the amount the option is “in-the-money” when the option is exercised offset by the premium received when the option was written. A call option is in-the-money if the value of the underlying asset exceeds the strike price of the option, and so the call option writer’s loss is theoretically unlimited. A put option is in-the-money if the strike price of the option exceeds the value of the underlying asset, and so the put option writer’s loss is limited to the strike price. Generally, any profit realized by an option purchaser represents a loss for the option writer. The writer of an option may seek to terminate a position in the option before exercise by closing out its position by entering into an offsetting option transaction if a liquid market is available. If the market is not liquid for an offsetting option, however, the writer must continue to be prepared to sell or purchase the underlying asset at the strike price while the option is outstanding, regardless of price changes.
If the Fund is the writer of a cleared option, the Fund is required to deposit initial margin. Additional variation margin may also be required. If the Fund is the writer of an uncleared option, the Fund may be required to deposit initial margin and additional variation margin.
A physical delivery option gives its owner the right to receive physical delivery (if it is a call), or to make physical delivery (if it is a put) of the underlying asset when the option is exercised. A cash-settled option gives its owner the right to receive a cash payment based on the difference between a determined value of the underlying asset at the time the option is exercised and the fixed exercise price of the option. In the case of physically settled options, it may not be possible to terminate the position at any particular time or at an acceptable price. A cash-settled call conveys the right to receive a cash payment if the determined value of the underlying asset at exercise exceeds the exercise price of the option, and a cash-settled put conveys the right to receive a cash payment if the determined value of the underlying asset at exercise is less than the exercise price of the option.
Combination option positions are positions in more than one option at the same time. A spread involves being both the buyer and writer of the same type of option on the same underlying asset but different exercise prices and/or expiration dates. A straddle consists of purchasing or writing both a put and a call on the same underlying asset with the same exercise price and expiration date.
The principal factors affecting the market value of a put or call option include supply and demand, interest rates, the current market price of the underlying asset in relation to the exercise price of the option, the volatility of the underlying asset and the remaining period to the expiration date.
If a trading market in particular options were illiquid, investors in those options would be unable to close out their positions until trading resumes, and option writers may be faced with substantial losses if the value of the underlying asset moves adversely during that time. There can be no assurance that a liquid market will exist for any particular options product at any specific time. Lack of investor interest, changes in volatility, or other factors or conditions might adversely affect the liquidity, efficiency, continuity, or even the orderliness of the market for particular options. Exchanges or other facilities on which options are traded may establish limitations on options trading, may order the liquidation of positions in excess of these limitations, or may impose other sanctions that could adversely affect parties to an options transaction.
Many options, in particular OTC options, are complex and often valued based on subjective factors. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Fund.
Foreign Currency Options: Put and call options on foreign currencies may be bought or sold either on exchanges or in the OTC market. A put option on a foreign currency gives the purchaser of the option the right to sell a foreign currency at the exercise price until the option expires. A call option on a foreign currency gives the purchaser of the option the right to purchase the currency at the exercise price until the option expires. Currency options traded on U.S. or other exchanges may be subject to position limits which may limit the ability of the Fund to reduce foreign currency risk using such options.
Index Options: An index option is a put or call option on a securities index or other (typically securities-related) index. In contrast to an option on a security, the holder of an index option has the right to receive a cash settlement amount upon exercise of the option. This settlement amount is equal to: (i) the amount, if any, by which the fixed exercise price of the option exceeds (in the case of a call) or is below (in the case of a put) the closing value of the underlying index on the date of exercise, multiplied; by (ii) a fixed “index multiplier.” The index underlying an index option may be a “broad-based” index, such as the S&P 500® Index or the NYSE Composite Index, the changes in value of which ordinarily will reflect movements in the stock market in general. In contrast, certain options may be based on narrower market indices, such as the S&P 100 Index, or on indices of securities of particular industry groups, such as those of oil and gas or technology issuers. A stock index assigns relative values to the stocks included in the index, and the index fluctuates with changes in the market values of the stocks so included. The composition of the index is changed periodically. The risks of purchasing and selling index options are generally similar to the risks of purchasing and selling options on securities.
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Participatory Notes: Participatory notes are a type of derivative instrument used by foreign investors to access local markets and to gain exposure to, primarily, equity securities of issuers listed on a local exchange. Rather than purchasing securities directly, the Fund may purchase a participatory note from a broker-dealer, which holds the securities on behalf of the noteholders.
Participatory notes are similar to depositary receipts except that: (1) brokers, not U.S. banks, are depositories for the securities; and (2) noteholders may remain anonymous to market regulators.
The value of the participatory notes will be directly related to the value of the underlying securities. Any dividends or capital gains collected from the underlying securities are remitted to the noteholder.
The risks of investing in participatory notes include derivatives risk and foreign investments risk. The foreign investments risk associated with participatory notes is similar to those of investing in depositary receipts. However, unlike depositary receipts, participatory notes are subject to counterparty risk based on the uncertainty of the counterparty’s (i.e., the broker’s) ability to meet its obligations.
Rights and Warrants: Warrants and rights are types of securities that give a holder a right to purchase shares of common stock. Warrants usually are issued in conjunction with a bond or preferred stock and entitle a holder to purchase a specified amount of common stock at a specified price typically for a period of years. Rights are instruments, frequently distributed to an issuer’s shareholders as a dividend, that usually entitle the holder to purchase a specified amount of common stock at a specified price on a specific date or during a specific period of time (typically for a period of only weeks). The exercise price on a right is normally at a discount from the market value of the common stock at the time of distribution.
Warrants may be used to enhance the marketability of a bond or preferred stock. Rights are frequently used outside of the United States as a means of raising additional capital from an issuer’s current shareholders.
Warrants and rights do not carry with them the right to dividends or to vote, do not represent any rights in the assets of the issuer and may or may not be transferable. Investments in warrants and rights may be considered more speculative than certain other types of investments. In addition, the value of a warrant or right does not necessarily change with the value of the underlying securities, and expires worthless if it is not exercised on or prior to its expiration date, if any.
Bonds issued with warrants attached to purchase equity securities have many characteristics of convertible bonds and their prices may, to some degree, reflect the performance of the underlying stock. Bonds also may be issued with warrants attached to purchase additional debt instruments.
Equity-linked warrants are purchased from a broker, who in turn is expected to purchase shares in the local market. If the Fund exercises its warrant, the shares are expected to be sold and the warrant redeemed with the proceeds. Typically, each warrant represents one share of the underlying stock. Therefore, the price and performance of the warrant are directly linked to the underlying stock, less transaction costs. In addition to the market risk related to the underlying holdings, the Fund bears counterparty risk with respect to the issuing broker. There is currently no active trading market for equity-linked warrants, and they may be highly illiquid.
Index-linked warrants are put and call warrants where the value varies depending on the change in the value of one or more specified securities indices. Index-linked warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of exercise. In general, if the value of the underlying index rises above the exercise price of the index-linked warrant, the holder of a call warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the value of the index and the exercise price of the warrant; if the value of the underlying index falls, the holder of a put warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the exercise price of the warrant and the value of the index. The holder of a warrant would not be entitled to any payments from the issuer at any time when, in the case of a call warrant, the exercise price is greater than the value of the underlying index, or, in the case of a put warrant, the exercise price is less than the value of the underlying index. If the Fund were not to exercise an index-linked warrant prior to its expiration, then the Fund would lose the amount of the purchase price paid by it for the warrant.
Index-linked warrants are normally used in a manner similar to its use of options on securities indices. The risks of index-linked warrants are generally similar to those relating to its use of index options. Unlike most index options, however, index-linked warrants are issued in limited amounts and are not obligations of a regulated clearing agency, but are backed only by the credit of the bank or other institution that issues the warrant. Also, index-linked warrants may have longer terms than index options. Index-linked warrants are not likely to be as liquid as certain index options backed by a recognized clearing agency. In addition, the terms of index-linked warrants may limit the Fund’s ability to exercise the warrants at such time, or in such quantities, as the Fund would otherwise wish to do.
Indirect investment in foreign equity securities may be made through international warrants, local access products, participation notes, or low exercise price warrants. International warrants are financial instruments issued by banks or other financial institutions, which may or may not be traded on a foreign exchange. International warrants are a form of derivative security that may give holders the right to buy or sell an underlying security or a basket of securities from or to the issuer for a particular price or may entitle holders to receive a cash payment relating to the value of the underlying security or basket of securities. International warrants are similar to options in that they are exercisable by the holder for an underlying security or the value of that security, but are generally exercisable over a longer term than typical options. These types of instruments may be American style exercise, which means that they can be exercised at any time on or before the expiration date of the international warrant, or European style exercise, which means that they may be exercised only on the expiration date. International warrants have an exercise price, which is typically fixed when the warrants are issued.
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Low exercise price warrants are warrants with an exercise price that is very low relative to the market price of the underlying instrument at the time of issue (e.g., one cent or less). The buyer of a low exercise price warrant effectively pays the full value of the underlying common stock at the outset. In the case of any exercise of warrants, there may be a time delay between the time a holder of warrants gives instructions to exercise and the time the price of the common stock relating to exercise or the settlement date is determined, during which time the price of the underlying security could change significantly. These warrants entail substantial credit risk, since the issuer of the warrant holds the purchase price of the warrant (approximately equal to the value of the underlying investment at the time of the warrant’s issue) for the life of the warrant.
The exercise or settlement date of the warrants and other instruments described above may be affected by certain market disruption events, such as difficulties relating to the exchange of a local currency into U.S. dollars, the imposition of capital controls by a local jurisdiction or changes in the laws relating to foreign investments. These events could lead to a change in the exercise date or settlement currency of the instruments, or postponement of the settlement date. In some cases, if the market disruption events continue for a certain period of time, the warrants may become worthless, resulting in a total loss of the purchase price of the warrants.
Investments in these instruments involve the risk that the issuer of the instrument may default on its obligation to deliver the underlying security or cash in lieu thereof. These instruments may also be subject to liquidity risk because there may be a limited secondary market for trading the warrants. They are also subject, like other investments in foreign (non-U.S.) securities, to foreign risk and currency risk.
Swap Transactions and Options on Swap Transactions: Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined underlying assets, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount,” (i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or in a “basket” of securities representing a particular index). When the Fund enters into an interest rate swap, it typically agrees to make payments to its counterparty based on a specified long- or short-term interest rate, and will receive payments from its counterparty based on another interest rate. Other forms of swap agreements include interest rate caps, under which, in return for a specified payment stream, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”; interest rate floors, under which, in return for a specified payment stream, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor”; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. The Fund may enter into an interest rate swap in order, for example, to hedge against the effect of interest rate changes on the value of specific securities in its portfolio, or to adjust the interest rate sensitivity (duration) or the credit exposure of its portfolio overall, or otherwise as a substitute for a direct investment in debt instruments.
In a total return swap, one party typically agrees to pay to the other a short-term interest rate in return for a payment at one or more times in the future based on the increase in the value of an underlying asset; if the underlying asset declines in value, the party that pays the short-term interest rate must also pay to its counterparty a payment based on the amount of the decline. A swap may create a long or short position in the underlying asset. A total return swap may be used to hedge against an exposure in an investment portfolio (including to adjust the duration or credit quality of a bond portfolio) or generally to put cash to work efficiently in the markets in anticipation of, or as a replacement for, cash investments. A total return swap may also be used to gain exposure to securities or markets which may not be accessed directly (in so-called market access transactions).
In a credit default swap, one party provides what is in effect insurance against a default or other adverse credit event affecting an issuer of debt instruments (typically referred to as a “reference entity”). In general, the protection “buyer” in a credit default swap is obligated to pay the protection “seller” an upfront amount or a periodic stream of payments over the term of the swap. If a “credit event” occurs, the buyer has the right to deliver to the seller bonds or other obligations of the reference entity (with a value up to the full notional value of the swap), and to receive a payment equal to the par value of the bonds or other obligations. Rather than exchange the bonds for the par value, a single cash payment may be due from the seller representing the difference between the par value of the bonds and the current market value of the bonds (which may be determined through an auction). Credit events that would trigger a request that the seller make payment are specific to each credit default swap agreement, but generally include bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. If the Fund buys protection, it may or may not own securities of the reference entity. If it does own securities of the reference entity, the swap serves as a hedge against a decline in the value of the securities due to the occurrence of a credit event involving the issuer of the securities. If the Fund does not own securities of the reference entity, the credit default swap may be seen to create a short position in the reference entity. If the Fund is a buyer and no credit event occurs, the Fund will typically recover nothing under the swap, but will have had to pay the required upfront payment or stream of continuing payments under the swap. If the Fund sells protection under a credit default swap, the position may have the effect of creating leverage in the Fund’s portfolio through the Fund’s indirect long exposure to the issuer or securities on which the swap is written. If the Fund sells protection, it may do so either to earn additional income or to create such a “synthetic” long position. Credit default swaps involve general market risks, illiquidity risk, counterparty risk, and credit risk.
A cross-currency swap is a contract between two counterparties to exchange interest and principal payments in different currencies. A cross-currency swap normally has an exchange of principal at maturity (the final exchange); an exchange of principal at the start of the swap (the initial exchange) is optional. An initial exchange of notional principal amounts at the spot exchange rate serves the same function as a spot transaction in the foreign exchange market (for an immediate exchange of foreign exchange risk). An exchange at maturity of notional principal amounts at the spot exchange rate serves the same function as a forward transaction in the foreign exchange market
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(for a future transfer of foreign exchange risk). The currency swap market convention is to use the spot rate rather than the forward rate for the exchange at maturity. The economic difference is realized through the coupon exchanges over the life of the swap. In contrast to single currency interest rate swaps, cross-currency swaps involve both interest rate risk and foreign exchange risk.
A portfolio may enter into swap transactions for any legal purpose consistent with its investment objective and policies, such as for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, to protect against currency fluctuations, as a duration management technique, to protect against any increase in the price of securities the portfolio anticipates purchasing at a later date, or to gain exposure to certain markets in a more economical way.
An interest rate cap is a right to receive periodic cash payments over the life of the cap equal to the difference between any higher actual level of interest rates in the future and a specified strike (or “cap”) level. The cap buyer purchases protection for a floating rate move above the strike. An interest rate floor is the right to receive periodic cash payments over the life of the floor equal to the difference between any lower actual level of interest rates in the future and a specified strike (or “floor”) level. The floor buyer purchases protection for a floating rate move below the strike. The strikes are based on a reference rate chosen by the parties and are typically measured quarterly. Rights arising pursuant to both caps and floors are typically exercised automatically if the strike is in the money. Caps and floors can eliminate the risk that the buyer fails to exercise an in-the-money option.
The swap market has grown over the years, with a large number of banks and investment banking firms acting both as principals and agents utilizing standard swap documentation, which has contributed to greater liquidity in certain areas of the swap market under normal market conditions.
An option on swap agreement (“swaption”) is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement, at some designated future time on specified terms. Depending on the terms of the particular swaption, generally a greater degree of risk is incurred when writing a swaption than when purchasing a swaption. If the Fund purchases a swaption, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, if the Fund writes a swaption, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.
The successful use of swap agreements or swaptions depends on the manager’s ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.
Swaps are highly specialized instruments that require investment techniques and risk analyses different from those associated with traditional investments. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions. Because they are two-party contracts that may be subject to contractual restrictions on transferability and termination and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. To the extent that a swap is not liquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses.
Like most other investments, swap agreements are subject to the risk that the market value of the instrument will change in a way detrimental to the Fund’s interest. The Fund bears the risk that its manager will not accurately forecast future market trends or the values of assets, reference rates, indices, or other economic factors in establishing swap positions for the Fund. If the manager attempts to use a swap as a hedge against, or as a substitute for, a portfolio investment, the Fund would be exposed to the risk that the swap will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the Fund. While hedging strategies involving swap instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Fund investments. Many swaps are complex and often valued subjectively.
Counterparty risk with respect to derivatives has been and may continue to be affected by rules and regulations concerning the derivatives market. Some interest rate swaps and credit default index swaps are required to be centrally cleared, and a party to a cleared derivatives transaction is subject to the credit risk of the clearing house and the clearing member through which it holds the position. Credit risk of market participants with respect to derivatives that are centrally cleared is concentrated in a few clearing houses and clearing members, and it is not clear how an insolvency proceeding of a clearing house or clearing member would be conducted, what effect the insolvency proceeding would have on any recovery by the Fund, and what impact an insolvency of a clearing house or clearing member would have on the financial system more generally. In some ways, cleared derivative arrangements are less favorable to the Fund than bilateral arrangements, for example, by requiring that the Fund provide more margin for its cleared derivatives positions. Also, as a general matter, in contrast to a bilateral derivatives position, following a period of notice to the Fund, the clearing house or the clearing member through which it holds its position at any time can require termination of an existing cleared derivatives position or an increase in the margin required at the outset of a transaction. Any increase in margin requirements or termination of existing cleared derivatives positions by the clearing member or the clearing house could interfere with the ability of the Fund to pursue its investment strategy.
Also, in the event of a counterparty's (or its affiliate's) insolvency, the possibility exists that the Fund's ability to exercise remedies, such as the termination of transactions, netting of obligations and realization on collateral, could be stayed or eliminated under new special resolution regimes adopted in the U.S., the EU, the UK, and various other jurisdictions. Such regimes provide government authorities with broad authority to intervene when a financial institution is experiencing financial difficulty. In particular, the regulatory authorities could reduce, eliminate, or convert to equity the liabilities to the Fund of a counterparty who is subject to such proceedings in the EU and the UK (sometimes referred to as a “bail in”).
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The U.S. government, the EU, and the UK have also adopted mandatory minimum margin requirements for bilateral derivatives. Such requirements could increase the amount of margin required to be provided by the Fund in connection with its derivatives transactions and, therefore, make derivatives transactions more expensive.
Foreign Currency Warrants: Foreign currency warrants such as Currency Exchange WarrantsSM (“CEWsSM”) are warrants that entitle the holder to receive from their issuer an amount of cash (generally, for warrants issued in the U.S., in U.S. dollars) which is calculated pursuant to a predetermined formula and based on the exchange rate between a specified foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction (e.g., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed).
OTHER INVESTMENT TECHNIQUES
Borrowing: Borrowing will result in leveraging of the Fund’s assets. This borrowing may be secured or unsecured. Borrowing, like other forms of leverage, will tend to exaggerate the effect on NAV of any increase or decrease in the market value of the Fund’s portfolio. Money borrowed will be subject to interest costs which may or may not be recovered by appreciation of the securities purchased, if any. The Fund also may be required to maintain minimum average balances in connection with such borrowing or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate. Provisions of the 1940 Act require the Fund to maintain continuous asset coverage (that is, total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for borrowings not in excess of 5% of the Fund’s total assets made for temporary administrative purposes. Any borrowings for temporary administrative purposes in excess of 5% of total assets must maintain continuous asset coverage. If the 300% asset coverage should decline as a result of market fluctuations or other reasons, the Fund may be required to sell some of its portfolio holdings within three days to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint to sell holdings at that time.
From time to time, the Fund may enter into, and make borrowings for temporary purposes related to the redemption of shares under, a credit agreement with third-party lenders. Borrowings made under such credit agreements will be allocated pursuant to guidelines approved by the Board.
The Fund may engage in other transactions that may have the effect of creating leverage in the Fund’s portfolio, including, by way of example, reverse repurchase agreements, dollar rolls, and derivatives transactions. The Fund will generally not treat such transactions as borrowings of money.
Illiquid Securities: Illiquid investment means any investment that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment.
Participation on Creditors’ Committees: The Fund may from time to time participate on committees formed by creditors to negotiate with the management of financially troubled issuers of securities held by the Fund. Such participation may incur additional expenses such as legal fees and may make the Fund an “insider” of the issuer for purposes of the federal securities laws, which may restrict such Fund’s ability to trade in or acquire additional positions in a particular security when it might otherwise desire to do so. Participation on such committees may also expose the Fund to potential liabilities under the federal bankruptcy laws or other laws governing the rights of creditors and debtors.
Repurchase Agreements: A repurchase agreement is a contract under which the Fund acquires a security for a relatively short period (usually not more than one week) subject to the obligation of the seller to repurchase and the Fund to resell such security at a fixed time and price. Repurchase agreements may be viewed as loans which are collateralized by the securities subject to repurchase. The value of the underlying securities in such transactions will be at least equal at all times to the total amount of the repurchase obligation, including the interest factor. If the seller defaults, the Fund could realize a loss on the sale of the underlying security to the extent that the proceeds of sale including accrued interest are less than the resale price provided in the agreement including interest. In addition, if the seller should be involved in bankruptcy or insolvency proceedings, the Fund may incur delay and costs in selling the underlying security or may suffer a loss of principal and interest if the Fund is treated as an unsecured creditor and required to return the underlying collateral to the seller’s estate. To the extent that the Fund has invested a substantial portion of its assets in repurchase agreements, the investment return on such assets, and potentially the ability to achieve the investment objectives, will depend on the counterparties’ willingness and ability to perform their obligations under the repurchase agreements.
Restricted Securities: Securities that are legally restricted as to resale (such as those issued in private placements), including securities governed by Rule 144A and Regulation S, and securities that are offered in reliance on Section 4(a)(2) of the 1933 Act, are referred to as “restricted securities.” Restricted securities may be sold in private placement transactions between issuers and their purchasers and may be neither listed on an exchange nor traded in other established markets. Due to the absence of a public trading market, restricted securities may be more volatile, less liquid, and more difficult to value than publicly-traded securities. The price realized from the sale of these securities could be less than the amount originally paid or less than their fair value if they are resold in privately negotiated transactions. In addition, these securities may not be subject to disclosure and other investment protection requirements that are afforded to publicly-traded securities. Certain restricted securities represent investments in smaller, less seasoned issuers, which may involve greater risk. The Fund may incur additional expenses when disposing of restricted securities, including costs to register the sale of the securities. The Board has delegated to Fund management the responsibility for monitoring and determining the liquidity of restricted securities, subject to the Board’s oversight.
35
Reverse Repurchase Agreements and Dollar Roll Transactions: Reverse repurchase agreements involve sales of portfolio securities to another party and an agreement by the Fund to repurchase the same securities at a later date at a fixed price. During the reverse repurchase agreement period, the Fund continues to receive principal and interest payments on the securities and also has the opportunity to earn a return on the collateral furnished by the counterparty to secure its obligation to redeliver the securities.
Dollar rolls involve selling securities (e.g., mortgage-backed securities or U.S. Treasury securities) and simultaneously entering into a commitment to purchase those or similar securities on a specified future date and price from the same party. Mortgage-dollar rolls and U.S. Treasury rolls are types of dollar rolls. During the roll period, principal and interest paid on the securities is not received but proceeds from the sale can be invested.
Reverse repurchase agreement and dollar rolls involve the risk that the market value of the securities to be repurchased under the agreement may decline below the repurchase price. If the buyer of securities under a reverse repurchase agreement or dollar rolls files for bankruptcy or becomes insolvent, such a buyer or its trustee or receiver may receive an extension of time to determine whether to enforce the obligation to repurchase the securities and use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision. Additionally, reverse repurchase agreements entail many of the same risks as OTC derivatives. These include the risk that the counterparty to the reverse repurchase agreement may not be able to fulfill its obligations, that the parties may disagree as to the meaning or application of contractual terms, or that the instrument may not perform as expected.
Securities Lending: Securities lending involves lending of portfolio securities to qualified broker/dealers, banks or other financial institutions who may need to borrow securities in order to complete certain transactions, such as covering short sales, avoiding failure to deliver securities, or completing arbitrage operations. Securities are loaned pursuant to a securities lending agreement approved by the Board and under the terms, structure and the aggregate amount of such loans consistent with the 1940 Act. Lending portfolio securities increases the lender’s income by receiving a fixed fee or a percentage of the collateral, in addition to receiving the interest or dividend on the securities loaned. As collateral for the loaned securities, the borrower gives the lender collateral equal to at least 100% of the value of the loaned securities. The collateral may consist of cash (including U.S. dollars and foreign currency), securities issued by the U.S. Government or its agencies or instrumentalities, or such other collateral as may be approved by the Board. The borrower must also agree to increase the collateral if the value of the loaned securities increases but may request some of the collateral be returned if the market value of the loaned securities goes down.
During the existence of the loan, the lender will receive from the borrower amounts equivalent to any dividends, interest or other distributions on the loaned securities, as well as interest on such amounts. Loans are subject to termination by the lender or a borrower at any time. The Fund may choose to terminate a loan in order to vote in a proxy solicitation.
During the time a security is on loan and the issuer of the security makes an interest or dividend payment, the borrower pays the lender a substitute payment equal to any interest or dividends the lender would have received directly from the issuer of the security if the lender had not loaned the security. When a lender receives dividends directly from domestic or certain foreign corporations, a portion of the dividends paid by the lender itself to its shareholders and attributable to those dividends (but not the portion attributable to substitute payments) may be eligible for (i) treatment as “qualified dividend income” in the hands of individuals or (ii) the U.S. federal dividends received deduction in the hands of corporate shareholders. The Investment Adviser expects generally to follow the practice of causing the Fund to terminate a securities loan – and forego any income on the loan after the termination – in anticipation of a dividend payment. By doing so, a lender would receive the dividend directly from the issuer of the securities, rather than a substitute payment from the borrower of the securities, and thereby preserve the possibility of those tax benefits for certain shareholders. A lender’s shares may be held by affiliates of the Investment Adviser, and the Investment Adviser’s termination of securities loans under these circumstances (resulting in the lender’s foregoing income from the loans after the termination) may provide an economic benefit to those affiliates.
Securities lending involves counterparty risk, including the risk that a borrower may not provide additional collateral when required or return the loaned securities in a timely manner. Counterparty risk also includes a potential loss of rights in the collateral if the borrower or the Lending Agent defaults or fails financially. This risk is increased if loans are concentrated with a single borrower or limited number of borrowers. There are no limits on the number of borrowers that may be used and securities may be loaned to only one or a small group of borrowers. Participation in securities lending also incurs the risk of loss in connection with investments of cash collateral received from the borrowers. Cash collateral is invested in accordance with investment guidelines contained in the Securities Lending Agreement and approved by the Board. Some or all of the cash collateral received in connection with the securities lending program may be invested in one or more pooled investment vehicles, including, among other vehicles, money market funds managed by the Lending Agent (or its affiliates). The Lending Agent shares in any income resulting from the investment of such cash collateral, and an affiliate of the Lending Agent may receive asset-based fees for the management of such pooled investment vehicles, which may create a conflict of interest between the Lending Agent (or its affiliates) and the Fund with respect to the management of such cash collateral. To the extent that the value or return on investments of the cash collateral declines below the amount owed to a borrower, the Fund may incur losses that exceed the amount it earned on lending the security. The Lending Agent will indemnify the Fund from losses resulting from a borrower’s failure to return a loaned security when due, but such indemnification does not extend to losses associated with declines in the value of cash collateral investments. The Investment Adviser is not responsible for any loss incurred by the Fund in connection with the securities lending program.
Short Sales: Short sales can be made “against the box” or not “against the box.” A short sale that is not made “against the box” is a transaction in which a party sells a security it does not own, in anticipation of a decline in the market value of that security. To complete such a transaction, the seller must borrow the security to make delivery to the buyer. To borrow the security, the seller also may be required to pay a premium, which would increase the cost of the security sold. The seller then is obligated to replace the security borrowed by purchasing it at the market price at the time of replacement. It may not be possible to liquidate or close out the short sale at any
36
particular time or at an acceptable price. The price at such a time may be more or less than the price at which the security was sold by the seller. The seller will incur a loss if the price of the security increases between the date of the short sale and the date on which the seller replaced the borrowed security. Such loss may be unlimited. The seller will realize a gain if the security declines in price between those dates. The amount of any gain will decrease, and the amount of a loss will increase, by the amount of the premium, dividends or interest the seller may be required to pay in connection with a short sale. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet the margin requirements, until the short position is closed out.
The seller may also make short sales “against the box.” A short sale “against the box” is a transaction in which a security identical to one owned by the seller is borrowed and sold short. If the seller enters into a short sale against the box, it is required to hold securities equivalent in-kind and in amount to the securities sold short (or securities convertible or exchangeable into such securities) while the short sale is outstanding. The seller will incur transaction costs, including interest, in connection with opening, maintaining, and closing short sales against the box and will forgo an opportunity for capital appreciation in the security.
Selling short “against the box” typically limits the amount of effective leverage. Short sales “against the box” may be used to hedge against market risks when the manager believes that the price of a security may decline, causing a decline in the value of a security or a security convertible into or exchangeable for such security. In such case, any future losses in the long position would be reduced by a gain in the short position. The extent to which such gains or losses in the long position are reduced will depend upon the amount of securities sold short relative to the amount of the securities owned, either directly or indirectly, and, in the case of convertible securities, changes in the investment values or conversion premiums of such securities.
In response to market events, the SEC and regulatory authorities in other jurisdictions may adopt (and in certain cases, have adopted) bans on, and/or reporting requirements for, short sales of certain securities.
To Be Announced Sale Commitments: To be announced commitments represent an agreement to purchase or sell securities on a delayed delivery or forward commitment basis through the “to-be announced” (“TBA”) market. With TBA transactions, a commitment is made to either purchase or sell securities for a fixed price, without payment, and delivery at a scheduled future dated beyond the customary settlement period for securities. In addition, with TBA transactions, the particular securities to be delivered or received are not identified at the trade date; however, securities delivered to a purchaser must meet specified criteria (such as yield, duration, and credit quality) and contain similar characteristics. TBA securities may be sold to hedge positions or to dispose of securities under delayed delivery arrangements.
Although the particular TBA securities must meet industry-accepted “good delivery” standards, there can be no assurance that a security purchased on a forward commitment basis will ultimately be issued or delivered by the counterparty. During the settlement period, the purchaser will still bear the risk of any decline in the value of the security to be delivered. Because these transactions do not require the purchase and sale of identical securities, the characteristics of the security delivered to the purchaser may be less favorable than the security delivered to the dealer. The purchaser of TBA securities generally is subject to increased market risk and interest rate risk because the delivered securities may be less favorable than anticipated by the purchaser. TBA securities have the effect of creating leverage.
Recently finalized but not yet effective FINRA rules include mandatory margin requirements for the TBA market with limited exceptions. TBAs historically have not been required to be collateralized. The collateralization of TBA trades is intended to mitigate counterparty credit risk between trade and settlement, but could increase the cost of TBA transactions and impose added operational complexity.
When-Issued Securities and Delayed Delivery Transactions: When-issued securities and delayed delivery transactions involve the purchase or sale of securities at a predetermined price or yield with payment and delivery taking place in the future after the customary settlement period for that type of security. Upon the purchase of the securities, liquid assets with an amount equal to or greater than the purchase price of the security will be set aside to cover the purchase of that security. The value of these securities is reflected in the net assets value as of the purchase date; however, no income accrues from the securities prior to their delivery.
There can be no assurance that a security purchased on a when-issued basis will be issued or that a security purchased or sold on a delayed delivery basis will be delivered. When the Fund engages in when-issued or delayed delivery transactions, it relies on the other party to consummate the trade. Failure of such party to do so may result in the Fund’s incurring a loss or missing an opportunity to obtain a price considered to be advantageous.
The purchase of securities in this type of transaction increases an overall investment exposure and involves a risk of loss if the value of the securities declines prior to settlement. If deemed advisable as a matter of investment strategy, the securities may be disposed of or the transaction renegotiated after it has been entered into, and the securities sold before those securities are delivered on the settlement date.
OTHER RISKS
Cyber Security Issues: Cyber security incidents and cyber-attacks (referred to collectively herein as “cyber-attacks”) have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future. The Voya family of funds, and their service providers, may be prone to operational and information security risks resulting from cyber-attacks. Furthermore, as the Fund’s assets grow, it may become a more appealing target for cybersecurity threats such as hackers and malware. Cyber-attacks include, among other behaviors, stealing or corrupting data maintained online or digitally, denial of service attacks on websites, ransomware attacks, social engineering attempts (such as business email compromise attacks), the unauthorized release of confidential information or various other forms of cyber security breaches. Cyber-attacks affecting the Fund or its service providers may adversely impact the Fund. For instance, cyber-attacks may interfere with the processing of shareholder transactions, impact the Fund’s ability to calculate its NAV, cause the release of private shareholder information or confidential business information, impede trading, subject the Fund to regulatory fines or
37
financial losses and/or cause reputational damage. The Fund may also incur additional costs for cyber security risk management purposes. In addition, substantial costs may be incurred in order to prevent any cyber-attacks in the future. Similar types of cyber security risks are also present for issuers of securities in which the Fund may invest, which could result in material adverse consequences for such issuers and may cause the Fund’s investment in such companies to lose value. In addition, cyber-attacks involving the Fund’s counterparty could affect such counterparty's ability to meet its obligations to the Fund, which may result in losses to the Fund and its shareholders. Furthermore, as a result of cyber-attacks, disruptions or failures, an exchange or market may close or issue trading halts on specific securities or the entire market, which may result in the Fund being, among other things, unable to buy or sell certain securities or unable to accurately price its investments. While the Fund has established a business continuity plan in the event of, and risk management systems to prevent, such cyber-attacks, there are inherent limitations in such plans and systems including the possibility that certain risks have not been identified. Furthermore, the Fund cannot control the cyber security plans and systems put in place by service providers to the Fund, and such third-party service providers may have limited indemnification obligations to the Investment Adviser or the Fund, each of whom could be negatively impacted as a result. The Fund and its shareholders could be negatively impacted as a result. Any problems relating to the performance and effectiveness of security procedures used by the Fund or third-party service providers to protect the Fund’s assets, such as algorithms, codes, passwords, multiple signature systems, encryption and telephone call-backs, may have an adverse impact on an investment in the Fund. There may be an increased risk of cyber-attacks during periods of geo-political or military conflict and new ways to carry out cyber-attacks are always developing. Therefore, there is a chance that some risks have not been identified or prepared for, or that an attack may not be detected, which puts limitations on the Fund’s ability to plan for or respond to a cyber-attack.
Qualified Financial Contracts: The Fund’s investments may involve qualified financial contracts (“QFCs”). QFCs include, but are not limited to, securities contracts, commodities contracts, forward contracts, repurchase agreements, securities lending agreements and swaps agreements, as well as related master agreements, security agreements, credit enhancements, and reimbursement obligations. Under regulations adopted by federal banking regulators pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, certain QFCs with counterparties that are part of U.S. or foreign global systemically important banking organizations are required to include contractual restrictions on close-out and cross-default rights. If a covered counterparty of the Fund or certain of the covered counterparty's affiliates were to become subject to certain insolvency proceedings, the Fund may be temporarily, or in some cases permanently, unable to exercise certain default rights, and the QFC may be transferred to another entity. These requirements may impact the Fund’s credit and counterparty risks.
TEMPORARY DEFENSIVE STRATEGIES
When the Investment Adviser or the Sub-Adviser to the Fund anticipates unusual market, economic, political, or other conditions, the Fund may temporarily depart from its principal investment strategies as a defensive measure. In such circumstances, the Fund may invest in securities believed to present less risk, such as cash, cash equivalents, money market fund shares and other money market instruments, debt instruments that are high quality or higher quality than normal, more liquid securities, or others. While the Fund invests defensively, it may not achieve its investment objective. The Fund's defensive investment position may not be effective in protecting its value. It is impossible to predict accurately how long such alternative strategies may be utilized.
38
PORTFOLIO TURNOVER
A change in securities held in the Fund’s portfolio is known as portfolio turnover and may involve the payment by the Fund of dealer mark-ups or brokerage or underwriting commissions and other transaction costs associated with the purchase or sale of securities.
The Fund may sell a portfolio investment soon after its acquisition if the Investment Adviser or Sub-Adviser believes that such a disposition is consistent with the Fund’s investment objective. Portfolio investments may be sold for a variety of reasons, such as a more favorable investment opportunity or other circumstances bearing on the desirability of continuing to hold such investments. Portfolio turnover rate for a fiscal year is the percentage determined by dividing (i) the lesser of the cost of purchases or sales of portfolio securities by (ii) the monthly average of the value of portfolio securities owned by the Fund during the fiscal year. Securities with maturities at acquisition of one year or less are excluded from this calculation. The Fund cannot accurately predict its turnover rate; however, the rate will be higher when the Fund finds it necessary or desirable to significantly change its portfolio to adopt a temporary defensive position or respond to economic or market events.
A portfolio turnover rate of 100% or more is considered high, although the rate of portfolio turnover will not be a limiting factor in making portfolio decisions. A high rate of portfolio turnover involves correspondingly greater brokerage commission expenses and transaction costs which are ultimately borne by the Fund’s shareholders. High portfolio turnover may result in the realization of substantial capital gains.
The Fund’s historical turnover rates are included in the Financial Highlights table(s) in the Prospectus.
FUNDAMENTAL AND NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
Unless otherwise noted, whenever an investment policy or limitation states a maximum percentage of the Fund’s assets that may be invested in any security or other asset, or sets forth a policy regarding quality standards, such percentage limitation or standard will be determined immediately after and as a result of the Fund’s acquisition of such security or other asset, except in the case of borrowing (or other activities that may be deemed to result in the issuance of a “senior security” under the 1940 Act). Accordingly, any subsequent change in value, net assets or other circumstances will not be considered when determining whether the investment complies with the Fund’s investment policies and limitations.
There is no limitation on the percentage of the Fund’s total assets that may be invested in instruments which are not readily marketable or subject to restrictions on resale and to the extent the Fund invests in such instruments, the Fund’s portfolio should be considered illiquid. The extent to which the Fund invests in such instruments may affect its ability to realize the NAV of the Fund in the event of the voluntary or involuntary liquidation of its assets.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions as fundamental policies, which means they cannot be changed without the approval of the holders of a “majority” of the Fund’s outstanding voting securities, as that term is defined in the 1940 Act. The term “majority” is defined in the 1940 Act as the lesser of: (i) 67% or more of the Fund’s voting securities present at a meeting of shareholders at which the holders of more than 50% of the outstanding voting securities of the Fund are present in person or represented by proxy; or (ii) more than 50% of the Fund’s outstanding voting securities.
As a matter of fundamental policy, the Fund will not:
1.
issue senior securities, except insofar as the Fund may be deemed to have issued a senior security by reason of: (i) entering into certain interest rate hedging transactions; (ii) entering into reverse repurchase agreements; or (iii) borrowing money or issuing preferred shares in amounts not exceeding the asset coverage tests established by Section 18(f) of the 1940 Act or as otherwise permitted by law;
2.
invest more than 25% of its total assets in any industry;
3.
make investments in any one issuer other than U.S. government securities if, immediately after such purchase or acquisition, more than 5% of the value of the Fund’s total assets would be invested in such issuer, or the Fund would own more than 25% of any outstanding issue, except that up to 25% of the Fund’s total assets may be invested without regard to the foregoing restrictions. For the purpose of the foregoing restriction, the Fund will consider the borrower on a loan, including a loan participation, to be the issuer of such loan. In addition, with respect to a loan under which the Fund does not have privity with the borrower or would not have a direct cause of action against the borrower in the event of the failure of the borrower to pay scheduled principal or interest, the Fund will also separately meet the foregoing requirements and consider each interpositioned bank (a lender from which the Fund acquires a loan) to be an issuer of the loan;
4.
act as an underwriter of securities, except to the extent that it may be deemed to act as an underwriter in certain cases when disposing of its portfolio investments or acting as an agent or one of a group of co-agents in originating loans;
5.
purchase or sell equity securities, real estate, real estate mortgage loans, commodities, commodity futures contracts, or oil or gas exploration or development programs; or sell short, purchase or sell straddles, spreads, or combinations thereof, or write put or call options (except that the Fund may, incidental to the purchase or ownership of an interest in a loan, or as part of a borrower reorganization, acquire, sell and exercise warrants and/or acquire or sell other equity securities as well as other assets, such as real estate and real estate mortgage loans);
39
6.
make loans of money or property to any person, except that the Fund may: (i) make loans to corporations or other business entities or enter into leases or other arrangements that have the characteristics of a loan consistent with its investment objective and policies; (ii) lend portfolio instruments; and (iii) acquire securities subject to repurchase agreements; or
7.
make investments on margin, hypothecate, mortgage, or pledge any of its assets except for the purpose of providing security for borrowings in an amount up to 33 1/3% of the Fund’s total assets as described above in paragraph 1.
For purposes of paragraph number 2 above, the Fund will consider the borrower on a loan, including a loan participation, to be the issuer of that loan. In addition, with respect to a loan under which the Fund does not have privity with the borrower or would not have a direct cause of action against the borrower in the event of the failure of the borrower to pay scheduled principal or interest, the Fund will also consider each interpositioned bank (a lender from which the Fund acquires a loan) to be an issuer of the loan.
REPURCHASE OFFER FUNDAMENTAL POLICY
The Board has adopted a repurchase offer fundamental policy resolution setting forth the Fund’s fundamental policy that it will conduct monthly repurchase offers. This fundamental policy may be changed only with the approval of a majority of the Fund’s outstanding voting securities, including a majority of any holders of preferred shares voting separately as a class. The Fund is required to offer to repurchase between 5% and 25% of its outstanding Common Shares with each repurchase offer and, under normal market conditions, the Board expects to authorize not less than a 5% offer (“Repurchase Offer”). The Fund may not offer to repurchase more than 25% of its outstanding Common Shares during any calendar quarter.
The time and dates by which Repurchase Offers must be accepted (“Repurchase Request Deadline”) are 4:00 p.m. Eastern time on the 10th business day of each month. The repurchase price will be the Fund’s NAV determined on the repurchase pricing date, which will be a date not more than 14 calendar days following the Repurchase Request Deadline (or the next business day if the 14th calendar day is not a business day) (“Repurchase Offer Amount”). Payment for all Common Shares repurchased pursuant to these offers will be made not later than 5 business days or 7 calendar days (whichever period is shorter) after the repurchase pricing date. Under normal circumstances, it is expected that the repurchase pricing date will be the Repurchase Request Deadline and that the repurchase price will be the Fund’s NAV determined after close of business on the Repurchase Request Deadline. Payment for Common Shares tendered will normally be made on the first business day following the repurchase pricing date and, in every case, at least five business days before sending notification of the next monthly Repurchase Offer. If the tendered shares have been purchased immediately prior to the tender, the Fund will not release repurchase proceeds until payment for the tendered shares has settled.
The Repurchase Offer fundamental policy may be changed only with approval of a majority of the Fund’s outstanding voting securities, including a majority of any holders of preferred shares voting separately as a class.
QUARTERLY DISCLOSURE OF the Fund’s PORTFOLIO SECURITIES
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form NPORT-P. The Fund’s Form NPORT-P is available on the SEC’s website at https://www.sec.gov/. The Fund’s complete schedule of portfolio holdings is available at https://individuals.voya.com/product/mutual-fund/prospectuses-reports and without charge upon request from the Fund by calling shareholder services toll-free at 1-800-992-0180.
40
MANAGEMENT OF the Trust
The business and affairs of the Trust are managed under the direction of the Trust’s Board according to the applicable laws of the State of Delaware.
The Board governs the Fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who oversee the Fund’s activities, review contractual arrangements with companies that provide services to the Fund, and review the Fund’s performance.
Set forth in the table below is information about each Trustee of the Fund.
 
Name, Address and
Year of Birth
Position(s)
Held
with the Trust
Term of Office
and Length
of Time
Served1
Principal Occupation(s)
During the Past 5 Years
Number
of Funds
in the
Fund Complex
Overseen by
Trustees2
Other Board
Positions Held
by Trustees
Independent Trustees
Colleen D. Baldwin

(1960)

7337 East
Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Chairperson
 
Trustee
January 2020 –
Present
November 2007 –
Present
President, Glantuam Partners,
LLC, a business consulting firm
(January 2009 – Present).
137
Stanley Global Engineering (2020
– Present).
John V. Boyer

(1953)

7337 East
Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Trustee
January 2005 –
Present
Retired. Formerly, President and
Chief Executive Officer, Bechtler
Arts Foundation, an arts and
education foundation (January
2008 – December 2019).
137
None.
Martin J. Gavin

(1950)

7337 East
Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Trustee
August 2015 –
Present
Retired.
137
None.
Joseph E. Obermeyer

(1957)

7337 East
Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Trustee
May 2013 – Present
President, Obermeyer &
Associates, Inc., a provider of
financial and economic
consulting services (November
1999 – Present).
137
None.
41
Name, Address and
Year of Birth
Position(s)
Held
with the Trust
Term of Office
and Length
of Time
Served1
Principal Occupation(s)
During the Past 5 Years
Number
of Funds
in the
Fund Complex
Overseen by
Trustees2
Other Board
Positions Held
by Trustees
Sheryl K. Pressler

(1950)

7337 East
Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Trustee
January 2006 –
Present
Consultant (May 2001 –
Present).
137
Centerra Gold Inc. (May 2008 –
Present).
Christopher P.
Sullivan

(1954)

7337 East
Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Trustee
October 2015 –
Present
Retired.
137
None.
 1
Trustees serve until their successors are duly elected and qualified. The tenure of each Trustee who is not an “interested person” as defined in the 1940 Act, of the Fund (as defined below, “Independent Trustee”) is subject to the Board’s retirement policy, which states that each duly elected or appointed Independent Trustee shall retire from and cease to be a member of the Board of Trustees at the close of business on December 31 of the calendar year in which the Independent Trustee attains the age of 75. A majority vote of the Board’s other Independent Trustees may extend the retirement date of an Independent Trustee if the retirement would trigger a requirement to hold a meeting of shareholders of the Trust under applicable law, whether for the purposes of appointing a successor to the Independent Trustee or otherwise complying under applicable law, in which case the extension would apply until such time as the shareholder meeting can be held or is no longer required (as determined by a vote of a majority of the other Independent Trustees).
2
For the purposes of this table, “Fund Complex” includes the following investment companies: Voya Asia Pacific High Dividend Equity Income Fund; Voya Balanced Portfolio, Inc.; Voya Credit Income Fund; Voya Emerging Markets High Dividend Equity Fund; Voya Enhanced Securitized Income Fund; Voya Equity Trust; Voya Funds Trust; Voya Global Advantage and Premium Opportunity Fund; Voya Global Equity Dividend and Premium Opportunity Fund; Voya Government Money Market Portfolio; Voya Infrastructure, Industrials and Materials Fund; Voya Intermediate Bond Portfolio; Voya Investors Trust; Voya Mutual Funds; Voya Partners, Inc.; Voya Separate Portfolios Trust; Voya Strategic Allocation Portfolios, Inc.; Voya Variable Funds; Voya Variable Insurance Trust; Voya Variable Portfolios, Inc.; and Voya Variable Products Trust. The number of funds in the Fund Complex is as of May 31, 2024.
Information Regarding Officers of the Trust
Set forth in the table below is information for each Officer of the Trust.
 
Name, Address and Year of Birth
Position(s) Held with the Trust
Term of Office and Length of Time Served1
Principal Occupation(s) During the Past 5
Years
Andy Simonoff

(1973)

5780 Powers Ferry Road NW
Atlanta, Georgia 30327
President and Chief Executive Officer
January 2023 – Present
Director, President, and Chief Executive
Officer, Voya Funds Services, LLC, Voya
Capital, LLC, and Voya Investments, LLC
(January 2023 – Present); Managing
Director, Chief Strategy and Transformation
Officer, Voya Investment Management
(January 2020 – Present). Formerly,
Managing Director, Head of Business
Management, Voya Investment Management
(March 2019 – January 2020); Managing
Director, Head of Business Management,
Fixed Income, Voya Investment Management
(November 2015 – March 2019).
42
Name, Address and Year of Birth
Position(s) Held with the Trust
Term of Office and Length of Time Served1
Principal Occupation(s) During the Past 5
Years
Jonathan Nash

(1967)

230 Park Avenue
New York, New York 10169
Executive Vice President
Chief Investment Risk Officer
March 2020 - Present
Head of Investment Risk for Equity and
Funds, Voya Investment Management (April
2024 – Present); Executive Vice President
and Chief Investment Risk Officer, Voya
Investments, LLC (March 2020 – Present).
Formerly, Senior Vice President, Investment
Risk Management, Voya Investment
Management (March 2017 – Present); Vice
President, Voya Investments, LLC
(September 2018 – March 2020).
Steven Hartstein

(1963)

230 Park Avenue
New York, New York 10169
Chief Compliance Officer
December 2022 – Present
Senior Vice President, Voya Investment
Management (December 2022 – Present).
Formerly, Head of Funds Compliance,
Brighthouse Financial, Inc.; and Chief
Compliance Officer, Brighthouse Funds and
Brighthouse Investment Advisers, LLC
(March 2017 – December 2022).
Todd Modic

(1967)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Senior Vice President, Chief/Principal
Financial Officer and Assistant Secretary
March 2005 - Present
Director and Senior Vice President, Voya
Capital, LLC and Voya Funds Services, LLC
(September 2022 – Present); Director, Voya
Investments, LLC (September 2022 –
Present); Senior Vice President, Voya
Investments, LLC (April 2005 – Present).
Formerly, President, Voya Funds Services,
LLC (March 2018 – September 2022).
Kimberly A. Anderson

(1964)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Senior Vice President
November 2003 - Present
Senior Vice President, Voya Investments,
LLC (September 2003 – Present).
Sara M. Donaldson

(1959)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Senior Vice President
June 2022 - Present
Senior Vice President, Voya Investments,
LLC (February 2022 – Present); Senior Vice
President, Head of Active Ownership, Voya
Investment Management (September 2021
– Present). Formerly, Vice President, Voya
Investments, LLC (October 2015 – February
2022); Vice President, Head of Proxy Voting,
Voya Investment Management (October
2015 – August 2021).
43
Name, Address and Year of Birth
Position(s) Held with the Trust
Term of Office and Length of Time Served1
Principal Occupation(s) During the Past 5
Years
Jason Kadavy

(1976)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Senior Vice President
September 2023 - Present
Senior Vice President, Voya Investments,
LLC and Voya Funds Services, LLC
(September 2023 – Present). Formerly, Vice
President, Voya Investments, LLC (October
2015 – September 2023); Vice President,
Voya Funds Services, LLC (July 2007 –
September 2023).
Andrew K. Schlueter

(1976)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Senior Vice President
June 2022 - Present
Senior Vice President, Head of Investment
Operations Support, Voya Investment
Management (April 2023 - Present); Vice
President, Voya Investments Distributor, LLC
(April 2018 - Present); Vice President, Voya
Investments, LLC and Voya Funds Services,
LLC (March 2018 - Present). Formerly,
Senior Vice President, Head of Mutual Fund
Operations, Voya Investment Management
(March 2022 - March 2023); Vice President,
Head of Mutual Fund Operations, Voya
Investment Management (February 2018 -
February 2022).
Joanne F. Osberg

(1982)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Senior Vice President
Secretary
March 2023 – Present
 
September 2020 – Present
Senior Vice President and Secretary, Voya
Investments, LLC, Voya Capital, LLC, and
Voya Funds Services, LLC and Senior Vice
President and Chief Counsel, Voya
Investment Management – Mutual Fund
Legal Department (March 2023 – Present).
Formerly, Secretary, Voya Capital, LLC
(August 2022 – March 2023); Vice
President and Secretary, Voya Investments,
LLC and Voya Funds Services, LLC and Vice
President and Senior Counsel, Voya
Investment Management – Mutual Fund
Legal Department (September 2020 –
March 2023); Vice President and Counsel,
Voya Investment Management – Mutual
Fund Legal Department (January 2013 –
September 2020).
Robert Terris

(1970)

5780 Powers Ferry Road NW
Atlanta, Georgia 30327
Senior Vice President
May 2006 - Present
Senior Vice President, Head of Future State
Operating Model Design, Voya Investment
Management (April 2023 – Present); Senior
Vice President, Voya Investments, LLC and
Voya Investments Distributor, LLC (April
2018 – Present); Senior Vice President,
Voya Funds Services, LLC (March 2006 -
Present).
44
Name, Address and Year of Birth
Position(s) Held with the Trust
Term of Office and Length of Time Served1
Principal Occupation(s) During the Past 5
Years
Fred Bedoya

(1973)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Vice President and Principal Accounting
Officer
Treasurer
September 2012 – Present
January 2021 - Present
Vice President, Voya Investments, LLC
(October 2015 – Present) and Voya Funds
Services, LLC (July 2012 – Present).
Robyn L. Ichilov

(1967)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Vice President
April 2001 - Present
Vice President Voya Investments, LLC
(August 1997 – Present); and Vice
President, Voya Funds Services, LLC
(November 1995 – Present).
Erica McKenna

(1972)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Vice President
June 2022 - Present
Vice President, Head of Mutual Fund
Compliance and Chief Compliance Officer,
Voya Investments, LLC (May 2022 –
Present). Formerly, Vice President, Fund
Compliance Manager, Voya Investments,
LLC (March 2021 – May 2022); Assistant
Vice President, Fund Compliance Manager,
Voya Investments, LLC (December 2016 –
March 2021).
Craig Wheeler

(1969)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Vice President
May 2013 - Present
Vice President – Director of Tax, Voya
Investments, LLC (October 2015 – Present).
Gizachew Wubishet

(1976)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Vice President
Assistant Secretary
March 2024 – Present
June 1, 2022 - Present
Vice President and Counsel, Voya
Investment Management – Mutual Fund
Legal Department (March 2024 – Present).
Formerly, Assistant Vice President and
Counsel, Voya Investment Management –
Mutual Fund Legal Department (May 2019 –
February 2024) Attorney, Ropes & Gray LLP
(October 2011 – April 2019).
Nicholas C.D. Ward

(1993)

7337 East Doubletree Ranch
Road, Suite 100
Scottsdale, Arizona
85258-2034
Assistant Vice President and Assistant
Secretary
June 2022 - Present
Assistant Vice President and Counsel, Voya
Investment Management – Mutual Fund
Legal Department (March 2024 – Present).
Formerly, Counsel, Voya Investment
Management – Mutual Fund Legal
Department (November 2021 – February
2024); Associate, Dechert LLP (October
2018 – November 2021).
45
Name, Address and Year of Birth
Position(s) Held with the Trust
Term of Office and Length of Time Served1
Principal Occupation(s) During the Past 5
Years
Monia Piacenti

(1976)

One Orange Way
Windsor, Connecticut 06095
Anti-Money Laundering Officer
June 2018 - Present
Compliance Manager, Voya Financial, Inc.
(March 2023 – Present); Anti-Money
Laundering Officer, Voya Investments
Distributor, LLC, Voya Investment
Management, and Voya Investment
Management Trust Co. (June 2018 –
Present). Formerly, Compliance Consultant,
Voya Financial, Inc. (January 2019 –
February 2023).
1
The Officers hold office until the next annual meeting of the Board of Trustees and until their successors shall have been elected and qualified.
46
The Board of Trustees
The Trust and the Fund are governed by the Board, which oversees the Trust’s business and affairs. The Board delegates the day-to-day management of the Trust and the Fund to the Trust’s Officers and to various service providers that have been contractually retained to provide such day-to-day services. The Voya entities that render services to the Trust and the Fund do so pursuant to contracts that have been approved by the Board. The Trustees are experienced executives who, among other duties, oversee the Trust’s activities, review contractual arrangements with companies that provide services to the Fund, and review the Fund’s investment performance.
The Board Leadership Structure and Related Matters
The Board is comprised of six (6) members, all of whom are independent or disinterested persons, which means that they are not “interested persons” of the Fund as defined in Section 2(a)(19) of the 1940 Act (the “Independent Trustees”).
The Trust is one of 21 registered investment companies (with a total of approximately 137 separate series) in the Voya family of funds and all of the Trustees serve as members of, as applicable, each investment company’s Board of Directors or Board of Trustees. The Board employs substantially the same leadership structure with respect to each of these investment companies.
One of the Independent Trustees, currently Colleen D. Baldwin, serves as the Chairperson of the Board of the Trust. The responsibilities of the Chairperson of the Board include: coordinating with management in the preparation of agendas for Board meetings; presiding at Board meetings; between Board meetings, serving as a primary liaison with other Trustees, officers of the Trust, management personnel, and legal counsel to the Independent Trustees; and such other duties as the Board periodically may determine. Ms. Baldwin does not hold a position with any firm that is a sponsor of the Trust. The designation of an individual as the Chairperson does not impose on such Independent Trustee any duties, obligations or liabilities greater than the duties, obligations or liabilities imposed on such person as a member of the Board, generally.
The Board performs many of its oversight and other activities through the committee structure described below in the “Board Committees” section. Each Committee operates pursuant to a written charter approved by the Board. The Board currently conducts regular meetings eight (8) times a year. All of these regular meetings consist of sessions held over a two- or three-day period. In addition, during the course of a year, the Board and many of its Committees typically hold special meetings by telephone or in person to discuss specific matters that require action prior to the next regular meeting. The Independent Trustees have engaged independent legal counsel to assist them in performing their oversight responsibilities.
The Board believes that its committee structure is an effective means of empowering the Trustees to perform their fiduciary and other duties. For example, the Board’s committee structure facilitates, as appropriate, the ability of individual Board members to receive detailed presentations on topics under their review and to develop increased familiarity with respect to such topics and with key personnel at relevant service providers. At least annually, with guidance from its Nominating and Governance Committee, the Board analyzes whether there are potential means to enhance the efficiency and effectiveness of the Board’s operations.
Board Committees
Audit Committee. The Board has established an Audit Committee whose functions include, among other things: (i) meeting with the independent registered public accounting firm of the Trust to review the scope of the Trust’s audit, the Trust’s financial statements and accounting controls; (ii) meeting with management concerning these matters, internal audit activities, reports under the Trust’s whistleblower procedures, the services rendered by various service providers, and other matters; and (iii) overseeing the implementation of the Voya funds’ valuation procedures and the fair value determinations made with respect to securities held by the Voya funds for which market value quotations are not readily available. The Audit Committee currently consists of three (3) Independent Trustees. The following Trustees currently serve as members of the Audit Committee: Ms. Baldwin and Messrs. Gavin and Sullivan. Mr. Gavin currently serves as the Chairperson of the Audit Committee. All Committee members have been designated as Audit Committee Financial Experts under the Sarbanes-Oxley Act of 2002. The Audit Committee typically meets five (5) times per year, and may hold special meetings by telephone or in person to discuss specific matters that may require action prior to the next regular meeting. The Audit Committee held five (5) meetings during the fiscal year ended February 29, 2024.
Compliance Committee. The Board has established a Compliance Committee for the purpose of, among other things: (i) providing oversight with respect to compliance by the funds in the Voya family of funds and their service providers with applicable laws, regulations, and internal policies and procedures affecting the operations of the funds; (ii) receiving reports of evidence of possible material violations of applicable U.S. federal or state securities laws and breaches of fiduciary duty arising under U.S. federal or state laws; (iii) coordinating activities between the Board and the Chief Compliance Officer (“CCO”) of the funds; (iv) facilitating information flow among Board members and the CCO between Board meetings; (v) working with the CCO and management to identify the types of reports to be submitted by the CCO to the Compliance Committee and the Board; (vi) making recommendations regarding the role, performance, compensation, and oversight of the CCO; (vii) overseeing the cybersecurity practices of the funds and their key service providers; (viii) overseeing management’s administration of proxy voting; (ix) overseeing the effectiveness of brokerage usage by the Trust’s advisers or sub-advisers, as applicable, and compliance with regulations regarding the allocation of brokerage for services; and (x) overseeing the implementation of the funds’ liquidity risk management program.
The Compliance Committee currently consists of three (3) Independent Trustees: Ms. Pressler and Messrs. Boyer and Obermeyer. Mr. Boyer currently serves as the Chairperson of the Compliance Committee. The Compliance Committee typically meets four (4) times per year, and may hold special meetings by telephone or in person to discuss specific matters that may require action prior to the next regular meeting. The Compliance Committee held five (5) meetings during the fiscal year ended February 29, 2024.
47
The Audit Committee and Compliance Committee sometimes meet jointly to consider matters that are reviewed by both Committees. The Committees held one (1) such additional joint meeting during the fiscal year ended February 29, 2024.
Contracts Committee. The Board has established a Contracts Committee for the purpose of overseeing the annual renewal process relating to investment advisory and sub-advisory agreements, distribution agreements, and Rule 12b-1 Plans and, at the discretion of the Board, other service agreements or plans involving the Voya funds (including the Fund). The responsibilities of the Contracts Committee include, among other things: (i) identifying the scope and format of information to be provided by service providers in connection with applicable contract approvals or renewals; (ii) providing guidance to independent legal counsel regarding specific information requests to be made by such counsel on behalf of the Trustees; (iii) evaluating regulatory and other developments that might have an impact on applicable approval and renewal processes; (iv) reporting to the Trustees its recommendations and decisions regarding the foregoing matters; (v) assisting in the preparation of a written record of the factors considered by Trustees relating to the approval and renewal of advisory and sub-advisory agreements; (vi) recommending to the Board specific steps to be taken by it regarding the contracts approval and renewal process, including, for example, proposed schedules of certain actions to be taken; and (vii) otherwise providing assistance in connection with Board decisions to renew, reject, or modify agreements or plans.
The Contracts Committee currently consists of all six (6) of the Independent Trustees of the Board. Ms. Pressler currently serves as the Chairperson of the Contracts Committee. The Contracts Committee typically meets five (5) times per year and may hold special meetings by telephone or in person to discuss specific matters that may require action prior to the next regular meeting. The Contracts Committee held five (5) meetings during the fiscal year ended February 29, 2024.
Investment Review Committees. The Board has established, for all of the funds under its direction, the following two Investment Review Committees (each an “IRC” and together, the “IRCs”): (i) the Investment Review Committee E (“IRC E”); and (ii) the Investment Review Committee F (“IRC F”). The funds are allocated among IRCs periodically by the Board as the Board deems appropriate to balance the workloads of the IRCs and to have similar types of funds or funds with the same investment sub-adviser or the same portfolio management team assigned to the same IRC. Each IRC performs the following functions, among other things: (i) monitoring the investment performance of the funds in the Voya family of funds that are assigned to that Committee; (ii) making recommendations to the Board with respect to investment management activities performed by the investment advisers and/or sub-advisers on behalf of such Voya funds, and reviewing and making recommendations regarding proposals by management to retain new or additional sub-advisers for these Voya funds; and (iii) making recommendations to the Board regarding the role, performance, compensation, and oversight of the Chief Investment Risk Officer. The Fund is monitored by the IRCs, as indicated below. Each committee is described below.
 
Fund
IRC E
IRC F
Voya Credit Income Fund
 
X
The IRC E currently consists of three (3) Independent Trustees. The following Trustees serve as members of the IRC E: Ms. Baldwin and Messrs. Gavin and Obermeyer. Mr. Obermeyer currently serves as the Chairperson of the IRC E. The IRC E typically meets five (5) times per year and on an as-needed basis. The IRC E held five (5) meetings during the fiscal year ended February 29, 2024.
The IRC F currently consists of three (3) Independent Trustees. The following Trustees serve as members of the IRC F: Ms. Pressler and Messrs. Boyer and Sullivan. Mr. Sullivan currently serves as the Chairperson of the IRC F. The IRC F typically meets five (5) times per year and on an as-needed basis. The IRC F held five (5) meetings during the fiscal year ended February 29, 2024.
The IRC E and IRC F sometimes meet jointly to consider matters that are reviewed by both Committees. The Committees held six (6) such additional joint meetings during the fiscal year ended February 29, 2024.
Nominating and Governance Committee. The Board has established a Nominating and Governance Committee for the purpose of, among other things: (i) identifying and recommending to the Board candidates it proposes for nomination to fill Independent Trustee vacancies on the Board; (ii) reviewing workload and capabilities of Independent Trustees and recommending changes to the size or composition of the Board, as necessary; (iii) monitoring regulatory developments and recommending modifications to the Committee’s responsibilities; (iv) considering and, if appropriate, recommending the creation of additional committees or changes to Trustee policies and procedures based on rule changes and “best practices” in corporate governance; (v) conducting an annual review of the membership and chairpersons of all Board committees and of practices relating to such membership and chairpersons; (vi) undertaking a periodic study of compensation paid to independent board members of investment companies and making recommendations for any compensation changes for the Independent Trustees; (vii) overseeing the Board’s annual self-evaluation process; (viii) developing (with assistance from management) an annual meeting calendar for the Board and its committees; (ix) overseeing actions to facilitate attendance by Independent Trustees at relevant educational seminars and similar programs; and (x) overseeing insurance arrangements for the funds.
In evaluating potential candidates to fill Independent Trustee vacancies on the Board, the Nominating and Governance Committee will consider a variety of factors. Specific qualifications of candidates for Board membership will be based on the needs of the Board at the time of nomination. The Nominating and Governance Committee will consider nominations received from shareholders and shall assess shareholder nominees in the same manner as it reviews nominees that it identifies as potential candidates. A shareholder nominee for Trustee should be submitted in writing to the Trust’s Secretary at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258-2034. Any such shareholder nomination should include at least the following information as to each individual proposed for nomination as Trustee: such person’s written consent to be named in a proxy statement as a nominee (if nominated) and to serve as a Trustee (if elected), and all information relating to such individual that is required to be disclosed in the solicitation of proxies for election of Trustees, or is otherwise required, in each case under applicable federal securities laws, rules, and regulations, including such information as the Board may reasonably deem necessary to satisfy its oversight and due diligence duties.
48
The Secretary shall submit all nominations received in a timely manner to the Nominating and Governance Committee. To be timely in connection with a shareholder meeting to elect Trustees, any such submission must be delivered to the Trust’s Secretary not earlier than the 90th day prior to such meeting and not later than the close of business on the later of the 60th day prior to such meeting or the 10th day following the day on which public announcement of the date of the meeting is first made, by either the disclosure in a press release or in a document publicly filed by the Trust with the SEC.
The Nominating and Governance Committee currently consists of all six (6) of the Independent Trustees of the Board. Mr. Gavin currently serves as the Chairperson of the Nominating and Governance Committee. The Nominating and Governance Committee conducts meetings as needed or appropriate.The Nominating and Governance Committee held four (4) meetings during the fiscal year ended February 29, 2024.
The Board’s Risk Oversight Role
The day-to-day management of various risks relating to the administration and operation of the Trust is the responsibility of management and other service providers retained by the Board or by management, most of whom employ professional personnel who have risk management responsibilities. The Board oversees this risk management function consistent with and as part of its oversight duties. The Board performs this risk management oversight function directly and, with respect to various matters, through its committees. The following description provides an overview of many, but not all, aspects of the Board’s oversight of risk management for the Fund. In this connection, the Board has been advised that it is not practicable to identify all of the risks that may impact the Fund or to develop procedures or controls that are designed to eliminate all such risk exposures, and that applicable securities law regulations do not contemplate that all such risks be identified and addressed.
The Board, working with management personnel and other service providers, has endeavored to identify the primary risks that confront the Fund. In general, these risks include, among others: (i) investment risks; (ii) credit risks; (iii) liquidity risks; (iv) valuation risks; (v) operational risks; (vi) reputational risks; (vii) regulatory risks; (viii) risks related to potential legislative changes; (ix) the risk of conflicts of interest affecting Voya affiliates in managing the Fund; and (x) cybersecurity risks. The Board has adopted and periodically reviews various policies and procedures that are designed to address these and other risks confronting the Fund. In addition, many service providers to the Fund have adopted their own policies, procedures, and controls designed to address particular risks to the Fund. The Board and persons retained to render advice and service to the Board periodically review and/or monitor changes to, and developments relating to, the effectiveness of these policies and procedures.
The Board oversees risk management activities in part through receipt and review by the Board or its committees of regular and special reports, presentations and other information from Officers of the Trust, including the CCOs for the Trust and the Investment Adviser and the Trust’s Chief Investment Risk Officer (“CIRO”), and from other service providers. For example, management personnel and the other persons make regular reports and presentations to: (i) the Compliance Committee regarding compliance with regulatory requirements and oversight of cybersecurity practices by the Fund and key service providers; (ii) the IRCs regarding investment activities and strategies that may pose particular risks; (iii) the Audit Committee with respect to financial reporting controls and internal audit activities; (iv) the Nominating and Governance Committee regarding corporate governance and best practice developments; and (v) the Contracts Committee regarding regulatory and related developments that might impact the retention of service providers to the Trust. The CIRO oversees an Investment Risk Department (“IRD”) that provides an additional source of analysis and research for Board members in connection with their oversight of the investment process and performance of portfolio managers. Among its other duties, the IRD seeks to identify and, where practicable, measure the investment risks being taken by the Fund’s portfolio managers. Although the IRD works closely with management of the Trust in performing its duties, the CIRO is directly accountable to, and maintains an ongoing dialogue with, the Independent Trustees.
Qualifications of the Trustees
The Board believes that each of its Trustees is qualified to serve as a Trustee of the Trust based on its review of the experience, qualifications, attributes, and skills of each Trustee. The Board bases this conclusion on its consideration of various criteria, no one of which is controlling. Among others, the Board has considered the following factors with respect to each Trustee: strong character and high integrity; an ability to review, evaluate, analyze, and discuss information provided; the ability to exercise effective business judgment in protecting shareholder interests while taking into account different points of views; a background in financial, investment, accounting, business, regulatory, or other skills that would be relevant to the performance of a Trustee's duties; the ability and willingness to commit the time necessary to perform his or her duties; and the ability to work in a collegial manner with other Board members. Each Trustee's ability to perform his or her duties effectively is evidenced by his or her: experience in the investment management business; related consulting experience; other professional experience; experience serving on the boards of directors/trustees of other public companies; educational background and professional training; prior experience serving on the Board, as well as the boards of other investment companies in the Voya family of funds and/or of other investment companies; and experience as attendees or participants in conferences and seminars that are focused on investment company matters and/or duties that are specific to board members of registered investment companies.
Information indicating certain of the specific experience and qualifications of each Trustee relevant to the Board’s belief that the Trustee should serve in this capacity is provided in the table above that provides information about each Trustee. That table includes, for each Trustee, positions held with the Trust, the length of such service, principal occupations during the past five (5) years, the number of series within the Voya family of funds for which the Trustee serves as a Board member, and certain directorships held during the past five (5) years. Set forth below are certain additional specific experiences, qualifications, attributes, or skills that the Board believes support a conclusion that each Trustee should serve as a Board member in light of the Trust’s business and structure.
Independent Trustees
49
Colleen D. Baldwin has been a Trustee of the Trust and a board member of other investment companies in the Voya family of funds since 2007. She also has served as the Chairperson of the Trust’s Board of Trustees since January 1, 2020 and, prior to that, as the Chairperson of the Trust’s IRC E from 2014 through 2019. Prior to that, she served as the Chairperson of the Trust’s Nominating and Governance Committee from 2009 through 2014. Ms. Baldwin has been a Board member of Stanley Global Engineering since 2020 and President of Glantuam Partners, LLC, a business consulting firm, since 2009. Prior to that, she served in senior positions at the following financial services firms: Chief Operating Officer for Ivy Asset Management, Inc. (2002-2004), a hedge fund manager; Chief Operating Officer and Head of Global Business and Product Development for AIG Global Investment Group (1995-2002), a global investment management firm; Senior Vice President at Bankers Trust Company (1994-1995); and Senior Managing Director at J.P. Morgan & Company (1987-1994). Ms. Baldwin began her career in 1981 at AT&T/Bell Labs as a systems analyst. Ms. Baldwin holds a B.S. from Fordham University and an M.B.A. from Pace University.
John V. Boyer has been a Trustee of the Trust and a board member of other investment companies in the Voya family of funds since 1997. He also has served as the Chairperson of the Trust’s Compliance Committee since January 1, 2020 and, prior to that, as the Chairperson of the Trust’s Board of Trustees from 2014 through 2019. Prior to that, he served as the Chairperson of the Trust’s IRC F since 2006 and as the Chairperson of the Compliance Committee for other funds in the Voya family of funds. Mr. Boyer was the President and CEO of the Bechtler Arts Foundation from 2008 until 2019 for which, among his other duties, Mr. Boyer oversaw all fiduciary aspects of the Foundation and assisted in the oversight of the Foundation’s endowment fund. Previously, he served as President and Chief Executive Officer of the Franklin and Eleanor Roosevelt Institute (2006-2007) and as Executive Director of The Mark Twain House & Museum (1989-2006) where he was responsible for overseeing business operations, including endowment funds. He also served as a board member of certain predecessor mutual funds of the Voya family of funds (1997-2005). Mr. Boyer holds a B.A. from the University of California, Santa Barbara and an M.F.A. from Princeton University.
Martin J. Gavin has been a Trustee of the Trust since August 1, 2015. He also has served as the Chairperson of the Trust’s Nominating and Governance Committee since January 1, 2024 and as the Chairperson of the Trust’s Audit Committee since January 1, 2018. Mr. Gavin previously served as a Trustee of the Trust from May 21, 2013 until September 12, 2013, and as a board member of other investment companies in the Voya family of funds from 2009 until 2010 and from 2011 until September 12, 2013.Mr. Gavin was the President and Chief Executive Officer of the Connecticut Children’s Medical Center from 2006 to 2015. Prior to his position at Connecticut Children’s Medical Center, Mr. Gavin worked in the insurance and investment industries for more than 27 years. Mr. Gavin served in several senior executive positions with The Phoenix Companies during a 16 year period, including as President of Phoenix Trust Operations, Executive Vice President and Chief Financial Officer of Phoenix Duff & Phelps, a publicly-traded investment management company, and Senior Vice President of Investment Operations at Phoenix Home Life. Mr. Gavin holds a B.A. from the University of Connecticut.
Joseph E. Obermeyer has been a Trustee of the Trust since May 21, 2013, and a board member of other investment companies in the Voya family of funds since 2003. He also has served as the Chairperson of the Trust’s IRC E since January 1, 2024 and, prior to that, as Chairperson of the Trust’s Nominating and Governance Committee from 2018 to 2023. Prior to that, he served as the Chairperson of the Trust’s former Joint IRC from 2014 through 2017. Mr. Obermeyer is the founder and President of Obermeyer & Associates, Inc., a provider of financial and economic consulting services since 1999. Prior to founding Obermeyer & Associates, Mr. Obermeyer had more than 15 years of experience in accounting, including serving as a Senior Manager at Arthur Andersen LLP from 1995 until 1999. Previously, Mr. Obermeyer served as a Senior Manager at Coopers & Lybrand LLP from 1993 until 1995, as a Manager at Price Waterhouse from 1988 until 1993, Second Vice President from 1985 until 1988 at Smith Barney, and as a consultant with Arthur Andersen & Co. from 1984 until 1985. Mr. Obermeyer holds a B.A. in Business Administration from the University of Cincinnati, an M.B.A. from Indiana University, and post graduate certificates from the University of Tilburg and INSEAD.
Sheryl K. Pressler has been a Trustee of the Trust and a board member of other investment companies in the Voya family of funds since 2006. She also has served as the Chairperson of the Trust’s Contracts Committee since 2007. Ms. Pressler has served on the Board of Centerra Gold since May 2008. Ms. Pressler has served as a consultant on financial matters since 2001. Previously, she held various senior positions involving financial services, including as Chief Executive Officer (2000-2001) of Lend Lease Real Estate Investments, Inc. (real estate investment management and mortgage servicing firm), Chief Investment Officer (1994-2000) of California Public Employees’ Retirement System (state pension fund), Director of Stillwater Mining Company (May 2002-May 2013), and Director of Retirement Funds Management (1981-1994) of McDonnell Douglas Corporation (aircraft manufacturer). Ms. Pressler holds a B.A. from Webster University and an M.B.A. from Washington University.
Christopher P. Sullivan has been a Trustee of the Trust since October 1, 2015. He also has served as the Chairperson of the Trust’s IRC F since January 1, 2018. He retired from Fidelity Management & Research in October 2012, following three years as first the President of the Bond Group and then the Head of Institutional Fixed Income. Previously, Mr. Sullivan served as Managing Director and Co-Head of U.S. Fixed Income at Goldman Sachs Asset Management (2001-2009) and prior to that, Senior Vice President at PIMCO (1997-2001). He currently serves as a Director of Rimrock Funds (since 2013), a fixed-income hedge fund. He is also a Senior Advisor to Asset Grade (since 2013), a private wealth management firm, and serves as a Trustee of the Overlook Foundation, a foundation that supports Overlook Hospital in Summit, New Jersey. In addition to his undergraduate degree from the University of Chicago, Mr. Sullivan holds an M.A. degree from the University of California at Los Angeles and is a Chartered Financial Analyst.
Trustee Ownership of Securities
In order to further align the interests of the Independent Trustees with shareholders, it is the policy of the Board for Independent Trustees to own, beneficially, shares of one or more funds in the Voya family of funds at all times (the “Ownership Policy”). For this purpose, beneficial ownership of shares of a Voya fund includes, in addition to direct ownership of Voya fund shares, ownership of a variable contract whose
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proceeds are invested in a Voya fund within the Voya family of funds, as well as deferred compensation payments under the Board’s deferred compensation arrangements pursuant to which the future value of such payments is based on the notional value of designated funds within the Voya family of funds.
The Ownership Policy requires the initial value of investments in the Voya family of funds that are directly or indirectly owned by the Trustees to equal or exceed the annual retainer fee for Board services (excluding any annual retainers for service as chairpersons of the Board or its committees or as members of committees), as such retainer shall be adjusted from time to time.
The Ownership Policy provides that existing Trustees shall have a reasonable amount of time from the date of any recent or future increase in the minimum ownership requirements in order to satisfy the minimum share ownership requirements. In addition, the Ownership Policy provides that a new Trustee shall satisfy the minimum share ownership requirements within a reasonable amount of time of becoming a Trustee. For purposes of the Ownership Policy, a reasonable period of time will be deemed to be, as applicable, no more than three years after a Trustee has assumed that position with the Voya family of funds or no more than one year after an increase in the minimum share ownership requirement due to changes in annual Board retainer fees. A decline in value of any fund investments will not cause a Trustee to have to make any additional investments under the Ownership Policy.
Investment in mutual funds of the Voya family of funds by the Trustees pursuant to the Ownership Policy is subject to: (i) policies, applied by the mutual funds of the Voya family of funds to other similar investors, that are designed to prevent inappropriate market timing trading practices; and (ii) any provisions of the Code of Ethics for the Voya family of funds that otherwise apply to the Trustees.
Trustees' Fund Equity Ownership Positions
The following table sets forth information regarding each Trustee's beneficial ownership of equity securities of the Fund and the aggregate holdings of shares of equity securities of all the funds in the Voya family of funds for the calendar year ended December 31, 2023.
 
Fund
Dollar Range of Equity Securities in the Fund as of December 31, 2023
Colleen D. Baldwin
John V. Boyer
Martin J. Gavin
Voya Credit Income Fund
$50,001-$100,0001
None
None
Aggregate Dollar Range of
Equity Securities in All
Registered Investment
Companies Overseen by
Trustee in the Voya family of
funds
Over $100,0001
Over $100,0001
Over $100,0001
 
Fund
Dollar Range of Equity Securities in the Fund as of December 31, 2023
Joseph E. Obermeyer
Sheryl K. Pressler
Christopher P. Sullivan
Voya Credit Income Fund
None
None
None
Aggregate Dollar Range of
Equity Securities in All
Registered Investment
Companies Overseen by
Trustee in the Voya family of
funds
Over $100,0001
Over $100,0001
Over $100,000
1
Includes the value of shares in which a Trustee has an indirect interest through a deferred compensation plan and/or a 401(k) plan.
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Independent Trustee Ownership of Securities of the Investment Adviser, Principal Underwriter, and their Affiliates
The following table sets forth information regarding each Independent Trustee's (and his/her immediate family members) share ownership, beneficially or of record, in securities of the Investment Adviser or Principal Underwriter, and the ownership of securities in an entity controlling, controlled by, or under common control with the Investment Adviser or Principal Underwriter of the Fund (not including registered investment companies) as of December 31, 2023.
 
Name of Trustee
Name of Owners
and Relationship
to Trustee
Company
Title of
Class
Value of
Securities
Percent of
Class
Colleen D. Baldwin
N/A
N/A
N/A
N/A
N/A
John V. Boyer
N/A
N/A
N/A
N/A
N/A
Martin J. Gavin
N/A
N/A
N/A
N/A
N/A
Joseph E. Obermeyer
N/A
N/A
N/A
N/A
N/A
Sheryl K. Pressler
N/A
N/A
N/A
N/A
N/A
Christopher P. Sullivan
N/A
N/A
N/A
N/A
N/A
Trustee Compensation
Each Trustee is reimbursed for reasonable expenses incurred in connection with each meeting of the Board or any of its Committee meetings attended. Each Independent Trustee is compensated for his or her services, on a quarterly basis, according to a fee schedule adopted by the Board. The Board may from time to time designate other meetings as subject to compensation.
The Fund pays each Trustee who is not an interested person of the Fund his or her pro rata share, as described below, of: (i) an annual retainer of $270,000; (ii) Ms. Baldwin, as the Chairperson of the Board, receives an additional annual retainer of $100,000; (iii) Ms. Pressler and Messrs. Boyer, Gavin, Obermeyer, and Sullivan, as the Chairpersons of Committees of the Board, each receives an additional annual retainer of $65,000, $30,000, $30,000, $30,000 and $30,000, respectively; (iv) $10,000 per attendance at any of the regularly scheduled meetings (four (4) quarterly meetings, two (2) auxiliary meetings, and two (2) annual contract review meetings); and (v) out-of-pocket expenses. The Board at its discretion may from time to time designate other special meetings as subject to compensation in such amounts as the Board may reasonably determine on a case-by-case basis.
The pro rata share paid by the Fund is based on the Fund’s average net assets as a percentage of the average net assets of all the funds managed by the Investment Adviser or its affiliate for which the Trustees serve in common as Trustees.
Future Compensation Payment
Certain future payment arrangements apply to certain Trustees. More particularly, each non-interested Trustee who will have served as a non-interested Trustee for five or more years for one or more funds in the Voya family of funds is entitled to a future payment (“Future Payment”), if such Trustee:  (i) retires in accordance with the Board’s retirement policy; (ii) dies; or (iii) becomes disabled.  The Future Payment shall be made promptly to, as applicable, the Trustee or the Trustee’s estate, in an amount equal to two (2) times the annual compensation payable to such Trustee, as in effect at the time of his or her retirement, death or disability if the Trustee had served as Trustee for at least five years as of May 9, 2007, or in a lesser amount calculated based on the proportion of time served by such Trustee (as compared to five years) as of May 9, 2007.  The annual compensation determination shall be based upon the annual Board membership retainer fee in effect at the time of that Trustee’s retirement, death or disability (but not any separate annual retainer fees for chairpersons of committees and of the Board), provided that the annual compensation used for this purpose shall not exceed the annual retainer fees as of May 9, 2007.  This amount shall be paid by the Voya fund or Voya funds on whose Board the Trustee was serving at the time of his or her retirement, death, or disability.  Each applicable Trustee may elect to receive payment of his or her benefit in a lump sum or in three substantially equal payments.
Compensation Table
The following table sets forth information provided by the Investment Adviser regarding compensation of Trustees by the Fund and other funds managed by the Investment Adviser and its affiliates for the fiscal year ended February 29, 2024. Officers of the Trust and Trustees who are interested persons of the Trust do not receive any compensation from the Trust or any other funds managed by the Investment Adviser or its affiliates.
 
Fund
Aggregate Compensation
Colleen D. Baldwin
John V. Boyer
Patricia W. Chadwick1
Martin J. Gavin
Voya Credit Income Fund
$597
$505
$505
$505
Pension or Retirement
Benefits Accrued as Part of
Fund Expenses2
N/A
$0
$113,333
N/A
Estimated Annual Benefits
Upon Retirement3
N/A
$400,000
$113,333
N/A
Total Compensation from the
Fund and the Voya family of
funds Paid to Trustees
$455,000
$385,000
$385,000
$385,000
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Fund
Aggregate Compensation
Joseph E. Obermeyer
Sheryl K. Pressler
Christopher P. Sullivan
Voya Credit Income Fund
$505
$551
$505
Pension or Retirement
Benefits Accrued as Part of
Fund Expenses2
$0
N/A
N/A
Estimated Annual Benefits
Upon Retirement3
N/A
$113,333
N/A
Total Compensation from the
Fund and the Voya family of
funds Paid to Trustees
$385,0004
$420,0004
$385,000
1
Patricia W. Chadwick retired as a Trustee effective December 31, 2023.
2
Future Compensation Payment amounts are accrued pro rata to all Voya funds in the same year that the Trustee retires.
3
As discussed in the section entitled “Future Compensation Payment” above, this is not an annual benefit. Rather each applicable Trustee may elect to receive payment of his or her benefit in a lump sum or in three substantially equal payments. Future Compensation Payments included in this table represent the total payment allocated pro rata to all Voya funds.
4
During the fiscal year ended February 29, 2024, Mr. Obermeyer and Ms. Pressler deferred $38,500 and $60,000, respectively, of their compensation from the Voya family of funds.
CODE OF ETHICS
The Fund, the Investment Adviser, the Sub-Adviser, and the Distributor have adopted a code of ethics (the “Code of Ethics”) pursuant to Rule 17j-1 under the 1940 Act governing personal trading activities of all Trustees, Officers of the Trust, and persons who, in connection with their regular functions, play a role in the recommendation of or obtain information pertaining to any purchase or sale of a security by the Fund. The Code of Ethics is intended to prohibit fraud against the Fund that may arise from the personal trading of securities that may be purchased or held by that Fund or of the Fund’s shares. The Code of Ethics prohibits short-term trading of the Fund’s shares by persons subject to the Code of Ethics. Personal trading is permitted by such persons subject to certain restrictions; however, such persons are generally required to pre-clear security transactions with the Investment Adviser or its affiliates and to report all transactions on a regular basis.
The Code of Ethics can be reviewed and copied at the SEC’s Public Reference Room located at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 551-8090. The Code of Ethics is available on the EDGAR Database on the SEC’s website at www.sec.gov and copies may also be obtained at prescribed rates by electronic request at publicinfo@sec.gov, or by writing the SEC’s Public Reference Section at the address listed above.
PROXY VOTING POLICY
The Board has approved the Investment Adviser’s Proxy Voting Policy (the “Proxy Voting Policy”) for voting proxies on behalf of the Voya funds. The Proxy Voting Policy requires the Investment Adviser to vote the Fund’s portfolio securities that have voting rights in accordance with the Proxy Voting Policy and provides a method for responding to potential conflicts of interest. An independent proxy voting service has been retained to assist in the voting of Fund proxies through the provision of vote analysis, implementation, recordkeeping, and disclosure services. The Compliance Committee oversees the implementation of the Fund’s Proxy Voting Policy, as applicable. A copy of
the Proxy Voting Policy is attached hereto as Appendix A. If applicable, no later than August 31st of each year, information regarding how the Fund voted proxies relating to portfolio securities for the twelve-month period ending June 30th is available online, without charge, at https://individuals.voya.com/product/mutual-fund/prospectuses-reports or by accessing the SEC’s EDGAR database at https://sec.gov.
PRINCIPAL SHAREHOLDERS AND CONTROL PERSONS
Control is defined by the 1940 Act as the beneficial ownership, either directly or through one or more controlled companies, of more than 25% of the voting securities of a company. A control person may have a significant impact on matters submitted to a shareholder vote.
Trustee and Officer Holdings
As of June 6, 2024, the Trustees and officers of the Trust as a group owned less than 1% of any class of the Fund’s outstanding Common Shares.
Principal Shareholders
As of June 6, 2024, to the best knowledge of management, no person owned beneficially or of-record 5% or more of the outstanding shares of any class of the Fund or 5% or more of the outstanding shares of the Fund addressed herein, except as set forth in the table below. The Trust has no knowledge as to whether all or any portion of shares owned of-record are also owned beneficially.
 
Name of Fund
Class
Name and Address
Percentage
of Class
Percent
of Fund
Voya Credit Income Fund
Class A
National Financial Services LLC
For the Exclusive Benefit of Our Customers
499 Washington Blvd FL 5
Jersey City, NJ 07310-2010
11.02%
9.88%
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Name of Fund
Class
Name and Address
Percentage
of Class
Percent
of Fund
Voya Credit Income Fund
Class A
Pershing LLC
1 Pershing Plaza
Jersey City, NJ 07399-00001
10.89%
11.24%
Voya Credit Income Fund
Class A
MLPF & S For the Sole Benefit of the Customers
Attn: Fund Administration
4800 Deer Lake Dr East 3rd FL
Jacksonville, FL 32246-6484
7.19%
6.31%
Voya Credit Income Fund
Class A
Raymond James
Omnibus for Mutual Funds House Account
Attn: Courtney Waller
880 Carillon Parkway
St. Petersburg, FL 33716
6.83%
6.31%
Voya Credit Income Fund
Class A
LPL Financial
Omnibus Customer Account
Attn: Lindsay O'Toole
4707 Executive Dr
San Diego, CA 92121
5.09%
4.79%
Voya Credit Income Fund
Class C
National Financial Services LLC
For the Exclusive Benefit of Our Customers
499 Washington Blvd FL 5
Jersey City, NJ 07310-2010
6.76%
9.88%
Voya Credit Income Fund
Class C
Pershing LLC
1 Pershing Plaza
Jersey City, NJ 07399-00001
6.27%
11.24%
Voya Credit Income Fund
Class C
Roger P. Erickson & Pamela J. Erickson
Jt Ten Wros
2459 N 69TH ST
Wauwatosa, WI 53213-1313
5.24%
0.24%
Voya Credit Income Fund
Class C
American Enterprise Investment SVC
707 2nd Ave South
Minneapolis, MN 55402-2405
17.97%
2.32%
Voya Credit Income Fund
Class I
Wells Fargo Clearing SVCS LLC
2801 Market Street
Saint Louis, MO 63103
10.97%
10.68%
Voya Credit Income Fund
Class I
Charles Schwab & Co. Inc.
Special Custody Account FBO Our Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco CA 94104-4122
14.14%
5.52%
Voya Credit Income Fund
Class W
Alain M. Karaoglan
4 E. 72nd Street 7A
New York, NY 10021
20.22%
0.55%
Voya Credit Income Fund
Class W
Pershing LLC
1 Pershing Plaza
Jersey City, NJ 07399-00001
43.53%
11.24%
Voya Credit Income Fund
Class W
American Enterprise Investment SVC
707 2nd Ave South
Minneapolis, MN 55402-2405
9.60%
2.32%
Voya Credit Income Fund
Class W
Charles Schwab & Co. Inc.
Special Custody Account FBO Our Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco CA 94104-4122
14.43%
5.52%
INVESTMENT ADVISER
Voya Investments, an Arizona limited liability company, is registered with the SEC as an investment adviser. Voya Investments serves as the investment adviser to, and has overall responsibility for the management of, the Fund. Voya Investments oversees all investment advisory and portfolio management services and assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including, but not limited to, the following: custodial, transfer agency, dividend disbursing, accounting, auditing, compliance, and related services.
54
Voya Investments began business as an investment adviser in 1994 and currently serves as investment adviser to certain registered investment companies, consisting of open- and closed-end registered investment companies and collateralized loan obligations. Voya Investments is an indirect subsidiary of Voya Financial, Inc. Voya Financial, Inc. is a U.S.-based financial institution whose subsidiaries operate in the retirement, investment, and insurance industries.
Investment Management Agreement
The Investment Adviser serves pursuant to an Investment Management Agreement between the Investment Adviser and the Trust on behalf of the Fund. Under the Investment Management Agreement, the Investment Adviser oversees, subject to the authority of the Board, the provision of all investment advisory and portfolio management services for the Fund. In addition, the Investment Adviser provides administrative services reasonably necessary for the ordinary operation of the Fund. The Investment Adviser has delegated certain management responsibilities to one or more Sub-Advisers.
Investment Management Services
Among other things, the Investment Adviser: (i) provides general investment advice and guidance with respect to the Fund and provides advice and guidance to the Fund’s Board; (ii) provides the Board with any periodic or special reviews or reporting it requests, including any reports regarding the Sub-Adviser and its investment performance; (iii) oversees management of the Fund’s investments and portfolio composition including supervising the Sub-Adviser with respect to the services the Sub-Adviser provides; (iv) makes available its officers and employees to the Board and officers of the Trust; (v) designates and compensates from its own resources such personnel as the Investment Adviser may consider necessary or appropriate to the performance of its services hereunder; (vi) periodically monitors and evaluates the performance of the Sub-Adviser with respect to the investment objectives and policies of the Fund and performs periodic detailed analysis and review of the Sub-Adviser’s investment performance; (vii) reviews, considers and reports on any changes in the personnel of the Sub-Adviser responsible for performing the Sub-Adviser’s obligations or any changes in the ownership or senior management of the Sub-Adviser; (viii) performs periodic in-person or telephonic diligence meetings with the Sub-Adviser; (ix) assists the Board and management of the Fund in developing and reviewing information with respect to the initial and subsequent annual approval of the Sub-Advisory Agreement(s); (x) monitors the Sub-Adviser for compliance with the investment objective(s), policies and restrictions of the Fund, the 1940 Act, Subchapter M of the Code, and, if applicable, regulations under these provisions, and other applicable law; (xi) if appropriate, analyzes and recommends for consideration by the Board termination of a contract with the Sub-Adviser; (xii) identifies potential successors to or replacements of the Sub-Adviser or potential additional sub-adviser(s), performs appropriate due diligence, and develops and presents recommendations to the Board; and (xiii) is authorized to exercise full investment discretion and make all determinations with respect to the day-to-day investment of the Fund’s assets and the purchase and sale of portfolio securities for the Fund in the event that at any time no sub-adviser is engaged to manage the assets of the Fund.
In addition, the Investment Adviser assists in managing and supervising all aspects of the general day-to-day business activities and operations of the Fund, including custodial, transfer agency, dividend disbursing, accounting, auditing, compliance, and related services. The Investment Adviser also reviews the Fund for compliance with applicable legal requirements and monitors the Sub-Adviser for compliance with requirements under applicable law and with the investment policies and restrictions of the Fund.
Limitation of Liability
The Investment Adviser is not subject to liability to the Fund for any act or omission in the course of, or in connection with, rendering services under the Investment Management Agreement, except by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of its obligations and duties under the Investment Management Agreement.
Continuation and Termination of the Investment Management Agreement
After an initial term of two years, the Investment Management Agreement continues in effect from year to year with respect to the Fund so long as such continuance is specifically approved at least annually by: (i) the Board of Trustees; or (ii) the vote of a “majority” of the Fund’s outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act); and provided that such continuance is also approved by a vote of at least a majority of the Independent Trustees who are not parties to the agreement by a vote cast either in person at a meeting called for the purpose of voting on such approval, or in reliance on exemptive relief from the SEC that has permitted such approval at virtual meetings held by video or telephone conference since the commencement of the COVID-19 pandemic.
The Investment Management Agreement may be terminated as to the Fund at any time without penalty by: (i) the vote of the Board; (ii) the vote of a majority of the Fund’s outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act); or (iii) the Investment Adviser, on sixty (60) days’ prior written notice to the other party. The notice provided for herein may be waived by either party, as a single class, or upon notice given by the Investment Adviser. The Investment Management Agreement will terminate automatically in the event of its “assignment” (as defined in Section 2(a)(4) of the 1940 Act).
Management Fees
The Investment Adviser pays all of its expenses arising from the performance of its obligations under the Investment Management Agreement, including executive salaries and expenses of the Trustees and officers of the Trust who are employees of the Investment Adviser or its affiliates, except the CCO. The Investment Adviser pays the fees of the Sub-Adviser.
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The Investment Adviser receives an annual management fee, payable monthly, in an amount equal to 0.80% of the Fund’s average daily gross asset value, minus the sum of the Fund’s accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of any outstanding preferred shares) (“Managed Assets”). This definition includes assets acquired through the Fund’s use of leverage.
Total Investment Management Fees Paid by the Fund
During the past three fiscal years, the Fund paid the following investment management fees to the Investment Adviser or its affiliates.
 
Fund
2024
2023
2022
Voya Credit Income Fund
 
 
 
 Management Fee
$1,108,881
$1,438,603
$1,859,565
EXPENSES
The Fund’s assets may decrease or increase during its fiscal year and the Fund’s operating expense ratios may correspondingly increase or decrease.
In addition to the management fee and other fees described previously, the Fund pays other expenses, such as legal, audit, transfer agency and custodian out-of-pocket fees, proxy solicitation costs, and the compensation of Trustees who are not affiliated with the Investment Adviser.
Certain expenses of the Fund are generally allocated to the Fund, and each class of the Fund, in proportion to its pro rata average net assets, provided that expenses that are specific to a class of the Fund may be charged directly to that class in accordance with the Trust’s Multiple Class Plan(s) pursuant to Rule 18f-3. However, any Rule 12b-1 Plan fees for each class of shares are charged proportionately only to the outstanding shares of that class.
EXPENSE LIMITATIONS
As described in the Prospectus, the Investment Adviser, Distributor, and/or Sub-Adviser may have entered into one or more expense limitation agreements with the Fund pursuant to which they have agreed to waive or limit their fees. In connection with such an agreement, the Investment Adviser, Distributor, or Sub-Adviser, as applicable, will assume expenses (excluding certain expenses as discussed below) so that the total annual ordinary operating expenses of the Fund do not exceed the amount specified in the Fund’s Prospectus.
Exclusions
Expense limitations do not extend to interest, taxes, other investment-related costs, leverage expenses (as defined below), extraordinary expenses such as litigation and expenses of the CCO and CIRO, other expenses not incurred in the ordinary course of the Fund’s business, and expenses of any counsel or other persons or services retained by the Independent Trustees. Leverage expenses shall mean fees, costs, and expenses incurred in connection with the Fund’s use of leverage (including, without limitation, expenses incurred by the Fund in creating, establishing, and maintaining leverage through borrowings or the issuance of preferred shares). Acquired Fund Fees and Expenses are not covered by any expense limitation agreement.
If an expense limitation is subject to recoupment (as indicated in the Prospectus), the Investment Adviser, Distributor, or Sub-Adviser, as applicable, may recoup any expenses reimbursed within 36 months of the waiver or reimbursement and the amount of the recoupment is limited to the lesser of the amounts that would be recoupable under: (i) the expense limitation in effect at the time of the waiver or reimbursement; or (ii) the expense limitation in effect at the time of recoupment. Reimbursement for fees waived or expenses assumed will only apply to amounts waived or expenses assumed after the effective date of the expense limitation.
The table below shows the net fund expenses reimbursed, waived, and any recoupment, if applicable, by the Investment Adviser and Distributor for the last three fiscal years.
NET FUND FEES WAIVED, REIMBURSED, OR RECOUPED
 
Fund
2024
2023
2022
Voya Credit Income Fund
($366,744)
($415,122)
($254,219)
Sub-Adviser
The Investment Adviser has engaged the services of the Sub-Adviser to provide sub-advisory services to the Fund and, pursuant to a Sub-Advisory Agreement, has delegated certain management responsibilities to the Sub-Adviser. The Investment Adviser monitors and evaluates the performance of the Sub-Adviser.
The Sub-Adviser provides, subject to the supervision of the Board and the Investment Adviser, a continuous investment program for the Fund and determines the composition of the assets of the Fund, including determination of the purchase, retention, or sale of the securities, cash and other investments for the Fund, in accordance with the Fund’s investment objectives, policies and restrictions and applicable laws and regulations.
Limitation of Liability
56
The Sub-Adviser is not subject to liability to the Fund for any act or omission in the course of, or in connection with, rendering services under the Sub-Advisory Agreement, except by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of its obligations and duties under the Sub-Advisory Agreement.
Continuation and Termination of the Sub-Advisory Agreement
After an initial term of two years, the Sub-Advisory Agreement continues in effect from year-to-year so long as such continuance is specifically approved at least annually by: (i) the Board; or (ii) the vote of a majority of the Fund’s outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act); provided, that the continuance is also approved by a majority of the Independent Trustees who are not parties to the agreement by a vote cast in person at a meeting called for the purpose of voting on such approval.
The Sub-Advisory Agreement may be terminated as to the Fund without penalty upon sixty (60) days’ written notice by: (i) the Board; (ii) the majority vote of the outstanding voting securities of the Fund; (iii) the Investment Adviser; or (iv) the Sub-Adviser upon 60-90 days’ written notice, depending on the terms of the Sub-Advisory Agreement. The Sub-Advisory Agreement terminates automatically in the event of its assignment or in the event of the termination of the Investment Management Agreement.
Sub-Advisory Fees
The Sub-Adviser receives compensation from the Investment Adviser at the annual rate of a specified percentage of the Fund’s average daily Managed Assets, as indicated below. The fee is accrued daily and paid monthly. The Sub-Adviser pays all of its expenses arising from the performance of its obligations under the Sub-Advisory Agreement.
 
Sub-Adviser
Annual Sub-Advisory Fee
Voya IM
0.36%
Total Sub-Advisory Fees Paid
The following table sets forth the sub-advisory fees paid by the Investment Adviser for the last three fiscal years.
 
Fund
2024
2023
2022
Voya Credit Income Fund
$499,126
$647,353
$836,756
PORTFOLIO MANAGEMENT
Other Accounts Managed
The following table sets forth the number of accounts and total assets in the accounts managed by each portfolio manager as of February 29, 2024:
 
Portfolio Manager
Fund(s)
Registered Investment
Companies
Other Pooled Investment
Vehicles
Other Accounts
Number of
Accounts
Total Assets
Number of
Accounts
Total Assets
Number of
Accounts
Total Assets
Mohamed Basma, CFA
Voya Credit Income
Fund
4
$1,219,618,153
0
$0
0
$0
Randall Parrish, CFA
Voya Credit Income
Fund
1
$125,644,758
70
$3,016,392,622
80
$17,453,462,810
Potential Material Conflicts of Interest
Voya IM
A portfolio manager may be subject to potential conflicts of interest because the portfolio manager is responsible for other accounts in addition to the Fund. These other accounts may include, among others, other mutual funds, separately managed advisory accounts, commingled trust accounts, insurance separate accounts, wrap fee programs, and hedge funds. Potential conflicts may arise out of the implementation of differing investment strategies for the portfolio manager’s various accounts, the allocation of investment opportunities among those accounts or differences in the advisory fees paid by the portfolio manager’s accounts.
A potential conflict of interest may arise as a result of the portfolio manager’s responsibility for multiple accounts with similar investment guidelines. Under these circumstances, a potential investment may be suitable for more than one of the portfolio manager’s accounts, but the quantity of the investment available for purchase is less than the aggregate amount the accounts would ideally devote to the opportunity. Similar conflicts may arise when multiple accounts seek to dispose of the same investment.
A portfolio manager may also manage accounts whose objectives and policies differ from those of the Fund. These differences may be such that under certain circumstances, trading activity appropriate for one account managed by the portfolio manager may have adverse consequences for another account managed by the portfolio manager. For example, if an account were to sell a significant position in a security, which could cause the market price of that security to decrease, while the Fund maintained its position in that security.
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A potential conflict may arise when a portfolio manager is responsible for accounts that have different advisory fees – the difference in the fees may create an incentive for the portfolio manager to favor one account over another, for example, in terms of access to particularly appealing investment opportunities. This conflict may be heightened where an account is subject to a performance-based fee.
As part of its compliance program, Voya IM has adopted policies and procedures reasonably designed to address the potential conflicts of interest described above.
Finally, a potential conflict of interest may arise because the investment mandates for certain other accounts, such as hedge funds, may allow extensive use of short sales which, in theory, could allow them to enter into short positions in securities where other accounts hold long positions. Voya IM has policies and procedures reasonably designed to limit and monitor short sales by the other accounts to avoid harm to the Fund.
Compensation
Voya IM
Compensation consists of: (i) a fixed base salary; (ii) a bonus, which is based on Voya IM performance, one-, three-, and five-year pre-tax performance of the accounts the portfolio managers are primarily and jointly responsible for relative to account benchmarks, peer universe performance, and revenue growth and net cash flow growth (changes in the accounts’ net assets not attributable to changes in the value of the accounts’ investments) of the accounts they are responsible for; and (iii) long-term equity awards tied to the performance of our parent company, Voya Financial, Inc. and/or a notional investment in a pre-defined set of Voya IM sub-advised funds.
Portfolio managers are also eligible to receive an annual cash incentive award delivered in some combination of cash and a deferred award in the form of Voya stock. The overall design of the annual incentive plan was developed to tie pay to both performance and cash flows, structured in such a way as to drive performance and promote retention of top talent. As with base salary compensation, individual target awards are determined and set based on external market data and internal comparators. Investment performance is measured on both relative and absolute performance in all areas.
The measures for the team are outlined on a “scorecard” that is reviewed on an annual basis. These scorecards measure investment performance versus benchmark and peer groups over one-, three-, and five-year periods and year-to-date net cash flow (changes in the accounts’ net assets not attributable to changes in the value of the accounts’ investments) for all accounts managed by the team. The results for overall Voya IM scorecards are typically calculated on an asset weighted performance basis of the individual team scorecards.
Investment professionals’ performance measures for bonus determinations are weighted by 25% being attributable to the overall Voya IM performance and 75% attributable to their specific team results (65% investment performance, 5% net cash flow, and 5% revenue growth).
Voya IM's long-term incentive plan is designed to provide ownership-like incentives to reward continued employment and to link long-term compensation to the financial performance of the business. Based on job function, internal comparators, and external market data, employees may be granted long-term awards. All senior investment professionals participate in the long-term compensation plan. Participants receive annual awards determined by the management committee based largely on investment performance and contribution to firm performance. Plan awards are based on the current year’s performance as defined by the Voya IM component of the annual incentive plan. Awards typically include a combination of performance shares, which vest ratably over a three-year period, and Voya restricted stock and/or a notional investment in a predefined set of Voya IM sub-advised funds, each subject to a three-year cliff-vesting schedule.
If a portfolio manager’s base salary compensation exceeds a particular threshold, he or she may participate in Voya’s deferred compensation plan. The plan provides an opportunity to invest deferred amounts of compensation in mutual funds, Voya stock, or at an annual fixed interest rate. Deferral elections are done on an annual basis and the amount of compensation deferred is irrevocable.
For the Fund, Voya IM has defined the following index as the benchmark index for the investment team:
 
Fund
Portfolio Manager
Benchmark
Voya Credit Income Fund
Mohamed Basma, CFA and Randall Parrish, CFA
50% Bloomberg High Yield Bond—2% Issuer
Constrained Composite Index/ 50% Morningstar
LSTA US Leveraged Loan Index
Ownership of Securities
The following table shows the dollar range of Fund shares beneficially owned by each portfolio manager (including investments by his/her immediate family members) and amounts invested through retirement and deferred compensation plans as of February 29, 2024.
 
Portfolio
Manager
Investment Adviser or
Sub-Adviser
Fund(s) Managed by the
Portfolio Manager
Dollar Range of Fund
Shares Owned
Mohamed Basma, CFA
Voya IM
Voya Credit Income Fund
None
Randall Parrish, CFA
Voya IM
Voya Credit Income Fund
None
PRINCIPAL UNDERWRITER
The Distributor, a Delaware limited liability company, is the principal underwriter and distributor of the Fund. The Distributor is an indirect subsidiary of Voya Financial, Inc. and is an affiliate of the Investment Adviser. The Distributor’s principal business address is 7337 East
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Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258. Common Shares of the Fund are offered on a continuous basis. As principal underwriter, the Distributor has agreed to use reasonable efforts to distribute the Common Shares, although it is not obligated to sell any particular amount of shares.
The Distributor is responsible for all of its expenses in providing services pursuant to the Distribution Agreement, including the payment of any commissions.
The Distribution Agreement may be continued from year to year if approved annually by the Trustees or by a vote of a majority of the outstanding voting securities of the Fund and by a vote of a majority of the Trustees who are not “interested persons” of the Distributor, or the Trust or parties to the Distribution Agreement, appearing in person at a meeting called for the purpose of approving such Agreement.
The Distribution Agreement terminates automatically upon assignment, and may be terminated at any time on sixty (60) days’ written notice by the Trustees or the Distributor or by vote of a majority of the outstanding voting securities of the Fund without the payment of any penalty.
In addition to paying fees under the Distribution Agreement, the Fund may pay service fees to intermediaries such as brokers-dealers, financial advisors, or other financial institutions, including affiliates of Voya Investments (such as Voya Funds Services, LLC) for administration, sub-transfer agency, and other shareholder services associated with investors whose shares are held of record in omnibus accounts. These additional fees paid by the Fund to intermediaries are a fixed dollar amount payment per each underlying shareholder account. These may include payments for 401k sub-accounting services, networking fees, and omnibus account servicing fees.
For the fiscal years ended February 29, 2024, February 28, 2023, and February 28, 2022, the Distributor was paid $300,737, $349,927, and $477,213, respectively, for services rendered to the Fund.
Commissions and Compensation Received by the Principal Underwriter
The following table shows all commissions and other compensation received by each Principal Underwriter, who is an affiliated person of the Fund or an affiliated person of that affiliated person, directly or indirectly, from the Fund during the most recent fiscal year.
 
Fund
Name of Principal
Underwriter
Net Underwriting
Discounts and
Commissions
Compensation on
Redemptions and
Repurchases
Brokerage
Commissions
Other
Compensation
Voya Credit Income Fund
Voya Investments
Distributor, LLC
$624
$219
$3,712
N/A
Additional Cash Compensation for Sales by “Focus Firms”
The Distributor may, at its discretion, pay additional cash compensation to its employee sales staff for sales by certain broker-dealers or “focus firms.” The Distributor may pay up to an additional 0.10% to its employee sales staff for sales that are made by registered representatives of these focus firms. As of the date of this SAI, the focus firms are: Ameriprise Financial Services, LLC; Broadridge Business Process Outsourcing, LLC; Cetera Financial Holdings, Inc.; Charles Schwab & Co. Inc.; Directed Services LLC; Empower Financial Services, Inc.; Fidelity Brokerage Services, LLC; J.P. Morgan Securities, LLC; LPL Financial, LLC; Merrill Lynch, Pierce, Fenner & Smith Inc.; Mid Atlantic Clearing & Settlement Corporation, Inc; Morgan Stanley; Osaic, Inc; Pershing, LLC; Prudential Insurance Company of America; Raymond James & Associates, Inc.; RBC Capital Markets, LLC; Reliance Trust Company; ReliaStar Life Insurance Company of New York; Stifel Nicolaus & Company, Inc.; TD Ameritrade Clearing, Inc; UBS Financial Services, Inc; Voya Financial Advisers, Inc.; Voya Retirement Insurance and Annuity Company; and Wells Fargo Clearing Services, LLC.
Other Incentives
The Distributor may, from time to time, pay additional cash and non-cash compensation from its own resources to its employee sales staff for sales of certain Voya funds that are made by registered representatives of broker-dealers to the extent such compensation is not prohibited by law or the rules of any self-regulatory agency, such as FINRA.
OTHER SERVICE PROVIDERS
Custodian
The Bank of New York Mellon, 225 Liberty Street, New York, New York 10286 serves as custodian for the Fund.
The custodian’s responsibilities include safekeeping and controlling the Fund’s cash and securities, handling the receipt and delivery of securities, and collecting interest and dividends on the Fund’s investments. The custodian does not participate in determining the investment policies of the Fund, in deciding which securities are purchased or sold by the Fund, or in the declaration of dividends and distributions. The Fund may, however, invest in obligations of the custodian and may purchase or sell securities from or to the custodian.
Independent Registered Public Accounting Firm
Ernst & Young LLP serves as an independent registered public accounting firm for the Fund. Ernst & Young LLP provides audit services and tax return preparation services. Ernst & Young LLP is located at 200 Clarendon Street, Boston, Massachusetts 02116.
Legal Counsel
Legal matters for the Trust are passed upon by Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, Massachusetts 02199-3600.
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Transfer Agent, Dividend Disbursing Agent, and Registrar
BNY Mellon Investment Servicing (US) Inc. (“Transfer Agent”) serves as the transfer agent, dividend disbursing agent, and registrar for the Common Shares of the Fund. Its principal office is located at 301 Bellevue Parkway, Wilmington, Delaware 19809. As transfer agent, dividend disbursing agent and registrar, BNY Mellon Investment Servicing (US) Inc. is responsible for maintaining account records, detailing the ownership of Fund shares and for crediting income, capital gains and other changes in share ownership to shareholder accounts.
PORTFOLIO TRANSACTIONS
The Fund will generally have at least 80% of its net assets (plus borrowings for investment purposes) invested in floating-rate obligations, fixed-income securities, and derivative instruments intended to provide economic exposure to such credit sectors. The Fund will acquire investments from and sell investments to banks, insurance companies, finance companies, and other investment companies and private investment funds. The Fund may also purchase investments from and sell investments to U.S. branches of foreign banks which are regulated by the Federal Reserve System or appropriate state regulatory authorities. The Fund’s interest in a particular investment will terminate when the Fund receives full payment on the investment or sells an investment in the secondary market. Costs associated with purchasing or selling investments in the secondary market include commissions paid to brokers and processing fees paid to agents. These costs are allocated between the purchaser and seller as agreed between the parties.
The Investment Adviser or the Sub-Adviser for the Fund places orders for the purchase and sale of investment securities for the Fund, pursuant to authority granted in the relevant Investment Management Agreement or Sub-Advisory Agreement.
Subject to policies and procedures approved by the Board, the Investment Adviser and/or Sub-Adviser have discretion to make decisions relating to placing these orders including, where applicable, selecting the brokers or dealers that will execute the purchase and sale of investment securities, negotiating the commission or other compensation paid to the broker or dealer executing the trade, or using an electronic communications network (“ECN”) or alternative trading system (“ATS”).
In situations where the Sub-Adviser resigns or the Investment Adviser otherwise assumes day to day management of the Fund pursuant to its Investment Management Agreement with such Fund, the Investment Adviser will perform the services described herein as being performed by the Sub-Adviser.
How Securities Transactions are Effected
Purchases and sales of securities on a securities exchange (which include most equity securities) are effected through brokers who charge a commission for their services. In transactions on securities exchanges in the U.S., these commissions are negotiated, while on many foreign (non-U.S.) securities exchanges commissions are fixed. Securities traded in the OTC markets (such as debt instruments and some equity securities) are generally traded on a “net” basis with market makers acting as dealers; in these transactions, the dealers act as principal for their own accounts without a stated commission, although the price of the security usually includes a profit to the dealer. Transactions in certain OTC securities also may be effected on an agency basis when, in the Investment Adviser’s or the Sub-Adviser’s opinion, the total price paid (including commission) is equal to or better than the best total price available from a market maker. In underwritten offerings, securities are usually purchased at a fixed price, which includes an amount of compensation to the underwriter, generally referred to as the underwriter’s concession or discount. On occasion, certain money market instruments may be purchased directly from an issuer, in which case no commissions or discounts are paid. The Investment Adviser or the Sub-Adviser may also place trades using an ECN or ATS.
How the Investment Adviser or the Sub Adviser Selects Broker-Dealers
The Investment Adviser and the Sub-Adviser(s) have a duty to seek to obtain best execution of the Fund’s orders, taking into consideration a full range of factors designed to produce the most favorable overall terms reasonably available under the circumstances. In selecting brokers and dealers to execute trades, the Investment Adviser or the Sub-Adviser may consider both the characteristics of the trade and the full range and quality of the brokerage services available from eligible broker-dealers. This consideration often involves qualitative as well as quantitative judgments. Factors relevant to the nature of the trade may include, among others, price (including the applicable brokerage commission or dollar spread), the size of the order, the nature and characteristics (including liquidity) of the market for the security, the difficulty of execution, the timing of the order, potential market impact, and the need for confidentiality, speed, and certainty of execution. Factors relevant to the range and quality of brokerage services available from eligible brokers and dealers may include, among others, each firm’s execution, clearance, settlement, and other operational facilities; willingness and ability to commit capital or take risk in positioning a block of securities, where necessary; special expertise in particular securities or markets; ability to provide liquidity, speed and anonymity; the nature and quality of other brokerage and research services provided to the Investment Adviser or the Sub-Adviser (consistent with the “safe harbor” described below and subject to the restrictions of the EU’s updated Markets in Financial Instruments Directive (“MiFID II”)); and each firm’s general reputation, financial condition and responsiveness to the Investment Adviser or the Sub-Adviser, as demonstrated in the particular transaction or other transactions. Subject to its duty to seek best execution of the Fund’s orders, the Investment Adviser or the Sub-Adviser may select broker-dealers that participate in commission recapture programs that have been established for the benefit of the Fund. Under these programs, the participating broker-dealers will return to the Fund (in the form of a credit to the Fund) a portion of the brokerage commissions paid to the broker-dealers by the Fund. These credits are used to pay certain expenses of the Fund. These commission recapture payments benefit the Fund, and not the Investment Adviser or the Sub-Adviser.
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The Safe Harbor for Soft Dollar Practices
In selecting broker-dealers to execute a trade for the Fund, the Investment Adviser or the Sub-Adviser may consider the nature and quality of brokerage and research services provided to the Investment Adviser or the Sub-Adviser as a factor in evaluating the most favorable overall terms reasonably available under the circumstances. As permitted by Section 28(e) of the 1934 Act, the Investment Adviser or the Sub-Adviser may cause the Fund to pay a broker-dealer a commission for effecting a securities transaction for the Fund that is in excess of the commission which another broker-dealer would have charged for effecting the transaction, as long as the services provided to the Investment Adviser or Sub-Adviser by the broker-dealer: (i) are limited to “research” or “brokerage” services; (ii) constitute lawful and appropriate assistance to the Investment Adviser or Sub-Adviser in the performance of its investment decision-making responsibilities; and (iii) the Investment Adviser or the Sub-Adviser makes a good faith determination that the broker’s commission paid by the Fund is reasonable in relation to the value of the brokerage and research services provided by the broker-dealer, viewed in terms of either the particular transaction or the Investment Adviser’s or the Sub-Adviser’s overall responsibilities to the Fund and its other investment advisory clients. In making such a determination, the Investment Adviser or Sub-Adviser might consider, in addition to the commission rate, the range and quality of a broker’s services, including the value of the research provided, execution capability, financial responsibility and responsiveness. The practice of using a portion of the Fund’s commission dollars to pay for brokerage and research services provided to the Investment Adviser or the Sub-Adviser is sometimes referred to as “soft dollars.” Section 28(e) of the 1934 Act is sometimes referred to as a “safe harbor,” because it permits this practice, subject to a number of restrictions, including the Investment Adviser or the Sub-Adviser’s compliance with certain procedural requirements and limitations on the type of brokerage and research services that qualify for the safe harbor. The provisions of MiFID II may limit the ability of the Sub-Adviser to pay for research services using soft dollars in various circumstances.
Brokerage and Research Products and Services Under the Safe Harbor – Research products and services may include, but are not limited to, general economic, political, business and market information and reviews, industry and company information and reviews, evaluations of securities and recommendations as to the purchase and sale of securities, financial data on a company or companies, performance and risk measuring services and analysis, stock price quotation services, computerized historical financial databases and related software, credit rating services, analysis of corporate responsibility issues, brokerage analysts’ earnings estimates, computerized links to current market data, software dedicated to research, and portfolio modeling. Research services may be provided in the form of reports, computer-generated data feeds and other services, telephone contacts, and personal meetings with securities analysts, as well as in the form of meetings arranged with corporate officers and industry spokespersons, economists, academics, and governmental representatives. Brokerage products and services assist in the execution, clearance and settlement of securities transactions, as well as functions incidental thereto including, but not limited to, related communication and connectivity services and equipment, software related to order routing, market access, algorithmic trading, and other trading activities. On occasion, a broker-dealer may furnish the Investment Adviser or the Sub-Adviser with a service that has a mixed use (that is, the service is used both for brokerage and research activities that are within the safe harbor and for other activities). In this case, the Investment Adviser or the Sub-Adviser is required to reasonably allocate the cost of the service, so that any portion of the service that does not qualify for the safe harbor is paid for by the Investment Adviser or the Sub-Adviser from its own funds, and not by portfolio commissions paid by the Fund.
Benefits to the Investment Adviser or the Sub-Adviser – Research products and services provided to the Investment Adviser or the Sub-Adviser by broker-dealers that effect securities transactions for the Fund may be used by the Investment Adviser or the Sub-Adviser in servicing all of its accounts. Accordingly, not all of these services may be used by the Investment Adviser or the Sub-Adviser in connection with the Fund. Some of these products and services are also available to the Investment Adviser or the Sub-Adviser for cash, and some do not have an explicit cost or determinable value. The research received does not reduce the management fees payable to the Investment Adviser or the sub-advisory fees payable to the Sub-Adviser for services provided to the Fund. The Investment Adviser’s or the Sub-Adviser’s expenses would likely increase if the Investment Adviser or the Sub-Adviser had to generate these research products and services through its own efforts, or if it paid for these products or services itself. It is possible that the Sub-Adviser subject to MiFID II will cause the Fund to pay for research services with soft dollars in circumstances where it is prohibited from doing so with respect to other client accounts, although those other client accounts might nonetheless benefit from those research services.
Broker-Dealers that are Affiliated with the Investment Adviser or the Sub-Adviser
Portfolio transactions may be executed by brokers affiliated with Voya Financial, Inc., the Investment Adviser, or the Sub-Adviser, so long as the commission paid to the affiliated broker is reasonable and fair compared to the commission that would be charged by an unaffiliated broker in a comparable transaction.
Prohibition on Use of Brokerage Commissions for Sales or Promotional Activities
The placement of portfolio brokerage with broker-dealers who have sold shares of the Fund is subject to rules adopted by the SEC and FINRA. Under these rules, the Investment Adviser or the Sub-Adviser may not consider a broker’s promotional or sales efforts on behalf of the Fund when selecting a broker-dealer for portfolio transactions, and neither the Fund nor the Investment Adviser or Sub-Adviser may enter into an agreement under which the Fund directs brokerage transactions (or revenue generated from such transactions) to a broker-dealer to pay for distribution of Fund shares. The Fund has adopted policies and procedures, approved by the Board, that are designed to attain compliance with these prohibitions.
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Principal Trades and Research
Purchases of securities for the Fund also may be made directly from issuers or from underwriters. Purchase and sale transactions may be effected through dealers which specialize in the types of securities which the Fund will be holding. Dealers and underwriters usually act as principals for their own account. Purchases from underwriters will include a concession paid by the issuer to the underwriter and purchases from dealers will include the spread between the bid and the asked price. If the execution and price offered by more than one dealer or underwriter are comparable, the order may be allocated to a dealer or underwriter which has provided such research or other services as mentioned above.
More Information about Trading in Debt Instruments
Purchases and sales of debt instruments will usually be principal transactions. Such instruments often will be purchased from or sold to dealers serving as market makers for the instruments at a net price. The Fund may also purchase such instruments in underwritten offerings and will, on occasion, purchase instruments directly from the issuer. Generally, debt instruments are traded on a net basis and do not involve brokerage commissions. The cost of executing debt instruments transactions consists primarily of dealer spreads and underwriting commissions.
In purchasing and selling debt instruments, it is the policy of the Fund to obtain the best results, while taking into account the dealer’s general execution and operational facilities, the type of transaction involved and other factors, such as the dealer’s risk in positioning the instruments involved. While the Investment Adviser or the Sub-Adviser generally seeks reasonably competitive spreads or commissions, the Fund will not necessarily pay the lowest spread or commission available.
Transition Management
Changes in sub-advisers, investment personnel, and reorganizations of the Fund may result in the sale of a significant portion or even all of the Fund’s portfolio securities. This type of change generally will increase trading costs and the portfolio turnover for the affected Fund. The Fund, the Investment Adviser, or the Sub-Adviser may engage a broker-dealer to provide transition management services in connection with a change in sub-adviser, reorganization, or other changes.
Allocation of Trades
Some securities considered for investment by the Fund may also be appropriate for other clients served by the Investment Adviser or Sub-Adviser. If the purchase or sale of securities consistent with the investment policies of the Fund and one or more of these other clients is considered at, or about the same time, transactions in such securities will be placed on an aggregate basis and allocated among the other funds and such other clients in a manner deemed fair and equitable, over time, by the Investment Adviser or Sub-Adviser and consistent with the Investment Adviser’s or Sub-Adviser’s written policies and procedures. The Investment Adviser and Sub-Adviser may use different methods of trade allocation. The Investment Adviser’s and Sub-Adviser’s relevant policies and procedures and the results of aggregated trades in which the Fund participated are subject to periodic review by the Board. To the extent the Fund seeks to acquire (or dispose of) the same security at the same time as other funds, such Fund may not be able to acquire (or dispose of) as large a position in such security as it desires, or it may have to pay a higher (or receive a lower) price for such security. It is recognized that in some cases, this system could have a detrimental effect on the price or value of the security insofar as the Fund is concerned. However, over time, the Fund’s ability to participate in aggregate trades is expected to provide better execution for the Fund.
Cross-Transactions
The Board has adopted a policy allowing trades to be made between affiliated registered investment companies or series thereof, provided they meet the conditions of Rule 17a-7 under the 1940 Act and conditions of the policy.
Brokerage Commissions Paid
No brokerage commissions were paid by the Fund for the last three fiscal years.
Securities of Regular Broker-Dealers
During the most recent fiscal year, the Fund acquired no securities of its regular broker-dealers (as defined in Rule 10b-1 under the 1940 Act) or their parent companies.
ADDITIONAL PURCHASE INFORMATION
Orders Placed with Intermediaries
If you invest in the Fund through a financial intermediary, you may be charged a commission or transaction fee by the financial intermediary for the purchase and sale of Fund shares.
Special Purchases at Net Asset Value- Class A Common Shares
Class A Common Shares of the Fund may be purchased at NAV, without a sales charge, by persons who have offered for repurchase their Class A Common Shares of the Fund or redeemed their Class A Common Shares of another Voya fund within the previous 90 days. The amount that may be so reinvested in the Fund is limited to an amount up to, but not exceeding, the repurchase or redemption proceeds (or to the nearest full share if fractional shares are not purchased). In order to exercise this privilege, a written order for the purchase of shares must be received by the Transfer Agent, or be postmarked, within 90 days after the date of redemption. This privilege may only be used once per calendar year. Payment must accompany the request and the purchase will be made at the then current NAV of the Fund. Such purchases may also be handled by a securities dealer who may charge a shareholder for this service. If the shareholder has
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realized a gain on the repurchase or redemption, the transaction is taxable and any reinvestment will not alter any applicable U.S. federal capital gains tax. If there has been a loss on the repurchase or redemption and a subsequent reinvestment pursuant to this privilege, some or all of the loss may not be allowed as a tax deduction depending upon the amount reinvested, although such disallowance is added to the tax basis of the shares acquired upon the reinvestment.
Class A Common Shares of the Fund may also be purchased at NAV by any charitable organization or any state, county, or city, or any instrumentality, department, authority or agency thereof that has determined that the Fund is a legally permissible investment and that is prohibited by applicable investment law from paying a sales charge or commission in connection with the purchase of shares of any registered management investment company (an “eligible governmental authority”). If an investment by an eligible governmental authority at NAV is made through a dealer who has executed a selling group agreement with respect to the Fund (or an open-end Voya fund), the Distributor may pay the selling firm 0.25% of the offering price.
The Fund’s Officers and Trustees (including retired officers and retired Board members), bona fide full-time employees of the Fund (including retired Fund employees) and the officers, directors, and full-time employees of their investment adviser, sub-adviser, principal underwriter, or any service provider to the Fund or affiliated corporation thereof (including retired officers and employees of the investment adviser, principal underwriter, Voya-affiliated service providers and affiliated corporations thereof) or any trust, pension, profit-sharing, or other benefit plan for such persons, broker-dealers, for their own accounts or for members of their families (defined as current spouse, children, parents, grandparents, uncles, aunts, siblings, nephews, nieces, step-relations, relations at-law, and cousins) employees of such broker-dealers (including their immediate families) and discretionary advisory accounts of Voya Investments or any Sub-Adviser, may purchase Class A Common Shares of the Fund at NAV without a sales charge. Such purchaser may be required to sign a letter stating that the purchase is for his own investment purposes only and that the securities will not be resold except to the Fund. The Fund may, under certain circumstances, allow registered advisers to make investments on behalf of their clients at NAV without any commission or concession. The Fund may terminate or amend the terms of this sales charge waiver at any time.
Class A Common Shares may also be purchased at NAV by certain fee based registered investment advisers, trust companies and bank trust departments under certain circumstances making investments on behalf of their clients and by shareholders who have authorized the automatic transfer of dividends from the same class of an open-end fund managed by the Investment Adviser.
Class A Common Shares may also be purchased without a sales charge by: (i) shareholders who have authorized the automatic transfer of dividends from the same class of another Voya fund distributed by the Distributor; (ii) registered investment advisors, trust companies and bank trust departments investing in Class A Common Shares on their own behalf or on behalf of their clients, provided that the aggregate amount invested in any one or more Voya funds, during the 13-month period starting with the first investment, equals at least $1,000,000; (iii) broker-dealers, who have signed selling group agreements with the Distributor, and registered representatives and employees of such broker-dealers, for their own accounts or for members of their families (defined as current spouse, children, parents, grandparents, uncles, aunts, siblings, nephews, nieces, step relations, relations-at-law and cousins); (iv) broker-dealers using third-party administrators for qualified retirement plans who have entered into an agreement with the Fund or an affiliate, subject to certain operational and minimum size requirements specified from time-to-time by the Fund; (v) accounts as to which a banker or broker-dealer charges an account management fee (“wrap accounts”); (vi) any registered investment company for which the Investment Adviser serves as adviser; (vii) investors who purchase Fund shares with redemption proceeds received in connection with a distribution from a retirement plan investing either: (1) directly in the Fund or through an unregistered separate account sponsored by VRIAC or any successor thereto or affiliate thereof; or (2) in a registered separate account sponsored by VRIAC or any successor thereto or affiliate thereof, but only if no deferred sales charge is paid in connection with such distribution and the investor receives the distribution in connection with a separation from service, retirement, death, or disability; and (viii) insurance companies (including separate accounts).
The Fund may terminate or amend the terms of these sales charge waivers at any time.
Letters of Intent and Rights of Accumulation- Class A Common Shares
An investor may immediately qualify for a reduced sales charge on a purchase of Class A Common Shares of the Fund by completing the Letter of Intent section of the Shareholder Application (“Letter of Intent” or “Letter”). By completing the Letter, the investor expresses an intention to invest during the next 13 months a specified amount which, if made at one time, would qualify for the reduced sales charge. At any time within 90 days after the first investment which the investor wants to qualify for the reduced sales charge, a signed Shareholder Application, with the Letter of Intent section completed, may be filed with the Fund. Those holdings will be counted towards completion of the Letter of Intent but will not be entitled to a retroactive downward adjustment of sales charge until the Letter of Intent is fulfilled. After the Letter of Intent is filed, each additional investment made will be entitled to the sales charge applicable to the level of investment indicated on the Letter of Intent as described above. Sales charge reductions based upon purchases in more than one Voya fund will be effective only after notification to the Distributor that the investment qualifies for a discount. Any shares of the shareholder repurchased by the Fund during the 13-month period will be subtracted from the amount of the purchases for purposes of determining whether the terms of the Letter of Intent have been completed. If the Letter of Intent is not completed within the 13-month period, there will be an upward adjustment of the sales charge as specified below, depending upon the amount actually purchased (less amounts repurchased by the Fund) during the period.
An investor acknowledges and agrees to the following provisions by completing the Letter of Intent section of the Shareholder Application in the Prospectus. A minimum initial investment equal to 25% of the intended total investment is required. An amount equal to the maximum sales charge, as stated in the Prospectus, will be held in escrow at Voya funds, in the form of shares, in the investor’s name to assure that the full applicable sales charge will be paid if the intended purchase is not completed. The shares in escrow will be included in the total shares owned as reflected on the purchaser’s monthly statement; income and capital gain distributions on the escrowed shares will
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be paid directly to the investor. The escrowed shares will not be available for repurchase by the Fund until the Letter of Intent has been completed, or the higher sales charge paid. When the total purchases, less repurchases by the Fund, equal the amount specified under the Letter of Intent, the shares in escrow will be released. If the total purchases, less repurchases by the Fund, exceed the amount specified under the Letter of Intent and is an amount which would qualify for a further quantity discount, a retroactive price adjustment will be made by the Distributor and the dealer with whom purchases were made pursuant to the Letter of Intent (to reflect such further quantity discount) on purchases made within 90 days before, and on those made after filing the Letter of Intent. The resulting difference in offering price will be applied to the purchase of additional shares at the applicable offering price. If the total purchases, less repurchases by the Fund, are less than the amount specified under the Letter of Intent, the investor will remit to the Distributor an amount equal to the difference in dollar amount of sales charge actually paid and the amount of sales charge which would have applied to the aggregate purchases if the total of such purchases had been made at a single account in the name of the investor or to the investor’s order. If within 10 days after written request such difference in sales charge is not paid, an appropriate number of shares in escrow will be repurchased by the Fund at the next monthly repurchase to realize such difference. If the proceeds from a total repurchase of the escrowed shares are inadequate, the investor will be liable to the Distributor for the difference. In the event of a total repurchase of the account prior to fulfillment of the Letter of Intent, the additional sales charge due will be deducted from the proceeds of the repurchase and the balance will be forwarded to the Investor. By completing the Letter of Intent section of the Shareholder Application, an investor grants to the Distributor a security interest in the shares in escrow and agrees to irrevocably appoint the Distributor as his or her attorney-in-fact with full power of substitution to surrender for repurchase any or all escrowed shares for the purpose of paying any additional sales charge due and authorizes the Transfer Agent or Sub-Transfer Agent to receive and liquidate shares and pay the proceeds as directed by the Distributor. The investor or the securities dealer must inform the Transfer Agent or the Distributor that the Letter of Intent is in effect each time a purchase is made.
If at any time prior to or after completion of the Letter of Intent the investor wishes to cancel the Letter of Intent, the investor must notify the Distributor in writing. If, prior to the completion of the Letter of Intent, the investor requests the Distributor to liquidate all shares held by the investor, the Letter of Intent will be terminated automatically. Under either of these situations, the total purchased may be less than the amount specified in the Letter of Intent. If so, the Distributor will redeem at NAV to remit to the Distributor and the appropriate authorized dealer an amount equal to the difference between the dollar amount of the sales charge actually paid and the amount of the sales charge that would have been paid on the total purchases if made at one time.
The value of shares of the Fund plus shares of open-end funds distributed by the Distributor can be combined with a current purchase of shares of the Fund to determine the reduced sales charge and applicable offering price of the current purchase. The reduced sales charge applies to quantity purchases made at one time or on a cumulative basis over any period of time by: (i) an investor; (ii) the investor’s spouse and children under the age of majority; (iii) the investor’s custodian accounts for the benefit of a child under the Uniform Gift to Minors Act; and (iv) a trustee or other fiduciary of a single trust estate or a single fiduciary account (including a pension, profit-sharing and/or other employee benefit plan qualified under Section 401 of the Code), by trust companies’ registered investment advisors, banks and bank trust departments for accounts over which they exercise exclusive investment discretionary authority and which are held in a fiduciary, agency, advisory, custodial or similar capacity.
The reduced sales charge also applies on a non-cumulative basis to purchases made at one time by the customers of a single dealer in excess of $1 million. The Letter of Intent option may be modified or discontinued at any time.
Shares of the Fund and open-end Voya funds purchased and owned of record or beneficially by a corporation, including employees of a single employer (or affiliates thereof) including shares held by its employees, under one or more retirement plans, can be combined with a current purchase to determine the reduced sales charge and applicable offering price of the current purchase, provided such transactions are not prohibited by one or more provisions of the Employee Retirement Income Security Act or the Code. Individuals and employees should consult with their tax advisors concerning the tax rules applicable to retirement plans before investing.
For the purposes of Rights of Accumulation and the Letter of Intent privilege, shares held by investors in the Voya family of funds which impose an EWC or CDSC may be combined with Class A Common Shares for a reduced sales charge but will not affect any EWC or CDSC which may be imposed upon the redemption of shares of the Fund which imposes an EWC or CDSC.
Liquidity Requirements
From the time that the Fund sends a notification to shareholders until the Repurchase Payment Deadline (as defined in the Fund’s repurchase offer documents), the Fund will maintain a percentage of the Fund’s assets equal to at least 100% of the Repurchase Offer Amount (as defined in the Fund’s repurchase offer documents) in assets: (a) that can be sold or disposed of in the ordinary course of business at approximately the price at which the Fund has valued the asset within the time period between the Repurchase Request Deadline and the next Repurchase Payment Deadline (as defined in the Fund’s repurchase offer documents); or (b) that mature by the next Repurchase Payment Deadline. In the event that the Fund’s assets fail to comply with this requirement, the Board will cause the Fund to take such action as the Board deems appropriate to ensure compliance.
TAX CONSIDERATIONS
The following tax information supplements and should be read in conjunction with the tax information contained in the Fund’s Prospectus. The Prospectus generally describes the U.S. federal income tax treatment of the Fund and its shareholders. This section of the SAI provides additional information concerning U.S. federal income taxes. It is based on the Code, applicable U.S. Treasury regulations, judicial authority, and administrative rulings and practice, all as in effect as of the date of this SAI and all of which are subject to change, including with retroactive effect. The following discussion is only a summary of some of the important U.S. federal tax considerations generally applicable to investments in the Fund. There may be other tax considerations applicable to particular shareholders. The Investment Adviser is not
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obligated to consider the tax consequences related to its management of the Fund's investments or other activities. It is possible that the actions taken by the Fund or the Investment Adviser on the Fund’s behalf could be disadvantageous to shareholders that hold shares through a taxable account. However, such actions likely will have no tax effect to shareholders that invest through a tax-advantaged account. Shareholders should consult their own tax advisers regarding their particular situation and the possible application of non-U.S., state and local tax laws.
Special tax rules apply to investments through defined contribution plans and other tax-qualified plans or tax-advantaged arrangements. Shareholders should consult their tax advisers to determine the suitability of Fund shares as an investment through such plans and arrangements and the precise effect of an investment on their particular tax situation.

Qualification as a Regulated Investment Company
The Fund has elected or will elect to be treated as a RIC under Subchapter M of the Code and intends each year to qualify and to be eligible to be treated as such. In order to qualify for the special tax treatment accorded RICs and their shareholders, the Fund must, among other things: (a) derive at least 90% of its gross income for each taxable year from: (i) dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gains from options, futures, or forward contracts) derived with respect to its business of investing in such stock, securities, or currencies; and (ii) net income derived from interests in “qualified publicly traded partnerships” (as defined below); (b) diversify its holdings so that, at the end of each quarter of the Fund’s taxable year: (i) at least 50% of the fair market value of its total assets consists of: (A) cash and cash items (including receivables), U.S. government securities and securities of other RICs; and (B) other securities (other than those described in clause (A)) limited in respect of any one issuer to a value that does not exceed 5% of the value of the Fund’s total assets and 10% of the outstanding voting securities of such issuer; and (ii) not more than 25% of the value of the Fund’s total assets is invested, including through corporations in which the Fund owns a 20% or more voting stock interest, in the securities of any one issuer (other than those described in clause (i)(A)), the securities (other than securities of other RICs) of two or more issuers the Fund controls and which are engaged in the same, similar, or related trades or businesses, or the securities of one or more qualified publicly traded partnerships; and (c) distribute with respect to each taxable year at least 90% of the sum of its investment company taxable income (as that term is defined in the Code without regard to the deduction for dividends paid—generally taxable ordinary income and the excess, if any, of net short-term capital gains over net long-term capital losses, taking into account any capital loss carryforwards) and its net tax-exempt income, for such year.
In general, for purposes of the 90% gross income requirement described in (a) above, income derived from a partnership will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership which would be qualifying income if realized directly by the RIC. However, 100% of the net income derived from an interest in a “qualified publicly traded partnership” (generally defined as a partnership (x) the interests in which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof, and (y) that derives less than 90% of its income from the qualifying income described in paragraph (a)(i) above) will be treated as qualifying income. In general, such entities will be treated as partnerships for U.S. federal income tax purposes because they meet the passive income requirement under Code Section 7704(c)(2). In addition, although in general the passive loss rules of the Code do not apply to RICs, such rules do apply to a RIC with respect to items attributable to an interest in a qualified publicly traded partnership. Certain of the Fund’s investments in MLPs and ETFs, if any, may qualify as interests in qualified publicly traded partnerships.
For purposes of the diversification test in (b) above, the term “outstanding voting securities of such issuer” will include the equity securities of a qualified publicly traded partnership and in the case of the Fund’s investments in loan participations, the Fund shall treat both the financial intermediary and the issuer of the underlying loan as an issuer. Also, for purposes of the diversification test in (b) above, the identification of the issuer (or, in some cases, issuers) of a particular Fund investment can depend on the terms and conditions of that investment. In some cases, the identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance by the IRS with respect to issuer identification for a particular type of investment may adversely affect the Fund’s ability to meet the diversification test in (b) above. The qualifying income and diversification requirements described above may limit the extent to which the Fund can engage in certain derivative transactions, as well as the extent to which it can invest in MLPs and certain commodity-linked ETFs.
If the Fund qualifies as a RIC that is accorded special tax treatment, the Fund will not be subject to U.S. federal income tax on investment company taxable income and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss, determined with reference to any capital loss carryforwards) distributed in a timely manner to its shareholders in the form of dividends (including Capital Gain Dividends, as defined below).
If the Fund were to fail to meet the income, diversification or distribution test described above, the Fund could in some cases cure such failure, including by paying a Fund-level tax, paying interest, making additional distributions, or disposing of certain assets. If the Fund were ineligible to or otherwise did not cure such failure for any year, or if the Fund were otherwise to fail to qualify as a RIC accorded special tax treatment for such year, the Fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would be taxable to shareholders as ordinary income. Some portions of such distributions may be eligible for the dividends-received deduction in the case of corporate shareholders and may be eligible to be treated as “qualified dividend income” in the case of shareholders taxed as individuals, provided, in both cases, the shareholder meets certain holding period and other requirements in respect of the Fund's shares (as described below). In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before re-qualifying as a RIC that is accorded special tax treatment.
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The Fund intends to distribute at least annually to its shareholders all or substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction), its net tax-exempt income (if any), and its net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss, in each case determined with reference to any loss carryforwards). However, no assurance can be given that the Fund will not be subject to U.S. federal income taxation. Any taxable income, including any net capital gain retained by the Fund, will be subject to tax at the Fund level at regular corporate rates.
In the case of net capital gain, the Fund is permitted to designate the retained amount as undistributed capital gain in a timely notice to its shareholders who would then, in turn, be: (i) required to include in income for U.S. federal income tax purposes, as long-term capital gain, their shares of such undistributed amount; and (ii) entitled to credit their proportionate shares of the tax paid by the Fund on such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim refunds on a properly-filed U.S. tax return to the extent the credit exceeds such liabilities. If the Fund makes this designation, for U.S. federal income tax purposes, the tax basis of shares owned by a shareholder of the Fund would be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder’s gross income under clause (i) of the preceding sentence and the tax deemed paid by the shareholder under clause (ii) of the preceding sentence. The Fund is not required to, and there can be no assurance the Fund will, make this designation if it retains all or a portion of its net capital gain in a taxable year.
In determining its net capital gain, including in connection with determining the amount available to support a Capital Gain Dividend, as defined below, its taxable income, and its earnings and profits, a RIC generally may elect to treat part or all of any post-October capital loss (defined as any net capital loss attributable to the portion of the taxable year after October 31 or, if there is no such loss, the net long-term capital loss or net short-term capital loss attributable to any such portion of the taxable year) or late-year ordinary loss (generally, the sum of its: (i) net ordinary loss from the sale, exchange or other taxable disposition of property, attributable to the portion of the taxable year after October 31, and (ii) other net ordinary loss attributable to the portion, if any, of the taxable year after December 31) as if incurred in the succeeding taxable year.
In order to comply with the distribution requirements described above applicable to RICs, the Fund generally must make the distributions in the same taxable year that it realizes the income and gain, although in certain circumstances, the Fund may make the distributions in the following taxable year in respect of income and gains from the prior taxable year.
If the Fund declares a distribution to shareholders of record in October, November, or December of one calendar year and pays the distribution in January of the following calendar year, the Fund and its shareholders will be treated as if the Fund paid the distribution on December 31 of the earlier year.
Excise Tax
If the Fund were to fail to distribute in a calendar year at least an amount equal to the sum of 98% of its ordinary income for such year and 98.2% of its capital gain net income for the one-year period ending October 31 of such year (or December 31 of that year if the Fund is permitted to elect and so elects), plus any such amounts retained from the prior year, the Fund would be subject to a nondeductible 4% excise tax on the undistributed amounts.
The Fund intends generally to make distributions sufficient to avoid the imposition of the 4% excise tax. However, no assurance can be given that the Fund will not be subject to the excise tax.
For purposes of the required excise tax distribution, a RIC’s ordinary gains and losses from the sale, exchange, or other taxable disposition of property that would otherwise be taken into account after October 31 of a calendar year generally are treated as arising on January 1 of the following calendar year. Also, for these purposes, the Fund will be treated as having distributed any amount on which it is subject to corporate income tax in the taxable year ending within the calendar year.
Use of Tax Equalization
The Fund distributes its net investment income and capital gains to shareholders at least annually to the extent required to qualify as a RIC under the Code and generally to avoid U.S. federal income or excise tax. Under current law, the Fund is permitted to treat the portion of redemption proceeds paid to redeeming shareholders that represents the redeeming shareholders’ pro-rata share of the Fund's accumulated earnings and profits as a dividend on the Fund’s tax return. This practice, which involves the use of tax equalization, will reduce the amount of income and gains that the Fund is required to distribute as dividends to shareholders in order for the Fund to avoid U.S. federal income tax and excise tax, which may include reducing the amount of distributions that otherwise would be required to be paid to non-redeeming shareholders. The Fund’s NAV generally will not be reduced by the amount of any undistributed income or gains allocated to redeeming shareholders under this practice and thus the total return on a shareholder’s investment generally will not be reduced as a result of this practice.
Capital Loss Carryforwards
Capital losses in excess of capital gains (“net capital losses”) are not permitted to be deducted against the Fund’s net investment income. Instead, potentially subject to certain limitations, the Fund is able to carry forward a net capital loss from any taxable year to offset its capital gains, if any, realized during a subsequent taxable year. Distributions from capital gains are generally made after applying any available capital loss carryforwards. Capital loss carryforwards are reduced to the extent they offset current-year net realized capital gains, whether the Fund retains or distributes such gains.
If the Fund incurs or has incurred net capital losses, those losses will be carried forward to one or more subsequent taxable years without expiration; any such carryover losses will retain their character as short-term or long-term.
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See the Fund’s most recent annual shareholder report for the Fund’s available capital loss carryforwards, if any, as of the end of its most recently ended fiscal year.
Fund Distributions
For U.S. federal income tax purposes, distributions of investment income generally are taxable to shareholders as ordinary income. Taxes on distributions of capital gains are determined by how long the Fund owned (or is deemed to have owned) the investments that generated them, rather than how long a shareholder has owned his or her shares. In general, the Fund will recognize long-term capital gain or loss on investments it has owned for more than one year, and short-term capital gain or loss on investments it has owned for one year or less. Tax rules can alter the Fund’s holding period in investments and thereby affect the tax treatment of gain or loss on such investments. Distributions of net capital gain that are properly reported by the Fund as capital gain dividends (“Capital Gain Dividends”) will be taxable to shareholders as long-term capital gains and taxed to individuals at reduced rates relative to ordinary income. Distributions from capital gains generally are made after applying any available capital loss carryforwards. The IRS and the U.S. Department of the Treasury have issued regulations that impose special rules in respect of Capital Gain Dividends received through partnership interests constituting “applicable partnership interests” under Section 1061 of the Code. Distributions of net short-term capital gain (as reduced by any net long-term capital loss for the taxable year) will be taxable to shareholders as ordinary income. Distributions of investment income reported by the Fund as derived from “qualified dividend income” will be taxed in the hands of individuals at the rates applicable to net capital gain, provided holding period and other requirements are met at both the shareholder and Fund level.
The Code generally imposes a 3.8% Medicare contribution tax on the net investment income of certain individuals, trusts and estates to the extent their income exceeds certain threshold amounts. For these purposes, “net investment income” generally includes, among other things: (i) distributions paid by the Fund of net investment income and capital gains as described above; and (ii) any net gain from the sale, exchange or other taxable disposition of Fund shares. Shareholders are advised to consult their tax advisers regarding the possible implications of this additional tax on their investment in the Fund.
As required by U.S. federal law, detailed U.S. federal tax information with respect to each calendar year will be furnished to each shareholder early in the succeeding year.
If, in and with respect to any taxable year, the Fund makes a distribution to a shareholder in excess of the Fund’s current and accumulated earnings and profits, the excess distribution will be treated as a return of capital to the extent of such shareholder’s tax basis in its shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces a shareholder’s tax basis in its shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the shareholder of its shares. To the extent the Fund makes distributions of capital gains in excess of the Fund’s net capital gain for the taxable year (as reduced by any available capital loss carryforwards from prior taxable years), there is a possibility that the distributions will be taxable as ordinary dividend distributions, even though distributed excess amounts would not have been subject to tax if retained by the Fund.
Distributions are taxable as described herein whether shareholders receive them in cash or reinvest them in additional shares.
A dividend paid to shareholders in January generally is deemed to have been paid by the Fund on December 31 of the preceding year if the dividend was declared and payable to shareholders of record on a date in October, November or December of that preceding year.
Distributions on the Fund’s shares generally are subject to U.S. federal income tax as described herein to the extent they do not exceed the Fund’s realized income and gains, even though such distributions may economically represent a return of a particular shareholder’s investment. Such distributions are likely to occur in respect of shares purchased at a time when the Fund’s NAV reflects either unrealized gains, or realized but undistributed income or gains, that were therefore included in the price the shareholder paid. Such distributions may reduce the fair market value of the Fund’s shares below the shareholder’s cost basis in those shares. As described above, the Fund is required to distribute realized income and gains regardless of whether the Fund’s NAV also reflects unrealized losses.
If the Fund holds, directly or indirectly, one or more “tax credit bonds” on one or more applicable dates during a taxable year, it is possible that the Fund will elect to permit its shareholders to claim a tax credit on their income tax returns equal to each shareholder's proportionate share of tax credits from the applicable bonds that otherwise would be allowed to the Fund. In such a case, a shareholder will be deemed to receive a distribution of money with respect to its Fund shares equal to the shareholder’s proportionate share of the amount of such credits and be allowed a credit against the shareholder's U.S. federal income tax liability equal to the amount of such deemed distribution, subject to certain limitations imposed by the Code on the credits involved. Even if the Fund is eligible to pass through tax credits to shareholders, the Fund may choose not to do so.
In order for some portion of the dividends received by the Fund shareholder to be “qualified dividend income” that is eligible for taxation at long-term capital gain rates, the Fund must meet holding period and other requirements with respect to some portion of the dividend-paying stocks in its portfolio and the shareholder must meet holding period and other requirements with respect to the Fund’s shares. In general, a dividend is not treated as qualified dividend income (at either the Fund or shareholder level): (1) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121-day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred stock, 91 days during the 181-day period beginning 90 days before such date); (2) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property; (3) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest; or (4) if the dividend is received from a foreign corporation that is: (a) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation readily tradable on an established securities market in the United States); or (b) treated as a passive foreign investment company.
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In general, distributions of investment income reported by the Fund as derived from qualified dividend income are treated as qualified dividend income in the hands of a shareholder taxed as an individual, provided the shareholder meets the holding period and other requirements described above with respect to the Fund’s shares.
If the aggregate qualified dividends received by the Fund during a taxable year are 95% or more of its gross income (excluding net long-term capital gain over net short-term capital loss), then 100% of the Fund’s dividends (other than dividends properly reported as Capital Gain Dividends) are eligible to be treated as qualified dividend income.
In general, dividends of net investment income received by corporate shareholders of the Fund qualify for the dividends-received deduction generally available to corporations to the extent of the amount of eligible dividends received by the Fund from domestic corporations for the taxable year. A dividend received by the Fund will not be treated as a dividend eligible for the dividends-received deduction: (1) if it has been received with respect to any share of stock that the Fund has held for less than 46 days (91 days in the case of certain preferred stock) during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (during the 181-day period beginning 90 days before such date in the case of certain preferred stock); or (2) to the extent that the Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. Moreover, the dividends received deduction may otherwise be disallowed or reduced: (1) if the corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of the Fund; or (2) by application of various provisions of the Code (for instance, the dividends-received deduction is reduced in the case of a dividend received on debt-financed portfolio stock (generally, stock acquired with borrowed funds)).
Any distribution of income that is attributable to: (i) income received by the Fund in lieu of dividends with respect to securities on loan pursuant to a securities lending transaction; or (ii) dividend income received by the Fund on securities it temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute qualified dividend income to individual shareholders and will not be eligible for the dividends-received deduction for corporate shareholders.
Distributions by the Fund to its shareholders that the Fund properly reports as “Section 199A dividends,” as defined and subject to certain conditions described below, are treated as qualified REIT dividends in the hands of non-corporate shareholders. Non-corporate shareholders are permitted a U.S. federal income tax deduction equal to 20% of qualified REIT dividends received by them, subject to certain limitations. Very generally, a Section 199A dividend is any dividend or portion thereof that is attributable to certain dividends received by the Fund from REITs, to the extent such dividends are properly reported as such by the RIC in a written notice to its shareholders. A Section 199A dividend is treated as a qualified REIT dividend only if the shareholder receiving such dividend holds the dividend-paying RIC shares for at least 46 days of the 91-day period beginning 45 days before the shares become ex-dividend, and is not under an obligation to make related payments with respect to a position in substantially similar or related property. The Fund is permitted to report such part of its dividends as Section 199A dividends as are eligible, but is not required to do so.
Subject to future regulatory guidance to the contrary, distributions attributable to qualified publicly traded partnership income from the Fund’s investments in MLPs will ostensibly not qualify for the deduction available to non-corporate taxpayers in respect of such amounts received directly from an MLP.
A shareholder whose distributions are reinvested in shares under the Dividend Reinvestment Plan generally will be treated as having received a dividend equal to either: (i) if the shares are trading below NAV, the amount of cash allocated to the shareholder for the purchase of shares on its behalf in the open market; or (ii) if shares are trading at or above NAV, generally the fair market value of the new shares issued to the shareholder.
Tax Implications of Certain Fund Investments
Special Rules for Debt Obligations. Some debt obligations with a fixed maturity date of more than one year from the date of issuance (and zero-coupon debt obligations with a fixed maturity date of more than one year from the date of issuance) will be treated as debt obligations that are issued originally at a discount. Generally, the original issue discount (“OID”) is treated as interest income and is included in the Fund’s income and required to be distributed by the Fund over the term of the debt instrument, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt instrument. In addition, payment-in-kind securities will give rise to income, which is required to be distributed and is taxable even though the Fund holding the security receives no interest payment in cash on the security during the year.
Some debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by the Fund in the secondary market may be treated as having “market discount.” Very generally, market discount is the excess of the stated redemption price of a debt obligation (or in the case of an obligation issued with OID, its “revised issue price”) over the purchase price of such obligation. Generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt instrument having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the “accrued market discount” on such debt instrument. Alternatively, the Fund may elect to accrue market discount currently, in which case the Fund will be required to include the accrued market discount in the Fund's income (as ordinary income) and thus distribute it over the term of the debt instrument, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt instrument. The rate at which the market discount accrues, and thus is included in the Fund's income, will depend upon which of the permitted accrual methods the Fund elects.
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Some debt obligations with a fixed maturity date of one year or less from the date of issuance may be treated as having OID or, in certain cases, “acquisition discount” (very generally, the excess of the stated redemption price over the purchase price). The Fund will be required to include the OID or acquisition discount in income (as ordinary income) and thus distribute it over the term of the debt instrument, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt instrument. The rate at which OID or acquisition discount accrues, and thus is included in the Fund's income, will depend upon which of the permitted accrual methods the Fund elects.
If the Fund holds the foregoing kinds of obligations, or other obligations subject to special rules under the Code, it may be required to pay out as an income distribution each year an amount which is greater than the total amount of cash interest the Fund actually received. Such distributions may be made from the cash assets of the Fund or, if necessary, by disposition of portfolio securities including at a time when it may not be advantageous to do so. These dispositions may cause the Fund to realize higher amounts of short-term capital gains (generally taxed to shareholders at ordinary income tax rates) and, in the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger Capital Gain Dividend than if the Fund had not held such obligations.
Securities Purchased at a Premium. Very generally, where the Fund purchases a bond at a price that exceeds the redemption price at maturity – that is, at a premium – the premium is amortizable over the remaining term of the bond. In the case of a taxable bond, if the Fund makes an election applicable to all such bonds it purchases, which election is irrevocable without consent of the IRS, the Fund would reduce the current taxable income from the bond by the amortized premium and reduce its tax basis in the bond by the amount of such offset; upon the disposition or maturity of such bonds acquired on or after January 4, 2013, the Fund is permitted to deduct any remaining premium allocable to a prior period. In the case of a tax-exempt bond, tax rules require the Fund to reduce its tax basis by the amount of amortized premium.
A portion of the OID accrued on certain high yield discount obligations may not be deductible to the issuer and will instead be treated as a dividend paid by the issuer for purposes of the dividends received deduction. In such cases, if the issuer of the high-yield discount obligations is a domestic corporation, dividend payments by the Fund may be eligible for the dividends received deduction to the extent attributable to the deemed dividend portion of such OID.
At-risk or Defaulted Securities. Investments in debt obligations that are at risk of or in default present special tax issues for the Fund. Tax rules are not entirely clear about issues such as whether or to what extent the Fund should recognize market discount on a debt obligation, when the Fund may cease to accrue interest, OID or market discount, when and to what extent the Fund may take deductions for bad debts or worthless securities and how the Fund should allocate payments received on obligations in default between principal and income. These and other related issues will be addressed by the Fund when, as and if it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and does not become subject to U.S. federal income or excise tax.
Certain Investments in REITs. Any investment by the Fund in equity securities of REITs qualifying as such under Subchapter M of the Code may result in the Fund’s receipt of cash in excess of the REIT’s earnings; if the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Dividends received by the Fund from a REIT will not qualify for the corporate dividends-received deduction and generally will not constitute qualified dividend income.
Certain distributions made by the Fund attributable to dividends received by the Fund from REITs may qualify as “qualified REIT dividends” in the hands of non-corporate shareholders, as discussed above.
Mortgage-Related Securities. The Fund may invest directly or indirectly in REMICs (including by investing in residual interests in collateralized mortgage obligations (“CMOs”) with respect to which an election to be treated as a REMIC is in effect) or equity interests in taxable mortgage pools (“TMPs”). Under a notice issued by the IRS in October 2006 and U.S. Treasury regulations that have yet to be issued but may apply retroactively, a portion of the Fund’s income (including income allocated to the Fund from a REIT or other pass-through entity) that is attributable to a residual interest in a REMIC or an equity interest in a TMP (referred to in the Code as an “excess inclusion”) will be subject to U.S. federal income tax in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a RIC will be allocated to shareholders of the RIC in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related interest directly. As a result, the Fund investing in such interests may not be a suitable investment for charitable remainder trusts, as noted below.
In general, excess inclusion income allocated to shareholders: (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions); (ii) will constitute unrelated business taxable income (“UBTI”) to entities (including a qualified pension plan, an IRA, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file a tax return, to file a tax return and pay tax on such income; and (iii) in the case of a non-U.S. shareholder, will not qualify for any reduction in U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding any exemption from such income tax otherwise available under the Code.
Foreign Currency Transactions. Any transaction by the Fund in foreign currencies, foreign currency-denominated debt obligations or certain foreign currency options, futures contracts or forward contracts (or similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. Any such net gains could require a larger dividend toward the end of the calendar year. Any such net losses generally will reduce and potentially require the recharacterization of prior ordinary income distributions. Such ordinary income treatment may accelerate Fund distributions to shareholders and increase the distributions taxed to shareholders as ordinary income. Any net ordinary losses so created cannot be carried forward by the Fund to offset income or gains earned in subsequent taxable years.
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Foreign currency gains generally are treated as qualifying income for purposes of the 90% gross income test described above. There is a remote possibility that the Secretary of the Treasury will issue contrary tax regulations with respect to foreign currency gains that are not directly related to a RIC’s principal business of investing in stocks or securities (or options or futures with respect to stocks or securities), and such regulations could apply retroactively.
Passive Foreign Investment Companies. Equity investments by the Fund in certain “passive foreign investment companies” (“PFICs”) could potentially subject the Fund to a U.S. federal income tax (including interest charges) on distributions received from the company or on proceeds received from the disposition of shares in the company. This tax cannot be eliminated by making distributions to Fund shareholders. However, the Fund may elect to avoid the imposition of that tax. For example, the Fund may elect to treat a PFIC as a “qualified electing fund” (i.e., make a “QEF election”), in which case the Fund will be required to include its share of the PFIC’s income and net capital gains annually, regardless of whether it receives any distribution from the PFIC. The Fund also may make an election to mark the gains (and to a limited extent losses) in such holdings “to the market” as though it had sold (and, solely for purposes of this mark-to-market election, repurchased) its holdings in those PFICs on the last day of the Fund’s taxable year. Such gains and losses are treated as ordinary income and loss. The QEF and mark-to-market elections may accelerate the recognition of income (without the receipt of cash) and increase the amount required to be distributed by the Fund to avoid taxation. Making either of these elections therefore may require the Fund to liquidate other investments (including when it is not advantageous to do so) to meet its distribution requirement, which also may accelerate the recognition of gain and affect the Fund’s total return. Dividends paid by PFICs will not be eligible to be treated as “qualified dividend income.” A foreign issuer in which the Fund invests will not be treated as a PFIC with respect to the Fund if such issuer is a controlled foreign corporation (“CFC”) for U.S. federal income tax purposes and the Fund holds (directly, indirectly, or constructively) 10% or more of the voting interests in or total value of such issuer. In such a case, the Fund generally would be required to include in gross income each year, as ordinary income, its share of certain amounts of a CFC's income, whether or not the CFC distributes such amounts to the Fund.
Because it is not always possible to identify a non-U.S. corporation as a PFIC, the Fund may incur the tax and interest charges described above in some instances.
Options and Futures
In general, option premiums received by the Fund are not immediately included in the income of the Fund. Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder, or the Fund transfers or otherwise terminates the option (e.g., through a closing transaction). If a call option written by the Fund is exercised and the Fund sells or delivers the underlying stock, the Fund generally will recognize capital gain or loss equal to (a) sum of the strike price and the option premium received by the Fund minus (b) the Fund’s basis in the stock. Such gain or loss generally will be short-term or long-term depending upon the holding period of the underlying stock. If securities are purchased by the Fund pursuant to the exercise of a put option written by it, the Fund generally will subtract the premium received for purposes of computing its cost basis in the securities purchased. Gain or loss arising in respect of a termination of the Fund’s obligation under an option other than through the exercise of the option will be short-term gain or loss depending on whether the premium income received by the Fund is greater or less than the amount paid by the Fund (if any) in terminating the transaction. Thus, for example, if an option written by the Fund expires unexercised, the Fund generally will recognize short-term gain equal to the premium received.
The Fund’s options activities may include transactions constituting straddles for U.S. federal income tax purposes, that is, that trigger the U.S. federal income tax straddle rules contained primarily in Section 1092 of the Code. Such straddles include, for example, positions in a particular security, or an index of securities, and one or more options that offset the former position, including options that are “covered” by the Fund’s long position in the subject security. Very generally, where applicable, Section 1092 requires: (i) that losses be deferred on positions deemed to be offsetting positions with respect to “substantially similar or related property,” to the extent of unrealized gain in the latter; and (ii) that the holding period of such a straddle position that has not already been held for the long-term holding period be terminated and begin anew once the position is no longer part of a straddle. Options on single stocks that are not “deep in the money” may constitute qualified covered calls, which generally are not subject to the straddle rules; the holding period on stock underlying qualified covered calls that are “in the money” although not “deep in the money” will be suspended during the period that such calls are outstanding. These straddle rules and the rules governing qualified covered calls could cause gains that would otherwise constitute long-term capital gains to be treated as short-term capital gains, and distributions that would otherwise constitute “qualified dividend income” or qualify for the dividends-received deduction to fail to satisfy the holding period requirements and therefore to be taxed as ordinary income or to fail to qualify for the dividends-received deduction, as the case may be.
The tax treatment of certain positions entered into by the Fund (including regulated futures contracts, certain foreign currency positions and certain listed non-equity options) will be governed by Section 1256 of the Code (“Section 1256 contracts”). Gains or losses on Section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses (“60/40”), although certain foreign currency gains and losses from such contracts may be treated as ordinary in character. Also, Section 1256 contracts held by the Fund at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed under the Code) are “marked to market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable.
Other Derivatives, Hedging, and Related Transactions. In addition to the special rules described above in respect of futures and options transactions, the Fund’s transactions in other derivative instruments (e.g., forward contracts and swap agreements), as well as any of its hedging, short sale, securities loan or similar transactions, may be subject to one or more special tax rules (e.g., notional principal contract, straddle, constructive sale, wash sale and short sale rules). These rules may affect whether gains and losses recognized by
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the Fund are treated as ordinary or capital, accelerate the recognition of income or gains to the Fund, defer losses to the Fund, and cause adjustments in the holding periods of the Fund’s securities, thereby affecting, among other things, whether capital gains and losses are treated as short-term or long-term. These rules could therefore affect the amount, timing and/or character of distributions to shareholders.
Because these and other tax rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether the Fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a RIC and avoid a Fund-level tax.
Commodity-Linked Instruments. The Fund’s investments in commodity-linked instruments can be limited by the Fund’s intention to qualify as a RIC, and can bear on the Fund’s ability to so qualify. Income and gains from certain commodity-linked instruments do not constitute qualifying income to a RIC for purposes of the 90% gross income test described above. The tax treatment of some other commodity-linked instruments in which the Fund might invest is not certain, in particular with respect to whether income or gains from such instruments constitute qualifying income to a RIC. If the Fund were to treat income or gain from a particular instrument as qualifying income and the income or gain were later determined not to constitute qualifying income and, together with any other nonqualifying income, caused the Fund’s nonqualifying income to exceed 10% of its gross income in any taxable year, the Fund would fail to qualify as a RIC unless it is eligible to and does pay a tax at the Fund level.
Exchange-Traded Notes, Structured Notes. The tax rules are uncertain with respect to the treatment of income or gains arising in respect of commodity-linked exchange-traded notes (“ETNs”) and certain commodity-linked structured notes; also, the timing and character of income or gains arising from ETNs can be uncertain. An adverse determination or future guidance by the IRS (which determination or guidance could be retroactive) may affect the Fund’s ability to qualify for treatment as a RIC and to avoid a Fund-level tax.
Book-Tax Differences. Certain of the Fund’s investments in derivative instruments and foreign currency-denominated instruments, and any of the Fund's transactions in foreign currencies and hedging activities, are likely to produce a difference between its book income and the sum of its taxable income and net tax-exempt income (if any). If such a difference arises, and the Fund’s book income is less than the sum of its taxable income and net tax-exempt income, the Fund could be required to make distributions exceeding book income to qualify as a RIC that is accorded special tax treatment and to avoid an entity-level tax. In the alternative, if the Fund’s book income exceeds the sum of its taxable income (including realized capital gains) and net tax-exempt income, the distribution (if any) of such excess generally will be treated as: (i) a dividend to the extent of the Fund’s remaining earnings and profits (including earnings and profits arising from tax-exempt income); (ii) thereafter, as a return of capital to the extent of the recipient’s basis in its shares; and (iii) thereafter as gain from the sale or exchange of a capital asset.
Investments in Other RICs. The Fund’s investments in shares of another mutual fund, an ETF or another company that qualifies as a RIC (each, an “investment company”) can cause the Fund to be required to distribute greater amounts of net investment income or net capital gain than the Fund would have distributed had it invested directly in the securities held by the investment company, rather than in shares of the investment company. Further, the amount or timing of distributions from the Fund qualifying for treatment as a particular character (e.g., long-term capital gain, exempt interest, eligibility for dividends-received deduction, etc.) will not necessarily be the same as it would have been had the Fund invested directly in the securities held by the investment company. If the Fund receives dividends from an investment company and the investment company reports such dividends as qualified dividend income, then the Fund is permitted in turn to report a portion of its distributions as qualified dividend income, provided the Fund meets holding period and other requirements with respect to shares of the investment company.
If the Fund receives dividends from an investment company and the investment company reports such dividends as eligible for the dividends-received deduction, then the Fund is permitted in turn to report its distributions derived from those dividends as eligible for the dividends-received deduction as well, provided the Fund meets holding period and other requirements with respect to shares of the investment company.
Investments in Master Limited Partnerships and Certain Non-U.S. Entities. The Fund’s ability to make direct and indirect investments in MLPs and certain non-U.S. entities is limited by the Fund’s intention to qualify as a RIC, and if the Fund does not appropriately limit such investments or if such investments are recharacterized for U.S. federal income tax purposes, the Fund’s status as a RIC may be jeopardized. Among other limitations, the Fund is permitted to have no more than 25% of the value of its total assets invested in qualified publicly traded partnerships, including MLPs.
Subject to any future regulatory guidance to the contrary, any distribution of income attributable to qualified publicly traded partnership income from the Fund’s investment in a MLP will ostensibly not qualify for the deduction that would be available to a non-corporate shareholder were the shareholder to own such MLP directly.
Tax-Exempt Shareholders
Income of a RIC that would be UBTI if earned directly by a tax-exempt entity generally will not constitute UBTI when distributed to a tax-exempt shareholder of the RIC. Notwithstanding this “blocking” effect, a tax-exempt shareholder could realize UBTI by virtue of its investment in the Fund if shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b).
A tax-exempt shareholder may also recognize UBTI if the Fund recognizes “excess inclusion income” derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs as described above, if the amount of such income recognized by the Fund exceeds the Fund’s investment company taxable income (after taking into account deductions for dividends paid by the Fund).
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In addition, special tax consequences apply to charitable remainder trusts (“CRTs”) that invest in RICs that invest directly or indirectly in residual interests in REMICs or equity interests in TMPs. Under legislation enacted in December 2006, a CRT (as defined in Section 664 of the Code) that realizes any UBTI for a taxable year must pay an excise tax annually of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI as a result of investing in the Fund that recognizes “excess inclusion income.” Rather, if at any time during any taxable year a CRT (or one of certain other tax-exempt shareholders, such as the United States, a state or political subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a share in the Fund that recognizes “excess inclusion income,” then the Fund will be subject to a tax on that portion of its “excess inclusion income” for the taxable year that is allocable to such shareholders at the highest U.S. federal corporate income tax rate. The extent to which this IRS guidance remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, the Fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such shareholder’s distributions for the year by the amount of the tax that relates to such shareholder’s interest in the Fund.
CRTs and other tax-exempt investors are urged to consult their tax advisers concerning the consequences of investing in the Fund.
Sale, Exchange or Redemption of Shares
The sale, exchange or redemption of Fund shares may give rise to a gain or loss.
In general, any gain or loss realized upon a taxable disposition of shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months. Otherwise, the gain or loss on the taxable disposition of Fund shares will be treated as short-term capital gain or loss. However, any loss realized upon a taxable disposition of Fund shares held by a shareholder for six months or less will be treated as long-term, rather than short-term, to the extent of any Capital Gain Dividends received (or deemed received) by the shareholder with respect to the shares.
Further, all or a portion of any loss realized upon a taxable disposition of Fund shares will be disallowed under the Code’s “wash-sale” rule if other substantially identical shares are purchased, including by means of dividend reinvestment, within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.
Shareholders who tender all shares held, or considered to be held, by them will be treated as having sold their shares and generally will realize a capital gain or loss. If a shareholder tenders fewer than all of its shares, such shareholder may be treated as having received a distribution under Section 301 of the Code (“Section 301 distribution”) unless the redemption is treated as being either: (i) “substantially disproportionate” with respect to such shareholder; or (ii) otherwise “not essentially equivalent to a dividend” under the relevant rules of the Code. A Section 301 distribution is not treated as a sale or exchange giving rise to a capital gain or loss, but rather is treated as a dividend to the extent supported by the Fund’s current and accumulated earnings and profits, with the excess treated as a return of capital reducing the shareholder’s tax basis in Fund shares, and thereafter as capital gain. Where a redeeming shareholder is treated as receiving a dividend, there is a risk that non-tendering shareholders whose interests in the Fund increase as a result of such tender will be treated as having received a taxable distribution from the Fund. The extent of such risk will vary depending upon the particular circumstances of the tender offer.
To the extent that the Fund recognizes net gains on the liquidation of portfolio securities to meet such tenders or other repurchases of Fund shares, the Fund will be required to make additional distributions to its common shareholders.
Tax Shelter Reporting Regulations
Under U.S. Treasury regulations, if a shareholder recognizes a loss of at least $2 million in any single taxable year or $4 million in any combination of taxable years for an individual shareholder or at least $10 million in any single taxable year or $20 million in any combination of taxable years for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult with their tax advisers to determine the applicability of these regulations in light of their individual circumstances.
Foreign Taxation
Income, proceeds and gains received by the Fund (or RICs in which the Fund has invested) from sources within non-U.S. countries may be subject to withholding and other taxes imposed by such countries. Tax treaties between certain countries and the United States may reduce or eliminate such taxes. This will decrease the Fund’s yield on securities subject to such taxes. If more than 50% of the Fund’s assets at taxable year end consists of the securities of non-U.S. corporations, the Fund may elect to permit shareholders to claim a credit or deduction on their income tax returns for their pro rata portions of qualified taxes paid by the Fund to non-U.S. countries in respect of foreign (non-U.S.) securities that the Fund has held for at least the minimum period specified in the Code. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes paid by the Fund. A shareholder’s ability to claim an offsetting foreign tax credit or deduction in respect of foreign taxes paid by the Fund is subject to certain limitations imposed by the Code, which may result in the shareholder’s not receiving a full credit or deduction (if any) for the amount of such taxes. Shareholders who do not itemize on their U.S. federal income tax returns may claim a credit (but not a deduction) for such foreign taxes.
Even if the Fund were eligible to make such an election for a given year, it may determine not to do so. Shareholders that are not subject to U.S. federal income tax, and those who invest in the Fund through tax-advantaged accounts (including those who invest through IRAs or other tax-advantaged retirement plans), generally will receive no benefit from any tax credit or deduction passed through by the Fund.
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Foreign Shareholders
Distributions by the Fund to shareholders that are not “U.S. persons” within the meaning of the Code (“foreign shareholders”) properly reported by the Fund as: (1) Capital Gain Dividends; (2) short-term capital gain dividends; and (3) interest-related dividends, each as defined below and subject to certain conditions described below, generally are not subject to withholding of U.S. federal income tax.
In general, the Code defines (1) “short-term capital gain dividends” as distributions of net short-term capital gains in excess of net long-term capital losses and (2) “interest-related dividends” as distributions from U.S. source interest income of types similar to those not subject to U.S. federal income tax if earned directly by an individual foreign shareholder, in each case to the extent such distributions are properly reported as such by the Fund in a written notice to shareholders. The exceptions to withholding for Capital Gain Dividends and short-term capital gain dividends do not apply to (A) distributions to an individual foreign shareholder who is present in the United States for a period or periods aggregating 183 days or more during the year of the distribution and (B) distributions attributable to gain that is treated as effectively connected with the conduct by the foreign shareholder of a trade or business within the United States under special rules regarding the disposition of U.S. real property interests as described below. The exception to withholding for interest-related dividends does not apply to distributions to a foreign shareholder (A) that has not provided a satisfactory statement that the beneficial owner is not a U.S. person, (B) to the extent that the dividend is attributable to certain interest on an obligation if the foreign shareholder is the issuer or is a 10% shareholder of the issuer, (C) that is within certain foreign countries that have inadequate information exchange with the United States, or (D) to the extent the dividend is attributable to interest paid by a person that is a related person of the foreign shareholder and the foreign shareholder is a controlled foreign corporation. If the Fund invests in a RIC that pays such distributions to the Fund, such distributions retain their character as not subject to withholding if properly reported when paid by the Fund to foreign shareholders. The Fund may report such part of its dividends as interest-related and/or short-term capital gain dividends as are eligible, but is not required to do so. In the case of shares held through an intermediary, the intermediary may withhold even if the Fund reports all or a portion of a payment as an interest-related or short-term capital gain dividend to shareholders.
Foreign shareholders should contact their intermediaries regarding the application of these rules to their accounts.
Distributions by the Fund to foreign shareholders other than Capital Gain Dividends, short-term capital gain dividends and interest-related dividends (e.g., dividends attributable to dividend and foreign-source interest income or to short-term capital gains or U.S. source interest income to which the exception from withholding described above does not apply) are generally subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate).
A foreign shareholder is not, in general, subject to U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of the Fund unless: (i) such gain is effectively connected with the conduct by the foreign shareholder of a trade or business within the United States; (ii) in the case of a foreign shareholder that is an individual, the shareholder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale and certain other conditions are met; or (iii) the special rules relating to gain attributable to the sale or exchange of “U.S. real property interests” (“USRPIs”) apply to the foreign shareholder's sale of shares of the Fund (as described below).
Subject to certain exceptions (e.g., for the Fund that is a “U.S. real property holding corporation” as described below), the Fund is generally not required (and does not expect) to withhold on the amount of a non-dividend distribution (i.e., a distribution that is not paid out of the Fund’s current earnings and profits for the applicable taxable year or accumulated earnings and profits) when paid to its foreign shareholders.
Special rules would apply if the Fund were a qualified investment entity (“QIE”) because it is either a “U.S. real property holding corporation” (“USRPHC”) or would be a USRPHC but for the operation of certain exceptions to the definition of USRPIs described below. Very generally, a USRPHC is a domestic corporation that holds USRPIs the fair market value of which equals or exceeds 50% of the sum of the fair market values of the corporation’s USRPIs, interests in real property located outside the United States, and other trade or business assets. USRPIs generally are defined as any interest in U.S. real property and any interest (other than solely as a creditor) in a USRPHC or, very generally, an entity that has been a USRPHC in the last five years. A fund that holds, directly or indirectly, significant interests in REITs may be a USRPHC. Interests in domestically controlled QIEs, including REITs and RICs that are QIEs, not-greater-than-10% interests in publicly traded classes of stock in REITs and not-greater-than-5% interests in publicly traded classes of stock in RICs generally are not USRPIs, but these exceptions do not apply for purposes of determining whether the Fund is a QIE.
If an interest in a Fund were a USRPI, the Fund would be required to withhold U.S. tax on the proceeds of a share redemption by a greater-than-5% foreign shareholder or any foreign shareholders if shares of the Fund are not considered regularly traded on an established securities market, in which case such foreign shareholder generally would also be required to file U.S. tax returns and pay any additional taxes due in connection with the redemption.
Moreover, if the Fund were a USRPHC or, very generally, had been one in the last five years, it would be required to withhold on amounts distributed to a greater-than-5% foreign shareholder to the extent such amounts would not be treated as a dividend, i.e., are in excess of the Fund’s current and accumulated “earnings and profits” for the applicable taxable year. Such withholding generally is not required if the Fund is a domestically controlled QIE.
If the Fund were a QIE, under a special “look-through” rule, any distributions by the Fund to a foreign shareholder (including, in certain cases, distributions made by the Fund in redemption of its shares) attributable directly or indirectly to: (i) distributions received by the Fund from a lower-tier RIC or REIT that the Fund is required to treat as USRPI gain in its hands; and (ii) gains realized on the disposition of USRPIs by the Fund would retain their character as gains realized from USRPIs in the hands of the Fund’s foreign shareholders and would be subject to U.S. tax withholding. In addition, such distributions could result in the foreign shareholder being required to file a
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U.S. tax return and pay tax on the distributions at regular U.S. federal income tax rates. The consequences to a foreign shareholder, including the rate of such withholding and character of such distributions (e.g., as ordinary income or USRPI gain), would vary depending upon the extent of the foreign shareholder’s current and past ownership of the Fund.
Foreign shareholders of the Fund also may be subject to “wash sale” rules to prevent the avoidance of the tax-filing and -payment obligations discussed above through the sale and repurchase of Fund shares.
Foreign shareholders should consult their tax advisers and, if holding shares through intermediaries, their intermediaries, concerning the application of these rules to their investment in the Fund.
Foreign shareholders with respect to whom income from the Fund is effectively connected with a trade or business conducted by the foreign shareholder within the United States will in general be subject to U.S. federal income tax on the income derived from the Fund at the graduated rates applicable to U.S. citizens, residents or domestic corporations, whether such income is received in cash or reinvested in shares of the Fund and, in the case of a foreign corporation, may also be subject to a branch profits tax. If a foreign shareholder is eligible for the benefits of a tax treaty, any effectively connected income or gain will generally be subject to U.S. federal income tax on a net basis only if it is also attributable to a permanent establishment maintained by the shareholder in the United States. More generally, foreign shareholders who are residents in a country with an income tax treaty with the United States may obtain different tax results than those described herein, and are urged to consult their tax advisers.
In order to qualify for any exemptions from withholding described above or for lower withholding tax rates under income tax treaties, or to establish an exemption from backup withholding, a foreign shareholder must comply with special certification and filing requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN, W-8BEN-E or substitute form). Foreign shareholders should consult their tax advisers in this regard.
Special rules (including withholding and reporting requirements) apply to foreign partnerships and those holding Fund shares through foreign partnerships. Additional considerations may apply to foreign trusts and estates. Investors holding Fund shares through foreign entities should consult their tax advisers about their particular situation.
A foreign shareholder may be subject to state and local tax and to the U.S. federal estate tax in addition to the U.S. federal income tax referred to above.
Backup Withholding
The Fund generally is required to withhold and remit to the U.S. Treasury a percentage of the taxable distributions and redemption proceeds paid to any individual shareholder who fails to properly furnish the Fund with a correct taxpayer identification number, who has under-reported dividend or interest income, or who fails to certify to the Fund that he or she is not subject to such withholding.
Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholder’s U.S. federal income tax liability, provided the appropriate information is timely furnished to the IRS.
Shareholder Reporting Obligations With Respect to Foreign Bank and Financial Accounts
Shareholders that are U.S. persons and own, directly or indirectly, more than 50% of the Fund could be required to report annually their “financial interest” in the Fund’s “foreign financial accounts,” if any, on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”). Shareholders should consult a tax adviser, and persons investing in the Fund through an intermediary should contact their intermediary, regarding the applicability to them of this reporting requirement.
Other Reporting and Withholding Requirements
Sections 1471-1474 of the Code and the U.S. Treasury regulations and IRS guidance issued thereunder (collectively, “FATCA”) generally require the Fund to obtain information sufficient to identify the status of each of its shareholders under FATCA or under an applicable intergovernmental agreement (an “IGA”) between the United States and a foreign government. If a shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, the Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends it pays. The IRS and the U.S. Department of the Treasury have issued proposed regulations providing that these withholding rules will not apply to the gross proceeds of share redemptions or Capital Gain Dividends the Fund pays. If a payment by the Fund is subject to FATCA withholding, the Fund is required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., interest-related dividends and short-term capital gain dividends).
Each prospective investor is urged to consult its tax adviser regarding the applicability of FATCA and any other reporting requirements with respect to the prospective investor’s own situation, including investments through an intermediary.
General Considerations
The U.S. federal income tax discussion set forth above is for general information only. Prospective investors should consult their tax advisers regarding the specific U.S. federal tax consequences of purchasing, holding, and disposing of shares of the Fund, as well as the effects of state, local, non-U.S., and other tax law and any proposed tax law changes.
FINANCIAL STATEMENTS
The audited financial statements, and the independent registered public accounting firm’s report thereon, are included in the Fund’s annual report to shareholders for the fiscal year ended February 29, 2024 and are incorporated herein by reference.
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Currently, paper copies of the Fund’s annual and semi-annual shareholder reports are not sent by mail, unless you specifically request paper copies of the reports. Instead, the reports are available on the Voya funds’ website (https://individuals.voya.com/literature), and you will be notified by mail each time a report is posted and provided with a website link to access the report. Effective July 24, 2024, shareholders will receive revised forms of annual and semi-annual shareholder reports in accordance with recently adopted SEC rule and form amendments requiring the Fund to transmit streamlined annual and semi-annual shareholder reports that highlight key information to shareholders. These annual and semi-annual shareholder reports will be sent to shareholders directly by mail. Other information, including financial statements, will no longer appear in the Fund’s shareholder reports but will be available on the Voya funds’ website (https://individuals.voya.com/literature), delivered free of charge upon request, and filed with the SEC on a semi-annual basis on Form N-CSR.You may elect to receive shareholder reports and other communications from a fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-992-0180 or by sending an e-mail request to Voyaim_literature@voya.com.
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APPENDIX A – PROXY VOTING PROCEDURES AND GUIDELINES
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PROXY VOTING POLICY
 
VOYA FUNDS
VOYA INVESTMENTS, LLC
      
Date Last Revised: May 22, 2024
Introduction
This document sets forth the proxy voting procedures (“Procedures”) and guidelines (“Guidelines”), collectively the “Proxy Voting Policy”, that Voya Investments, LLC (“Adviser”) shall follow when voting proxies on behalf of the Voya funds for which it serves as investment adviser (each a “Fund” and collectively, the “Funds”). The Funds’ Boards of Directors/Trustees (“Board”) have approved the Proxy Voting Policy.
The Board may determine to delegate proxy voting to a sub-adviser of one or more Funds (rather than to the Adviser) in which case the sub-adviser’s proxy policies and procedures for implementation on behalf of such Fund (a “Sub-Adviser-Voted Fund”) shall be subject to Board approval. Sub-Adviser-Voted Funds are not covered under the Proxy Voting Policy except as described in the Reporting and Record Retention section below relating to vote reporting requirements. Sub-Adviser-Voted Funds are governed by the applicable sub-adviser’s respective proxy policies provided that the Board has approved such policies.
The Proxy Voting Policy incorporates principles and guidance set forth in relevant pronouncements of the
U.S. Securities and Exchange Commission (“SEC”) and its staff regarding the Adviser’s fiduciary duty to ensure that proxies are voted in a timely manner and that voting decisions are always in the Funds’ best interest.
Pursuant to the Policy, the Adviser’s Active Ownership team (“AO Team”) is delegated the responsibility to vote the Funds’ proxies in accordance with the Proxy Voting Policy on the Funds’ behalf.
The engagement of a Proxy Advisory Firm (as defined in the Proxy Advisory Firm section below) shall be subject to the Board’s initial approval and annual Board review and approval thereafter. The AO Team is responsible for Proxy Advisory Firm oversight and shall direct the Proxy Advisory Firm to vote proxies in accordance with the Guidelines.
The Board’s Compliance Committee (“Compliance Committee”) shall review the Proxy Voting Policy not less than annually and these documents shall be updated as appropriate. No material changes to the Proxy Voting Policy shall become effective without Board approval. The Compliance Committee may approve non-material amendments for immediate implementation subject to full Board ratification at its next regularly scheduled meeting.
Adviser’s Roles and Responsibilities
Active Ownership Team
The AO Team shall direct the Proxy Advisory Firm to vote proxies on the Funds’ and Adviser’s behalf in connection with annual and special shareholder meetings (except those regarding bankruptcy matters and/or related plans of reorganization).
The AO Team is responsible for overseeing the Proxy Advisory Firm and voting the Funds’ proxies in accordance with the Proxy Voting Policy on the Funds’ and the Adviser’s behalf.
The AO Team is authorized to direct the Proxy Advisory Firm to vote Fund proxies in accordance with the Proxy Voting Policy. Responsibilities assigned to the AO Team or activities in support thereof may be performed by such members of the Proxy Committee (as defined in the Proxy Committee section below) or employees of the Adviser’s affiliates as the Proxy Committee deems appropriate.
The AO Team is also responsible for identifying potential conflicts between the proxy issuer and the Proxy Advisory Firm, the Adviser, the Funds’ principal underwriters, or an affiliated person of the Funds. The AO Team shall identify such potential conflicts of interest based on information the Proxy Advisory Firm periodically provides; analyses of Voya’s clients, distributors, broker-dealers, and vendors; and information derived from other sources including but not limited to public filings.
Proxy Committee
The Proxy Committee shall ensure that the Funds vote proxies consistent with the Proxy Voting Policy. The Proxy Committee accordingly reviews and evaluates this Policy, oversees the development and implementation thereof, and resolves ad hoc issues that may arise from time to time. The Proxy Committee is comprised of senior leaders of Voya Investment Management, including fundamental research, ESG research, active ownership, compliance, legal, finance, and operations of the Adviser. The Proxy Committee membership may be amended at the Adviser’s discretion from time to time. The Board will be informed of any membership changes quarterly at the next regularly scheduled meeting.
Investment Professionals
The Funds’ sub-advisers and/or portfolio managers are each referred to herein as an “Investment Professional” and collectively, “Investment Professionals”. Investment Professionals are encouraged to submit recommendations to the AO Team regarding any proxy voting-related proposals relating to the portfolio securities over which they have daily portfolio management responsibility including proxy contests, proposals relating to issuers with dual class shares with superior voting rights, and/or mergers and acquisitions.
Proxy Advisory Firm
The Proxy Advisory Firm is required to coordinate with the Funds’ custodians to ensure that those firms process all proxy materials they receive relating to portfolio securities in a timely manner. To the extent applicable the Proxy Advisory Firm is required to provide research, analysis, and vote recommendations under its Proxy Voting guidelines. The Proxy Advisory Firm is required to produce custom vote recommendations in accordance with the Guidelines and their vote recommendations.
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PROXY VOTING PROCEDURES
Vote Classification
Within-Guidelines Votes: Votes in Accordance with these Guidelines
A vote cast in accordance with these Guidelines is considered Within-Guidelines.
Out-of-Guidelines Votes: Votes Contrary to these Guidelines
A vote that is contrary to these Guidelines may be cast when the AO team and/or Proxy Committee determine that application of these Guidelines is inappropriate under the circumstances. A vote is considered contrary to these Guidelines when such vote contradicts the approach outlined in the Policy.
A vote would not be considered contrary to these Guidelines for cases in which these Guidelines stipulate a Case-by-Case consideration, or an Investment Professional provides a written rationale for such vote.
Matters Requiring Case-by-Case Consideration
The Proxy Advisory Firm shall refer proxy proposals to the AO Team for consideration when the Procedures and Guidelines indicate a “Case-by-Case” consideration. Additionally, the Proxy Advisory Firm shall refer a proxy proposal under circumstances in which the application of the Procedures and Guidelines is uncertain, appears to involve unusual or controversial issues, or is silent regarding the proposal.
Upon receipt of a referral from the Proxy Advisory Firm, the AO Team may solicit additional research or clarification from the Proxy Advisory Firm, Investment Professional(s), or other sources.
The AO Team shall review matters requiring Case-by-Case consideration to determine whether such proposals require an Investment Professional and/or Proxy Committee input and a vote determination.
Non-Votes: Votes in which No Action is Taken
The AO Team shall make reasonable efforts to secure and vote all Fund proxies. Nevertheless, a Fund may refrain from voting under certain circumstances including, but not limited to:
•
The economic effect on shareholder interests or the value of the portfolio holding is indeterminable or insignificant (e.g., proxies in connection with fractional shares), securities no longer held in a Fund, or a proxy is being considered for a Fund no longer in existence.
•
The cost of voting a proxy outweighs the benefits (e.g., certain international proxies, particularly in cases in which share-blocking practices may impose trading restrictions on the relevant portfolio security).
Conflicts of Interest
The Adviser shall act in the Funds’ best interests and strive to avoid conflicts of interest. Conflicts of interest may arise in situations in which, but not limited to:
•
The issuer is a vendor whose products or services are material to the Funds, the Adviser, or their affiliates;
•
The issuer is an entity participating to a material extent in the Funds’ distribution;
•
The issuer is a significant executing broker-dealer for the Funds and/or the Adviser;
•
Any individual who participates in the voting process for the Funds, including:
•
Investment Professionals;
•
Members of the Proxy Committee;
•
Employees of the Adviser;
•
Board Directors/Trustees; and
•
Individuals who serve as a director or officer of the issuer.
•
The issuer is Voya Financial.
Investment Professionals, the Proxy Advisory Firm, the Proxy Committee, and the AO Team shall disclose any potential conflicts of interest and/or confirm they do not have conflicts of interest relating to their participation in the voting process for portfolio securities.
The AO Team shall call a meeting of the Proxy Committee if a potential conflict exists and a member (or members) of the AO Team wishes to vote contrary to these Guidelines or an Investment Professional provides input regarding a meeting and has confirmed a conflict exists with regard thereto. The Proxy Committee shall then consider the matter and vote on a best course of action.
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The AO Team shall use best efforts to convene the Proxy Committee with respect to all matters requiring its consideration. If the Proxy Committee cannot meet its quorum requirements by the voting deadline it shall execute the vote in accordance with these Guidelines.
The Adviser shall maintain records regarding any determinations to vote contrary to these Guidelines including those in which a potential Voya Investment Management Conflict exists. Such records shall include the rationale for the contrary vote.
Potential Conflicts with a Proxy Issuer
The AO Team shall identify potential conflicts with proxy issuers. In addition to obtaining potential conflict of interest information described in the Roles and Responsibilities section above, Proxy Committee members shall disclose to the AO Team any potential conflicts of interests with an issuer prior to discussing the Proxy Advisory Firm’s recommendation.
Proxy Committee members shall advise the AO Team in the event they believe a potential or perceived conflict of interest exists that may preclude them from making a vote determination in the Funds’ best interests. The Proxy Committee member may elect recusal from considering the relevant proxy. Proxy Committee members shall complete a Conflict of Interest Report when they verbally disclose a potential conflict of interest.
Investment Professionals shall also confirm that they do not have any potential conflicts of interest when submitting vote recommendations to the AO Team.
The AO Team gathers and analyzes the information provided by the:
•
Proxy Advisory Firm;
•
Adviser;
•
Funds’ principal underwriters;
•
Fund affiliates;
•
Proxy Committee members;
•
Investment Professionals; and
•
Fund Directors and Officers.
Assessment of the Proxy Advisory Firm
On the Board’s and Adviser’s behalf the AO Team shall assess whether the Proxy Advisory Firm:
•
Is independent from the Adviser;
•
Has resources that indicate it can competently provide analysis of proxy issues;
•
Can make recommendations in an impartial manner and in the best interests of the Funds and their beneficial owners; and
•
Has adequate compliance policies and procedures to:
•
Ensure that its proxy voting recommendations are based on current and accurate information; and
•
Identify and address conflicts of interest.
The AO Team shall utilize and the Proxy Advisory Firm shall comply with such methods for completing the assessment as the AO Team may deem reasonably appropriate. The Proxy Advisory Firm shall also promptly notify the AO Team in writing of any material changes to information it previously provided to the AO Team in connection with establishing the Proxy Advisory Firm’s independence, competence, or impartiality.
Voting Funds of Funds, Investing Funds and Feeder Funds
Funds that are funds-of-funds1 (each a “Fund-of-Funds” and collectively, “Funds-of-Funds”) shall “echo” vote their interests in underlying mutual funds, which may include mutual funds other than the Funds indicated on Voya’s website (www.voyainvestments.com). Meaning that if the Fund-of-Funds must vote on a proposal with respect to an underlying investment issuer the Fund-of-Funds shall vote its interest in that underlying fund in the same proportion as all other shareholders in the underlying investment company voted their interests.
However, if the underlying fund has no other shareholders, the Fund-of-Funds shall vote as follows:
•
If the Fund-of-Funds and the underlying fund are solicited to vote on the same proposal (e.g., the election of fund directors/trustees), the Fund-of-Funds shall vote the shares it holds in the underlying fund in the same proportion as all votes received from the holders of the Fund-of-Funds’ shares with respect to that proposal.
•
If the Fund-of-Funds is solicited to vote on a proposal for an underlying fund (e.g., a new sub-adviser to the underlying fund), and there is no corresponding proposal at the Fund-of-Funds level, the Adviser shall determine the most appropriate method of voting with respect to the underlying fund proposal.
1 Invest in underlying funds beyond 12d-1 limits.
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An Investing Fund2 (e.g., any Voya fund), while not a Fund-of-Funds shall have the foregoing Fund-of- Funds procedure applied to any Investing Fund that invests in one or more underlying funds. Accordingly:
•
Each Investing Fund shall “echo” vote its interests in an underlying fund if the underlying fund has shareholders other than the Investing Fund;
•
In the event an underlying fund has no other shareholders and the Investing Fund and the underlying fund are solicited to vote on the same proposal, the Investing Fund shall vote its interests in the underlying fund in the same proportion as all votes received from the holders of its own shares on that proposal; and
•
In the event an underlying fund has no other shareholders, and no corresponding proposal exists at the Investing Fund level, the Board shall determine the most appropriate method of voting with respect to the underlying fund proposal.
A fund that is a “Feeder Fund” in a master-feeder structure passes votes requested by the underlying master fund to its shareholders. Meaning that, if the master fund solicits the Feeder Fund, the Feeder Fund shall request instructions from its own shareholders as to how it should vote its interest in an underlying master fund either directly or in the case of an insurance-dedicated Fund through an insurance product or retirement plan.
When a Fund is a feeder in a master-feeder structure, proxies for the master fund’s portfolio securities shall be voted pursuant to the master fund’s proxy voting policies and procedures. As such, Feeder Funds shall not be subject to the Procedures and Guidelines except as described in the Reporting and Record Retention section below.
Securities Lending
Many of the Funds participate in securities lending arrangements that generate additional revenue for the Fund. Accordingly, the Fund is unable to vote securities that are on loan under these arrangements. However, under certain circumstances, for voting issues that may have a significant impact on the investment, members of the Proxy Committee or AO Team may request that the Fund’s securities lending agent recall securities on loan if they determine that the benefit of voting outweighs the costs and lost revenue to the Fund as well as the administrative burden of retrieving the securities.
Investment Professionals may also deem a vote to be “material” in the context of the portfolio(s) they manage. They may therefore request that the Proxy Committee review lending activity on behalf of their portfolio(s) with respect to the relevant security and consider recalling and/or restricting the security. The Proxy Committee shall give primary consideration to relevant Investment Professional input in its determination as to whether a given proxy vote is material and if the associated security should accordingly be restricted from lending. The determination that a vote is material in the context of a Fund’s portfolio shall not mean that such vote is considered material across all Funds voting at that meeting. In order to recall or restrict shares on a timely basis for material voting purposes the AO Team shall use best efforts to consider and, when appropriate, act upon such requests on a timely basis. Any relevant Investment Professional may submit a request to review lending activity in connection with a potentially material vote for the Proxy Committee’s consideration at any time.
Reporting and Record Retention
Reporting by the Funds
Annually, as required, each Fund and each Sub-Adviser-Voted Fund shall post on the Voya Funds’ website its proxy voting record or a link to the prior one-year period ended June 30. The proxy voting record for each Fund and each Sub-Adviser-Voted Fund shall also be available on Form N-PX in the SEC’s EDGAR database on its website. For any Fund that is a feeder within a master-feeder structure, no proxy voting record related to the portfolio securities owned by the master fund shall be posted on the Funds’ website or included in the Fund’s Form N-PX; however, a cross-reference to the master fund’s proxy voting record as filed in the SEC’s EDGAR database shall be included in the Fund’s Form N-PX and posted on the Funds’ website. If an underlying master fund solicited any Feeder Fund for a vote during the reporting period, a record of the votes cast by means of the pass-through process described above shall be included on the Voya funds’ website and in the Feeder Fund’s Form N-PX.
Reporting to the Compliance Committee
At each quarterly Compliance Committee meeting the AO Team shall provide to the Compliance Committee a report outlining each proxy proposal, or a summary of such proposals, that was:
1.
Voted Out-of-Guidelines; and/or
2.
When the Proxy Committee did not agree with an Investment Professional’s recommendation, as assessed when the Investment Professional raises a potential conflict of interest.
The report shall include the name of the issuer, the substance of the proposal, a summary of the Investment Professional’s recommendation as applicable, and the reasons for voting or recommending an Out-of- Guidelines Vote or in the case of (2) above a vote which differed from that recommended by the Investment Professional.
Reporting by the AO Team on behalf of the Adviser
The Adviser shall maintain the records required by Rule 204-2(c)(2), as may be amended from time to time, including the following:
2 Invest in underlying funds but not beyond 12d-1 limits.
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•
A copy of each proxy statement received regarding a Fund’s portfolio securities. Such proxy statements the issuers send are available either in the SEC’s EDGAR database or upon request from the Proxy Advisory Firm;
•
A record of each vote cast on behalf of a Fund;
•
A copy of any Adviser-created document that was material to making a proxy vote decision or that memorializes the basis for that decision;
•
A copy of written requests for Fund proxy voting information and any written response thereto or to any oral request for information on how the Adviser voted proxies on behalf of a Fund;
•
A record of all recommendations from Investment Professionals to vote contrary to these Guidelines;
•
All proxy questions/recommendations that have been referred to the Compliance Committee; and
•
All applicable recommendations, analyses, research, Conflict Reports, and vote determinations. All proxy voting materials and supporting documentation shall be retained for a minimum of six years.
Records Maintained by the Proxy Advisory Firm
The Proxy Advisory Firm shall retain a record of all proxy votes handled by the Proxy Advisory Firm. Such record must reflect all the information required to be disclosed in a Fund’s Form N-PX pursuant to Rule 30b1-4 under the Investment Company Act of 1940. Additionally, the Proxy Advisory Firm shall be responsible for maintaining copies of all proxy statements received by issuers and to promptly provide such materials to the Adviser upon request.
PROXY VOTING GUIDELINES
Introduction
Proxies shall be voted in the Funds’ best interests. These Guidelines summarize the Funds’ positions regarding certain matters of importance to shareholders and provide an indication as to how the Funds’ ballots shall be voted for certain types of proposals. These Guidelines are not exhaustive and do not provide guidance on all potential voting matters. Proposals may be addressed on a CASE-BY-CASE basis rather than according to these Guidelines when assessing the merits of available rationale and disclosure.
These Guidelines generally apply to securities of publicly traded operating issuers and to those of privately held operating issuers if publicly available disclosure permits such application. The Funds will consider matters relating to investment companies that are registered under the Investment Company Act of 1940 on a CASE-BY-CASE basis. Additionally, all matters for which such disclosure is not available shall be considered on a CASE-BY-CASE basis.
Investment Professionals are encouraged to submit recommendations to the AO Team regarding proxy voting matters relating to the portfolio securities over which they have daily portfolio management responsibility. Investment Professionals may submit recommendations in connection with any proposal and they are likely to receive requests for recommendations relating to proxies for private equity or fixed income securities and/or proposals relating to merger transactions/corporate restructurings, proxy contests, or unusual or controversial issues.
Interpretation and application of these Guidelines is not intended to supersede any law, regulation, binding agreement, or other legal requirement to which an issuer may be or become subject. No proposal shall be supported where implementation would contravene such requirements.
General Policies
The Funds generally support the recommendation of an issuer’s management when the Proxy Advisory Firm’s recommendation also aligns with such recommendation and to vote in accordance with the Proxy Advisory Firm’s recommendation when management has made no recommendation. However, this policy shall not apply to CASE-BY-CASE proposals for which a contrary recommendation from the relevant Investment Professional(s) is utilized.
The rationale and vote recommendation from Investment Professionals shall receive primary consideration with respect to CASE-BY-CASE proposals considered on the relevant Fund’s behalf.
The Fund’s policy is to not support proposals that would negatively impact the existing rights of the Funds’ beneficial owners. Shareholder proposals shall not be supported if they impose excessive costs and/or are overly restrictive or prescriptive. Depending on the relevant market, appropriate opposition may be expressed as an ABSTAIN, AGAINST, or WITHHOLD vote.
In the event competing shareholder and board proposals appear on the same agenda at uncontested proxies, the shareholder proposal shall not be supported, and the management proposal shall be supported when the management proposal meets the factors for support under the relevant topic/policy (e.g., Allocation of Income and Dividends); the competing proposals shall otherwise be considered on a CASE- BY-CASE basis.
International Policies
Companies incorporated outside the U.S. are subject to the following U.S. policies if they are listed on a
U.S. exchange and treated as a U.S. domestic issuer by the SEC. Where applicable, certain U.S. policies may also be applied to issuers incorporated outside the U.S. (e.g., issuers with a significant base of U.S. operations and employees).
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However, given the differing regulatory and legal requirements, market practices, and political and economic systems existing in various international markets, the Funds shall:
•
Vote AGAINST international proposals when the Proxy Advisory Firm recommends voting AGAINST such proposal due to inadequate relevant disclosure by the issuer or time provided for consideration of such disclosure;
•
Consider proposals that are associated with a firm AGAINST vote on a CASE-BY-CASE basis when the Proxy Advisory Firm recommends support when:
•
The issuer or market transitions to better practices (e.g., committing to new regulations or governance codes);
•
The market standard is stricter than the Fund’s Guidelines; and/or
•
It is the more favorable choice when shareholders must choose between alternate proposals.
Proposal Specific Policies
As mentioned above, these Guidelines may be overridden in any case as provided for in the Procedures. Similarly, the Procedures outline the proposals with Guidelines that prescribe a firm voting position that may instead be considered on a CASE-BY-CASE basis when unusual or controversial circumstances so dictate, in such circumstances the AO Team may deem it appropriate to seek input from the relevant Investment Professional(s).
Proxy Contests:
Votes in contested elections on shall be considered on a CASE-BY-CASE basis with primary consideration given to input from the relevant Investment Professional(s).
Uncontested Proxies:
1- The Board of Directors
Overview
The Funds may indicate disagreement with an issuer’s policies or practices by withholding support from the relevant proposal rather than from the director nominee(s) to which the Proxy Advisory Firm assigns fault or assigns an association.
The Funds shall withhold support from director(s) deemed responsible in cases in which the Funds’ disagreement is assigned to the board of directors. Responsibility may be attributed to the entire board, a committee, or an individual, and the Funds shall apply a vote accountability guideline (“Vote Accountability Guideline”) specific to the concerns under review. For example:
•
Relevant committee chair;
•
Relevant committee member(s); and/or
•
Board chair.
If any director to whom responsibility has been attributed is not standing for election (e.g., the board is classified) support shall typically not be withheld from other directors in their stead. Additionally, the Funds shall typically vote FOR a director in connection with issues the Proxy Advisory Firm raises if the director did not serve on the board or relevant committee during the majority of the time period relevant to the concerns the Proxy Advisory Firm cited.
The Funds shall vote with the Proxy Advisory Firm’s recommendation when more candidates are presented than available seats and no other provisions under these Guidelines apply.
Vote with the Proxy Advisory Firm’s recommendation to withhold support from the legal entity and vote on the individual when a director holds one seat as an individual plus an additional seat as a representative of a legal entity.
Bundled Director Slates
The Funds shall WITHHOLD support from directors or slates of directors when they are presented in a manner not aligned with market best practice and/or regulation, irrespective of complying with independence requirements, such as:
•
Bundled slates of directors (e.g., Canada, France, Hong Kong, or Spain);
•
In markets with term lengths capped by regulation or market practice, directors whose terms exceed the caps or are not disclosed; or
•
Directors whose names are not disclosed in advance of the meeting or far enough in advance relative to voting deadlines to make an informed voting decision.
For issuers with multiple slates in Italy, the Funds shall follow the Proxy Advisory Firm’s standards for assessing which slate is best suited to represent shareholder interests.
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Independence
Director and Board/Committee Independence
The Funds expect boards and key committees to have an appropriate level of independence and shall accordingly consider the Proxy Advisory Firm’s standards to determine that adequate level of independence. A director would be deemed non-independent if the individual had/has a relationship with the issuer that could potentially influence the individual’s objectivity causing the inability to satisfy fiduciary standards on behalf of shareholders. Audit, compensation/remuneration, and nominating and/or governance committees are considered key committees and should be 100% independent. The Funds shall consider the Proxy Advisory Firm’s standards and generally accepted best practice (collectively “Independence Expectations”) with respect to determining director independence and Board/Committee independence levels. Note: Non-voting directors (e.g., director emeritus or advisory director) shall be excluded from calculations relating to board independence.
The Funds shall consider non-independent directors standing for election on a CASE-BY-CASE basis when the full board or committee does not meet Independence Expectations. Additionally, the Funds shall:
•
WITHHOLD support from the non-independent nominating committee chair or non-independent board chair, and if necessary, fewest non-independent directors, including the Founder, Chair, or Chief Executive Officer (“CEO”) if their removal would achieve the independence requirements across the remaining board or key committee, except that support may be withheld from additional directors whose relative level of independence cannot be differentiated, or the number required to achieve the independence requirements is equal to or greater than the number of non-independent directors standing for election;
•
WITHHOLD support from the nominating committee chair or board chair if the board chair is non- independent and the board does not have a lead independent director;
•
WITHHOLD support from slates of directors if the board’s independence cannot be ascertained due to inadequate disclosure or when the board’s independence does not meet Independence Expectations;
•
WITHHOLD support from key committee slates if they contain non-independent directors; and/or
•
WITHHOLD support from non-independent nominating committee chair, board chair, and/or directors if the full board serves or appears to serve as a key committee, the board has not established a key committee, or the board and/or a key committee(s) does not meet Independence Expectations.
Self-Nominated/Shareholder-Nominated Director Candidates
The Funds shall consider self-nominated or shareholder-nominated director candidates on a CASE-BY- CASE basis and shall WITHHOLD support from the candidate when:
•
Adequate disclosure has not been provided (e.g., rationale for candidacy and candidate’s qualifications relative to the issuer);
•
The candidate’s agenda is not in line with the long-term best interests of the issuer; or
•
Multiple self-nominated candidates are considered to constitute a proxy contest if similar issues are raised (e.g., potential change in control).
Management Proposals Seeking Non-Board Member Service on Key Committees
The Funds shall vote AGAINST proposals that permit non-board members to serve on the audit, remuneration (compensation), nominating, and/or governance committee, provided that bundled slates may be supported if no slate nominee serves on relevant committee(s) except in cases in which best market practice otherwise dictates.
The Funds shall consider other concerns regarding committee members on a CASE-BY-CASE basis.
Board Member Roles and Responsibilities
Attendance
The Funds shall WITHHOLD support from a director who, during the prior year attended less than 75 percent of the board and committee meetings with no valid reason for the absences, excluding directors who have not completed a full year on the board.
The Funds shall WITHHOLD support from nominating committee members according to the Vote Accountability Guideline if a director has three or more years of poor attendance without a valid reason for their absences.
The Funds shall apply a two-year attendance policy relating to statutory auditors at Japanese issuer meetings.
Over-boarding
The Funds shall vote AGAINST directors who serve on:
•
More than two public issuer boards and are named executive officers at any public issuer, and shall WITHHOLD support only at their outside board(s);
•
Five or more public issuer boards; or
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•
Four or more public issuer boards and is Board Chair at two or more public issuers and shall WITHHOLD support on boards for which such director does not serve as chair.
The Funds shall vote AGAINST shareholder proposals limiting the number of public issuer boards on which a director may serve.
Tenure
The Funds shall WITHHOLD support from the nominating committee chair and/or members of the nominating committee when the average board tenure exceeds 15 years.
Combined Chair / CEO Role
The Funds shall vote FOR directors without regard to recommendations that the position of chair should be separate from that of CEO or should otherwise require independence unless other concerns requiring CASE-BY-CASE consideration arise (e.g., a former CEO proposed as board chair).
The Funds shall consider shareholder proposals that require that the positions of chair and CEO be held separately on a CASE-BY-CASE basis.
Cumulative/Net Voting Markets
When cumulative or net voting applies, the Funds shall follow the Proxy Advisory Firm’s recommendation to vote FOR nominees, such as when the issuer assesses that such nominees are independent, irrespective of key committee membership, even if independence disclosure or criteria fall short of the Proxy Advisory Firm’s standards.
Board Accountability
Board Diversity
United States:
The Funds shall vote AGAINST directors according to the Vote Accountability Guideline if no women are on the issuer’s board. The Funds shall consider directors on a CASE-BY-CASE basis if gender diversity existed prior to the most recent annual meeting.
The Funds shall vote AGAINST directors according to the Vote Accountability Guideline when the board has no apparent racially or ethnically diverse members. The Funds shall consider directors on a CASE-BY- CASE basis if racial and/or ethnic diversity existed prior to the most recent annual meeting.
Diversity (Shareholder Proposals):
The Funds shall generally vote FOR shareholder proposals that request the issuer to improve/promote gender and/or racial/ethnic diversity and/or gender and/or racial/ethnic diversity-related disclosure.
International:
The Funds shall vote AGAINST directors according to the Vote Accountability Guideline when no women are on the issuer’s board or if its board’s gender diversity level does not meet a higher standard established by the relevant country’s corporate governance code and generally accepted best practice.
The Funds shall vote AGAINST directors according to the Vote Accountability Guideline when the relevant country’s corporate governance code contains a minimally acceptable threshold for racial/ethnic diversity and the board does not appear to meet this expectation.
Return on Equity
The Funds shall vote FOR the most senior executive at an issuer in Japan if the only reason the Proxy Advisory Firm withholds its recommendation results from the issuer underperforming in terms of capital efficiency or issuer performance (e.g., net losses or low return on equity (ROE)).
Compensation Practices
The Funds may WITHHOLD support from compensation committee members whose actions or disclosure do not appear to support compensation practices aligned with the best interests of the issuer and its shareholders.
“Say on Pay” Responsiveness. The Funds shall consider compensation committee members on a CASE- BY-CASE basis for failure to sufficiently address compensation concerns prompting significant opposition to the most recent advisory vote on executive officers’ compensation, “Say on Pay”, or continuing to maintain problematic pay practices, considering such factors as the level of shareholder opposition, subsequent actions taken by the compensation committee, and level of responsiveness disclosure, among others.
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“Say on Pay Frequency”. The Funds shall WITHHOLD support according to the Vote Accountability Guideline if the Proxy Advisory Firm opposes directors due to the issuer’s failure to include a “Say on Pay” proposal and/or a “Say on Pay Frequency” proposal when required pursuant to SEC or market regulatory provisions; or implemented a “Say on Pay Frequency” schedule that is less frequent than the frequency most recently preferred by not less than a plurality of shareholders; or is an externally-managed issuer (EMI) or externally-managed REIT (EMR) and has failed to include a “Say on Pay” proposal or adequate disclosure of the compensation structure.
Commitments. The Funds shall vote FOR compensation committee members receiving an adverse recommendation from the Proxy Advisory Firm due to problematic pay practices or thresholds (e.g., burn rate) if the issuer makes a public commitment (e.g., via a Form 8-K filing) to rectify the practice on a going- forward basis. However, the Funds shall consider such proposal on a CASE-BY-CASE basis if the issuer does not rectify the practice prior to the issuer’s next annual general meeting.
For markets in which the issuer has not followed market practice by submitting a resolution on executive remuneration/compensation, the Funds shall consider remuneration/compensation committee members on a CASE-BY-CASE basis.
Accounting Practices
The Funds shall consider audit committee members, the issuer’s CEO or Chief Financial Officer (“CFO”) when nominated as directors, or the board chair or lead director on a CASE-BY-CASE basis if poor accounting practice concerns are raised, considering, but not limited to, the following factors:
•
Audit committee failed to remediate known ongoing material weaknesses in the issuer’s internal controls for more than one year;
•
Issuer has not yet had a full year to remediate the concerns since the time such issues were identified; and/or
•
Issuer has taken adequate steps to remediate the concerns cited that would typically include removing or replacing the responsible executives and the concerning issues do not recur.
The Funds shall vote FOR audit committee members, or the issuer’s CEO or CFO when nominated as directors, who did not serve on the committee or did not have responsibility over the relevant financial function during the majority of the time period relevant to the concerns cited.
The Funds shall WITHHOLD support on audit committee members according to the Vote Accountability Guideline if the issuer has failed to disclose audit fees and has not provided an auditor ratification or remuneration proposal for shareholder vote.
Problematic Actions
The Funds shall consider directors on a CASE-BY-CASE basis when the Proxy Advisory Firm cites them for problematic actions including a lack of due diligence in relation to a major transaction (e.g., a merger or an acquisition), material failures, inadequate oversight, scandals, malfeasance, or negligent internal controls at the issuer or that of an affiliate, factoring in the merits of the director’s performance, rationale, and disclosure when:
•
Culpability can be attributed to the director (e.g., director manages or is responsible for the relevant function); or
•
The director has been directly implicated resulting in arrest, criminal charge, or regulatory sanction.
The Funds shall consider members of the nominating committee on a CASE-BY-CASE basis when an issuer nominates a director who is subject to any of the above concerns to serve on its board.
The Funds shall vote AGAINST applicable directors due to share pledging concerns factoring in the pledged amount, unwinding time, and any historical concerns raised. Responsibility shall be assigned to the pledgor, where the pledged amount and unwinding time are deemed significant and therefore an unnecessary risk to the issuer.
The Funds shall WITHHOLD support from (a) all members of the governance committee or nominating committee if a formal governance committee has not been established, and (b) directors holding shares with superior voting rights if the issuer is controlled by means of a dual class share with superior/exclusive voting rights and does not have a reasonable sunset provision (e.g., fewer than five (5) years).
The Funds shall WITHHOLD support from incumbent directors (tenure of more than one year) if (a) no governance or nominating committee directors are under consideration or the issuer does not have governance or nominating committees, and (b) no director holding the shares with superior voting rights is under consideration; otherwise, the Funds shall consider all directors on a CASE-BY-CASE basis. Investment Professionals who have daily portfolio management responsibility for such issuers may be required to submit a recommendation to the AO Team.
The Funds shall WITHHOLD support from directors according to the Vote Accountability Guideline when the Proxy Advisory Firm recommends withholding support due to the board (a) unilaterally adopting by-law amendments that have a negative impact on existing shareholder rights or function as a diminution of shareholder rights and which are not specifically addressed under these Guidelines, or (b) failing to remove or subject to a reasonable sunset provision in its by-laws.
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Anti-Takeover Measures
The Funds shall WITHHOLD support from directors according to the Vote Accountability Guideline if the issuer implements excessive anti-takeover measures.
The Funds shall WITHHOLD support from directors according to the Vote Accountability Guideline if the issuer fails to remove restrictive “poison pill” features, ensure a “poison pill” expiration, or submits the “poison pill” in a timely manner to shareholders for vote unless an issuer has implemented a policy that should reasonably prevent abusive use of its “poison pill”.
Board Responsiveness
The Funds shall vote FOR directors if the majority-supported shareholder proposal has been reasonably addressed.
•
Proposals seeking shareholder ratification of a “poison pill” provision may be deemed reasonably addressed if the issuer has implemented a policy that should reasonably prevent abusive use of the “poison pill”.
The Funds shall WITHHOLD support from directors according to the Vote Accountability Guideline if a shareholder proposal received majority support and the board has not disclosed a credible rationale for not implementing the proposal.
The Funds shall WITHHOLD support on a director if the board has not acted upon the director who did not receive shareholder support representing a majority of the votes cast at the previous annual meeting; and shall consider such directors on a CASE-BY-CASE basis if the issuer has a controlling shareholder(s).
The Funds shall vote FOR directors in cases in which an issue relevant to the majority negative vote has been adequately addressed or cured and which may include sufficient disclosure of the board’s rationale.
Board–Related Proposals
Classified/Declassified Board Structure
The Funds shall vote AGAINST proposals to classify the board unless the proposal represents an increased frequency of a director’s election in the staggered cycle (e.g., seeking to move from a three-year cycle to a two-year cycle).
The Funds shall vote FOR proposals to repeal classified boards and to elect all directors annually. Board Structure
The Funds shall vote FOR management proposals to adopt or amend board structures unless the resulting change(s) would mean the board would not meet Independence Expectations.
For issuers in Japan, the Funds shall vote FOR proposals seeking a board structure that would provide greater independent oversight.
Board Size
The Funds shall vote FOR proposals seeking a board range if the range is reasonable in the context of market practice and anti-takeover considerations; however, the Funds shall vote AGAINST a proposal if the issuer seeks to remove shareholder approval rights or the board fails to meet market independence requirements.
Director and Officer Indemnification and Liability Protection
The Funds shall consider proposals on director and officer indemnification and liability protection on a CASE-BY-CASE basis using Delaware law as the standard.
The Funds shall vote AGAINST proposals to limit or eliminate entirely directors’ and officers’ liability in connection with monetary damages for violating their collective duty of care.
The Funds shall vote AGAINST indemnification proposals that would expand coverage beyond legal expenses to acts that are more serious violations of fiduciary obligation such as negligence.
Director and Officer Indemnification and Liability Protection
The Funds shall vote in accordance with the Proxy Advisory Firm’s standards (e.g., overly broad provisions).
Discharge of Management/Supervisory Board Members
The Funds shall vote FOR management proposals seeking the discharge of management and supervisory board members (including when the proposal is bundled) unless concerns surface relating to the past actions of the issuer’s auditors or directors, or legal or other shareholders take regulatory action against the board.
The Funds shall vote FOR such proposals in connection with remuneration practices otherwise supported under these Guidelines or as a means of expressing disapproval of the issuer’s or its board’s broader practices.
Establish Board Committee
The Funds shall vote FOR shareholder proposals that seek creation of a key board committee.
The Funds shall vote AGAINST shareholder proposals requesting creation of additional board committees or offices except as otherwise provided for herein.
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Filling Board Vacancies / Removal of Directors
The Funds shall vote AGAINST proposals that allow removal of directors only for cause.
The Funds shall vote FOR proposals to restore shareholder ability to remove directors with or without cause.
The Funds shall vote AGAINST proposals that allow only continuing directors to elect replacement directors to fill board vacancies.
The Funds shall vote FOR proposals that permit shareholders to elect directors to fill board vacancies.
Stock Ownership Requirements
The Funds shall vote AGAINST such shareholder stock ownership requirement proposals. Term Limits / Retirement Age
The Funds shall vote FOR management proposals and AGAINST shareholder proposals limiting the tenure of outside directors or imposing a mandatory retirement age for outside directors unless the proposal seeks to relax existing standards.
2- Compensation
Frequency of Advisory Votes on Executive Compensation
The Funds shall vote FOR proposals seeking an annual “Say on Pay”, and AGAINST those seeking less frequent “Say on Pay”.
Proposals to Provide an Advisory Vote on Executive Compensation (Canada)
The Funds shall vote FOR if it is an ANNUAL vote unless the issuer already provides an annual shareholder vote.
Executive Pay Evaluation
Advisory Votes on Executive Compensation (Say on Pay) and Remuneration Reports or Committee Members in Absence of Such Proposals
The Funds shall vote FOR management proposals seeking ratification of the issuer’s executive compensation structure unless the program includes practices or features not supported under these Guidelines and the proposal receives a negative Proxy Advisory Firm recommendation.
Listed below are examples of compensation practices and provisions and respective consideration and treatment under these Guidelines that factor in whether the issuer has provided reasonable rationale/disclosure for such factors or the proposal in its entirety. The Funds shall consider on a CASE-BY-CASE basis:
•
Short-Term Investment Plans for which the board has exercised discretion to exclude extraordinary items;
•
Retesting in connection with achievement of performance hurdles;
•
Long-Term Incentive Plans for which executives already hold significant equity positions;
•
Long-Term Incentive Plans for which the vesting or performance period is too short or stringency of performance criteria is called into question;
•
Pay Practices (or combination of practices) that appear to have created a misalignment between executive(s) compensation pay and performance regarding shareholder value;
•
Legacy Single Trigger Severance provisions that do not require an actual change in control to be triggered;
•
Long-Term Incentive Plans that lack an appropriate equity component (e.g., “cash-based only”); and/or
•
Excessive levels of discretionary bonuses, recruitment awards, retention awards, non-compete payments, severance/termination payments, perquisites (unreasonable levels in context of total compensation or purpose of the incentive awards or payouts).
The Funds shall vote AGAINST:
•
Provisions that permit or give the Board sole discretion for repricing, replacement, buy back, exchange, or any other form of alternative options. (Note: cancellation of options would not be considered an exchange unless the cancelled options were re-granted or expressly returned to the plan reserve for reissuance.);
•
Single Trigger Severance provisions that do not require an actual change in control to be triggered in new or amended employment agreements;
•
Plans that allow named executive officers to have material input into setting their own compensation;
•
Short-Term Incentive Plans in which treatment of payout factors has been inconsistent (e.g., exclusion of losses but not gains);
•
Long-Term Incentive Plans in which performance measures hurdles/measures are set based on a backward-looking performance period;
•
Company plans in international markets that provide for contract or notice periods or severance/termination payments that exceed market practices (e.g., relative to multiple of annual compensation); and/or
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•
Compensation structures at externally managed issuers (EMI) or externally managed REITs (EMR) that lack adequate disclosure based on the Proxy Advisory Firm’s assessment.
Golden Parachutes
The Funds shall vote to ABSTAIN regarding “golden parachutes” if it is determined that the Funds would not have an economic interest in such arrangements (e.g., in the case of an all-cash transaction, regardless of payout terms, amounts, thresholds, etc.).
However, if an economic interest exists, vote AGAINST proposals due to:
•
Single or modified-single trigger severance provisions;
•
Total Named Executive Officer (“NEO”) payout as a percentage of the total equity value;
•
Aggregate of all single-triggered components (cash and equity) as a percentage of the total NEO payout;
•
Excessive payout; and/or
•
Recent material amendments or new agreements that incorporate problematic features.
Equity-Based and Other Incentive Plans Including OBRA
Equity Compensation
The Funds shall consider compensation and employee benefit plans, including those in connection with OBRA3, or the issuance of shares in connection with such plans on a CASE-BY-CASE basis. The Funds shall vote the plan or issuance based on factors and related vote treatment under the Executive Pay Evaluation section above or based on circumstances specific to such equity plans as follows:
The Funds shall vote FOR a plan, if:
•
Board independence is the only concern;
•
Amendment places a cap on annual grants;
•
Amendment adopts or changes administrative features to comply with Section 162(m) of OBRA;
•
Amendment adds performance-based goals to comply with Section 162(m) of OBRA; and/or
•
Cash or cash-and-stock bonus components are approved for exemption from taxes under Section 162(m) of OBRA.
•
The Funds shall give primary consideration to management’s assessment that such plan meets the requirements for exemption of performance-based compensation.
The Funds shall vote AGAINST a plan if it:
•
Exceeds recommended costs (U.S. or Canada);
•
Incorporates share allocation disclosure methods that prevent a cost or dilution assessment;
•
Exceeds recommended burn rates and/or dilution limits, including cases in which dilution cannot be fully assessed (e.g., due to inadequate disclosure);
•
Permits deep or near-term discounts (or the equivalent, such as dividend equivalents on unexercised options) to executives or directors;
•
Provides for retirement benefits or equity incentive awards to outside directors if not in line with market practice;
•
Permits financial assistance to executives, directors, subsidiaries, affiliates, or related parties that is not in line with market practice;
•
Permits plan administrators to benefit from the plan as potential recipients;
•
Permits for an overly liberal change in control definition. (This refers to plans that would reward recipients even if the event does not result in an actual change in control or results in a change in control but does not terminate the employment relationship.);
•
Permits for post-employment vesting or exercise of options if deemed inappropriate;
•
Permits plan administrators to make material amendments without shareholder approval; and/or
•
Permits procedure amendments that do not preserve shareholder approval rights.
Amendment Procedures for Equity Compensation Plans and Employee Stock Purchase Plans (Toronto Stock Exchange Issuers)
The Funds shall vote AGAINST if the amendment procedures do not preserve shareholder approval rights.
Stock Option Plans for Independent Internal Statutory Auditors (Japan)
The Funds shall vote AGAINST such proposals.
3 OBRA is an employee-funded defined contribution plan for certain employees of publicly held companies.
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Matching Share Plans
The Funds shall vote AGAINST such proposals if the matching share plan does not meet recommended standards considering holding period, discounts, dilution, participation, purchase price, or performance criteria.
Employee Stock Purchase Plans or Capital Issuance in Support Thereof
Voting decisions are generally based on the Proxy Advisory Firm’s approach to evaluating such proposals.
Director Compensation
Non-Executive Director Compensation
The Funds shall vote FOR cash-based proposals.
The Funds shall vote AGAINST performance-based equity-based proposals and patterns of excessive pay.
Bonus Payments (Japan)
The Funds shall vote FOR if all bonus payments are for directors or auditors who have served as executives of the issuer and AGAINST if any bonus payments are for outsiders.
Bonus Payments – Scandals
The Funds shall vote AGAINST bonus proposals for a retiring director or continuing director or auditor when culpability for any malfeasance may be attributable to the nominee.
The Funds shall consider on a CASE-BY-CASE basis bundled bonus proposals for retiring directors or continuing directors or auditors where culpability for malfeasance may not be attributable to all nominees.
Severance Agreements
Vesting of Equity Awards upon Change in Control
The Funds shall vote FOR management proposals seeking a specific treatment (e.g., double-trigger or pro- rata) of equity that vests upon change in control unless evidence exists of abuse in historical compensation practices.
The Funds shall vote AGAINST shareholder proposals regarding the treatment of equity if change(s) in control severance provisions are double-triggered. The funds shall vote FOR the proposal if such provisions are not double-triggered.
Executive Severance or Termination Arrangements, including those Related to Executive Recruitment or Retention
The Funds shall vote FOR such compensation arrangements if:
•
The primary concerns raised would not result in a negative vote under these Guidelines on a management “Say on Pay” proposal or the relevant board or committee member(s);
•
The issuer has provided adequate rationale and/or disclosure; or
•
Support is recommended as a condition to a major transaction such as a merger. Treatment of Severance Provisions
The Funds shall vote AGAINST new or materially amended plans, contracts, or payments that include a single trigger change in control severance provisions or do not require an actual change in control in order to be triggered.
The Funds shall vote FOR shareholder proposals seeking double triggers on change in control severance provisions.
Compensation-Related Shareholder Proposals
Executive and Director Compensation
The Funds shall consider on a CASE-BY-CASE basis shareholder proposals that seek to impose new compensation structures or policies.
Holding Periods
The Funds shall vote AGAINST shareholder proposals requiring mandatory issuer stock holding periods for officers and directors.
Submit Severance and Termination Payments for Shareholder Ratification
The Funds shall vote FOR shareholder proposals to submit executive severance agreements for shareholder ratification if such proposals specify change in control events, supplemental executive retirement plans, or deferred executive compensation plans, or if the listing exchange requires ratification thereof.
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3- Audit-Related
Auditor Ratification and/or Remuneration
The Funds shall vote FOR management proposals except in such cases as indicated below. The Funds shall consider auditor ratification and/or remuneration on a CASE-BY-CASE basis if:
•
The Proxy Advisory Firm raises questions of auditor independence or disclosure including the auditor selection process;
•
Total fees for non-audit services exceed 50 percent of aggregated auditor fees (including audit-related fees, and tax compliance and preparation fees as applicable); or
•
Evidence exists of excessive compensation relative to the size and nature of the issuer.
The Funds shall vote AGAINST an auditor ratification and/or remuneration proposal if the issuer has failed to disclose audit fees.
The Funds shall vote FOR shareholder proposals that ask the issuer to present its auditor for ratification annually.
Auditor Independence
The Funds shall consider shareholder proposals asking issuers to prohibit their auditors from engaging in non-audit services (or capping the level of non-audit services) on a CASE-BY-CASE basis.
Audit Firm Rotation
The Funds shall vote AGAINST shareholder proposals asking for mandatory audit firm rotation. Indemnification of Auditors
The Funds shall vote AGAINST auditor indemnification proposals. Independent Statutory Auditors (Japan)
The Funds shall vote AGAINST an independent statutory auditor proposal if the candidate is or was affiliated with the issuer, its primary bank(s), or one of its top shareholders.
The Funds shall vote AGAINST incumbent directors implicated in scandals, malfeasance, or at issuers exhibiting poor internal controls.
The Funds shall vote FOR remuneration so long as the amount is not excessive (e.g., significant increases should be supported by adequate rationale and disclosure), no evidence of abuse is evident, the recipient’s overall compensation appears reasonable, and the board and/or responsible committee meet exchange or market independence standards.
4- Shareholder Rights and Defenses
Advance Notice for Shareholder Proposals
The Funds shall vote FOR management proposals relating to advance notice period requirements provided that the period requested is in accordance with applicable law and no material governance concerns have arisen regarding the issuer.
Corporate Documents / Article and Bylaw Amendments or Related Director Actions
The Funds shall vote FOR such proposal if the change or policy is editorial in nature or if shareholder rights are protected.
The Funds shall vote AGAINST such proposal if it seeks to impose a negative impact on shareholder rights or diminishes accountability to shareholders including cases in which the issuer failed to opt out of a law that affects shareholder rights (e.g., staggered board).
The Funds shall, with respect to article amendments for Japanese issuers:
•
Vote FOR management proposals to amend an issuer’s articles to expand its business lines in line with its current industry;
•
Vote FOR management proposals to amend an issuer’s articles to provide for an expansion or reduction in the size of the board unless the expansion/reduction is clearly disproportionate to the growth/decrease in the scale of the business or raises anti-takeover concerns;
•
If anti-takeover concerns exist, the Funds shall vote AGAINST management proposals including bundled proposals to amend an issuer’s articles to authorize the Board to vary the annual meeting record date or to otherwise align them with provisions of a takeover defense; and/or
•
Follow the Proxy Advisory Firm’s guidelines relating to management proposals regarding amendments to authorize share repurchases at the board’s discretion, and vote AGAINST proposals unless there is little to no likelihood of a creeping takeover or constraints on liquidity (free float of shares is low) and in cases in which the issuer trades at below book value or faces a real likelihood of substantial share sales, or in which this amendment is bundled with other amendments that are clearly in shareholders’ interest.
Majority Voting Standard
The Funds shall vote FOR proposals that seek director election via an affirmative majority vote in connection with a shareholder meeting provided such vote contains a plurality carve-out for contested elections and provided such standard does not conflict with applicable law in the issuer’s country of incorporation.
The Funds shall vote FOR amendments to corporate documents or other actions promoting a majority standard.
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Cumulative Voting
The Funds shall vote FOR shareholder proposals to restore or permit cumulative voting.
The Funds shall vote AGAINST management proposals to eliminate cumulative voting if the issuer:
•
Is controlled;
•
Maintains a classified board of directors; or
•
Maintains a dual class voting structure.
Proposals may be supported irrespective of classified board status if an issuer plans to declassify its board or adopt a majority voting standard.
Confidential Voting
The Funds shall vote FOR management proposals to adopt confidential voting.
The Funds shall vote FOR shareholder proposals that request issuers to adopt confidential voting, use independent tabulators, and use independent election inspectors so long as the proposals include clauses for proxy contests as follows:
•
In the case of a contested election management should be permitted to request that the dissident group honors its confidential voting policy;
•
If the dissidents agree the policy shall remain in place; and
•
If the dissidents do not agree the confidential voting policy shall be waived.
Fair Price Provisions
The Funds shall consider proposals to adopt fair price provisions on a CASE-BY-CASE basis.
The Funds shall vote AGAINST fair price provisions containing shareholder vote requirements greater than a majority of disinterested shares.
Poison Pills
The Funds shall vote AGAINST management proposals in connection with poison pills or anti-takeover activities (e.g., disclosure requirements or issuances, transfers, or repurchases) that can be reasonably construed as an anti-takeover measure based on the Proxy Advisory Firm’s approach to evaluating such proposals.
The Funds shall vote FOR shareholder proposals that ask an issuer to submit its poison pill for shareholder ratification or to redeem that poison pill in lieu thereof, unless:
•
Shareholders have approved the plan’s adoption;
•
The issuer has already implemented a policy that should reasonably prevent abusive use of the poison pill; or
•
The board had determined that it was in the best interest of shareholders to adopt a poison pill without delay, provided that such plan shall be put to shareholder vote within twelve months of adoption or expire and would immediately terminate if not approved by a majority of the votes cast.
The Funds shall consider shareholder proposals to redeem an issuer’s poison pill on a CASE-BY-CASE basis.
Proxy Access
The Funds shall vote FOR proposals to allow shareholders to nominate directors and list those nominees in the issuer’s proxy statement and on its proxy card, provided that criteria meet the Funds’ internal thresholds and that such standard does not conflict with applicable law in the country in which the issuer is incorporated. The Funds shall consider shareholder and management proposals that appear on the same agenda on a CASE-BY-CASE basis.
The Funds shall vote FOR management proposals also supported by the Proxy Advisory Firm.
Quorum Requirements
The Funds shall consider on a CASE-BY-CASE basis proposals to lower quorum requirements for shareholder meetings below a majority of the shares outstanding.
Exclusive Forum
The Funds shall vote FOR management proposals to designate Delaware or New York as the exclusive forum for certain legal actions as defined by the issuer (“Exclusive Forum”) if the issuer’s state of incorporation is the same as its proposed Exclusive Forum, otherwise they shall consider such proposals on a CASE-BY-CASE basis.
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Reincorporation Proposals
The Funds shall consider proposals to change an issuer’s state of incorporation on a CASE-BY-CASE basis.
The Funds shall vote FOR management proposals not assessed as:
•
A potential takeover defense; or
•
A significant reduction of minority shareholder rights that outweigh the aggregate positive impact, but if assessed as such the Funds shall consider management’s rationale for the change.
The Funds shall vote FOR management reincorporation proposals upon which another key proposal, such as a merger transaction, is contingent if the other key proposal is also supported.
The Funds shall vote AGAINST shareholder reincorporation proposals not supported by the issuer.
Shareholder Advisory Committees
The Funds shall consider proposals to establish a shareholder advisory committee on a CASE-BY-CASE
basis.
Right to Call Special Meetings
The Funds shall vote FOR management proposals to permit shareholders to call special meetings.
The Funds shall consider management proposals to adjust the thresholds applicable to call a special meeting on a CASE-BY-CASE basis.
The Funds shall vote FOR shareholder proposals that provide shareholders with the ability to call special meetings when any of the following apply:
•
Company does not currently permit shareholders to do so;
•
Existing ownership threshold is greater than 25 percent; or
•
Sole concern relates to a net-long position requirement. Written Consent
The Funds shall vote AGAINST shareholder proposals seeking the right to act via written consent if the issuer:
•
Permits shareholders to call special meetings;
•
Does not impose supermajority vote requirements on business combinations/actions (e.g., a merger or acquisition) and on bylaw or charter amendments; and
•
Has otherwise demonstrated its accountability to shareholders (e.g., the issuer has reasonably addressed majority-supported shareholder proposals).
The Funds shall vote FOR shareholder proposals seeking the right to act via written consent if the above conditions are not present.
The Funds shall vote AGAINST management proposals to eliminate the right to act via written consent. State Takeover Statutes
The Funds shall consider proposals to opt-in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freeze-out provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, anti-greenmail provisions, and disgorgement provisions) on a CASE-BY-CASE basis.
Supermajority Shareholder Vote Requirement
The Funds shall vote AGAINST proposals to require a supermajority shareholder vote and FOR proposals to lower supermajority shareholder vote requirements, except:
The Funds shall consider such proposals on a CASE-BY-CASE basis if the issuer has shareholder(s) holding significant ownership percentages and retaining existing supermajority requirements would protect minority shareholder interests.
Time-Phased Voting
The Funds shall vote AGAINST proposals to implement and FOR proposals to eliminate time-phased or other forms of voting that do not promote a “one share, one vote” standard.
5- Capital and Restructuring
The Funds shall consider management proposals to make changes to the capital structure not otherwise addressed under these Guidelines, on a CASE-BY-CASE basis, voting with the Proxy Advisory Firm’s recommendation unless they utilize a contrary recommendation from the relevant Investment Professional(s).
The Funds shall vote AGAINST proposals authorizing excessive board discretion.
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Capital
Common Stock Authorization
The Funds shall consider proposals to increase the number of shares of common stock authorized for issuance on a CASE-BY-CASE basis. The Proxy Advisory Firm’s proprietary approach of determining appropriate thresholds shall be utilized in evaluating such proposals. In cases in which such requests are above the allowable threshold the Funds shall utilize an issuer-specific qualitative review (e.g., considering rationale and prudent historical usage).
The Funds shall vote FOR proposals within the Proxy Advisory Firm’s permissible thresholds or those in excess of but meeting Proxy Advisory Firm’s qualitative standards, to authorize capital increases, unless the issuer states that the additionally issued stock may be used as a takeover defense.
The Funds shall vote FOR proposals to authorize capital increases exceeding the Proxy Advisory Firm’s thresholds when an issuer’s shares are at risk of delisting.
Notwithstanding the above, the Funds shall vote AGAINST:
•
Proposals to increase the number of authorized shares of a class of stock if these Guidelines do not support the issuance which the increase is intended to service (e.g., merger or acquisition proposals).
Dual Class Capital Structures
The Funds shall vote AGAINST:
•
Proposals to create or perpetuate dual class capital structures with unequal voting rights (e.g., exchange offers, conversions, and recapitalizations) unless supported by the Proxy Advisory Firm (e.g., utilize a “one share, one vote” standard, contain a sunset provision of five years or fewer to avert bankruptcy or generate non-dilutive financing, or are not designed to increase the voting power of an insider or significant shareholder).
•
Proposals to increase the number of authorized shares of the class of stock that has superior voting rights in issuers that have dual-class capital structures.
The Funds shall vote FOR proposals to eliminate dual-class capital structures.
General Share Issuances / Increases in Authorized Capital
The Funds shall consider specific issuance requests on a CASE-BY-CASE basis based on the proposed use and the issuer’s rationale.
The Proxy Advisory Firm’s assessment shall govern Fund voting decisions to determine support for requests for general issuances (with or without preemptive rights), authorized capital increases, convertible bonds issuances, warrants issuances, or related requests to repurchase and reissue shares.
Preemptive Rights
The Funds shall consider shareholder proposals that seek preemptive rights or management proposals that seek to eliminate them on a CASE-BY-CASE basis. In evaluating proposals on preemptive rights, the Funds shall consider an issuer’s size and shareholder base characteristics.
Adjustments to Par Value of Common Stock
The Funds shall vote FOR management proposals to reduce the par value of common stock unless doing so raises other concerns not otherwise supported under these Guidelines.
Preferred Stock
Utilize the Proxy Advisory Firm's approach for evaluating issuances or authorizations of preferred stock considering the Proxy Advisory Firm's support of special circumstances such as mergers or acquisitions in addition to the following criteria:
The Funds shall consider on a CASE-BY-CASE basis proposals to increase the number of shares of “blank check” preferred shares or preferred stock authorized for issuance. This approach incorporates both qualitative and quantitative measures including a review of:
•
Past performance (e.g., board governance, shareholder returns, and historical share usage); and
•
The current request (e.g., rationale, whether shares are “blank check” and “declawed”, and dilutive impact as determined through the Proxy Advisory Firm’s model for assessing appropriate thresholds).
The Funds shall vote AGAINST proposals authorizing issuance of preferred stock or creation of new classes of preferred stock having unspecified voting, conversion, dividend distribution, and other rights (“blank check” preferred stock).
The Funds shall vote FOR proposals to issue or create “blank check” preferred stock in cases in which the issuer expressly states that the stock shall not be used as a takeover defense or not utilize a disparate voting rights structure.
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The Funds shall vote AGAINST in cases in which the issuer expressly states that, or fails to disclose whether, the stock may be used as a takeover defense.
The Funds shall vote FOR proposals to authorize or issue preferred stock in cases in which the issuer specifies the voting, dividend, conversion, and other rights of such stock and the terms of the preferred stock appear reasonable.
Preferred Stock (International)
Fund voting decisions should generally be based on the Proxy Advisory Firm’s approach, and the Funds shall:
•
Vote FOR the creation of a new class of preferred stock or issuances of preferred stock up to 50 percent of issued capital unless the terms of the preferred stock would adversely affect the rights of existing shareholders;
•
Vote FOR the creation/issuance of convertible preferred stock so long as the maximum number of common shares that could be issued upon conversion meets the Proxy Advisory Firm’s guidelines on equity issuance requests; and
•
Vote AGAINST the creation of:
(1)
A new class of preference shares that would carry superior voting rights to common shares; or
(2)
“Blank check” preferred stock unless the board states that the authorization shall not be used to thwart a takeover bid.
Shareholder Proposals Regarding Blank Check Preferred Stock
The Funds shall vote FOR shareholder proposals requesting shareholder ratification of “blank check” preferred stock placements other than those shares issued for the purpose of raising capital or making acquisitions in the normal course of business.
Share Repurchase Programs
The Funds shall vote FOR management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms but vote AGAINST plans containing terms favoring selected parties.
The Funds shall vote FOR management proposals to cancel repurchased shares.
The Funds shall vote AGAINST proposals for share repurchase methods lacking adequate risk mitigation or exceeding appropriate market volume or duration parameters.
The Funds shall consider shareholder proposals seeking share repurchase programs on a CASE-BY- CASE basis giving primary consideration to input from the relevant Investment Professional(s).
Stock Distributions: Splits and Dividends
The Funds shall vote FOR management proposals to increase common share authorization for a stock split provided that the increase in authorized shares falls within the Proxy Advisory Firm’s allowable thresholds.
Reverse Stock Splits
The Funds shall consider management proposals to implement a reverse stock split on a CASE-BY-CASE considering management’s rationale and/or disclosure if the split constitutes a capital increase that effectively exceeds the Proxy Advisory Firm’s permissible threshold due to the lack of a proportionate reduction in the number of shares authorized.
Allocation of Income and Dividends
With respect to Japanese and South Korean issuers, the Funds shall consider management proposals concerning income allocation and the dividend distribution, including adjustments to reserves to make capital available for such purposes, on a CASE-BY-CASE basis voting with the Proxy Advisory Firm’s recommendations to oppose such proposals for cases in which:
•
The dividend payout ratio has been consistently below 30 percent without adequate explanation; or
•
The payout is excessive given the issuer’s financial position.
The Funds shall vote FOR such issuer management proposals in other markets.
The Funds shall vote AGAINST proposals in which issuers seek to establish or maintain disparate dividend distributions between stockholders of the same share class (e.g., long-term stockholders receiving a higher dividend ratio (“Loyalty Dividends”)).
In any market, in the event multiple proposals regarding dividends are on the same agenda the Funds shall vote FOR the management proposal if the proposal meets the support conditions described above and shall vote AGAINST the shareholder proposal; otherwise, the Funds shall consider such proposals on a CASE-BY-CASE basis.
Stock (Scrip) Dividend Alternatives
The Funds shall vote FOR most stock (scrip) dividend proposals but vote AGAINST proposals that do not allow for a cash option unless management demonstrates that the cash option is harmful to shareholder value.
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Tracking Stock
The Funds shall consider the creation of tracking stock on a CASE-BY-CASE basis giving primary consideration to the input from relevant Investment Professional(s).
Capitalization of Reserves
The Funds shall vote FOR proposals to capitalize the issuer’s reserves for bonus issues of shares or to increase the par value of shares unless the Proxy Advisory Firm raises concerns not otherwise supported under these Guidelines.
Debt Instruments and Issuance Requests (International)
The Funds shall vote AGAINST proposals authorizing excessive board discretion to issue or set terms for debt instruments (e.g., commercial paper).
The Funds shall vote FOR debt issuances for issuers when the gearing level (current debt-to-equity ratio) does not exceed the Proxy Advisory Firm’s defined thresholds.
The Funds shall vote AGAINST proposals in which the debt issuance will result in an excessive gearing level as set forth in the Proxy Advisory Firm’s defined thresholds, or for which inadequate disclosure precludes calculation of the gearing level, unless the Proxy Advisory Firm’s approach to evaluating such requests results in support of the proposal.
Acceptance of Deposits (India)
Fund voting decisions are based on the Proxy Advisory Firm’s approach to evaluating such proposals.
Debt Restructurings
The Funds shall consider proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan on a CASE-BY-CASE basis.
Financing Plans
The Funds shall vote FOR the adoption of financing plans if they are in shareholders’ best economic interests.
Investment of Company Reserves (International)
The Funds shall consider such proposals on a CASE-BY-CASE basis.
Restructuring
Mergers and Acquisitions, Special Purpose Acquisition Corporations (SPACs) and Corporate Restructurings
The Funds shall vote FOR a proposal not typically supported under these Guidelines if a key proposal such as a merger transaction is contingent upon its support and a vote FOR is recommended by the Proxy Advisory Firm or relevant Investment Professional(s).
The Funds shall consider such proposals on a CASE-BY-CASE basis based on the Proxy Advisory Firm’s evaluation approach if the relevant Investment Professional(s) do not provide input with regard thereto.
Waiver on Tender-Bid Requirement
The Funds shall consider proposals on a CASE-BY-CASE basis if seeking a waiver for a major shareholder or concert party from the requirement to make a buyout offer to minority shareholders, voting FOR when little concern of a creeping takeover exists, and the issuer has provided a reasonable rationale for the request.
Related Party Transactions
The Funds shall vote FOR approval of such transactions, unless the agreement requests a strategic move outside the issuer’s charter, contains unfavorable or high-risk terms (e.g., deposits without security interest or guaranty), or is deemed likely to have a negative impact on director or related party independence.
6- Environmental and Social Issues
Environmental and Social Proposals
Institutional shareholders now routinely scrutinize shareholder proposals regarding environmental and social matters. Accordingly, in addition to governance risks and opportunities, issuers should also assess their environmental and social risks and opportunities as they pertain to stakeholders including their employees, shareholders, communities, suppliers, and customers.
Issuers should adequately disclose how they evaluate and mitigate such material risks in order to allow shareholders to assess how well the issuers mitigate and leverage their social and environmental risks and opportunities. Issuers should adopt disclosure methodologies considering recommendations from the Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), or Global Reporting Initiative (GRI) to foster uniform disclosure and to allow shareholders to assess risks across issuers.
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Accordingly, the Funds shall vote FOR proposals related to environmental, sustainability and corporate social responsibility if the issuer’s disclosure and/or its management of the issue(s) appears inadequate relative to its peers and if the proposal:
•
applies to the issuer’s business,
•
enhances long-term shareholder value,
•
requests more transparency and commitment to improve the issuer’s environmental and/or social risks,
•
aims to benefit the issuer’s stakeholders,
•
is reasonable and not unduly onerous or costly, or
•
is not requesting data that is primarily duplicative to data the issuer already publicly provides.
Environmental
The Funds shall vote FOR proposals relating to environmental impact that reasonably:
•
aim to reduce negative environmental impact, including the reduction of greenhouse gas emissions and other contributing factors to global climate change; and/or
•
request disclosure relating to how the issuer addresses its climate impact.
Social
The Funds shall vote FOR proposals relating to corporate social responsibility that request disclosure of how the issuer manages its:
•
employee and board diversity; and/or
•
human capital management, human rights, and supply chain risks.
Approval of Donations
The Funds shall vote FOR proposals if they are for single- or multi-year authorities and prior disclosure of amounts is provided. The Funds shall otherwise vote AGAINST such proposals.
7- Routine/Miscellaneous
Routine Management Proposals
The Funds shall consider proposals for which the Proxy Advisory Firm recommends voting AGAINST on a
CASE-BY-CASE basis.
Authority to Call Shareholder Meetings on Less than 21 Days’ Notice
For issuers in the United Kingdom, the Funds shall consider such proposals on a CASE-BY-CASE basis assessing whether the issuer has provided clear disclosure of its compliance with any hurdle conditions for authority imposed by applicable law and has historically limited its use of such authority to time-sensitive matters.
Approval of Financial Statements and Director and Auditor Reports
The Funds shall vote AGAINST such proposals if concerns exist regarding inadequate disclosure, remuneration arrangements (including severance/termination payments exceeding local standards for multiples of annual compensation), or consulting agreements with non-executive directors.
The Funds shall consider such proposals on a CASE-BY-CASE basis if other concerns exist regarding severance/termination payments.
The Funds shall vote AGAINST such proposals if concerns exist regarding the issuer’s financial accounts and reporting, including related party transactions.
The Funds shall vote AGAINST board-issued reports receiving a negative recommendation from the Proxy Advisory Firm resulting from concerns regarding board independence or inclusion of non-independent directors on the audit committee.
The Funds shall vote FOR such proposals if the only reason for a negative Proxy Advisory Firm recommendation is to express disapproval of broader issuer or board practices.
Other Business
The Funds shall vote AGAINST proposals for Other Business.
Adjournment
The Funds shall vote FOR when presented with a primary proposal such as a merger or corporate restructuring that is also supported.
The Funds shall vote AGAINST when not presented with a primary proposal, such as a merger, and a proposal on the ballot is opposed.
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The Funds shall consider other circumstances on a CASE-BY-CASE basis.
Changing Corporate Name
The Funds shall vote FOR management proposals requesting a corporate name change. Multiple Proposals
The Funds may vote FOR multiple proposals of a similar nature presented as options to the issuer management’s favored course of action, provided that:
•
Support for a single proposal is not operationally required;
•
No single proposal is deemed superior in the interest of the Fund(s); and
•
Each proposal would otherwise be supported under these Guidelines.
The Funds shall vote AGAINST any proposals that would otherwise be opposed under these Guidelines.
Bundled Proposals
The Funds shall vote FOR such proposals if all of the bundled items are supported under these Guidelines.
The Funds shall consider such proposals on a CASE-BY-CASE basis if one or more items are not supported under these Guidelines and/or the Proxy Advisory Firm deems the negative impact, on balance, to outweigh any positive impact.
Moot Proposals
This instruction pertains to items for which support has become moot (e.g., a director for whom support has become moot since the time the individual was nominated (e.g., due to death, disqualification, or determination not to accept appointment)); the Funds shall WITHHOLD support if the Proxy Advisory Firm recommends that course of action.
8- Investment Companies Registered Under the Investment Company Act of 1940
Investment companies registered under the Investment Company Act of 1940 (Investment Companies) generally have different matters requiring shareholder approval and are subject to different regulatory requirements than operating issuers. Accordingly, the Funds shall consider matters related to Investment Companies on a CASE-BY-CASE basis.
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PART C

OTHER INFORMATION

Voya Credit Income Fund

ITEM 25. FINANCIAL STATEMENTS AND EXHIBITS

1.Financial Statements

Contained in Part A: The years ended February 29, 2024, February 28, 2023, February 28, 2022, February 28, 2021, February 29, 2020, February 28, 2019, February 28, 2018, February 28, 2017, February 29, 2016, February 28, 2015, February 28, 2014, February 28, 2013, February 29, 2012, February 28, 2011, and February 28, 2010.

Contained in Part B: Financial Statements are incorporated in Part B by reference to Registrant’s February 29, 2024 annual shareholder report (audited) and August 31, 2023 semi-annual shareholder report (unaudited).

2.Exhibits

(A)(1) Agreement and Declaration of Trust dated December 15, 2000 – Filed as an exhibit to the Registrant’s Registration Statement under the Investment Company Act of 1940, as amended (the “1940 Act”) on Form N-2 (File No. 811-10223), filed on February 2, 2001 and incorporated herein by reference.

(a)Amendment No. 1 dated March 1, 2002 to Agreement and Declaration of Trust – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on April 30, 2004 and incorporated herein by reference.

(b)Amendment No. 2 dated January 31, 2008 to Agreement and Declaration of Trust – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (the “1933 Act”) on Form N-2 (333-150236) filed on April 14, 2008 and incorporated herein by reference.

(c)Amendment No. 3 dated November 20, 2009 to Agreement and Declaration of Trust – Filed as an exhibit to Post-Effective Amendment No. 4 to the Registrant’s Registration Statement on Form N-2 on June 29, 2010 and incorporated herein by reference.

(d)Amendment No. 4 dated May 19, 2011 to Agreement and Declaration of Trust – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on June 26, 2012 and incorporated herein by reference.

(e)Amendment No. 5 dated January 12, 2017 to Agreement and Declaration of Trust – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 28, 2017 and incorporated herein by reference.

(f)Amendment No. 6 dated May 8, 2017 to Agreement and Declaration of Trust

– Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 28, 2017 and incorporated herein by reference.

(g)Certificate of Amendment to the Certificate of Trust of Voya Senior Income Fund dated July 23, 2021 – Filed as an exhibit to the Registrant’s

1

Registration Statement under the 1940 Act on Form N-2 (File No. 811- 10223) and under the Securities Act of 1933 (333-219011) on April 29, 2022 and incorporated herein by reference.

(h)Amendment No. 7 effective January 12, 2023 to Agreement and Declaration of Trust – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(2)Certificate of Trust of Voya Senior Income Fund dated December 15, 2000 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on April 30, 2004 and incorporated herein by reference.

(a)Certificate of Amendment of Certificate of Trust dated March 26, 2001 – Filed as an exhibit to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on March 30, 2001 and incorporated herein by reference.

(b)Certificate of Amendment of Certificate of Trust effective March 1, 2002 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on April 30, 2002 and incorporated herein by reference.

(c)Certificate of Amendment of Certificate of Trust effective May 1, 2014 – Filed as an exhibit to Post-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 filed on June 24, 2014 and incorporated herein by reference.

(d)Certificate of Amendment of Certificate of Trust dated July 23, 2021 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(e)Certificate of Amendment of Certificate of Trust effective June 30, 2022 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(B)Amended and Restated By-Laws of Voya Senior Income Fund approved March 18, 2018 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.

(C)Not Applicable.

(D)Not Applicable.

(E)Not Applicable.

(F)Not Applicable.

(G)(1) Amended and Restated Investment Management Agreement, dated November 18, 2014, as amended and restated May 1, 2015, between Voya Senior Income Fund and Voya Investments, LLC – Filed as an exhibit to Post-Effective Amendment No. 4 to the Registrant’s Registration Statement on Form N-2 filed on June 29, 2015 and incorporated herein by reference.

(i)Amended Schedule B and Amended Schedule C, dated June 2020, to Amended and Restated Investment Management Agreement, dated November 18, 2014, as amended and restated May 1, 2015 – Filed as an exhibit to Post-Effective Amendment No.5 to the Registrant’s Registration

Statement on Form N-2 filed on June 26, 2020 and incorporated herein by reference.

(ii)Amended Schedule A, dated November 17, 2022, to the Amended and Restated Investment Management Agreement, dated November 18, 2014, as amended and restated May 1, 2015, between Voya Senior Credit Fund and

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Voya Investments, LLC – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(2)Sub-Advisory Agreement, effective November 18, 2014, between Voya Investments, LLC and Voya Investment Management Co. LLC – Filed as an exhibit to Post- Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 filed on April 28, 2015 and incorporated herein by reference.

(i)Amended Schedule A, dated November 17, 2022, to the Sub-Advisory Agreement effective November 18, 2012 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(H)(1) Underwriting Agreement dated November 18, 2014 as amended and restated July 13, 2017 and further amended and restated December 1, 2017 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.

(i)Amended Schedule A, dated November 17, 2022, to the Underwriting Agreement dated November 18, 2014 as amended and restated July 13, 2017 and further amended and restated December 1, 2017 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(I)(1) Amended and Restated Deferred Compensation Plan for Independent Directors dated January 10, 2024 – Filed herein.

(J)` (1) Custodian and Investment Accounting Agreement dated November 1, 2001 between

the Registrant and State Street Bank and Trust Company – Filed as an exhibit to Post- Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on April 30, 2004 and incorporated herein by reference.

(i)First Amendment, dated March 1, 2002, to Custodian and Investment Accounting Agreement – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on April 30, 2004 and incorporated herein by reference.

(ii)Second Amendment, dated October 1, 2007, to Custodian and Investment Accounting Agreement – Filed as an exhibit to Post-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 filed on June 27, 2008 and incorporated herein by reference.

(iii)Third Amendment and Exhibit A dated August 2, 2010 to Custodian and Investment Accounting Agreement – Filed as an exhibit to the Registrant’s Registration Statement on Form N-2 on June 28, 2011 and incorporated herein by reference.

(J)(2) Custody Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(i)Amended Exhibit A, effective May 1, 2024 to the Custody Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(ii)Amendment, dated January 1, 2019 to the Custody Agreement, dated January 6, 2003, between the Registrant and The Bank of New York Mellon – Filed herein.

(iii)Amendment, effective November 21, 2022, to the Custody Agreement, dated January 6, 2003, between the Registrant and The Bank of New York Mellon

 – Filed herein.

3

(J)(3) Foreign Custody Manager Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(i)Amended Exhibit A, effective May 1, 2024, to the Foreign Custody Manager Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(ii)Amended Schedule 2 dated July 21, 2021 to the Foreign Custody Manager Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(iii)Amendment, dated September 6, 2012, to the Foreign Custody Manager Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(iv)Amendment dated July 13, 2021, to the Foreign Custody Manager Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(J)(4) Fund Accounting Agreement with The Bank of New York Melon dated January 6, 2003 – Filed herein.

(i)Amended Exhibit A, effective May 1, 2024, to the Fund Accounting Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(ii)Amendment, effective November 21, 2022 to the Fund Accounting Agreement with The Bank of New York Melon dated January 6, 2003 – Filed herein.

(iii)Amendment, effective January 1, 2019 to the Fund Accounting Agreement with The Bank of New York Melon dated January 6, 2003 – Filed herein.

(iv)Investment Company Reporting Modernization Services Amendment to Fund Accounting Agreement dated February 1, 2018 to the Fund Accounting Agreement with The Bank of New York Mellon dated January 6, 2003 – Filed herein.

(K)(1) Fourth Amended and Restated Shareholder Service Plan for Class A shares effective November 16, 2023 – Filed herein.

(2)Fourth Amended and Restated Service and Distribution Plan for Class C shares effective November 16, 2023 – Filed herein.

(3)Twelfth Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3 for Voya Senior Income Fund dated January 12, 2023 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(4)Expense Limitation Agreement between Voya Senior Income Fund and Voya Investments, LLC effective January 1, 2016 – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on

June 27, 2018 and incorporated herein by reference.

(a)Amended Schedule A effective January 12, 2023 to the Expense Limitation Agreement between Voya Credit Income Fund (formerly, Voya Senior Income Fund) and Voya Investments, LLC effective January 1, 2016 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(b)Letter Agreement, dated July 1, 2024, to Expense Limitation Agreement between Voya Credit Income Fund and Voya Investments, LLC effective January 1, 2016 for the period from July 1, 2024 through July 1, 2025 – Filed herein.

(5)Transfer Agency Services Agreement dated February 25, 2009 between BNY Mellon

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Investment Servicing (US) Inc., formerly, PNC Global Investment Servicing (U.S.) Inc., and Voya Senior Income Fund – Filed as an exhibit to Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 filed on June 23, 2009 and incorporated herein by reference.

(a)Amendment, effective February 8, 2011, to the Transfer Agency Services Agreement dated February 25, 2009 – Filed as an exhibit to the Registrant’s Registration Statement on Form N-2 filed on June 28, 2011.

(b)Amendment, effective May 1, 2019, to the Transfer Agency Services Agreement dated February 25, 2009 – Filed as an exhibit to Post-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 filed on June 26, 2019 and incorporated herein by reference.

(c)Amendment, effective November 5, 2019, to the Transfer Agency Services Agreement dated February 25, 2009 – Filed as an exhibit to Post-Effective Amendment No.5 to the Registrant’s Registration Statement on Form N-2 filed on June 26, 2020 and incorporated herein by reference.

(d)Amendment, effective May 1, 2020, to the Transfer Agency Services Agreement dated February 25, 2009 – Filed as an exhibit to Post-Effective Amendment No.5 to the Registrant’s Registration Statement on Form N-2 filed on June 26, 2020 and incorporated herein by reference.

(e)Amendment, effective April 4, 2022, to the Transfer Agency Services Agreement, dated February 25, 2009, between, the Registrant and BNY Mellon Investment Servicing (US) Inc. – Filed as an exhibit to Post- Effective Amendment NO. 8 to the Registrant’s Registration Statement on Form N-2 filed on April 29, 2022 and incorporated herein by reference.

(f)Amendment, effective October 21, 2022, to the Transfer Agency Services Agreement, dated February 25, 2009 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811- 10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(g)Amendment, effective November 18, 2022, to the Transfer Agency Services Agreement, dated February 25, 2009 – Filed here as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023in.

(h)Amendment, effective November 21, 2022, to the Transfer Agency Services Agreement, dated February 25, 2009 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811- 10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(i)Amendment, effective February 9, 2023, to the Transfer Agency Services Agreement, dated February 25, 2009 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811- 10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(6)Allocation Agreement – Directors & Officers Liability dated May 24, 2002 – Filed as an exhibit to Post-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 filed on June 28, 2004 and incorporated herein by reference.

(a)Amended Schedule A, dated July 2021, with respect to Allocation Agreement – Directors & Officers Liability dated May 24, 2002 – Filed as an exhibit to Post-Effective Amendment NO. 8 to the Registrant’s Registration Statement on Form N-2 filed on April 29, 2022 and incorporated herein by reference.

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(7)Allocation Agreement – Fidelity Bond dated May 24, 2002 – Filed as an exhibit to Post-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-2 filed on June 28, 2004 and incorporated herein by reference.

(a)Amended Schedule A, dated July 2021, with respect to Allocation Agreement- Fidelity Bond dated May 24, 2002 – Filed as an exhibit to Post- Effective Amendment NO. 8 to the Registrant’s Registration Statement on Form N-2 filed on April 29, 2022 and incorporated herein by reference.

(8)Service Agreement effective February 12, 2018 between State Street Bank and Trust Company and Voya Senior Income Fund – Filed as an exhibit to Post-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on June 27, 2018 and incorporated herein by reference.

(9)Global Industry Classification Standards Services Fee Allocation Agreement, dated May 1, 2007, between ING Funds Services, LLC, ING Funds Distributor, LLC and Morgan Stanley Capital International, Inc. – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(i)Amended Schedule A, dated July 2021, with respect to the Global Industry Classification Standards Services Fee Allocation Agreement, dated May 1, 2007 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(10)Amended and Restated Investment Company Institute Fee Allocation Agreement, effective March 24, 2004, amended and restated January 1, 2007 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(i)Amended Schedule A, dated July 2021, with respect to the Amended and Restated Investment Company Institute Fee Allocation Agreement, effective March 24, 2004, amended and restated January 1, 2007 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2

(File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(ii)First Amendment effective January 1, 2006 to the Amended and Restated Investment Company Institute Fee Allocation Agreement, effective March 24, 2004, amended and restated January 1, 2007 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(iii)Second Amendment effective March 27, 2008 to the Amended and Restated Investment Company Institute Fee Allocation Agreement, effective March 24, 2004, amended and restated January 1, 2007 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(11)Fund Administration Support Services Agreement between Voya Investments, LLC and The Bank of New York Mellon (Redacted) dated July 29, 2022 – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 27, 2023.

(L)(1) Opinion and Consent of Dechert LLP regarding Registration of additional Class A and Class C Common Shares dated June 29, 2007 – Filed as an exhibit to Post-

6

Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on June 29, 2005 and incorporated herein by reference.

(2)Opinion of Dechert LLP regarding legality of shares being registered – Class I and Class W Common Shares – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the 1933 Act on Form N-2 (333-150236) filed on April 14, 2008 and incorporated herein by reference.

(3)Opinion and Consent of Dechert LLP regarding legality of shares being registered – Class A, Class C, and Class W Common Shares – Filed as an exhibit to the Registrant’s Registration Statement on Form N-2 on June 28, 2011 and incorporated herein by reference.

(4)Opinion and Consent of Dechert LLP regarding legality of shares being registered – Class W Common Shares – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 on Form N-2 (333-189639) filed on June 27, 2013 and incorporated herein by reference.

(5)Opinion and Consent of Dechert LLP regarding legality of shares being registered – Class A and Class I Common Shares – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 on Form N-2 (333-192499) filed on November 22, 2013 and incorporated herein by reference.

(6)Opinion and Consent of Ropes & Gray LLP regarding legality of shares being registered – Class T Common Shares – Filed as an exhibit to the Registrant’s Registration Statement under the 1940 Act on Form N-2 (File No. 811-10223) and under the Securities Act of 1933 (333-219011) on June 28, 2017 and incorporated herein by reference.

(M)Not Applicable

(N)(1) Consent of Ropes & Gray LLP – Filed herein.

(2)Consent of Ernst & Young LLP – Filed herein.

(O)Not Applicable

(P)Representation Letter dated March 27, 2001 – Filed as an exhibit to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-2 filed on March 30, 2001 and incorporated herein by reference.

(Q)Not Applicable

(R)Voya Funds and Advisers Code of Ethics Amended December 29, 2024 – Filed herein.

ITEM 26. MARKETING ARRANGEMENTS

Not Applicable.

ITEM 27. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Not Applicable.

ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

Not Applicable.

7

ITEM 29. NUMBER OF HOLDERS OF SECURITIES

Class A Common Shares

2141

As of May 31, 2024

Class C Common Shares

112

As of May 31, 2024

Class I Common Shares

300

As of May 31, 2024

Class W Common Shares

21

As of May 31, 2024

Total

2574

As of May 31, 2024

ITEM 30. INDEMNIFICATION

Section 8.2 of the Agreement and Declaration of Trust provides: The Trustees shall not be responsible or liable in any event for any neglect or wrong-doing of any officer, agent, employee, Manager or Principal Underwriter of the Fund, nor shall any Trustee be responsible for the act or omission of any other Trustee, and the Fund out of its assets shall indemnify, defend and hold harmless each and every Trustee from and against any and all claims and demands whatsoever arising out of or related to each Trustee’s performance of his or her duties as a Trustee of the Fund; PROVIDED, HOWEVER, that the Fund shall not indemnify a Trustee against liability caused by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.

Every note, bond, contract, instrument, certificate or undertaking, and every other act or thing whatsoever issued, executed or done by or on behalf of the Fund or the Trustees or any of them, in connection with the Fund shall be conclusively deemed to have been issued, executed or done only in or with respect to their or his or her capacity as Trustees or a Trustee, and such Trustees or Trustee shall not be personally liable thereon.

Section 8.3 of the Agreement and Declaration of Trust provides: The exercise by the Trustees of their powers and discretion hereunder shall be binding upon everyone interested. A Trustee shall be liable to the Fund and to any Shareholder solely for his or her own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and shall not be liable for errors of judgment or mistakes of fact or law. In performing their duties, the Trustees may rely on any information, advice, opinion, report or statement (including without limiting the generality of the foregoing any financial statement or other financial data and any interpretation of the meaning and operation of the Fund’s governing documents), prepared or presented by an officer or employee of the Fund, or prepared or presented by a lawyer, certified public accountant or other person as a matter which a Trustee believes to be within the person’s professional or expert competence and the Trustees shall be under no liability for any act or omission in accordance with any such information advice, opinion, report or statement nor failing to rely on or follow such information, advice, opinion, report or statement. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required.

Section 8.4 of the Agreement and Declaration of Trust provides: The Trustees shall be entitled and empowered to the fullest extent permitted by law to purchase with Fund assets insurance for liability and for all expenses reasonably incurred or paid or expected to be paid by a Trustee in connection with any claim, action, suit or proceeding in which he or she becomes involved by virtue of his or her capacity or former capacity with the Fund, whether or not the Fund would have the power to indemnify him or her against such liability under the provisions of this Article.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission, such indemnification is against public

8

policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of the Registrant of expenses incurred or paid by a Trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, the Registrant will submit, unless in the opinion of its counsel the matter has been settled by controlling precedent, to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

ITEM 31. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER

Information as to the Trustees and officers of the Investment Manager, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by the directors and officers of the Investment Manager in the last two years, is included in its application for registration as an investment adviser on Form ADV (File No. 801-48282) filed under the Investment Advisers Act of 1940, as amended (“Advisers Act”), and is incorporated herein by reference thereto.

Information as to the directors and officers of the sub-adviser, together with information as to any other business, profession, vocation or employment of a substantial nature engaged in by the directors and officers of the sub-adviser in the last two years, is included in its application for registration as an investment adviser on Form ADV for Voya Investment Management Co. LLC (File No. 801-9046) filed under the Investment Advisers Act of 1940, as amended, and is incorporated by reference thereto.

ITEM 32. LOCATION OF ACCOUNTS AND RECORDS

The amounts and records of the Registrant will be maintained at its office at 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, Arizona 85258 and at the office of its custodian, The Bank of New York Mellon, 225 Liberty Street, New York, New York 10286.

ITEM 33. MANAGEMENT SERVICES

Not Applicable.

ITEM 34. UNDERTAKINGS

1.Not Applicable.

2.Not Applicable.

3.Not Applicable.

4.(a) To file during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(b)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

9

(c)To remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

5.Not Applicable.

6.The Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery, within two business days of receipt of a written or oral request, any Statement of Additional Information.

10


SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the “1933 Act”), and/or the Investment Company Act of 1940, as amended, the Registrant certifies that this Registration Statement meets all the requirements for effectiveness under paragraph (b) of Rule 486 and it has duly caused this Amendment No. 12 to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Scottsdale and the State of Arizona on the 27th day of June, 2024.
VOYA CREDIT INCOME FUND
By:  /s/ Gizachew Wubishet
Gizachew Wubishet
Assistant Secretary
Pursuant to the requirements of the 1933 Act, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated. 
SIGNATURE
TITLE
DATE
___________________
Andy Simonoff*
President and Chief Executive Officer
June 27, 2024
___________________
Todd Modic*
Senior Vice President,
Chief/Principal Financial Officer and Assistant
Secretary
June 27, 2024
___________________
Fred Bedoya*
Vice President, Treasurer and Principal Accounting
Officer
June 27, 2024
___________________
Colleen D. Baldwin*
Trustee
June 27, 2024
___________________
John V. Boyer*
Trustee
June 27, 2024
___________________
Martin J. Gavin*
Trustee
June 27, 2024
___________________
Joseph E. Obermeyer*
Trustee
June 27, 2024
___________________
Sheryl K. Pressler*
Trustee
June 27, 2024
___________________
Christopher P. Sullivan*
Trustee
June 27, 2024
*By: /s/ Gizachew Wubishet
Gizachew Wubishet
Attorney-in-Fact**

(i)(1)

DEFERRED COMPENSATION PLAN FOR INDEPENDENT DIRECTORS

as amended and restated January 10, 2024

WHEREAS, the Deferred Compensation Plan for Independent Directors (the "A Plan") was adopted by resolution of the Boards of Trustees of ING Asia Pacific High Dividend Equity Income Fund, ING Equity Trust, ING Emerging Markets High Dividend Equity Fund, ING Funds Trust, ING Global Equity Dividend and Premium Opportunity Fund, ING Global Advantage and Premium Opportunity Fund, ING Investors Trust, ING Mayflower Trust, ING Mutual Funds, ING Partners, Inc., ING Senior Income Fund, ING Variable Insurance Trust, ING Variable Products Trust, ING Separate Portfolios Trust, and ING Infrastructure, Industrials and Materials Fund (the "A Funds") on September 15, 2005, amended on September 12, 2007, and amended and restated on January 1, 2010, and on May 22, 2013;

WHEREAS, the Deferred Compensation Plan (the "B Plan") was adopted by resolution of the Boards of Directors/Trustees of ING VP Balanced Portfolio, Inc., ING Strategic Allocation Portfolios, Inc., ING VP Intermediate Bond Portfolio, ING VP Money Market Fund, ING Variable Funds, and ING Variable Portfolios, Inc. (the "B Funds") on April 24, 1997 and amended and restated on June 26, 2002, on January 1, 2009, December 20, 2010, and on May 22, 2013;

WHEREAS, the Boards of Trustees of the A Funds and the Boards of Directors/Trustees of the B Funds previously amended and restated the A Plan and the B Plan, respectively, each effective as of May 22, 2013, as provided herein, such that each plan shall henceforth be constituted and administered as set forth herein as the "Deferred Compensation Plan for Independent Directors" (the "Plan") of the registrants listed on Appendix A to the Plan. The Boards of Directors/Trustees previously amended and restated the Plan on January 22, 2015, on July 9, 2015, on January 14, 2016, on January 11, 2018, on January 25, 2019, on January 24, 2020, and on January 11, 2021.

NOW THEREFORE, each of the A Plan and the B Plan, as renamed the Plan, shall be amended and restated as follows:

_____________________________

ARTICLE I.

ESTABLISHMENT AND PURPOSE

1.1.The Plan has been established by resolution of the Boards of Directors/Trustees (the "Board") of the registrants listed on Appendix A to the Plan. These registrants or their portfolio series, if they have issued more than one series, are collectively referred to under the Plan as the "Funds." The purpose of the Plan is to provide retirement benefits for those former and active directors or trustees, as well as consultants that are anticipated to become directors or trustees, as the case may be, of each Fund who are not employees of the Funds, Voya Investments Distributor, LLC, or Voya Investments, LLC or its successor (the "Investment Manager"), or any affiliate of the Investment Manager ("Independent Directors"). The Plan shall be maintained and administered as an unfunded plan of deferred compensation that is intended to comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code") and the regulations and guidance promulgated thereunder ("Section 409A").

1

Effective January 1, 2016, notwithstanding any other provision of the Plan, Compensation payable by the portfolio series listed on Appendix B shall no longer be eligible for deferral under the Plan. On and after such date, such portfolio series shall not be included in the term "Funds" as used herein where such inclusion would be inconsistent with the intent of the preceding sentence. Compensation deferred prior to such date shall continue to be deferred in accordance with the terms of the Plan and the applicable Deferral Agreement.

1.2.The provisions of the Plan, as set forth herein or as subsequently amended, are applicable only for Independent Directors who are such on or after May 22, 2013 (the "Effective Date"). The terms of the A Plan and/or the B Plan shall govern with respect to any director/trustee who (a) was an active Independent Director prior to the Effective Date and (b) is not an active Independent Director on or after the Effective Date.

1.3.The Plan shall be administered by the Board or by such person or persons as the Board may designate to carry out administrative functions hereunder (the "Plan Administrator"). The Plan Administrator shall have complete discretion to interpret and administer the Plan in accordance with its terms, and its determinations shall be final and binding on all persons except for the provisions of ARTICLE VIII, whereunder action by the full Board shall be required.

1.4.This plan document evidences the Plan for each Fund, but each Fund maintains its own separate Plan.

ARTICLE II.

DEFINITIONS

2.1.Whenever used in the Plan, the following terms shall have the meanings set forth below unless otherwise expressly provided. When the defined term is intended, the term is capitalized. The definition of any term in the singular shall also include the plural, and vice versa, whichever is appropriate in the context.

2.1.1."Account" means the bookkeeping account maintained for each Participant that represents the Participant's total interest under each Plan as of any Valuation Date. An Account shall consist of the sum of deferrals of Compensation credited to such Account pursuant to Section 4.1 and any investment earnings including from reinvestment of dividends or losses on these amounts. A Participant shall have a fully vested, non-forfeitable interest at all times in his or her Account.

2.1.2."Beneficiary or Beneficiaries" means the person, persons, or legal entities designated by the Participant in the Participant's Deferral Agreement who are entitled to receive payments under the Plan that become payable to such person, persons, or legal entities in the event of the Participant's death. If more than one designated beneficiary survives the Participant, payments shall be made equally, unless otherwise provided in the beneficiary

2

designation. Nothing herein shall prevent the Participant from designating primary and secondary beneficiaries. Secondary beneficiaries are considered designated beneficiaries and are entitled to payments under the Plan only in the event that there are no primary beneficiaries surviving the Participant. The Participant may change his or her beneficiary designation at any time by filing a properly completed form with the Plan Administrator. To be effective, a properly completed beneficiary designation form must be on file with the Plan Administrator at the time of the Participant's death.

2.1.3."Compensation" means the annual retainer fees earned by a Participant for service as an Independent Director of the Funds, the annual retainer fee earned by a Participant for service as Chair or Vice-Chair of the Board or a Committee of the Board, and any fees earned by a Participant for attendance at meetings of the Board and any of its Committees, all or a portion of which may be deferred. For a Participant who is an anticipated Independent Director, "Compensation" may include fees earned by the Participant for consulting, advisory, or other non-employee services to the Funds in anticipation of becoming an active Independent Director prior to becoming an active Independent Director.

2.1.4."Deferral Agreement" means the annual written agreement between the Funds and the Participant to defer Compensation under the Plan.

2.1.5."Deferred Compensation" means the amount, as mutually agreed to by the Participant and the Funds, by which any Compensation not yet earned shall be reduced in return for the benefits provided under the Plan.

2.1.6."Lump Sum" means a single payment of the entire balance credited to the Participant's bookkeeping account under ARTICLE IV with respect to one or more Funds at the time payment is required to be made hereunder.

2.1.7."Notional Fund" means any open-end management investment company registered under the Investment Company Act of 1940 with respect to which the Investment Manager serves as investment adviser, shares of which are sold to the public, and which the Plan Administrator designates as a Notional Fund under the Plan.

2.1.8."Participant" means any Independent Director of a Fund who fulfills the eligibility and enrollment requirements of ARTICLE III.

2.1.9."Retirement or Retires" means the time at which the Participant has a separation from service for purposes of Treas. Reg. 1.409A-3(a)(1) from a Fund in conformity with the Retirement Policy of the Board in effect at the time of such cessation of service, provided such Retirement Policy provides for retirement solely after a specified age or solely after a combination of a specified age and years of service.

3

2.1.10."Termination of Services" means the time at which the Participant has a separation from service for purposes of Treas. Reg. 1.409A-3(a)(1) from a Fund for any reason other than Retirement or death.

2.1.11."Unforeseeable Emergency" means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant's spouse or a dependent (as defined in Section 152(a) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For purposes of the Plan, a determination of an Unforeseeable Emergency by the Plan Administrator shall comply with the provisions of Section 409A.

2.1.12."Valuation Date" means each day on which the Plan Administrator determines the value of Participant Accounts.

ARTICLE III.

PARTICIPATION IN THE PLAN

3.1.Eligibility: Any Independent Director of the Funds on or after the Effective Date shall be eligible to participate in the Plan, provided that the terms of the A Plan and/or the B Plan shall govern with respect to any director/trustee who (a) was an active Independent Director prior to the Effective Date and (b) is not an active Independent Director on or after the Effective Date.

3.2.Enrollment in the Plan:

(a)An Independent Director may become a Participant by executing a Deferral Agreement whereunder that Independent Director agrees to defer all or a portion of Compensation not yet earned and agrees to the provisions of the Plan. An Independent Director who does not elect to participate by completing and filing with the Plan Administrator a Deferral Election shall not be a Plan Participant.

(b)An election by the Independent Director to defer Compensation under the Plan for any calendar year shall not be effective unless such election is made on or before December 31 of the preceding year, except that an Independent Director may elect to participate in the Plan within 30 days of the date upon which such Independent Director first meets the eligibility requirements of Section 3.1, with deferral of Compensation to begin on the first day of the month subsequent to the month in which the election is made.

(c)An Independent Director who defers Compensation may not modify the Independent Director's Deferral Agreement to change the amount deferred during the calendar year; provided, however, that a Participant must make a new election no later than December 31 each year for Compensation to be earned in the immediately following and subsequent calendar years, with such new election being effective for the deferral of Compensation to begin

4

on the first day of January and then with respect only to Compensation earned on or after that date.

(d)In the Deferral Agreement, the Participant shall elect the time at which his or her Account shall be distributed. With respect to an election made on or after the Effective Date, a Participant may elect to be paid either in a lump sum or in three or five annual installments. A Participant may change his or her distribution election with respect to the Participant's Account, by notifying the Plan Administrator in writing of the Participant's new distribution election; provided, however, that such election may not take effect until at least 12 months after the date on which the election is made, the payment date must defer payment for a period of no less than five years from the date such payment would otherwise have been made, and the election must be made no later than 12 months prior to the Participant's Retirement or Termination of Services. Notwithstanding the foregoing, no change to a Deferral Agreement under this Section 4.02(d) shall be effective if such change does not comply with the applicable provisions of the Code, including but not limited to, Section 409A.

ARTICLE IV.

ACCUMULATION OF DEFERRED COMPENSATION

4.1.The Plan Administrator shall establish an Account on behalf of each Participant, the value of which at any given time shall determine the benefits payable to the Participant under ARTICLES V and VI and the withdrawal values under ARTICLE VII. Beginning on the date the Participant first enrolls in the Plan, the Account shall be credited with an amount equal to the Participant's Deferred Compensation at such times as the Compensation subject to deferral would otherwise have been paid. Until the Account is removed from the books of the Funds, the Account shall be further adjusted each Valuation Date for notional investment experience as described in Section 4.2 and reduced by any fees or expenses charged against the Account.

4.2.Amounts credited to the Participant's Account shall be periodically adjusted for notional investment experience. In each case such notional investment experience shall be determined by treating such Account as though an equivalent dollar amount had been invested and reinvested in any or all of the Notional Funds. The Plan Administrator shall designate the Notional Funds that are available for notional investing under the Plan. The Plan Administrator shall have the right to add or eliminate Notional Funds at any time and for any or no reason. The Notional Funds used as a basis for determining notional investment experience with respect to the Participant's Account shall be designated by the Participant pursuant to the administrative practices established by the Plan Administrator for this purpose, provided that a Participant may designate no more than five Notional Funds in total. The Notional Funds designated by a Participant may be changed by the Participant once per calendar month (or such other frequency as established by the Plan Administrator) on a prospective basis by the Participant making a

5

change to his or her investment elections. If at any time any Notional Fund that has previously been designated by the Plan Administrator as a notional investment shall cease to exist or shall be unavailable for any reason, or if the Participant fails to designate one or more Notional Funds pursuant to this Section 4.2, the Plan Administrator may, at its discretion and upon notice to the Participant, treat any amounts previously notionally invested or to be notionally invested in such Notional Fund as being invested in the Voya Money Market Fund or if the Voya Money Market Fund ceases to exist or is unavailable for any reason, such other short-term high-quality fixed-income Notional Fund as the Plan Administrator may from time to time designate, in all cases only until such time as the Participant shall have made another investment election in accordance with the foregoing procedures. The Participant's Account shall continue to be adjusted for notional investment experience until such time as the Participant's Account has been distributed in full.

4.3.It is specifically provided that neither the Plan Administrator nor the Funds shall be obligated to make actual cash deposits to a Participant's Account, but only to make bookkeeping entries as if deposits had been made. If for its own convenience the Funds should make deposits, it is further provided that any sums thus deposited shall remain a general unrestricted asset of the Funds and shall not be deemed as being held in trust, escrow, or in any other fiduciary manner for the benefit of the Participant. The value of a Participant's Account will fluctuate due to the investment experience of the Notional Funds which such Participant has chosen from time to time and at the time at which benefits become payable under the Plan, the value of the Participant's Account may be less than the total amount of Compensation deferred under the Plan. The Funds are not responsible or liable for any amount by which the total amount of Compensation deferred exceeds the value of the Account and the Funds shall have no obligation to restore any such difference.

4.4.If a Notional Fund is dissolved or liquidated, a Participant's deferrals under the Plan which are treated as though invested in such Notional Fund shall be redirected to one or more Notional Funds designated by the Participant based upon the relative allocations identified by the Participant at that time, or, if the Participant has not designated any remaining Notional Funds, redirected to a Fund operated as a money market Fund in accordance with Rule 2a-7 under the Investment Company Act of 1940.

6

ARTICLE V.

BENEFITS ON RETIREMENT

5.1.If the Participant continues in the service of one or more Funds until Retirement, the Funds shall pay to such Participant the amount then and thereafter standing credited to the Participant's Account described in ARTICLE IV with respect to such Funds at the time as elected by the Participant in the Participant's Deferral Agreement. Installment payments shall be substantially equal over the period elected. Any excess amounts remaining in the Account with respect to such Funds shall be paid out in the final installment. With respect to benefits payable in a Lump Sum, the Lump Sum shall be an amount equal to the current value of the Participant's Account with respect to such Funds one month prior to such date elected by the Participant in the Deferral Agreement, paid to the Participant on or about the first day of the month specified by the Participant in the Deferral Agreement, with no interest or earnings being credited after the date payment is due to be made. Notwithstanding the foregoing, if required by Section 409A, distribution shall not be made until the expiration of six calendar months from the date the payment was otherwise required to be made and the value of such Participant's Account shall reflect notional earnings for this six-month period.

5.2.Should the Participant die at any time after Retirement, whether prior to or after the Participant has begun to receive the retirement payments provided for in Section 5.1, the Participant's designated Beneficiary or Beneficiaries shall be entitled to receive the balance of such payments in a Lump Sum equal to the current value of the deceased Participant's Account on the date as of which such payment is processed. If no Beneficiary or Beneficiaries are designated at the time the Participant dies, then the Participant's surviving spouse, or if no surviving spouse, his or her estate shall be paid by the Plan as promptly as possible after due proof of death, but in all events within 90 days of the receipt of such proof of death, a Lump Sum amount equal to the value of the Participant's Account on the Valuation Date immediately preceding or coincident with the date as of which such payment is processed, with no interest or earnings being credited after the date the payment is due to be made. Notwithstanding the foregoing, if required by Section 409A, distribution shall not be made until the expiration of six calendar months from the date the payment was otherwise required to be made and the value of such Participant's Account shall reflect notional earnings for this six-month period.

ARTICLE VI.

BENEFITS ON TERMINATION OF SERVICES OR

DEATH PRIOR TO RETIREMENT

6.1.In the event there is a Termination of Services with respect to one or more Funds for reason other than death or Retirement, such Funds shall pay to the Participant the amount then and thereafter standing credited to the Participant's Account described in ARTICLE IV with respect to such Funds at the time and in the manner as elected by the Participant in the Participant's Deferral Agreement. Installment

7

payments shall be substantially equal over the period elected. Any excess amounts remaining in the Account with respect to such Funds shall be paid out in the final installment. With respect to benefits payable in a Lump Sum, the Lump Sum shall be an amount equal to the current value of the Participant's bookkeeping account one month prior to such date elected by the Participant in the Deferral Agreement. The Lump Sum or the initial installment payment shall be paid to the Participant as soon as administratively practicable after the date elected by the Participant, on or about the first day of the month specified by the Participant in the Deferral Agreement (with such month being no less than one month following the Termination of Services), with no interest or earnings being credited after the date the payment is due to be made. Notwithstanding the foregoing, if required by Section 409A, distribution shall not be made until the expiration of six calendar months from the date the payment was otherwise required to be made and the value of such Participant's Account shall reflect notional earnings for this six-month period.

6.2.In the event the Participant dies before the Participant's Retirement or Termination of Services, or prior to the date the Participant has received all of the payments under Section 6.1, the Participant's designated Beneficiary or Beneficiaries shall be entitled to receive the balance remaining of such payments in a Lump Sum equal to the value of the deceased Participant's Account on the Valuation Date immediately preceding or coincident with the date of the Participant's death. If no Beneficiary or Beneficiaries are designated at the time the Participant dies, then the Participant's surviving spouse, or if no surviving spouse, his or her estate shall be paid by the Plan as promptly as possible after due proof of death, but in all events within 90 days of the receipt of such proof of death, a Lump Sum amount equal to the value of the Participant's Account on the Valuation Date immediately preceding or coincident with the date as of which such payment is due to be made, with no interest or earnings being credited after the date the payment is processed. Notwithstanding the foregoing, if required by Section 409A, distribution shall not be made until the expiration of six calendar months from the date the payment was otherwise required to be made and the value of such Participant's Account shall reflect notional earnings for this six-month period.

6.3.The Plan Administrator may, in its sole and absolute discretion and after providing written notice to the Participant, cause the Plan to pay to the Participant as promptly as possible a Lump Sum equal to the value of the Participant's Account on the Valuation Date immediately preceding or coincident with the date as of which such payment is made ("Cash-Out Payment"); provided that the Cash-Out Payment results in the termination and liquidation of the entirety of the Participant's interest under the Plan (including all plans with which the Plan is required to be aggregated pursuant to Treas. Reg. §1.409A-1(c)(2) (collectively, the "Controlled Group")); provided, further, that the Cash-Out Payment may not be greater than the applicable dollar amount under Section 402(g)(1)(B) of the Code (which amount for 2024 is $23,000). Notwithstanding the foregoing, no Cash-Out Payment shall be made to a Participant who continues to be a participant in a plan that is a member of the Controlled Group and this Section 6.3 shall be

8

applied to a Participant's Account separately with respect to the portions of such account attributable to each group of plans constituting a Controlled Group.

ARTICLE VII.

WITHDRAWALS

7.1.In the event of an Unforeseeable Emergency, the Participant may apply to the Plan Administrator for early withdrawal from the Plan of an amount limited to that which is necessary to meet the emergency and/or suspend his or her deferral under the Plan. If such application for withdrawal is approved by the Plan Administrator, the withdrawal shall be effective at the latter of the date specified in the Participant's application or the date of approval by the Plan Administrator. Whenever an application for withdrawal is honored, the Plan Administrator shall pay the Participant from the Participant's Account described in ARTICLE IV only those amounts necessary to meet the emergency. The Participant's Account shall be appropriately adjusted to reflect the amounts withdrawn. The Plan Administrator shall make the required findings and such findings shall be conclusive and binding upon all interested persons.

ARTICLE VIII.

LIQUIDATION AND DISSOLUTION OF A FUND

8.1.Notwithstanding anything in the foregoing to the contrary, to the extent permitted by Treas. Reg. 1.409A-3(j)(4)(ix), in the event of the liquidation, dissolution or winding up of a Fund that qualifies as a corporate dissolution under Section 331 of the Code (or analogous Code provision in the case of a Fund that is taxable as a partnership), the Plan maintained by such Fund shall be terminated and all unpaid amounts in the bookkeeping accounts of the Participants with respect to such Fund as of the effective date of such dissolution shall be paid in a Lump Sum to the Participants on such effective date or as soon as administratively practicable thereafter, but in all events by the later of: (1) the end of the calendar year in which the deferred compensation plan termination occurs; or (2) the end of the first calendar year in which the payment is administratively practicable. For this purpose, a sale, conveyance or transfer of the Fund's assets to a trust, partnership, association or another corporation in exchange for cash, shares or other securities with the transfer being made subject to, or with the assumption by the transferee of, the liabilities of the Fund shall not be deemed a dissolution of the Fund. In such a case, if the Participant does not continue to provide services to such other trust, partnership, association or corporation following the transaction, the Participant shall be treated as having had a separation from service for purposes of Treas. Reg. §1.409A-3(a)(1) and shall become entitled to payment under ARTICLE VI, but if the Participant continues to provide services to the other trust, partnership, association or corporation following the transaction, the parties to the transaction shall, pursuant to Treas. Reg. §1.409A-1(h)(4), treat the Participant as not having had a separation from service and the Participant shall not become entitled to payment under ARTICLE VI by reason of the transaction.

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ARTICLE IX.

AMENDMENT OR TERMINATION OF PLAN

9.1.The Board may at any time terminate the Plan. Upon such termination, the Participant shall be deemed to have revoked the election to defer Compensation as of the date of such termination and on and after that date, all Compensation deferrals shall cease. Distributions of Participant Accounts shall be made in accordance with the Deferral Elections on file at the time of Plan termination and no distribution may be accelerated as a result of the termination of the Plan, except to the extent permitted under Section 409A.

9.2.The Board may amend the provisions of the Plan at any time; provided, however, that no amendment shall adversely affect the rights of the Participant or the designated Beneficiary or Beneficiaries, if any, as to the receipt of payments under the Plan to the extent of any Compensation deferred before the time of the amendment unless the Participant agrees to such amendment. No Participant consent shall be required for prospective amendments or retroactive amendments that do not adversely affect Plan Participants. Notwithstanding anything herein to the contrary, the Board may amend the provisions of the Plan to comply with the requirements of applicable law, including but not limited to, Section 409A, without Participant consent irrespective of the impact any such amendment may have on Plan Participants.

ARTICLE X.

PARTICIPANT STATUS

10.1.Each Participant in the Plan shall have only the status of general unsecured creditor of each applicable Fund. The Plan constitutes a mere promise by each Fund to make payments in the future. Nothing is the Plan shall be deemed to constitute an employment agreement.

ARTICLE XI.

NON-ASSIGNABILITY CLAUSE

11.1.It is expressly provided that neither the Participant nor the Participant's Beneficiary or Beneficiaries, nor any other designee, shall have any right to commute, sell, assign, transfer, or otherwise convey the right to receive any payments hereunder, which payments and rights thereto are expressly declared to be non-assignable and non-transferable and, in the event of any attempted assignment or transfer, the Funds shall have no further liability hereunder. Moreover, no unpaid benefits shall be subject to attachment, garnishment, or execution, or be transferable by operation of law in the event of bankruptcy or insolvency, or pursuant to a separation or divorce. The rights of the Participant or the Participant's Beneficiary or Beneficiaries to payments under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's Beneficiary or Beneficiaries. Notwithstanding the foregoing,

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a Participant's Account may be used to pay any amounts the Participant owes to the Funds or an affiliate of the Funds on the date payment is required to be made by the Plan.

ARTICLE XII.

APPLICABLE LAW

12.1.The Plan shall be construed under the law of the State of Arizona.

ARTICLE XIII.

EFFECTIVE DATE

13.1.This amendment and restatement of the Plan shall be effective on the date of its adoption by the Funds' Boards of Directors or on such later date as may be provided in the vote, resolution, or consent in which such adoption takes place.

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APPENDIX A

Up-to-date as of January 10, 2024

VOYA ASIA PACIFIC HIGH DIVIDEND EQUITY INCOME FUND

VOYA BALANCED PORTFOLIO, INC.

VOYA CREDIT INCOME FUND

VOYA EMERGING MARKETS HIGH DIVIDEND EQUITY FUND

VOYA EQUITY TRUST

VOYA FUNDS TRUST

VOYA GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND

VOYA GLOBAL EQUITY DIVIDEND AND PREMIUM OPPORTUNITY FUND

VOYA GOVERNMENT MONEY MARKET PORTFOLIO

VOYA INFRASTRUCTURE, INDUSTRIALS AND MATERIALS FUND

VOYA INTERMEDIATE BOND PORTFOLIO

VOYA INVESTORS TRUST

VOYA MUTUAL FUNDS

VOYA PARTNERS, INC.

VOYA SEPARATE PORTFOLIOS TRUST

VOYA STRATEGIC ALLOCATION PORTFOLIOS, INC.

VOYA VARIABLE FUNDS

VOYA VARIABLE INSURANCE TRUST

VOYA VARIABLE PORTFOLIOS, INC.

VOYA VARIABLE PRODUCTS TRUST

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APPENDIX B

VOYA GOVERNMENT MONEY MARKET FUND, a series of VOYA MUTUAL FUNDS

VOYA GOVERNMENT MONEY MARKET PORTFOLIO, a series of

VOYA GOVERNMENT MONEY MARKET PORTFOLIO

VOYA GOVERNMENT LIQUID ASSETS PORTFOLIO, a series of

VOYA INVESTORS TRUST

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(J)(2)

CUSTODY AGREEMENT

AGREEMENT, dated as of January 6, 2003 between each entity listed in Exhibit A hereto (each a "Fund"; and collectively, the "Funds") and The Bank of New York, a New York corporation authorized to do a banking business having its principal office and place of business at One Wall Street, New York, New York 10286 ("Custodian").

W I T N E S S E T H:

that for and in consideration of the mutual promises hereinafter set forth the Fund and Custodian agree as follows:

ARTICLE I

DEFINITIONS

Whenever used in this Agreement, the following words shall have the meanings set forth below:

1."Authorized Person" shall be any person, whether or not an officer or employee of the Fund, duly authorized by the Fund's board of trustees/directors ("board") execute any Certificate or to give any Oral Instruction with respect to one or more Accounts, such persons to be designated in a Certificate annexed hereto as Schedule I or such other Certificate as may be received by Custodian from time to time.

2."BNY Affiliate" shall mean any office, branch or subsidiary of The Bank of New York Company, Inc.

3."Book-Entry System" shall mean the Federal Reserve/Treasury book-entry system for receiving and delivering securities, its successors and nominees.

4."Business Day" shall mean any day on which the Fund, the Custodian and relevant Depositories are open for business.

5."Certificate" shall mean any notice, instruction, or other instrument in writing, authorized or required by this Agreement to be given to Custodian, which is actually received by Custodian by letter or facsimile transmission and signed on behalf of the Fund by an Authorized Person.

6."Composite Currency Unit" shall mean the Euro or any other composite currency unit consisting of the aggregate of specified amounts of specified currencies, as such unit may be constituted from time to time.

7."Depository" shall include (a) the Book-Entry System, (b) the Depository Trust Company, (c) any other clearing agency or securities depository registered with the

Securities and Exchange Commission identified to the Fund from time to time, and (d) the respective successors and nominees of the foregoing.

8."Foreign Depository" shall mean (a) Euroclear, (b) Clearstream Banking, societe anonyme, (c) each Eligible Securities Depository as defined in Rule 17f-7 under the Investment Company Act of 1940, as amended, identified to the Fund from time to time, and (d) the respective successors and nominees of the foregoing.

9."Instructions" shall mean communications transmitted by electronic or telecommunications media, including S.W.I.F.T., computer-to-computer interface, or dedicated transmission lines.

10."Oral Instructions" shall mean verbal instructions received by Custodian from an Authorized Person or from a person reasonably believed by Custodian to be an Authorized Person.

11."Series" shall mean the various portfolios, if any, of the Fund listed on Exhibit A hereto, and if none are listed references to Series shall be references to the Fund.

12."Securities" shall have the same meaning as when used in Securities Act of 1933, including without limitation, any common stock and other equity securities, bonds, debentures and other debt securities, notes, mortgages or other obligations, and any instruments representing rights to receive, purchase, or subscribe for the same, or representing any other rights or interests therein (whether represented by a certificate or held in a Depository).

13."Subcustodian" shall mean a bank (including any branch thereof) or other financial institution (other than a Foreign Depository) located outside the U.S. which is utilized by Custodian in connection with the purchase, sale or custody of Securities hereunder and identified to the Fund from time to time, and their respective successors and nominees.

ARTICLE II

APPOINTMENT OF CUSTODIAN; ACCOUNTS;

REPRESENTATIONS, WARRANTIES, AND COVENANTS

1.(a) Each Fund hereby appoints Custodian as custodian of all Securities and cash at any time delivered to Custodian during the term of this Agreement, and authorizes Custodian to hold Securities in registered form in its name or the name of its nominees. Custodian hereby accepts such appointment and agrees to establish and maintain one or more securities accounts and cash accounts for each Series in which Custodian will hold Securities and cash as provided herein. Custodian shall maintain books and records segregating the assets of each Series from the assets of any other Series. Such accounts (each, an "Account"; collectively, the "Accounts") shall be in the name of the Fund.

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(b)Custodian may from time to time establish on its books and records such sub-accounts within each Account as the Fund and Custodian may agree upon (each a "Special Account"), and Custodian shall reflect therein such assets as the Fund may specify in a Certificate or Instructions.

(c)Custodian may from time to time establish pursuant to a written agreement with and for the benefit of a broker, dealer, future commission merchant or other third party identified in a Certificate or Instructions such accounts on such terms and conditions as the Fund and Custodian shall agree, and Custodian shall transfer to such account such Securities and money as the Fund may specify in a Certificate or Instructions.

2.The Fund hereby represents and warrants, which representations and warranties shall be continuing and shall be deemed to be reaffirmed upon each delivery of a Certificate or each giving of Oral Instructions or Instructions by the Fund, that:

(a)It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement, and to perform its obligations hereunder;

(b)This Agreement has been duly authorized, executed and delivered by the Fund, approved by a resolution of its board, constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms, and to its knowledge there is no statute, regulation, rule, order or judgment binding on it, and no provision of its charter or by-laws, nor of any mortgage, indenture, credit agreement or other contract binding on it or affecting its property, which would prohibit its execution or performance of this Agreement;

(c)It is conducting its business in substantial compliance with all applicable laws and requirements, both state and federal, and has obtained all regulatory licenses, approvals and consents necessary to carry on its business as now conducted;

(d)It will not knowingly use the services provided by Custodian hereunder in any manner that is, or will result in, a violation of any law, rule or regulation applicable to the Fund;

(e)Unless The Bank of New York is acting as the Foreign Custody manager of the Fund, the Fund's board or its foreign custody manager, as defined in Rule 17f-5 under the Investment Company Act of 1940, as amended (the "'40 Act"), has determined that use of each Subcustodian (including any Replacement Custodian) and each Depository which Custodian or any Subcustodian is authorized to utilize in accordance with Section 1(a) of Article III hereof, satisfies the applicable requirements of the '40 Act and Rules 17f-4 or 17f-5 thereunder, as the case may be;

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(f)The Fund or its investment adviser has determined that the custody arrangements of each Foreign Depository provide reasonable safeguards against the custody risks associated with maintaining assets with such Foreign Depository within the meaning of Rule 17f-7 under the '40 Act;

(g)It is fully informed of the protections and risks associated with various methods of transmitting Instructions and Oral Instructions and delivering Certificates to Custodian, understands that there may be more secure methods of transmitting or delivering the same than the methods selected by the Fund, agrees that the security procedures (if any) to be utilized provide a commercially reasonable degree of protection in light of its particular needs and circumstances, and acknowledges and agrees that Instructions need not be reviewed by Custodian, may conclusively be presumed by Custodian to have been given by person(s) duly authorized, and may be acted upon as given;

(h)It shall manage its borrowings, including, without limitation, any advance or overdraft (including any day-light overdraft) in the Accounts, so that the aggregate of its total borrowings for each Series does not exceed the amount such Series is permitted to borrow under the '40 Act;

(i)Its transmission or giving of, and Custodian acting upon and in reliance on, Certificates, Instructions, or Oral Instructions pursuant to this Agreement shall at all times comply with the '40 Act;

(j)It shall impose and maintain restrictions on the destinations to which cash may be disbursed by Instructions to ensure that each disbursement is for a proper purpose; and

(k)It has the right to make the pledge and grant the security interest to Custodian contained in Section 1 of Article V hereof, free of any right of redemption or prior claim of any other person or entity, such pledge and such grants shall have a first priority subject to no setoffs, counterclaims, or other liens or grants prior to or on a parity therewith, and it shall take such additional steps as Custodian may require to assure such priority.

3.The Custodian hereby represents and warrants, which representations and warranties shall be continuing and shall be deemed to be reaffirmed upon each receipt of a Certificate or of Oral Instructions or Instruction by the Fund, that:

(a)It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement, and to perform its obligations hereunder;

(b)This Agreement has been duly authorized, executed and delivered by the Fund, approved by a resolution of its board, constitutes a valid and legally binding

4

obligation of Custodian, enforceable in accordance with its terms, and there is no statute, regulation, rule, order or judgment binding on it, and no provision of its charter or by- laws, nor of any mortgage, indenture, credit agreement or other contract binding on it or affecting its property, which would prohibit its execution or performance of this Agreement;

(c)It is conducting its business in substantial compliance with all applicable laws and requirements, both state and federal, and has obtained all regulatory licenses, approvals and consents necessary to carry on its business as now conducted;

(d)It will not knowingly use the Securities and cash delivered to Custodian hereunder in any manner that is, or will result in, a violation of any law, rule or regulation applicable to the Custodian; and

(e)It has at least the minimum qualifications required by Section 17(f)(1) of the Investment Company Act of 1940, as amended (the "40 Act"), to act as custodian of the portfolio securities and cash of the Fund, and has indicated its willingness to so act, subject to the terms and conditions of this agreement.

4.The Fund hereby covenants that it shall from time to time complete and execute and deliver to Custodian upon Custodian's request a Form FR U-1 (or successor form) whenever the Fund borrows from Custodian any money to be used for the purchase or carrying of margin stock as defined in Federal Reserve Regulation U.

ARTICLE III

CUSTODY AND RELATED SERVICES

1.(a) Subject to the terms hereof, the Fund hereby authorizes Custodian to hold any Securities received by it from time to time for the Fund's account. Custodian shall be entitled to utilize Depositories, Subcustodians, and, subject to subsection (c) of this Section 1, Foreign Depositories, to the extent possible in connection with its performance hereunder. Securities and cash held in a Depository or Foreign Depository will be held subject to the rules, terms and conditions of such entity. Securities and cash held through Subcustodians shall be held subject to the terms and conditions of Custodian's agreements with such Subcustodians. Subcustodians may be authorized to hold Securities in Foreign Depositories in which such Subcustodians participate. Unless otherwise required by local law or practice or a particular subcustodian agreement, Securities deposited with a Subcustodian, a Depositary or a Foreign Depository will be held in a commingled account, in the name of Custodian, holding only Securities held by Custodian as custodian for its customers. Custodian shall identify on its books and records the Securities and cash belonging to the Fund, whether held directly or indirectly through Depositories, Foreign Depositories, or Subcustodians. Custodian shall, directly or indirectly through Subcustodians, Depositories, or Foreign Depositories, endeavor, to the extent feasible, to hold Securities in the country or other jurisdiction in which the principal trading market for such Securities is located, where such Securities are to be

5

presented for cancellation and/or payment and/or registration, or where such Securities are acquired. Custodian at any time may cease utilizing any Subcustodian and/or may replace a Subcustodian with a different Subcustodian (the "Replacement Subcustodian"). In the event Custodian selects a Replacement Subcustodian, Custodian shall not utilize such Replacement Subcustodian until after the Fund's board or foreign custody manager has determined that utilization of such Replacement Subcustodian satisfies the requirements of the '40 Act and Rule 17f-5 thereunder.

(b)Unless Custodian has received a Certificate or Instructions to the contrary, Custodian shall hold Securities indirectly through a Subcustodian only if (i) the Securities are not subject to any right, charge, security interest, lien or claim of any kind in favor of such Subcustodian or its creditors or operators, including a receiver or trustee in bankruptcy or similar authority, except for a claim of payment for the safe custody or administration of Securities on behalf of the Fund by such Subcustodian, and (ii) beneficial ownership of the Securities is freely transferable without the payment of money or value other than for safe custody or administration.

(c)With respect to each Foreign Depository, Custodian shall exercise reasonable care, prudence, and diligence (i) to provide the Fund with an analysis of the custody risks associated with maintaining assets with the Foreign Depository, and (ii) to monitor such custody risks on a continuing basis and promptly notify the Fund of any material change in such risks. The Fund acknowledges and agrees that such analysis and monitoring shall be made on the basis of, and limited by, information gathered from Subcustodians or through publicly available information otherwise obtained by Custodian, and shall not include any evaluation of Country Risks. As used herein the term "Country Risks" shall mean with respect to any Foreign Depository: (a) the financial infrastructure of the country in which it is organized, (b) such country's prevailing custody and settlement practices, (c) nationalization, expropriation or other governmental actions, (d) such country's regulation of the banking or securities industry,

(e)currency controls, restrictions, devaluations or fluctuations, and (f) market conditions which affect the order execution of securities transactions or affect the value of securities.

2.Custodian shall furnish the Fund on-line access to daily transactions on a real time or near real time basis (including a confirmation of each transfer of Securities) and a monthly summary of all transfers to or from the Accounts.

3.With respect to all Securities held hereunder, Custodian shall, unless otherwise instructed to the contrary:

(a)Receive all income and other payments and advise the Fund as promptly as practicable of any such amounts due but not paid;

(b)Present for payment and receive the amount paid upon all Securities which may mature and advise the Fund as promptly as practicable of any such amounts due but not paid;

6

(c)Forward to the Fund copies of all information or documents that it may actually receive from an issuer of Securities which, in the opinion of Custodian, are intended for the beneficial owner of Securities;

(d)Execute, as custodian, any certificates of ownership, affidavits, declarations or other certificates under any tax laws now or hereafter in effect in connection with the collection of bond and note coupons;

(e)Hold directly or through a Depository, a Foreign Depository, or a Subcustodian all rights and similar Securities issued with respect to any Securities credited to an Account hereunder; and

(f)Endorse for collection checks, drafts or other negotiable instruments.

4.(a) Custodian shall notify the Fund of rights or discretionary actions with respect to Securities held hereunder, and of the date or dates by when such rights must be exercised or such action must be taken, provided that Custodian has actually received, from the issuer or the relevant Depository (with respect to Securities issued in the United States) or from the relevant Subcustodian, Foreign Depository, or a nationally or internationally recognized bond or corporate action service to which Custodian subscribes, timely notice of such rights or discretionary corporate action or of the date or dates such rights must be exercised or such action must be taken. Absent actual receipt of actual notice, Custodian shall have no liability for failing to so notify the Fund.

(b)Whenever Securities (including, but not limited to, warrants, options, tenders, options to tender or non-mandatory puts or calls) confer discretionary rights on the Fund or provide for discretionary action or alternative courses of action by the Fund, the Fund shall be responsible for making any decisions relating thereto and for directing Custodian to act. In order for Custodian to act, it must receive the Fund's Certificate or Instructions at Custodian's offices, addressed as Custodian may from time to time request, not later than noon (New York time) at least one (1) Business Day prior to the last scheduled date to act with respect to such Securities (or such earlier date or time as Custodian may specify to the Fund). Absent Custodian's timely receipt of such Certificate or Instructions, Custodian shall not be liable for failure to take any action relating to or to exercise any rights conferred by such Securities, unless Custodian has failed to timely receive the Fund's Certificate or Instruction and such failure is attributable to Custodian's own negligence or willful misconduct.

5.All voting rights with respect to Securities, however registered, shall be exercised by the Fund or its designee. For Securities issued in the United States, Custodian's only duty shall be to mail to the Fund any documents (including proxy statements, annual reports and signed proxies) actually received by Custodian relating to the exercise of such voting rights. With respect to Securities issued outside of the United States, Custodian's only duty shall be to provide the Fund with access to a provider of

7

global proxy services at the Fund's request. The Fund shall be responsible for all costs associated with its use of such services.

6.Custodian shall promptly advise the Fund upon Custodian's actual receipt of notification of the partial redemption, partial payment or other action affecting less than all Securities of the relevant class. If Custodian, any Subcustodian, any Depository, or any Foreign Depository holds any Securities in which the Fund has an interest as part of a fungible mass, Custodian, such Subcustodian, Depository, or Foreign Depository may select the Securities to participate in such partial redemption, partial payment or other action in any non-discriminatory manner that it customarily uses to make such selection.

7.Custodian shall not under any circumstances accept bearer interest coupons which have been stripped from United States federal, state or local government or agency securities unless explicitly agreed to by Custodian in writing.

8.The Fund shall be liable for all taxes, assessments, duties and other governmental charges, including any interest or penalty with respect thereto ("Taxes"), with respect to any cash or Securities held on behalf of the Fund or any transaction related thereto. The Fund shall indemnify Custodian and each Subcustodian for the amount of any Tax that Custodian, any such Subcustodian or any other withholding agent is required under applicable laws (whether by assessment or otherwise) to pay on behalf of, or in respect of income earned by or payments or distributions made to or for the account of the Fund (including any payment of Tax required by reason of an earlier failure to withhold). Custodian shall, or shall instruct the applicable Subcustodian or other withholding agent to, withhold the amount of any Tax which is required to be withheld under applicable law upon collection of any dividend, interest or other distribution made with respect to any Security and any proceeds or income from the sale, loan or other transfer of any Security. In the event that Custodian or any Subcustodian is required under applicable law to pay any Tax on behalf of the Fund, Custodian is hereby authorized to withdraw cash from any cash account in the amount required to pay such Tax and to use such cash, or to remit such cash to the appropriate Subcustodian or other withholding agent, for the timely payment of such Tax in the manner required by applicable law. If the aggregate amount of cash in all cash accounts is not sufficient to pay such Tax, Custodian shall promptly notify the Fund of the additional amount of cash (in the appropriate currency) required, and the Fund shall directly deposit such additional amount in the appropriate cash account promptly after receipt of such notice, for use by Custodian as specified herein. In the event that Custodian reasonably believes that Fund is eligible, pursuant to applicable law or to the provisions of any tax treaty, for a reduced rate of, or exemption from, any Tax which is otherwise required to be withheld or paid on behalf of the Fund under any applicable law, Custodian shall, or shall instruct the applicable Subcustodian or withholding agent to, either withhold or pay such Tax at such reduced rate or refrain from withholding or paying such Tax, as appropriate; provided that Custodian shall have received from the Fund all documentary evidence of residence or other qualification for such reduced rate or exemption required to be received under

8

such applicable law or treaty. In the event that Custodian reasonably believes that a reduced rate of, or exemption from, any Tax is obtainable only by means of an application for refund, Custodian and the applicable Subcustodian shall have no responsibility for the accuracy or validity of any forms or documentation provided by the Fund to Custodian hereunder. The Fund hereby agrees to indemnify and hold harmless Custodian and each Subcustodian in respect of any liability arising from any underwithholding or underpayment of any Tax which results from the inaccuracy or invalidity of any such forms or other documentation, and such obligation to indemnify shall be a continuing obligation of the Fund, its successors and assigns notwithstanding the termination of this Agreement.

9.(a) For the purpose of settling Securities and foreign exchange transactions, the Fund shall provide Custodian with sufficient immediately available funds for all transactions by such time and date as conditions in the relevant market dictate. As used herein, "sufficient immediately available funds" shall mean either (i) sufficient cash denominated in U.S. dollars to purchase the necessary foreign currency, or (ii) sufficient applicable foreign currency, to settle the transaction. Custodian shall provide the Fund with immediately available funds each day which result from the actual settlement of all sale transactions, based upon advice received by Custodian from Subcustodians, Depositories, and Foreign Depositories. Such funds shall be in U.S. dollars or such other currency as the Fund may specify to Custodian.

(b)Any foreign exchange transaction effected by Custodian in connection with this Agreement may be entered with Custodian or a BNY Affiliate acting as principal or otherwise through customary banking channels. The Fund may issue a standing Certificate or Instructions with respect to foreign exchange transactions, but Custodian may establish rules or limitations concerning any foreign exchange facility made available to the Fund. The Fund shall bear all risks of investing in Securities or holding cash denominated in a foreign currency.

10.Custodian shall promptly send to the Fund (a) any reports it receives from a Depository on such Depository's system of internal accounting control, and (b) such reports on its own system of internal accounting control as the Fund may reasonably request from time to time.

11.Until such time as Custodian receives a certificate to the contrary with respect to a particular Security, Custodian may release the identity of the Fund to an issuer which requests such information pursuant to the Shareholder Communications Act of 1985 for the specific purpose of direct communications between such issuer and shareholder.

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ARTICLE IV

PURCHASE AND SALE OF SECURITIES;

CREDITS TO ACCOUNT

1.Promptly after each purchase or sale of Securities by the Fund, the Fund shall deliver to Custodian a Certificate or Instructions, or with respect to a purchase or sale of a Security generally required to be settled on the same day the purchase or sale is made, Oral Instructions specifying all information Custodian may reasonably request to settle such purchase or sale. Custodian shall account for all purchases and sales of Securities on the actual settlement date unless otherwise agreed by Custodian.

2.The Fund understands that when Custodian is instructed to deliver Securities against payment, delivery of such Securities and receipt of payment therefor may not be completed simultaneously. Notwithstanding any provision in this Agreement to the contrary, settlements, payments and deliveries of Securities may be effected by Custodian or any Subcustodian in accordance with the customary or established securities trading or securities processing practices and procedures in the jurisdiction in which the transaction occurs, including, without limitation, delivery to a purchaser or dealer therefor (or agent) against receipt with the expectation of receiving later payment for such Securities. The Fund assumes full responsibility for all risks, including, without limitation, credit risks, involved in connection with such deliveries of Securities.

3.Custodian may, as a matter of bookkeeping convenience or by separate agreement with the Fund, credit the Account with the proceeds from the sale, redemption or other disposition of Securities or interest, dividends or other distributions payable on Securities prior to its actual receipt of final payment therefor. All such credits shall be conditional until Custodian's actual receipt of final payment and may be reversed by Custodian to the extent that final payment is not received. Payment with respect to a transaction will not be "final" until Custodian shall have received immediately available funds which under applicable local law, rule and/or practice are irreversible and not subject to any security interest, levy or other encumbrance, and which are specifically applicable to such transaction.

ARTICLE V

OVERDRAFTS OR INDEBTEDNESS

1.If Custodian should in its sole discretion advance funds on behalf of any Series which results in an overdraft (including, without limitation, any day-light overdraft) because the money held by Custodian in an Account for such Series shall be insufficient to pay the total amount payable upon a purchase of Securities specifically allocated to such Series, as set forth in a Certificate, Instructions or Oral Instructions, or if an overdraft arises in the Account of a particular Series for some other reason, including, without limitation, because of a reversal of a conditional credit or the purchase of any currency, or if the Fund is for any other reason indebted to Custodian with respect to a Series (except a borrowing for investment or for temporary or emergency purposes using

10

Securities as collateral pursuant to a separate agreement and subject to the provisions of Section 2 of this Article), such overdraft or indebtedness shall be deemed to be a loan made by Custodian to the Fund for such Series payable on demand and shall bear interest from the date incurred at a rate per annum as the Fund and Custodian may agree from time to time. In addition, the Fund hereby agrees that to the extent of the overdraft or indebtedness and interest thereon, Custodian shall have a continuing lien and security interest in and to any property specifically allocated to such Series at any time held by Custodian for the benefit of such Series or in which such Series may have an interest which is then in Custodian's possession or control or in possession or control of any third party acting in Custodian's behalf. The Fund authorizes Custodian, in its sole discretion, at any time to charge any such overdraft or indebtedness together with interest due thereon against any balance of account standing to such Series' credit on Custodian's books. Custodian shall promptly advise the Fund whenever such Fund has an overdraft or indebtedness bearing interest as provided in this Article, or whenever Custodian intends to realize upon its lien or security interest.

2.If the Fund borrows money from any bank (including Custodian if the borrowing is pursuant to a separate agreement) for investment or for temporary or emergency purposes using Securities held by Custodian hereunder as collateral for such borrowings, the Fund shall deliver to Custodian a Certificate specifying with respect to each such borrowing: (a) the Series to which such borrowing relates; (b) the name of the bank, (c) the amount of the borrowing, (d) the time and date, if known, on which the loan is to be entered into, (e) the total amount payable to the Fund on the borrowing date, (f) the Securities to be delivered as collateral for such loan, including the name of the issuer, the title and the number of shares or the principal amount of any particular Securities, and

(g)a statement specifying whether such loan is in conformance with the '40 Act and the Fund's then-current prospectus and statement of additional information. Custodian shall deliver on the borrowing date specified in a Certificate the specified collateral against payment by the lending bank of the total amount of the loan payable, provided that the same conforms to the total amount payable as set forth in the Certificate. Custodian may, at the option of the lending bank, keep such collateral in its possession, but such collateral shall be subject to all rights therein given the lending bank by virtue of any promissory note or loan agreement. Custodian shall deliver such Securities as additional collateral as may be specified in a Certificate to collateralize further any transaction described in this Section. The Fund shall cause all Securities released from collateral status to be returned directly to Custodian for the Account of the Series for which such Securities were last use as collateral, and Custodian shall receive from time to time such return of collateral as may be tendered to it.

ARTICLE VI

SALE AND REDEMPTION OF SHARES

1.Whenever the Fund shall sell any shares issued by the Fund ("Shares") it shall deliver to Custodian a Certificate or Instructions specifying the amount of money and/or

11

Securities to be received by Custodian for the sale of such Shares and specifically allocated to an Account for the appropriate Series.

2.Upon receipt of such money, Custodian shall credit such money to an Account in the name of the Series for which such money was received.

3.Except as provided hereinafter, whenever the Fund desires Custodian to make payment out of the money held by Custodian hereunder in connection with a redemption of any Shares, it shall furnish to Custodian a Certificate or Instructions specifying the total amount to be paid for such Shares. Custodian shall make payment of such total amount to the transfer agent specified in such Certificate or Instructions out of the money held in an Account of the appropriate Series.

4.Notwithstanding the above provisions regarding the redemption of any Shares, whenever any Shares are redeemed pursuant to any check redemption privilege which may from time to time be offered by the Fund, Custodian, unless otherwise instructed by a Certificate or Instructions, shall, upon presentment of such check, charge the amount thereof against the money held in the Account of the Series of the Shares being redeemed, provided, that if the Fund or its agent timely advises Custodian that such check is not to be honored, Custodian shall return such check unpaid.

ARTICLE VII

PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1.Whenever the Fund shall determine to pay a dividend or distribution on Shares it shall furnish to Custodian Instructions or a Certificate setting forth with respect to the Series specified therein the date of the declaration of such dividend or distribution, the total amount payable, and the payment date.

2.Upon the payment date specified in such Instructions or Certificate, Custodian shall pay out of the money held for the Account of such Series the total amount payable to the dividend agent of the Fund specified therein.

ARTICLE VIII

CONCERNING CUSTODIAN

1.(a) Custodian shall exercise such good faith, reasonable care, diligence, and prudence as a professional custodian for securities would exercise in carrying out all of these duties and obligations. Except as otherwise expressly provided herein, Custodian shall not be liable for any costs, expenses, damages, liabilities or claims, including attorneys' and accountants' fees (collectively, "Losses"), incurred by or asserted against the Fund, except those Losses arising out of Custodian's own negligence or willful misconduct. Custodian shall have no liability whatsoever for the action or inaction of any Depositories, or, except to the extent such action or inaction is a direct result of the Custodian's failure to fulfill its duties hereunder, of any Foreign Depositories. With

12

respect to any Losses incurred by the Fund as a result of the acts or failures to act by a Subcustodian listed on part 1 of Schedule 1, Custodian shall be liable to the Fund for such Losses, but only to the extent such Losses arise out of or are caused by acts or failure to act by such Subcustodian for which it is liable under the terms of its agreement with Custodian and the laws governing such agreement. With respect to any Losses incurred by the Fund as a result of the acts or omission of a Subcustodian either not listed on part 1 of Schedule 1 or listed on part 2 of Schedule 1, Custodian shall take appropriate action to recover such Losses, and Custodian's liability shall be limited to the amount recovered net of costs and expenses. In no event shall Custodian be liable to the Fund or any third party for special, indirect or consequential damages, or lost profits or loss of business, arising in connection with this Agreement, nor shall BNY or any Subcustodian be liable: (i) for acting in accordance with any Certificate or Oral Instructions actually received by Custodian and reasonably believed by Custodian to be given by an Authorized Person; (ii) for acting in accordance with Instructions without reviewing the same; (iii) for conclusively presuming that all Instructions are given only by person(s) duly authorized; (iv) for conclusively presuming that all disbursements of cash directed by the Fund by an Instruction, are in accordance with Section 2(j) of Article II hereof; (v) for holding property in any particular country, including, but not limited to, Losses resulting from nationalization, expropriation or other governmental actions; regulation of the banking or securities industry; exchange or currency controls or restrictions, devaluations or fluctuations; availability of cash or Securities or market conditions which prevent the transfer of property or execution of Securities transactions or affect the value of property; (vi) for any Losses due to forces beyond the reasonable control of Custodian, including without limitation strikes, work stoppages, acts of war or terrorism, insurrection, revolution, nuclear or natural catastrophes or acts of God, or interruptions, loss or malfunctions of utilities, non-internal communication services, but only to the extent beyond Custodian's reasonable control, and, but only if Custodian is maintaining such back-up system(s) and disaster recovery plan(s) as are required by its regulators and all laws applicable to Custodian, interruption, loss or malfunction of internal communication services or of computer (software or hardware) services; it being understood that Custodian shall use commercially reasonable best efforts to resume performance as soon as practicable under the circumstances; (vii) for the insolvency of any Subcustodian (other than a BNY Affiliate), any Depository, or, except to the extent such action or inaction is a direct result of the Custodian's failure to fulfill its duties hereunder, any Foreign Depository; or (viii) for any Losses arising from the applicability of any law or regulation now or hereafter in effect, or from the occurrence of any event, including, without limitation, implementation or adoption of any rules or procedures of a Foreign Depository, which may affect, limit, prevent or impose costs or burdens on, the transferability, convertibility, or availability of any currency or Composite Currency Unit in any country or on the transfer of any Securities, and in no event shall Custodian be obligated to substitute another currency for a currency (including a currency that is a component of a Composite Currency Unit) whose transferability, convertibility or availability has been affected, limited, or prevented by such law, regulation or event, and to the extent that any such law, regulation or event imposes a cost or charge upon

13

Custodian in relation to the transferability, convertibility, or availability of any cash currency or Composite Currency Unit, such cost or charge shall be for the account of the Fund, and Custodian may treat any account denominated in an affected currency as a group of separate accounts denominated in the relevant component currencies.

(b)Custodian may enter into subcontracts, agreements and understandings with any BNY Affiliate, whenever and on such terms and conditions as it deems necessary or appropriate to perform its services hereunder. No such subcontract, agreement or understanding shall in any way discharge Custodian from its obligations hereunder.

(c)The Fund agrees to indemnify Custodian and hold Custodian harmless from and against any and all Losses sustained or incurred by or asserted against Custodian by reason of or as a result of any action or inaction, or arising out of Custodian's performance hereunder, including reasonable fees and expenses of counsel, provided however, that the Fund shall not indemnify Custodian for those Losses arising out of Custodian's own negligence or willful misconduct or for any Losses which constitutes indirect, special, or consequential damages or lost profits or loss of business. Custodian agrees to indemnify the Fund and hold the Fund harmless from and against any and all Losses, including reasonable fees ad expenses of counsel, sustained or incurred by or asserted against the Fund arising out of the Custodian's negligence or willful misconduct, provided, however, that the Custodian shall not indemnify the Fund for nor be liable for any Losses which constitute indirect, special, or consequential damages or lost profits or loss of business. This indemnity shall be a continuing obligation of the Fund and the custodian, their successors and assigns, notwithstanding the termination of this Agreement.

2.Without limiting the generality of the foregoing, Custodian shall be under no obligation to inquire into, and shall not be liable for:

(a)Any Losses incurred by the Fund or any other person as a result of the receipt or acceptance of fraudulent, forged or invalid Securities, or Securities which are otherwise not freely transferable or deliverable without encumbrance in any relevant market;

(b)The validity of the issue of any Securities purchased, sold, or written by or for the Fund, the legality of the purchase, sale or writing thereof, or the propriety of the amount paid or received therefor;

(c)The legality of the sale or redemption of any Shares, or the propriety of the amount to be received or paid therefor;

(d)The legality of the declaration or payment of any dividend or distribution by the Fund;

14

(e)The legality of any borrowing by the Fund;

(f)The legality of any loan of portfolio Securities, nor shall Custodian be under any duty or obligation to see to it that any cash or collateral delivered to it by a broker, dealer or financial institution or held by it at any time as a result of such loan of portfolio Securities is adequate security for the Fund against any loss it might sustain as a result of such loan, which duty or obligation shall be the sole responsibility of the Fund. In addition, Custodian shall be under no duty or obligation to see that any broker, dealer or financial institution to which portfolio Securities of the Fund are lent makes payment to it of any dividends or interest which are payable to or for the account of the Fund during the period of such loan or at the termination of such loan, provided, however that Custodian shall promptly notify the Fund in the event that such dividends or interest are not paid and received when due;

(g)The sufficiency or value of any amounts of money and/or Securities held in any Special Account in connection with transactions by the Fund; whether any broker, dealer, futures commission merchant or clearing member makes payment to the Fund of any variation margin payment or similar payment which the Fund may be entitled to receive from such broker, dealer, futures commission merchant or clearing member, or whether any payment received by Custodian from any broker, dealer, futures commission merchant or clearing member is the amount the Fund is entitled to receive, or to notify the Fund of Custodian's receipt or non-receipt of any such payment; except that Custodian shall notify the Fund of any difference between any amount the Fund has specified in a Certificate or Oral Instructions as the amount to be received and the amount custodian actually receives; or

(h)Whether any Securities at any time delivered to, or held by it or by any Subcustodian, for the account of the Fund and specifically allocated to a Series are such as properly may be held by the Fund or such Series under the provisions of its then current prospectus and statement of additional information, or to ascertain whether any transactions by the Fund, whether or not involving Custodian, are such transactions as may properly be engaged in by the Fund.

3.Custodian may, with respect to questions of law specifically regarding an Account, obtain the advice of counsel and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice.

4.Custodian shall be under no obligation to take action to collect any amount payable on Securities in default, or if payment is refused after due demand and presentment.

5.Custodian shall have no duty or responsibility to inquire into, make recommendations, supervise, or determine the suitability of any transactions affecting any Account.

15

6.The Fund shall pay to Custodian the fees and charges as may be specifically agreed upon from time to time and such other fees and charges at Custodian's standard rates for such services as may be applicable. The Fund shall reimburse Custodian for all costs associated with the conversion of the Fund's Securities hereunder and the transfer of Securities and records kept in connection with this Agreement. The Fund shall also reimburse Custodian for out-of pocket expenses , subject to approval of the Fund, which are a normal incident of the services provided hereunder.

7.With Instructions from an Authorized Person or Oral Instructions, Custodian has the right to debit any cash account for any amount payable by the Fund in connection with any and all obligations of the Series to Custodian. In addition to the rights of Custodian under applicable law and other agreements, at any time when the Fund shall not have honored any of its obligations to Custodian, Custodian shall have the right without notice to the Fund to retain or set-off, against such obligations of the Series, any Securities or cash Custodian or a BNY Affiliate may directly or indirectly hold for the account of the Fund, and any obligations (whether matured or unmatured) that Custodian or a BNY Affiliate may have to the Fund in any currency or Composite Currency Unit and shall notify the Fund whenever it has exercised such right.

8.The Fund agrees to forward to Custodian a Certificate or Instructions confirming Oral Instructions by the close of business of the same day that such Oral Instructions are given to Custodian. The Fund agrees that the fact that such confirming Certificate or Instructions are not received by Custodian shall in no way affect the validity or enforceability of transactions authorized by such Oral Instructions and effected by Custodian. If the Fund elects to transmit Instructions through an on-line communications system offered by Custodian, the Fund's use thereof shall be subject to the Terms and Conditions attached as Appendix I hereto, and Custodian shall provide user and authorization codes, passwords and authentication keys only to an Authorized Person or a person reasonably believed by Custodian to be an Authorized Person.

9.The books and records pertaining to the Fund which are in possession of Custodian shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the '40 Act and the rules thereunder. The Fund, or its authorized representatives, all regulatory authorities whose statutes, laws, rules and regulations are applicable to the Fund shall have access to such books and records during Custodian's normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by Custodian to the Fund or its authorized representative. Upon the reasonable request of the Fund, Custodian shall provide in hard copy or on computer disc any records included in any such delivery which are maintained by Custodian on a computer disc, or are similarly maintained.

10.It is understood that Custodian is authorized to supply any information regarding the Accounts which is required by any law, regulation or rule now or hereafter in effect. The Custodian shall provide the Fund with any report obtained by Custodian on

16

the system of internal accounting control of a Depository, and with such reports on its own system of internal accounting control as the Fund may reasonably request from time to time.

11.Custodian hereby specifically agrees that it will provide any sub-certifications reasonably requested by the Fund in connection with any certification required by the Sarbanes-Oxley Act of 2002 or any rules or regulations promulgated by the Securities and Exchange Commission thereunder, provided the same do not change BNY's standard of care.

12.Custodian will also provide those custody related services not already described above that are included in the Service Guidelines established and agreed between the parties as the same may be revised from time to time by mutual agreement of the parties hereto. The Service Guidelines will also govern the timeliness and performance standards for custody related services where specified therein.

13.Custodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied against Custodian in connection with this Agreement.

ARTICLE IX

TERMINATION

1.Either of the parties hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be not less than ninety (90) days after the date of giving of such notice. In the event such notice is given by the Fund, shall designate a successor custodian or custodians, each of which shall meet the requirements of 1940 Act. In the event such notice is given by Custodian, the Fund shall, on or before the termination date, deliver to Custodian, written notice designating a successor custodian or custodians. In the absence of such designation by the Fund, Custodian may designate a successor custodian which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon the date set forth in such notice this Agreement shall terminate, and Custodian shall upon receipt of a notice of acceptance by the successor custodian on that date deliver directly to the successor custodian all Securities and money then owned by the Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled.

2.If a successor custodian is not designated by the Fund or Custodian in accordance with the preceding Section, the Fund shall upon the date specified in the notice of termination of this Agreement and upon the delivery by Custodian of all Securities (other than Securities which cannot be delivered to the Fund) and money then owned by the Fund be deemed to be its own custodian and Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement, other than the duty

17

with respect to Securities which cannot be delivered to the Fund to hold such Securities hereunder in accordance with this Agreement.

ARTICLE X

MISCELLANEOUS

1.The Fund agrees to furnish to Custodian a new Certificate of Authorized Persons in the event of any change in the then present Authorized Persons. Until such new Certificate is received, Custodian shall be fully protected in acting upon Certificates or Oral Instructions of such present Authorized Persons.

2.Any notice or other instrument in writing, authorized or required by this Agreement to be given to Custodian, shall be sufficiently given if addressed to Custodian and received by it at its offices at 100 Church Street, New York, New York 10286, or at such other place as Custodian may from time to time designate in writing.

3.Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Fund shall be sufficiently given if addressed to the Fund and received by it at its offices at 7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258, or at such other place as the Fund may from time to time designate in writing.

4.Each and every right granted to either party hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of either party to exercise, and no delay in exercising, any right will operate as a waiver thereof, nor will any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right.

5.In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any exclusive jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected thereby. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties, except that any amendment to the Schedule I hereto need be signed only by the Fund and any amendment to Appendix I hereto need be signed only by Custodian. This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by either party without the written consent of the other.

6.This Agreement shall be construed in accordance with the substantive laws of the State of New York, without regard to conflicts of laws principles thereof. The Fund and Custodian hereby consent to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder. The Fund hereby irrevocably waives, to the fullest extent permitted by applicable law, any

18

objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that such proceeding brought in such a court has been brought in an inconvenient forum. The Fund and Custodian each hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or relating to this Agreement.

7.This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.

8.A copy of the Declaration of trust of each Fund that is a Massachusetts Business Trust is on file with the Secretary of the Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund; provided, however, that the Declaration of trust of the Fund provides that the assets of a particular Series of the Fund shall under no circumstance be charged with liabilities attributable to any other Series of the fund and that all person extending credit to, or contracting with or having any claim against a particular Series of the Fund shall look only to the assets of that particular Series for payment of such credit, contract or claim.

19

IN WITNESS WHEREOF, the Fund and Custodian have caused this Agreement to be executed by their respective officers, thereunto duly authorized, as of the day and year first above written.

By: Illegible

On behalf of each Fund identified on Exhibit

A hereto:

THE BANK OF NEW YORK

By: /s/ Edward G. McGann

Title: Vice President

20

 

Schedule A

Name of Fund

Name of Series

ING Get Fund

GET V

21

APPENDIX I

THE BANK OF NEW YORK

ON-LINE COMMUNICATIONS SYSTEM (THE "SYSTEM")

TERMS AND CONDITIONS

1.License; Use. Upon delivery to an Authorized Person of the Fund of software enabling the Fund to obtain access to the System (the "Software"), Custodian grants to the Fund a personal, nontransferable and nonexclusive license to use the Software solely for the purpose of transmitting Written Instructions, receiving reports, making inquiries or otherwise communicating with Custodian in connection with the Account(s). The Fund shall use the Software solely for its own internal and proper business purposes and not in the operation of a service bureau. Except as set forth herein, no license or right of any kind is granted to the Fund with respect to the Software. The Fund acknowledges that Custodian and its suppliers retain and have title and exclusive proprietary rights to the Software, including any trade secrets or other ideas, concepts, know-how, methodologies, or information incorporated therein and the exclusive rights to any copyrights, trademarks and patents (including registrations and applications for registration of either), or other statutory or legal protections available in respect thereof. The Fund further acknowledges that all or a part of the Software may be copyrighted or trademarked (or a registration or claim made therefor) by Custodian or its suppliers. The Fund shall not take any action with respect to the Software inconsistent with the foregoing acknowledgments, nor shall you attempt to decompile, reverse engineer or modify the Software. The Fund may not copy, sell, lease or provide, directly or indirectly, any of the Software or any portion thereof to any other person or entity without Custodian's prior written consent. The Fund may not remove any statutory copyright notice or other notice included in the Software or on any media containing the Software. The Fund shall reproduce any such notice on any reproduction of the Software and shall add any statutory copyright notice or other notice to the Software or media upon Custodian's request. Custodian shall be responsible for all costs, if any, associated with such request in the preceding sentence.

2.Equipment. The Fund shall obtain and maintain at its own cost and expense all equipment and services, including but not limited to communications services, necessary for it to utilize the Software and obtain access to the System, and Custodian shall not be responsible for the reliability or availability of any such equipment or services.

3.Proprietary Information. The Software, any data base and any proprietary data, processes, information and documentation made available to the Fund (other than which are or become part of the public domain or are legally required to be made available to the public) (collectively, the "Information"), are the exclusive and confidential property of Custodian or its suppliers. The Fund shall keep the Information

confidential by using the same care and discretion that the Fund uses with respect to its own confidential property and trade secrets, but not less than reasonable care. Upon termination of the Agreement or the Software license granted herein for any reason, the Fund shall return to Custodian any and all copies of the Information which are in its possession or under its control.

4.Modifications. Custodian reserves the right to modify the Software from time to time and the Fund shall install new releases of the Software as Custodian may reasonably direct. Custodian shall be responsible for all costs, if any, associated with the installation of such new releases. The Fund agrees not to modify or attempt to modify the Software without Custodian's prior written consent. The Fund acknowledges that any modifications to the Software, whether by the Fund or Custodian and whether with or without Custodian's consent, shall become the property of Custodian.

5.NO REPRESENTATIONS OR WARRANTIES. CUSTODIAN AND ITS MANUFACTURERS AND SUPPLIERS MAKE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE SOFTWARE, SERVICES OR ANY DATABASE, EXPRESS OR IMPLIED, IN FACT OR IN LAW, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A

PARTICULAR PURPOSE. THE FUND ACKNOWLEDGES THAT THE SOFTWARE, SERVICES AND ANY DATABASE ARE PROVIDED "AS IS." IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ACTS OF GOD, MACHINE OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF COMMUNICATION FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR CAUSE BEYOND THEIR REASONABLE CONTROL, PROVIDED THAT REASONABLE BACK-UP AND DISASTER RECOVER SYSTEMS WERE IN PLACE.

6.Security; Reliance; Unauthorized Use. The Fund will cause all persons utilizing the Software and System to treat all applicable user and authorization codes, passwords and authentication keys with the same care that such persons would use with respect to the Fund's own computer Software and System, and it will establish internal control and safekeeping procedures to restrict the availability of the same to persons duly authorized to give Instructions. Custodian is hereby irrevocably authorized to act in accordance with and reasonably rely on Instructions received by it from an Authorized Person through the System. The Fund acknowledges that it is its sole responsibility to assure that only persons duly authorized use the System and that Custodian shall not be responsible nor liable for any unauthorized use thereof.

7.System Acknowledgments. Custodian shall acknowledge through the System its receipt of each transmission communicated through the System, and in the absence of such acknowledgment Custodian shall not be liable for any failure to act in accordance with such transmission, provided Custodian did not receive such acknowledgment.

8.EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY UNITED STATES LAW. THE FUND MAY NOT UNDER ANY CIRCUMSTANCES RESELL, DIVERT, TRANSFER, TRANSSHIP OR OTHERWISE DISPOSE OF THE SOFTWARE (IN ANY FORM) IN OR TO ANY OTHER COUNTRY. IF CUSTODIAN DELIVERED THE SOFTWARE TO THE FUND OUTSIDE OF THE UNITED STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES IN ACCORDANCE WITH THE EXPORTER ADMINISTRATION REGULATIONS. DIVERSION CONTRARY TO U.S. LAW IS PROHIBITED. The Fund hereby authorizes Custodian to report its name and address to government agencies to which Custodian is required to provide such information by law.

9.ENCRYPTION. The Fund acknowledges and agrees that encryption may not be available for every communication through the System, or for all data. The Fund agrees that Custodian may deactivate any encryption features at any time, upon one business day's notice to the Fund, without further notice or liability to the Fund, for the purpose of maintaining, repairing or troubleshooting the System or the Software.


 

(J)(2)(i)

May 1, 2024

Michael Rothemeyer

Vice President

The Bank of New York Mellon

135 Santilli Highway

Room 026-0026

Everett, MA 02149

Dear Mr. Rothemeyer:

Pursuant to the terms and conditions of the Custody Agreement, Foreign Custody Manager Agreement, and Fund Accounting Agreement, each dated January 6, 2003, the Fund Accounting, Custody &Transfer Agency for Voya Funds Fee Schedule, effective January 1, 2023, and the Letter of Instruction and Indemnification Agreement In Connection With Signature Guarantees and Signature Verifications, dated January 12, 2011 (collectively, the "Agreements"), we hereby notify you of the addition of Voya Credit Income Fund and Voya Floating Rate Fund (together, the "Funds"), effective on May 1, 2024, to be included on the Amended Exhibit A to the Agreements. Also effective on May 1, 2024, the name of Voya Global Multi-Asset Fund will change to Voya Global Income & Growth Fund. This Amended Exhibit A supersedes the previous Amended Exhibit A dated March 31, 2024.

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

 

Page 2

Please signify your acceptance to provide services under the Agreements with respect to the aforementioned Fund by signing below where indicated. If you have any questions, please contact me at (480) 477-2190.

Very sincerely,

By:

/s/ Todd Modic

Name:

Todd Modic

Title:

Senior Vice President

 

Voya Credit Income Fund

 

Voya Funds Trust

ACCEPTED AND AGREED TO:

The Bank of New York Mellon

By:

/s/ Michael Green

 

Name:

Michael Green

 

Title:

Managing Director

, Duly Authorized

BNY Mellon Investment Servicing (US) Inc.

(solely with respect to the Transfer Agency Fee Schedule)

By:

/s/ Michael Green

 

Name:

Michael Green

 

Title:

Managing Director

, Duly Authorized

 

AMENDED EXHIBIT A

 

Fund

Effective Date

Voya Asia Pacific High Dividend Equity Income Fund

March 27, 2007

Voya Balanced Portfolio, Inc.

 

Voya Balanced Portfolio

July 7, 2003

Voya Corporate Leaders Trust Fund

 

Voya Corporate Leaders® Trust Fund – Series B

May 17, 2004

Voya Credit Income Fund

May 1, 2024

Voya Emerging Markets High Dividend Equity Fund

April 26, 2011

Voya Equity Trust

 

Voya Corporate Leaders® 100 Fund

November 5, 2019

Voya Global Income & Growth Fund

November 5, 2019

Voya Large-Cap Growth Fund

June 9, 2003

Voya Large Cap Value Fund

December 4, 2007

Voya Mid Cap Research Enhanced Index Fund

November 5, 2019

Voya MidCap Opportunities Fund

June 9, 2003

Voya Multi-Manager Mid Cap Value Fund

September 30, 2011

Voya Small Cap Growth Fund

April 4, 2022

Voya Small Company Fund

November 5, 2019

Voya U.S. High Dividend Low Volatility Fund

December 5, 2016

Voya VACS Series MCV Fund

November 18, 2022

Voya Funds Trust

 

Voya Floating Rate Fund

May 1, 2024

Voya GNMA Income Fund

April 7, 2003

Voya Government Money Market Fund

November 5, 2019

Voya High Yield Bond Fund

April 7, 2003

Voya Intermediate Bond Fund

April 7, 2003

Voya Short Duration High Income Fund

February 9, 2023

Voya Short Term Bond Fund

December 17, 2012

Voya Strategic Income Opportunities Fund

October 15, 2012

Voya VACS Series HYB Fund

November 18, 2022

Voya Global Advantage and Premium Opportunity Fund

October 27, 2005

Voya Global Equity Dividend and Premium Opportunity Fund

March 28, 2005

Voya Government Money Market Portfolio

July 7, 2003

Voya Infrastructure, Industrials and Materials Fund

January 26, 2010

Voya Intermediate Bond Portfolio

July 7, 2003

 

Voya Investors Trust

 

Voya Balanced Income Portfolio

April 28, 2006

Voya Global Perspectives® Portfolio

May 1, 2013

Voya Government Liquid Assets Portfolio

January 6, 2003

Voya High Yield Portfolio

November 5, 2003

Voya Large Cap Growth Portfolio

May 3, 2004

Voya Large Cap Value Portfolio

May 11, 2007

Voya Limited Maturity Bond Portfolio

January 6, 2003

Voya Retirement Conservative Portfolio

August 12, 2009

Voya Retirement Growth Portfolio

August 12, 2009

Voya Retirement Moderate Growth Portfolio

August 12, 2009

Voya Retirement Moderate Portfolio

August 12, 2009

Voya U.S. Stock Index Portfolio

November 5, 2003

Voya VACS Index Series S Portfolio

October 21, 2022

VY® BlackRock Inflation Protected Bond Portfolio

April 30, 2007

VY® CBRE Global Real Estate Portfolio

January 3, 2006

VY® CBRE Real Estate Portfolio

January 3, 2006

VY® Invesco Growth and Income Portfolio

January 13, 2003

VY® JPMorgan Emerging Markets Equity Portfolio

January 13, 2003

VY® JPMorgan Small Cap Core Equity Portfolio

January 13, 2003

VY® Morgan Stanley Global Franchise Portfolio

January 13, 2003

VY® T. Rowe Price Capital Appreciation Portfolio

January 13, 2003

VY® T. Rowe Price Equity Income Portfolio

January 13, 2003

Voya Mutual Funds

 

Voya Global Bond Fund

June 19, 2006

Voya Global Diversified Payment Fund

November 5, 2019

Voya Global High Dividend Low Volatility Fund

November 3, 2003

Voya Global Perspectives® Fund

March 28, 2013

Voya International High Dividend Low Volatility Fund

December 5, 2016

Voya Multi-Manager Emerging Markets Equity Fund

September 30, 2011

Voya Multi-Manager International Equity Fund

December 15, 2010

Voya Multi-Manager International Factors Fund

February 1, 2011

Voya Multi-Manager International Small Cap Fund

November 3, 2003

Voya Russia Fund

November 3, 2003

Voya VACS Series EME Fund

November 18, 2022

Voya Partners, Inc.

 

Voya Global Bond Portfolio

January 10, 2005

Voya Index Solution 2025 Portfolio

March 7, 2008

Voya Index Solution 2030 Portfolio

September 28, 2011

Voya Index Solution 2035 Portfolio

March 7, 2008

Voya Index Solution 2040 Portfolio

September 28, 2011

Voya Index Solution 2045 Portfolio

March 7, 2008

Voya Index Solution 2050 Portfolio

September 28, 2011

Voya Index Solution 2055 Portfolio

December 4, 2009

Voya Index Solution 2060 Portfolio

February 9, 2015

Voya Index Solution 2065 Portfolio

May 1, 2020

Voya Index Solution Income Portfolio

March 7, 2008

 

Voya International High Dividend Low Volatility Portfolio

November 30, 2005

Voya Solution 2025 Portfolio

April 29, 2005

Voya Solution 2030 Portfolio

September 28, 2011

Voya Solution 2035 Portfolio

April 29, 2005

Voya Solution 2040 Portfolio

September 28, 2011

Voya Solution 2045 Portfolio

April 29, 2005

Voya Solution 2050 Portfolio

September 28, 2011

Voya Solution 2055 Portfolio

December 4, 2009

Voya Solution 2060 Portfolio

February 9, 2015

Voya Solution 2065 Portfolio

May 1, 2020

Voya Solution Aggressive Portfolio

May 1, 2013

Voya Solution Balanced Portfolio

June 29, 2007

Voya Solution Conservative Portfolio

April 30, 2010

Voya Solution Income Portfolio

April 29, 2005

Voya Solution Moderately Aggressive Portfolio

April 30, 2010

Voya Solution Moderately Conservative Portfolio

June 29, 2007

VY® American Century Small-Mid Cap Value Portfolio

January 10, 2005

VY® Baron Growth Portfolio

January 10, 2005

VY® Columbia Contrarian Core Portfolio

January 10, 2005

VY® Columbia Small Cap Value II Portfolio

April 28, 2006

VY® Invesco Comstock Portfolio

January 10, 2005

VY® Invesco Equity and Income Portfolio

January 10, 2005

VY® Invesco Global Portfolio

January 10, 2005

VY® JPMorgan Mid Cap Value Portfolio

January 10, 2005

VY® T. Rowe Price Diversified Mid Cap Growth Portfolio

January 10, 2005

VY® T. Rowe Price Growth Equity Portfolio

January 10, 2005

Voya Separate Portfolios Trust

 

Voya Investment Grade Credit Fund

May 16, 2007

Voya Securitized Credit Fund

August 6, 2014

Voya Target In-Retirement Fund

December 19, 2012

Voya Target Retirement 2025 Fund

December 19, 2012

Voya Target Retirement 2030 Fund

December 19, 2012

Voya Target Retirement 2035 Fund

December 19, 2012

Voya Target Retirement 2040 Fund

December 19, 2012

Voya Target Retirement 2045 Fund

December 19, 2012

Voya Target Retirement 2050 Fund

December 19, 2012

Voya Target Retirement 2055 Fund

December 19, 2012

Voya Target Retirement 2060 Fund

October 15, 2015

Voya Target Retirement 2065 Fund

May 1, 2020

Voya VACS Series EMCD Fund

November 18, 2022

Voya VACS Series EMHCD Fund

November 18, 2022

Voya VACS Series SC Fund

November 18, 2022

Voya Strategic Allocation Portfolios, Inc.

 

Voya Strategic Allocation Conservative Portfolio

July 7, 2003

Voya Strategic Allocation Growth Portfolio

July 7, 2003

Voya Strategic Allocation Moderate Portfolio

July 7, 2003

Voya Variable Funds

 

 

Voya Growth and Income Portfolio

July 7, 2003

Voya Variable Insurance Trust

 

VY® BrandywineGLOBAL – Bond Portfolio

February 9, 2015

Voya Variable Portfolios, Inc.

 

Voya Emerging Markets Index Portfolio

November 30, 2011

Voya Global High Dividend Low Volatility Portfolio

January 16, 2008

Voya Index Plus LargeCap Portfolio

July 7, 2003

Voya Index Plus MidCap Portfolio

July 7, 2003

Voya Index Plus SmallCap Portfolio

July 7, 2003

Voya International Index Portfolio

March 4, 2008

Voya Russell™ Large Cap Growth Index Portfolio

May 1, 2009

Voya Russell™ Large Cap Index Portfolio

March 4, 2008

Voya Russell™ Large Cap Value Index Portfolio

May 1, 2009

Voya Russell™ Mid Cap Growth Index Portfolio

May 1, 2009

Voya Russell™ Mid Cap Index Portfolio

March 4, 2008

Voya Russell™ Small Cap Index Portfolio

March 4, 2008

Voya Small Company Portfolio

July 7, 2003

Voya U.S. Bond Index Portfolio

March 4, 2008

Voya VACS Index Series EM Portfolio

October 21, 2022

Voya VACS Index Series I Portfolio

October 21, 2022

Voya VACS Index Series MC Portfolio

October 21, 2022

Voya VACS Index Series SC Portfolio

October 21, 2022

Voya Variable Products Trust

 

Voya MidCap Opportunities Portfolio

October 6, 2003

Voya SmallCap Opportunities Portfolio

October 6, 2003

(J)(2)(ii)

AMENDMENT

This Amendment is an amendment to the Custody Agreement dated as of January 6, 2003 between each entity listed on Exhibit A hereto (each a "Fund" and collectively the "Funds") and The Bank of New York Mellon ("Custodian") (the "Agreement").

The date of this Amendment is as of January 1, 2019.

Each intending to be legally bound, and each acknowledging receipt of sufficient consideration with respect to the provisions set forth in this Amendment, each Fund and Custodian hereby agrees as follows:

1.In Article II, Section 3(b) of the Agreement, the reference to "Fund" is replaced with "Custodian".

2.In Article III, Section 3(c) of the Agreement, the following is added at the end of that provision: "; with respect to bankruptcy matters, following the forwarding of the initial notice of bankruptcy and notice of any required action related thereto, Custodian shall have no further responsibility with respect to such matter".

3.In Article III, Section 9(b) of the Agreement, the following is added at the end of that provision: "With respect to foreign exchange transactions, Custodian or any BNY Affiliate is acting as a principal counterparty on its own behalf and is not acting as a fiduciary or agent for, or on behalf of, any Fund or Series or its investment manager or any Account."

4.In Article VIII, Section 1(a) of the Agreement, the reference to "part 1 of Schedule 1" in the fourth sentence of that provision is replaced with "part A of Schedule I".

5.In Article VIII, Section 1(a) of the Agreement, the reference to "on part 1 of Schedule 1 or listed on part 2 of Schedule 1" in the fifth sentence of that provision is replaced with "on part A of Schedule I or listed on part B of Schedule I".

6.In Article VIII, Section 6 of the Agreement, the following is added at the end of that provision: "For clarity, as part of Custodian's compensation, Custodian will earn interest on cash balances held by Custodian (including disbursement balances, balances arising from purchase and sale transactions and when cash otherwise remains uninvested) as provided in Custodian's compensation disclosures."

7.In Article VIII, Section 7 of Agreement, the first sentence of that provision is deleted.

8.Article IX of the Agreement is amended and restated as follows:

"ARTICLE IX

TERMINATION

1.As between Custodian and a particular Fund, this Agreement shall continue until December 31, 2022 and thereafter shall automatically renew for additional successive one (1) year extension periods, unless and until either Custodian or such Fund provides in advance of December 31, 2022 or in advance of the end of the applicable one year extension period at least three (3)

months prior written notice to the other party of its intention not to further renew this Agreement.

2.A Fund shall have the right to terminate all, but not part, of the services provided to it under this Agreement, as of a date specified in a written notice of termination, in the event that Custodian commits a material breach of this Agreement (or repeatedly breaches this Agreement where such repeated breaches constitute a material breach of this Agreement) and Custodian has not reasonably cured or remedied the material breach within sixty (60) days of receipt of a written notice from the Fund specifying in reasonable detail the basis for the claim of material breach; provided that the Fund may terminate immediately upon notice to Custodian (or on a date specified in such notice) if the Fund reasonably determines that any such cure is impracticable or would not restore the Fund to the position it would have been in had the breach not occurred.

3.In the event of termination of this Agreement by a Fund the Fund shall designate a successor custodian or custodians each of which shall meet the requirements of the 1940 Act, and in the event of termination of this Agreement by Custodian the applicable Fund shall on or before the termination date deliver to Custodian written notice designating a successor custodian or custodians; in the absence of such designation by the applicable Fund, Custodian may designate a successor custodian which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon receipt of a notice of acceptance by the successor custodian Custodian shall upon termination of the Agreement deliver directly to the successor custodian all Securities and money then owned by the applicable Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled.

4.If a successor custodian is not designated by a Fund or Custodian in accordance with Section 5 of this Article IX, the Fund shall upon termination of this Agreement and upon the delivery by Custodian of all Securities (other than Securities which cannot be delivered to the Fund) and money then owned by the Fund be deemed to be its own custodian and Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement, other than the duty with respect to Securities which cannot be delivered to the Fund to hold such Securities hereunder in accordance with this Agreement."

9.In Article X, Section 5 of the Agreement, the exceptions set forth at the end of the second sentence of that provision are deleted, such that such second sentence terminates with the words "except by a written agreement executed by both parties."

10.The following is added as a new Section 9 of Article X of the Agreement:

"9. Custodian agrees to use the Confidential Information of a Fund, and a Fund agrees to use the Confidential Information of Custodian, solely to accomplish the purposes of this Agreement and, except in connection with such purposes or as otherwise permitted herein, not to disclose such information to any other entity without the prior written consent of the disclosing party.

-2-

Notwithstanding the foregoing, Custodian may (a) use a Fund's Confidential Information in connection with certain functions performed on a centralized basis by Custodian, its affiliates and joint ventures and their service providers (including audit, accounting, risk, legal, compliance, administration, product communication, relationship management, compilation and analysis of customer-related data and storage) and (b) disclose such information to its affiliates and joint ventures and to its and their service providers who are subject to confidentiality obligations with respect to the Fund's Confidential Information at least as comprehensive as those required of Custodian hereunder. In addition, Custodian may aggregate information regarding one or more Funds on an anonymized basis with other similar client data for Custodian's and its affiliates' reporting, research, product development and marketing purposes. A party's confidentiality obligations under this Section 9 will not apply to information (1) that is, as of the time of its disclosure or thereafter becomes, part of the public domain through a source other than the receiving party; (2) that was known to the receiving party as of the time of its disclosure and was not otherwise subject to confidentiality obligations; (3) that is independently developed by the receiving party without reference to such information; (4) that is subsequently learned from a third party not known to be under a confidentiality obligation to the disclosing party or (5) that is required to be disclosed pursuant to applicable law, rule, regulation, requirement of any law enforcement agency, court order or other legal process or at the request of a regulatory authority. For purposes of this Section 9, "Confidential Information" shall mean, with respect to a party, the terms of this Agreement and all non- public business and financial information of such party (including, with respect to a Fund, information regarding the Accounts and including, with respect to the Custodian, information regarding its practices and procedures related to the services provided under this Agreement) disclosed in connection with this Agreement."

11.The following is added as a new Section 10 of Article X of the Agreement:

"10. Throughout the term of this Agreement, each Fund (a) will have in place and will implement policies and procedures designed to prevent violations of Sanctions, including measures to accomplish effective and timely scanning of all relevant data with respect to incoming or outgoing assets or transactions relating to this Agreement; (b) will ensure that neither the Fund nor any of its affiliates, directors, officers or employees is an individual or entity that is, or is owned or controlled by an individual or entity that is: (1) the target of Sanctions or (2) located, organized or resident in a country or territory that is, or whose government is, the target of Sanctions and (c) will not, directly or indirectly, use its Accounts in any manner that would result in a violation by the Fund or Custodian of Sanctions. Each Fund will promptly provide to Custodian such information as Custodian reasonably requests in connection with the matters referenced in this Section 10, including information regarding its Accounts, the assets maintained under this Agreement and the source thereof, and the identity of any individual or entity having or claiming an interest therein. Custodian may decline to act or provide services in respect of any Account, and take such other actions as it, in its reasonable discretion, deems necessary of advisable, in

-3-

connection with the matters referenced in this Section 10. If Custodian declines to act or provide services as provided in the preceding sentence, except as otherwise prohibited by applicable law or official request, Custodian will inform the applicable Fund as soon as reasonably practicable. For purposes of this Section 10, "Sanctions" shall mean all economic sanctions laws, rules, executive orders and requirements administered by any governmental authority of the U.S. (including the U.S. Office of Foreign Assets Control) or any other applicable U.S. or non-U.S. authority with jurisdiction over the applicable Fund."

12.The entirety of Appendix I of the Agreement is amended and restated as follows: "Electronic Access Terms and Conditions to which the Funds are a party is incorporated herein by reference."

13.Capitalized terms not defined in this Amendment have their respective meanings as defined in the Agreement.

14.As hereby amended and supplemented, the Agreement shall remain in full force and effect. In the event of a conflict between the terms hereof and the Agreement, this Amendment shall control.

15.The Agreement, as amended hereby, together with its Exhibits and Schedules, constitutes the complete understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior communications with respect thereto.

16.This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The facsimile signature of any party to this Amendment shall constitute the valid and binding execution hereof by such party.

17.If any provision of the Agreement including this Amendment is found to be invalid, illegal or unenforceable, no other provision of this contract shall be affected and all other provisions shall be enforced to the full extent of the law.

18.This Amendment shall be governed by the laws of the State of New York, without regard to its principles of conflicts of laws.

[Remainder of this page intentionally left blank]

[Signature page follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective authorized officers or representatives as of the date first above written.

Agreed:

 

 

Each Entity Listed on Exhibit A hereto

The Bank of New York Mellon

By:

/s/ Todd Modic

By:

/s/ Peter G. Rigopoulos

 

Todd Modic

 

 

Peter G. Rigopoulos

 

Senior Vice President

 

Director, Business Executive

-5-

EXHIBIT A

Fund

Voya Asia Pacific High Dividend Equity Income Fund

Voya Balanced Portfolio, Inc.

Voya Corporate Leaders Trust Fund

Voya Emerging Markets High Dividend Equity Fund

Voya Equity Trust

Voya Funds Trust

Voya Global Advantage and Premium Opportunity Fund

Voya Global Equity Dividend and Premium Opportunity Fund

Voya Government Money Market Portfolio

Voya Infrastructure, Industrials and Materials Fund

Voya Intermediate Bond Portfolio

Voya International High Dividend Equity Income Fund

Voya Investors Trust

Voya Mutual Funds

Voya Natural Resources Equity Income Fund

Voya Partners, Inc.

Voya Separate Portfolios Trust

Voya Series Fund, Inc.

Voya Strategic Allocation Portfolios, Inc.

Voya Variable Funds

Voya Variable Insurance Trust

Voya Variable Portfolios, Inc.

Voya Variable Products Trust

-6-


AMENDMENT(J)(2)(iii)

This Amendment is an amendment to the Custody Agreement dated as of January 6, 2003 (as amended) between each entity listed on Exhibit A thereto (each a "Fund" and collectively the "Funds") and The Bank of New York Mellon ("Custodian") (the "Agreement").

The date of this Amendment is as of __November 21__, 2022 (the "Effective Date").

Each intending to be legally bound, and each acknowledging receipt of sufficient consideration with respect to the provisions set forth in this Amendment, each Fund and Custodian hereby agrees as follows:

1.Section 8 of Article III of the Agreement is amended and restated as follows:

"8. (a) To the extent that Custodian has received all accurate, relevant and necessary information with respect to the Fund's Accounts and with respect to the Fund's identification or classification for purposes of taxes, withholding, tax certification and reporting requirements, claims for tax exemptions or tax refunds and interest, penalties, additions to tax and other related expenses, in each case as may be required by applicable tax laws or by a tax authority inquiry, or as may be requested by Custodian in connection with the matters set forth in this Section 8 (such information, "Tax Information") within the time stipulated, Custodian will perform the following services with respect to taxes, withholding, tax certification and reporting requirements and claims for tax exemptions or tax refunds:

(i)Unless prohibited by law or regulation, upon reasonable request of the Fund, Custodian will provide to the Fund such information received by Custodian in its capacity as custodian that could assist the Fund or its designee in the submission of any reports or returns with respect to taxes, withholding, tax certification and reporting requirements, claims for tax exemptions or tax refunds and interest, penalties, additions to tax and other related expenses. An Authorized Person will inform Custodian in writing as to which party or parties will receive information from Custodian;

(ii)Custodian will, upon receipt of sufficient Tax Information from the Fund (as reasonably determined by Custodian), file claims for exemptions or refunds with respect to withheld taxes in those markets where it provides such services and subject to Custodian's service level description (in each case as made available to the Fund from time to time). Where the Fund (for whatever reason) fails or neglects to provide Custodian with or to review and confirm the Tax Information within a reasonable time as stipulated by Custodian, then such failure or neglect may result in the disapplication of withholding tax relief or the obligation on the Fund to immediately return amounts already refunded by a tax authority. The Fund may, however, elect to appoint its own tax agent to file claims for exemptions or refunds in any or all markets, with advance notice to Custodian of such appointment and completion of standard documentation agreed between Custodian and the Fund; and

(iii)Custodian or the applicable Subcustodian will withhold appropriate amounts, as required by applicable tax laws, with respect to amounts received and Custodian is authorized to debit the relevant Account in the amount of a tax-related obligation and to pay such amount to the appropriate taxing authority.

The Fund's receipt of the foregoing services is dependent upon its subscription to Custodian's information reporting system, and the Fund will be responsible for enrolling its designated Authorized Persons in such system. The Fund acknowledges that Custodian may, at any time, amend the scope of its tax service offering and prior notice of such changes will be made available to Custodian's customers through its information reporting system. Such changes may require additional documentation, attestations or declarations to be entered into by the Fund in order to continue receiving the relevant tax service in a particular market. Subject to the Fund's full compliance with the requirements referenced in the preceding sentence, and not including any change related to a matter outside the reasonable control of Custodian, no change in the scope of the tax service offering will result in a material diminution of such service.

(b)The Fund acknowledges that Custodian is a service provider and not an economic beneficiary of any transaction.

(c)Without limiting any obligations of Custodian set forth in Section 8(a) of this Agreement, the Fund is responsible for understanding its obligations relating to taxes, withholding, tax certification and reporting requirements, claims for tax exemptions or tax refunds and interest, penalties, additions to tax and other related expenses, and the Fund is liable for the same with respect to any assets held on behalf of the Fund and any transaction related thereto.

(d)The Fund will provide Custodian with Tax Information to enable Custodian to comply with Custodian's obligations under any applicable tax laws or with any tax authority enquiry.

(e)In no event will Custodian be liable to the Fund or any third party for any inability of Custodian, a Subcustodian or any of their respective agents to file claims for exemptions or refunds or otherwise obtain relief from any tax-related obligations due to (i) the Fund's failure to provide, or delay in providing, Tax Information to Custodian, (ii) any failure of the Fund to comply with applicable tax laws or (iii) any failure or refusal of any taxing authority to provide such relief.

(f)The Fund acknowledges and agrees that none of Custodian nor any BNY Affiliate is a tax adviser and none of Custodian nor any BNY Affiliate will, under any circumstances, provide tax advice to the Fund. The Fund will obtain its own independent tax advice for any tax-related matters."

2.Article IX of the Agreement is amended and restated as follows:

"ARTICLE IX

TERMINATION

-2-

1.As between Custodian and a particular Fund, this Agreement shall continue until December 31, 2027 (the "Initial Term") and thereafter shall automatically renew for additional successive one (1) year extension periods (each a "Renewal Term"), unless and until either Custodian or such Fund provides prior written notice to the other party of its intention not to renew this Agreement at least one hundred eighty (180) days in advance of the end of the Initial Term or the then-current Renewal Term.

2.If a Fund or Custodian with respect to a particular Fund materially breaches this Agreement (or repeatedly breaches this Agreement where such repeated breaches constitute a material breach of this Agreement) (a "Defaulting Party") the other party (the "Non-Defaulting Party") may give written notice thereof to the Defaulting Party ("Breach Notice"), and if such material breach shall not have been remedied within thirty (30) days after the Breach Notice is given, then the Non-Defaulting Party may terminate this Agreement by giving written notice of termination to the Defaulting Party ("Breach Termination Notice"), in which case this Agreement shall terminate on the 30th day following the date the Breach Termination Notice is given, or such later date as may be specified in the Breach Termination Notice (but not later than the last day of the Initial Term or then-current Renewal Term, as appropriate). In all cases, termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party of any other rights it might have under this Agreement or otherwise against the Defaulting Party.

3.Notwithstanding any other provision of this Agreement, Custodian may terminate this Agreement by written notice to a Fund if such Fund shall terminate its fund accounting agreement with The Bank of New York Mellon, effective on the date of termination of such fund accounting agreement.

4.In the event of termination of this Agreement by a Fund the Fund shall designate a successor custodian or custodians each of which shall meet the requirements of the 1940 Act, and in the event of termination of this Agreement by Custodian the applicable Fund shall on or before the termination date deliver to Custodian written notice designating a successor custodian or custodians; in the absence of such designation by the applicable Fund, Custodian may designate a successor custodian which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon receipt of a notice of acceptance by the successor custodian Custodian shall upon termination of the Agreement deliver directly to the successor custodian all Securities and money then owned by the applicable Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled.

5.In addition to the termination provisions set forth in Section 1 and Section 2 of this Article IX, and for clarity subject to the terms of Section 4 and Section 6 of this Article IX, a Fund shall have the right to terminate all, but not part, of the services provided to it under this Agreement for any reason at any time after January 1, 2023 and before January 1, 2027 by giving Custodian written notice of such termination at least three hundred sixty-five (365) days prior to the termination date specified in the notice.

-3-

6.If a successor custodian is not designated by a Fund or Custodian in accordance with Section 4 of this Article IX, the Fund shall upon termination of this Agreement and upon the delivery by Custodian of all Securities (other than Securities which cannot be delivered to the Fund) and money then owned by the Fund be deemed to be its own custodian and Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement, other than the duty with respect to Securities which cannot be delivered to the Fund to hold such Securities hereunder in accordance with this Agreement.

7.For clarity, a Fund will be deemed to have terminated this Agreement if any of such Fund's assets are moved to a service provider other than Custodian without the prior written consent of Custodian."

3.A new Section 11 of Article X of the Agreement is added as follows:

"11. Upon agreement of the Fund and Custodian, Custodian will provide consolidated recordkeeping services reflecting on statements provided to the Fund securities and other assets not held by Custodian (for purposes of this Section 11, "Non-Custody Assets"). Non-Custody Assets are designated on Custodian's books as "assets not held in custody" or by other similar designation. The Fund acknowledges and agrees that (a) the Fund will have no security entitlement against Custodian with respect to Non-Custody Assets; and (b) Custodian will rely, without independent verification, on information provided by the Fund or its designee regarding Non-Custody Assets."

4.Capitalized terms not defined in this Amendment have their respective meanings as defined in the Agreement.

5.As hereby amended and supplemented, the Agreement shall remain in full force and effect. In the event of a conflict between the terms hereof and the Agreement, this Amendment shall control.

6.The Agreement, as amended hereby, together with its Exhibits and Schedules, constitutes the complete understanding and agreement of the parties with respect to the subject matter thereof and supersedes all prior communications with respect thereto.

7.This Amendment may be executed in one or more counterparts and such execution may occur by manual signature on a copy of this Amendment physically delivered, on a copy of this Amendment transmitted by facsimile transmission or on a copy of this Amendment transmitted as an imaged document attached to an email, or by "Electronic Signature", which is hereby defined to mean inserting an image, representation or symbol of a signature into an electronic copy of this Amendment by electronic, digital or other technological methods. Each counterpart executed in accordance with the foregoing shall be deemed an original, with all such counterparts together constituting one and the same instrument. The exchange of executed counterparts of this Amendment or of executed signature pages to counterparts of this Amendment, in either case by facsimile transmission or as an imaged document attached to an email transmission, shall constitute effective execution and delivery

-4-

of this Amendment and may be used for all purposes in lieu of a manually executed and physically delivered copy of this Amendment.

8.If any provision of the Agreement including this Amendment is found to be invalid, illegal or unenforceable, no other provision of this contract shall be affected and all other provisions shall be enforced to the full extent of the law.

9.This Amendment shall be governed by the laws of the State of New York, without regard to its principles of conflicts of laws.

[Remainder of this page intentionally left blank]

[Signature page follows]

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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed as of the Effective Date by its duly authorized representative designated below. An authorized representative, if executing this Amendment by Electronic Signature, affirms authorization to execute this Amendment by Electronic Signature and that the Electronic Signature represents an intent to enter into this Amendment and an agreement with its terms.

Agreed:

Each Entity Listed on Exhibit A to the Agreement

The Bank of New York Mellon

By:

/s/ Todd Modic___________

By:

/s/ Sean Brumble__________

Name: Todd Modic

Name: Sean Brumble

Title:

Senior Vice President

Title:

Managing Director

-6-


(J)(3)

FOREIGN CUSTODY MANAGER AGREEMENT

AGREEMENT made as of January 6, 2003 between each entity listed on Schedule 1 attached hereto (each a "Fund" and collectively, "Funds") and The Bank of New York ("BNY").

W I T N E S S E T H:

WHEREAS, the Fund and BNY have entered into a Custody Agreement (the "Custody Agreement");

WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets, and the Fund has made each of its current series listed on Schedule 1 hereto (the "Series"), as may be amended from time to time, subject to this Agreement;

WHEREAS, the Fund desires to appoint BNY as a Foreign Custody Manager on the terms and conditions contained herein;

WHEREAS, BNY desires to serve as a Foreign Custody Manager and perform the duties set forth herein on the terms and conditions contained herein; and

NOW THEREFORE, in consideration of the mutual promises hereinafter contained in this Agreement, the Fund and BNY hereby agree as follows:

ARTICLE I.

DEFINITIONS

Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

1."Board" shall mean the board of directors or board of trustees, as the case may be, of

the Fund.

2."Eligible Foreign Custodian" shall have the meaning provided in the Rule.

3."Monitoring System" shall mean a system established by BNY to fulfill the Responsibilities specified in clauses (d) and (e) of Section 1 of Article III of this Agreement.

4."Responsibilities" shall mean the responsibilities delegated to BNY under the Rule as a Foreign Custody Manager with respect to each Specified Country and each Eligible Foreign Custodian selected by BNY, as such responsibilities are more fully described in Article III of this Agreement.

5."Rule" shall mean Rule 17f-5 under the Investment Company Act of 1940, as amended on June 12, 2000.

6."Specified Country" shall mean each country listed on Schedule 2 attached hereto (as amended from time to time) and each country, other than the United States, constituting the

 

primary market for a security with respect to which the Fund has given, or may give, settlement instructions to The Bank of New York as custodian (the "Custodian") under its Custody Agreement with the Fund.

ARTICLE II.

BNY AS A FOREIGN CUSTODY MANAGER

1.The Fund on behalf of its Board hereby delegates to BNY with respect to each Specified Country the Responsibilities.

2.BNY accepts the Board's delegation of Responsibilities with respect to each Specified Country and agrees in performing the Responsibilities as a Foreign Custody Manager to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of the Fund's assets would exercise.

3.BNY shall provide to the Board and the Fund's investment adviser at such times as the Board deems reasonable and appropriate based on the circumstances of the Fund's foreign custody arrangements (but in no event less frequently than quarterly) written reports notifying the Board and the Fund's investment adviser of the placement of assets of the Fund with a particular Eligible Foreign Custodian within a Specified Country and shall promptly notify the Board and the Fund's investment adviser of any material change in the arrangements (including the contract governing such arrangements) with respect to assets of the Fund with any such Eligible Foreign Custodian.

ARTICLE III.

RESPONSIBILITIES

1.Subject to the provisions of this Agreement, BNY shall with respect to each Specified Country select an Eligible Foreign Custodian. In connection therewith, BNY shall: (a) determine that assets of the Fund held by such Eligible Foreign Custodian will be subject to reasonable care, based on the standards applicable to custodians in the relevant market in which such Eligible Foreign Custodian operates, after considering all factors relevant to the safekeeping of such assets, including, without limitation, those contained in paragraph (c)(1) of the Rule; (b) determine that the Fund's foreign custody arrangements with each Eligible Foreign Custodian are governed by a written contract with the Custodian which will provide reasonable care for the Fund's assets based on the standards specified in paragraph (c)(1) of the Rule; (c) determine that each contract with an Eligible Foreign Custodian shall include the provisions specified in paragraph (c)(2)(i)(A) through (F) of the Rule or, alternatively, in lieu of any or all of such (c)(2)(i)(A) through (F) provisions, such other provisions as BNY determines will provide, in their entirety, the same or a greater level of care and protection for the assets of the Fund as such specified provisions; (d) monitor pursuant to the Monitoring System the appropriateness of maintaining the assets of the Fund with a particular Eligible Foreign Custodian pursuant to paragraph (c)(1) of the Rule and the performance of the contract governing such arrangement; and (e) advise the Fund and the Fund's investment adviser, as soon as reasonably possible, whenever BNY determines under the Monitoring System that an arrangement (including, any

- 2 –

 

material change in the contract governing such arrangement) described in preceding clause (d) no longer meets the requirements of the Rule.

2.For purposes of clause (d) of the preceding Section 1 of this Article, BNY's determination of appropriateness shall not include, nor be deemed to include, any evaluation of Country Risks associated with investment in a particular country. For purposes hereof, "Country Risks" shall mean systemic risks of holding assets in a particular country including but not limited to (a) an Eligible Foreign Custodian's use of any depositories that act as or operate a system or a transnational system for the central handling of securities or any equivalent book- entries; (b) such country's financial infrastructure; (c) such country's prevailing custody and settlement practices (but not the custody and settlement practices of any Eligible Foreign Custodian whose custody and settlement practices are not such prevailing practices); (d) nationalization, expropriation or other governmental actions; (e) regulation of the banking or securities industry; (f) currency controls, restrictions, devaluations or fluctuations; and (g) market conditions which affect the orderly execution of securities transactions or affect the value of securities.

ARTICLE IV.

REPRESENTATIONS

1.The Fund hereby represents that: (a) this Agreement has been duly authorized, executed and delivered by the Fund, constitutes a valid and legally binding obligation of the Fund enforceable in accordance with its terms, and, to the Fund's knowledge, no statute, regulation, rule, order, judgment or contract binding on the Fund prohibits the Fund's execution or performance of this Agreement; (b) this Agreement has been approved and ratified by the Board at a meeting duly called and at which a quorum was at all times present; and (c) the Board or the Fund's Investment Adviser has considered the Country Risks associated with investment in each Specified Country and will have considered such risks prior to any settlement instructions being given to the Custodian with respect to any other country.

2.BNY hereby represents that: (a) BNY is duly organized and existing under the laws of the State of New York, with full power to carry on its businesses as now conducted, and to enter into this Agreement and to perform its obligations hereunder; (b) this Agreement has been duly authorized, executed and delivered by BNY, constitutes a valid and legally binding obligation of BNY enforceable in accordance with its terms, and, to BNY's knowledge, no statute, regulation, rule, order, judgment or contract binding on BNY prohibits BNY's execution or performance of this Agreement; (c) BNY has established and will maintain the Monitoring System, and (d) BNY is a U.S. Bank as defined in paragraph (a)(7) of the Rule.

ARTICLE V.

CONCERNING BNY

1.BNY shall not be liable under this Agreement for any costs, expenses, damages, liabilities or claims, including attorneys' and accountants' fees, sustained or incurred by, or asserted against, the Fund except to the extent the same arises out of the failure of BNY to exercise the care, prudence and diligence required by Section 2 of Article II hereof. In no event

- 3 –

 

shall BNY be liable to the Fund, the Board, or any third party for special, indirect or consequential damages, or for lost profits or loss of business, arising in connection with this Agreement.

2.The Fund shall indemnify BNY and hold it harmless from and against any and all costs, expenses, damages, liabilities or claims, including attorneys' and accountants' fees, sustained or incurred by, or asserted against, BNY by reason or as a result of any action or inaction, or arising out of BNY's performance hereunder, provided that the Fund shall not indemnify BNY to the extent any such costs, expenses, damages, liabilities or claims arises out of BNY's failure to exercise the reasonable care, prudence and diligence required by Section 2 of Article II hereof, nor shall the Fund be liable to BNY or any third party for special, indirect or consequential damages, or for lost profits or loss of business arising in connection with this Agreement.

3.For its services hereunder, the Fund agrees to pay to BNY such compensation and out-of-pocket expenses as shall be mutually agreed.

4.BNY shall have only such duties as are expressly set forth herein. In no event shall BNY be liable for any Country Risks associated with investments in a particular country.

ARTICLE VI.

MISCELLANEOUS

1.This Agreement constitutes the entire agreement between the Fund and BNY as a foreign custody manager, and no provision in the Custody Agreement between the Fund and the Custodian shall affect the duties and obligations of BNY hereunder, nor shall any provision in this Agreement affect the duties or obligations of the Custodian under the Custody Agreement.

2.Any notice or other instrument in writing, authorized or required by this Agreement to be given to BNY, shall be sufficiently given if received by it at its offices at 100 Church Street, 10th Floor, New York, New York 10286, or at such other place as BNY may from time to time designate in writing.

3.Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Fund shall be sufficiently given if received by it at its offices at 7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258 or at such other place as the Fund may from time to time designate in writing.

4.In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected thereby. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties. This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided however, that this Agreement shall not be assignable by either party without the written consent of the other.

5.This Agreement shall be construed in accordance with the substantive laws of the State of New York, without regard to conflicts of laws principles thereof. The Fund and BNY

- 4 –

 

hereby consent to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder. The Fund and BNY each hereby irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that such proceeding brought in such a court has been brought in an inconvenient forum. The Fund and BNY each hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or relating to this Agreement.

6.The parties hereto agree that in performing hereunder, BNY is acting solely on behalf of the Fund and no contractual or service relationship shall be deemed to be established hereby between BNY and any other person by reason of this Agreement.

7.This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.

8.This Agreement shall terminate simultaneously with the termination of the Custody Agreement between the Fund and the Custodian, and may otherwise be terminated by either party giving to the other party a notice in writing specifying the date of such termination, which shall be not less than thirty (30) days after the date of such notice.

9.A copy of the Declaration of Trust of the each Fund that is a Massachusetts Business Trust is on file with the Secretary of the Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund; provided, however, that the Declaration of Trust of the Fund provides that the assets of a particular Series of the Fund shall under no circumstances be charged with liabilities attributable to any other Series of the Fund and that all persons extending credit to, or contracting with or having any claim against a particular Series of the Fund shall look only to the assets of that particular Series for payment of such credit, contract or claim.

- 5 –

 

IN WITNESS WHEREOF, the Fund and BNY have caused this Agreement to be executed by their respective officers, thereunto duly authorized, as of the date first above written.

By: /s/ Michael J. Roland

on behalf of each Fund identified on Schedule 1 hereto

THE BANK OF NEW YORK

By: /s/ Edward G. McGann

Title: Vice President

- 6 –

 

SCHEDULE 1

Name of Fund

Name of Series

- 7 –

 

 

SCHEDULE 2

 

Specified Countries

Argentina

Malaysia

Australia

Mauritius

Austria

Mexico

Bahrain

Morocco

Bangladesh

Namibia

Belgium

Netherlands

Bermuda

New Zealand

Bolivia

Nigeria

Botswana

Norway

Brazil

Oman

Bulgaria

Pakistan

Canada

Panama

Chile

Peru

China

Philippines

Colombia

Poland

Costa Rica

Portugal

Croatia

Romania

Cyprus

Russia

Czech Republic

Singapore

Denmark

Slovakia

Ecuador

Slovenia

Egypt

South Africa

Estonia

South Korea

Finland

Spain

France

Sri Lanka

Germany

Swaziland

Ghana

Sweden

Greece

Switzerland

Hong Kong

Taiwan

Hungary

Thailand

India

Transnational

Indonesia

Turkey

Ireland

Ukraine

Israel

United Kingdom

Italy

Uruguay

Ivory Coast

Venezuela

Japan

Zambia

Jordan

Zimbabwe

Kenya

 

Latvia

 

Lebanon

 

Lithuania

 

Luxembourg

 

 


 

(J)(3)(i)

May 1, 2024

Michael Rothemeyer

Vice President

The Bank of New York Mellon

135 Santilli Highway

Room 026-0026

Everett, MA 02149

Dear Mr. Rothemeyer:

Pursuant to the terms and conditions of the Custody Agreement, Foreign Custody Manager Agreement, and Fund Accounting Agreement, each dated January 6, 2003, the Fund Accounting, Custody &Transfer Agency for Voya Funds Fee Schedule, effective January 1, 2023, and the Letter of Instruction and Indemnification Agreement In Connection With Signature Guarantees and Signature Verifications, dated January 12, 2011 (collectively, the "Agreements"), we hereby notify you of the addition of Voya Credit Income Fund and Voya Floating Rate Fund (together, the "Funds"), effective on May 1, 2024, to be included on the Amended Exhibit A to the Agreements. Also effective on May 1, 2024, the name of Voya Global Multi-Asset Fund will change to Voya Global Income & Growth Fund. This Amended Exhibit A supersedes the previous Amended Exhibit A dated March 31, 2024.

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

 

Page 2

Please signify your acceptance to provide services under the Agreements with respect to the aforementioned Fund by signing below where indicated. If you have any questions, please contact me at (480) 477-2190.

Very sincerely,

By:

/s/ Todd Modic

Name:

Todd Modic

Title:

Senior Vice President

 

Voya Credit Income Fund

 

Voya Funds Trust

ACCEPTED AND AGREED TO:

The Bank of New York Mellon

By:

/s/ Michael Green

 

Name:

Michael Green

 

Title:

Managing Director

, Duly Authorized

BNY Mellon Investment Servicing (US) Inc.

(solely with respect to the Transfer Agency Fee Schedule)

By:

/s/ Michael Green

 

Name:

Michael Green

 

Title:

Managing Director

, Duly Authorized

 

AMENDED EXHIBIT A

 

Fund

Effective Date

Voya Asia Pacific High Dividend Equity Income Fund

March 27, 2007

Voya Balanced Portfolio, Inc.

 

Voya Balanced Portfolio

July 7, 2003

Voya Corporate Leaders Trust Fund

 

Voya Corporate Leaders® Trust Fund – Series B

May 17, 2004

Voya Credit Income Fund

May 1, 2024

Voya Emerging Markets High Dividend Equity Fund

April 26, 2011

Voya Equity Trust

 

Voya Corporate Leaders® 100 Fund

November 5, 2019

Voya Global Income & Growth Fund

November 5, 2019

Voya Large-Cap Growth Fund

June 9, 2003

Voya Large Cap Value Fund

December 4, 2007

Voya Mid Cap Research Enhanced Index Fund

November 5, 2019

Voya MidCap Opportunities Fund

June 9, 2003

Voya Multi-Manager Mid Cap Value Fund

September 30, 2011

Voya Small Cap Growth Fund

April 4, 2022

Voya Small Company Fund

November 5, 2019

Voya U.S. High Dividend Low Volatility Fund

December 5, 2016

Voya VACS Series MCV Fund

November 18, 2022

Voya Funds Trust

 

Voya Floating Rate Fund

May 1, 2024

Voya GNMA Income Fund

April 7, 2003

Voya Government Money Market Fund

November 5, 2019

Voya High Yield Bond Fund

April 7, 2003

Voya Intermediate Bond Fund

April 7, 2003

Voya Short Duration High Income Fund

February 9, 2023

Voya Short Term Bond Fund

December 17, 2012

Voya Strategic Income Opportunities Fund

October 15, 2012

Voya VACS Series HYB Fund

November 18, 2022

Voya Global Advantage and Premium Opportunity Fund

October 27, 2005

Voya Global Equity Dividend and Premium Opportunity Fund

March 28, 2005

Voya Government Money Market Portfolio

July 7, 2003

Voya Infrastructure, Industrials and Materials Fund

January 26, 2010

Voya Intermediate Bond Portfolio

July 7, 2003

 

Voya Investors Trust

 

Voya Balanced Income Portfolio

April 28, 2006

Voya Global Perspectives® Portfolio

May 1, 2013

Voya Government Liquid Assets Portfolio

January 6, 2003

Voya High Yield Portfolio

November 5, 2003

Voya Large Cap Growth Portfolio

May 3, 2004

Voya Large Cap Value Portfolio

May 11, 2007

Voya Limited Maturity Bond Portfolio

January 6, 2003

Voya Retirement Conservative Portfolio

August 12, 2009

Voya Retirement Growth Portfolio

August 12, 2009

Voya Retirement Moderate Growth Portfolio

August 12, 2009

Voya Retirement Moderate Portfolio

August 12, 2009

Voya U.S. Stock Index Portfolio

November 5, 2003

Voya VACS Index Series S Portfolio

October 21, 2022

VY® BlackRock Inflation Protected Bond Portfolio

April 30, 2007

VY® CBRE Global Real Estate Portfolio

January 3, 2006

VY® CBRE Real Estate Portfolio

January 3, 2006

VY® Invesco Growth and Income Portfolio

January 13, 2003

VY® JPMorgan Emerging Markets Equity Portfolio

January 13, 2003

VY® JPMorgan Small Cap Core Equity Portfolio

January 13, 2003

VY® Morgan Stanley Global Franchise Portfolio

January 13, 2003

VY® T. Rowe Price Capital Appreciation Portfolio

January 13, 2003

VY® T. Rowe Price Equity Income Portfolio

January 13, 2003

Voya Mutual Funds

 

Voya Global Bond Fund

June 19, 2006

Voya Global Diversified Payment Fund

November 5, 2019

Voya Global High Dividend Low Volatility Fund

November 3, 2003

Voya Global Perspectives® Fund

March 28, 2013

Voya International High Dividend Low Volatility Fund

December 5, 2016

Voya Multi-Manager Emerging Markets Equity Fund

September 30, 2011

Voya Multi-Manager International Equity Fund

December 15, 2010

Voya Multi-Manager International Factors Fund

February 1, 2011

Voya Multi-Manager International Small Cap Fund

November 3, 2003

Voya Russia Fund

November 3, 2003

Voya VACS Series EME Fund

November 18, 2022

Voya Partners, Inc.

 

Voya Global Bond Portfolio

January 10, 2005

Voya Index Solution 2025 Portfolio

March 7, 2008

Voya Index Solution 2030 Portfolio

September 28, 2011

Voya Index Solution 2035 Portfolio

March 7, 2008

Voya Index Solution 2040 Portfolio

September 28, 2011

Voya Index Solution 2045 Portfolio

March 7, 2008

Voya Index Solution 2050 Portfolio

September 28, 2011

Voya Index Solution 2055 Portfolio

December 4, 2009

Voya Index Solution 2060 Portfolio

February 9, 2015

Voya Index Solution 2065 Portfolio

May 1, 2020

Voya Index Solution Income Portfolio

March 7, 2008

 

Voya International High Dividend Low Volatility Portfolio

November 30, 2005

Voya Solution 2025 Portfolio

April 29, 2005

Voya Solution 2030 Portfolio

September 28, 2011

Voya Solution 2035 Portfolio

April 29, 2005

Voya Solution 2040 Portfolio

September 28, 2011

Voya Solution 2045 Portfolio

April 29, 2005

Voya Solution 2050 Portfolio

September 28, 2011

Voya Solution 2055 Portfolio

December 4, 2009

Voya Solution 2060 Portfolio

February 9, 2015

Voya Solution 2065 Portfolio

May 1, 2020

Voya Solution Aggressive Portfolio

May 1, 2013

Voya Solution Balanced Portfolio

June 29, 2007

Voya Solution Conservative Portfolio

April 30, 2010

Voya Solution Income Portfolio

April 29, 2005

Voya Solution Moderately Aggressive Portfolio

April 30, 2010

Voya Solution Moderately Conservative Portfolio

June 29, 2007

VY® American Century Small-Mid Cap Value Portfolio

January 10, 2005

VY® Baron Growth Portfolio

January 10, 2005

VY® Columbia Contrarian Core Portfolio

January 10, 2005

VY® Columbia Small Cap Value II Portfolio

April 28, 2006

VY® Invesco Comstock Portfolio

January 10, 2005

VY® Invesco Equity and Income Portfolio

January 10, 2005

VY® Invesco Global Portfolio

January 10, 2005

VY® JPMorgan Mid Cap Value Portfolio

January 10, 2005

VY® T. Rowe Price Diversified Mid Cap Growth Portfolio

January 10, 2005

VY® T. Rowe Price Growth Equity Portfolio

January 10, 2005

Voya Separate Portfolios Trust

 

Voya Investment Grade Credit Fund

May 16, 2007

Voya Securitized Credit Fund

August 6, 2014

Voya Target In-Retirement Fund

December 19, 2012

Voya Target Retirement 2025 Fund

December 19, 2012

Voya Target Retirement 2030 Fund

December 19, 2012

Voya Target Retirement 2035 Fund

December 19, 2012

Voya Target Retirement 2040 Fund

December 19, 2012

Voya Target Retirement 2045 Fund

December 19, 2012

Voya Target Retirement 2050 Fund

December 19, 2012

Voya Target Retirement 2055 Fund

December 19, 2012

Voya Target Retirement 2060 Fund

October 15, 2015

Voya Target Retirement 2065 Fund

May 1, 2020

Voya VACS Series EMCD Fund

November 18, 2022

Voya VACS Series EMHCD Fund

November 18, 2022

Voya VACS Series SC Fund

November 18, 2022

Voya Strategic Allocation Portfolios, Inc.

 

Voya Strategic Allocation Conservative Portfolio

July 7, 2003

Voya Strategic Allocation Growth Portfolio

July 7, 2003

Voya Strategic Allocation Moderate Portfolio

July 7, 2003

Voya Variable Funds

 

 

Voya Growth and Income Portfolio

July 7, 2003

Voya Variable Insurance Trust

 

VY® BrandywineGLOBAL – Bond Portfolio

February 9, 2015

Voya Variable Portfolios, Inc.

 

Voya Emerging Markets Index Portfolio

November 30, 2011

Voya Global High Dividend Low Volatility Portfolio

January 16, 2008

Voya Index Plus LargeCap Portfolio

July 7, 2003

Voya Index Plus MidCap Portfolio

July 7, 2003

Voya Index Plus SmallCap Portfolio

July 7, 2003

Voya International Index Portfolio

March 4, 2008

Voya Russell™ Large Cap Growth Index Portfolio

May 1, 2009

Voya Russell™ Large Cap Index Portfolio

March 4, 2008

Voya Russell™ Large Cap Value Index Portfolio

May 1, 2009

Voya Russell™ Mid Cap Growth Index Portfolio

May 1, 2009

Voya Russell™ Mid Cap Index Portfolio

March 4, 2008

Voya Russell™ Small Cap Index Portfolio

March 4, 2008

Voya Small Company Portfolio

July 7, 2003

Voya U.S. Bond Index Portfolio

March 4, 2008

Voya VACS Index Series EM Portfolio

October 21, 2022

Voya VACS Index Series I Portfolio

October 21, 2022

Voya VACS Index Series MC Portfolio

October 21, 2022

Voya VACS Index Series SC Portfolio

October 21, 2022

Voya Variable Products Trust

 

Voya MidCap Opportunities Portfolio

October 6, 2003

Voya SmallCap Opportunities Portfolio

October 6, 2003

(J)(3)(ii)

AMENDMENT

TO

FOREIGN CUSTODY MANAGER AGREEMENT

This Amendment ("Amendment") is made as of the 21st day of July, 2021, by and between each entity listed on Schedule 1 (each a "Fund" and collectively, "Funds") and The Bank of New York Mellon ("BNY Mellon").

BACKGROUND:

A.BNY Mellon and the Fund entered into a Foreign Custody Manager Agreement dated as of January 6, 2003, as amended to date, (the "Agreement") relating to BNY Mellon's provision of services to the Fund.

B.The parties desire to amend the Agreement as set forth herein.

TERMS:

The parties hereby agree that:

1.Amended Schedule 2 to the Agreement is hereby deleted in its entirety and replaced with Amended Schedule 2 attached hereto.

2.Miscellaneous.

(a)Capitalized terms not defined in this Amendment shall have the same meanings as in the Agreement. In the event of a conflict between the terms hereof and the Agreement, this Amendment shall control.

(b)As hereby amended and supplemented, the Agreement shall remain in full force and effect.

(c)The Agreement, as amended hereby, constitutes the complete understanding and agreement of the parties with respect to the subject matter thereof and supersedes all prior communications with respect thereto.

3.This Amendment may be executed in any number of counterparts, either manually or by Electronic Signature, each of which will be deemed an original, and said counterparts when taken together will constitute one and the same instrument and may be sufficiently evidenced by one set of counterparts. Each party represents and warrants that the individual executing this Amendment on its behalf has the requisite authority to bind it to this Amendment including by Electronic Signature, and any such Electronic Signature represents an intent to enter into this Amendment and an agreement with its terms. As used herein, "Electronic Signature" shall mean image, representation or symbol inserted into an electronic

copy of the Amendment by electronic, digital or other technological methods. Executed counterparts may be delivered by facsimile or email.

4.This Amendment shall be governed by the laws of the State of New York, without regard to its principles of conflicts of laws.

[Signature page follows.]

IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed by its duly authorized representative indicated below on the date and year first above written.

On behalf of each Fund identified on Schedule 1 attached to the Agreement

By: /s/ Todd Modic____________________

Todd Modic

Senior Vice President

THE BANK OF NEW YORK MELLON

By: /s/ Michael Rothemeyer_____________

Michael Rothemeyer

Vice President

 

AMENDED SCHEDULE 2

 

(Amended and Restated as of July 21, 2021)

 

Specified Countries

 

 

 

Country

Country

Country

Argentina

Jordan

Taiwan

Australia

Kazakhstan

Tanzania

Austria

Kenya

Thailand

Bahrain

Kuwait

Tunisia

Bangladesh

Latvia

Turkey

Belgium

Lithuania

Uganda

Bermuda

Luxembourg

Ukraine

Botswana

Malawi

United Arab Emirates

Brazil

Malaysia

United Kingdom

Bulgaria

Malta

Uruguay

Canada

Mauritius

Vietnam

Cayman Islands

Mexico

WAEMU1

Channel Islands

Morocco

Zambia

Chile

Namibia

Zimbabwe

China

Netherlands

Zambia

Colombia

New Zealand

Zimbabwe

Costa Rica

Nigeria

 

Croatia

Norway

 

Cyprus

Oman

 

Czech Republic

Pakistan

 

Denmark

Panama

 

Egypt

Peru

 

Estonia

Philippines

 

Eswatini

Poland

 

Euromarket

Portugal

 

Finland

Qatar

 

France

Romania

 

Germany

Russia

 

Ghana

Saudi Arabia

 

Greece

Serbia

 

Hong Kong

Singapore

 

Hungary

Slovak Republic

 

Iceland

Slovenia

 

India

South Africa

 

Indonesia

South Korea

 

Ireland

Spain

 

Israel

Sri Lanka

 

Italy

Sweden

 

Japan

Switzerland

 

1WAEMU is the acronym for the West African Economic and Monetary Union.


(J)(3)(iii)

September 6, 2012

Anthony Ong

Vice President, Client Service Officer

The Bank of New York Mellon

100 Colonial Center Parkway Suite 300

Lake Mary, Florida 32746

Re: IPO/BID Processing for the ING Funds

Dear Mr. Ong:

The Bank of New York Mellon ("BNY Mellon") serves as custodian for certain ING Funds (the "Client"). From time to time an investment manager or other authorized person acting on behalf of the Client may desire for the Client to participate in certain initial public offerings, private placements, auctions or similar events relating to the purchase of securities or for the sale (buy back) of securities ("Bid" or "Bids" as the context so requires) where BNY Mellon maintains subcustodian arrangements through which such Bids will be submitted directly by the applicable local subcustodians. The undersigned, duly authorized to act on behalf of the Client, hereby directs BNY Mellon to assist with this process in those markets where the Client can only subscribe to Bids through the use of a local subcustodian.

The undersigned understands and agrees that it is the responsibility of the Client and its authorized person, and not that of BNY Mellon and/or its subcustodians or agents, to ensure that all Bids instructed are undertaken in accordance with all local laws and regulations (including, but not limited to, any investment limits and any restrictions or regulations applicable to foreign financial institutions).

The undersigned hereby expressly understands and agrees that instructions on behalf of the Client regarding Bids will involve payment for such Bids, and the undersigned on behalf of the Client hereby represents and agrees that that sufficient funds in the applicable currency shall be available by the required date in the applicable Client account on BNY Mellon's books and records in accordance with local issuer and market requirements and practice. The undersigned further understands and agrees that, depending on local issuer and market requirements and practice, failure to ensure that sufficient funds in the applicable currency are available by the required date in the applicable Client account on BNY Mellon's books and records may result in the application for any such Bid being withheld, withdrawn, or default funding procedures being automatically implemented without prior notice to the Client, its investment manager or other authorized person. Where default funding procedures are implemented, the undersigned understands and agrees that the Client will be solely

7337 E. Doubletree Ranch Rd. Suite 100

Tel: 480-477-3000

ING Investments, LLC

Scottsdale, AZ 85258-2034

Fax: 480-477-2700

 

 

www.ingfunds.com

 

responsible and liable for any and all costs, expenses and losses relating to any such default funding, any additional funding arrangements that may have already been made or that may be required to be made, and for any additional arrangements that may further be required to remedy or correct any deficiency in funding, including but not limited to any costs, expenses, losses or deficiencies associated with foreign exchange. The undersigned understands and agrees that payments associated with any such Bids may include the full subscription amount with respect to any such Bids, and that prior to the closing subscription date or shares allocation date for a Bid, Client cash may be encumbered in an amount sufficient to cover the full payment amount, even though the full amount of the requested Bid may not be accepted. The undersigned on behalf of the Client understands and agrees that instructions to bid for buy backs on the Client's behalf will involve ensuring that the securities subject to the buy back are timely available for sale, unencumbered and free of any lien, and that the receipt of funds resulting from the sale will be credited in the currency received from the issuer or market in accordance with the terms of the buy back and local issuer and market practice.

The undersigned authorizes and directs BNY Mellon and/or its subcustodian to complete certain applications and/or make certain representations to which the undersigned, the Client or other person will be obligated. Further, the undersigned agrees that BNY Mellon and its subcustodian will (i) not interpret bidding or buy back or other rules, and (ii) submit such necessary Bid applications, instructions and directions and any other materials in its capacity as a service provider to the Client and not in BNY Mellon's individual capacity. The undersigned agrees to reimburse, or cause to be reimbursed, BNY Mellon and/or its subcustodians for any costs, expenses or losses incurred in connection therewith. Further, the undersigned agrees that while BNY Mellon and/or its subcustodian shall exercise reasonable efforts to submit all Bids for which it receives timely direction and related documents, it does not make any guarantees, representations or warranties with respect to its discharge of such duties. In the event of any errors or omissions in the performance of the Bid submissions, the Client's (including any and all persons acting for or on behalf of the Client) sole and exclusive remedy and the sole liability of BNY Mellon and/or its subcustodian, shall be limited to re-performance of the Bids submission, if practicable, at no cost to the Client.

This letter is applicable to those markets for which an authorized person acting on behalf of the Client desires for the Client to participate in Bids associated with certain markets where such Bids are to be submitted through the use of a local subcustodian, as more fully described above.

BNY Mellon is hereby authorized and directed to follow the directions provided through this letter unless and until such directions are modified by written notice and direction of an authorized party acting on behalf of the Client.

The undersigned hereby represents and warrants to BNY Mellon that the undersigned is duly authorized to act on behalf of the Client (including, without limitation, to execute this letter on behalf of the Client).

Sincerely,

/s/ Todd Modic

Todd Modic

Senior Vice President

ING Funds Services, LLC


July 13, 2021

(J)(3)(iv)

Dayton Krzanik

VP Team Leader

The Bank of New York Mellon

100 Colonial Center Parkway

Lake Mary, FL 32746

Re: IPO/BID Processing for the Voya Funds (see Appendix A for list of accounts)

Dear Dayton:

The Bank of New York Mellon ("BNY Mellon") serves as custodian for the Voya Funds (see Appendix A for list of accounts) (the "Client"). From time to time an investment manager or other authorized person acting on behalf of the Client may desire for the Client to participate in certain initial public offerings, private placements, auctions or similar events relating to the purchase of securities or for the sale (buy back) of securities ("Bid" or "Bids" as the context so requires) where BNY Mellon maintains subcustodian arrangements through which such Bids will be submitted directly by the applicable local subcustodians. The undersigned, duly authorized to act on behalf of the Client, hereby directs BNY Mellon to assist with this process in those markets where the Client can only subscribe to Bids through the use of a local subcustodian.

The undersigned understands and agrees that it is the responsibility of the Client and its authorized person, and not that of BNY Mellon and/or its subcustodians or agents, to ensure that all Bids instructed are undertaken in accordance with all local laws and regulations (including, but not limited to, any investment limits and any restrictions or regulations applicable to foreign financial institutions).

The undersigned hereby expressly understands and agrees that instructions on behalf of the Client regarding Bids will involve payment for such Bids, and the undersigned on behalf of the Client hereby represents and agrees that that sufficient funds in the applicable currency shall be available by the required date in the applicable Client account on BNY Mellon's books and records in accordance with local issuer and market requirements and practice. The undersigned further understands and agrees that, depending on local issuer and market requirements and practice, failure to ensure that sufficient funds in the applicable currency are available by the required date in the applicable Client account on BNY Mellon's books and records may result in the application for any such Bid being withheld, withdrawn, or default funding procedures being automatically implemented without prior notice to the Client, its investment manager or other authorized person. Where default funding procedures are implemented, the undersigned understands and agrees that the Client will be solely responsible and liable for any and all costs, expenses and losses relating to any such default funding, any additional funding arrangements that may have already been made or that may be required to be made, and for any additional arrangements that may further be required to remedy or correct any deficiency in funding, including but not limited to any costs, expenses, losses or deficiencies associated with foreign exchange. The undersigned understands and agrees that payments associated with any such Bids may include the full subscription amount with respect to any such Bids, and that prior to the closing subscription date or shares allocation date for a Bid, Client cash may be encumbered in an amount sufficient to cover the full payment amount, even though the full amount of the requested Bid may not be accepted. The undersigned on behalf of the Client understands and agrees that instructions to bid for buy backs on the Client's behalf will involve ensuring that the securities subject to the buy back are timely available for sale, unencumbered and free of any lien,

July 13, 2021

Page 2

and that the receipt of funds resulting from the sale will be credited in the currency received from the issuer or market in accordance with the terms of the buy back and local issuer and market practice.

The undersigned authorizes and directs BNY Mellon and/or its subcustodian to complete certain applications and/or make certain representations to which the undersigned, the Client or other person will be obligated. Further, the undersigned agrees that BNY Mellon and its subcustodian will (i) not interpret bidding or buy back or other rules, and (ii) submit such necessary Bid applications, instructions and directions and any other materials in its capacity as a service provider to the Client and not in BNY Mellon's individual capacity. The undersigned agrees to reimburse, or cause to be reimbursed, BNY Mellon and/or its subcustodians for any costs, expenses or losses incurred in connection therewith. Further, the undersigned agrees that while BNY Mellon and/or its subcustodian shall exercise reasonable efforts to submit all Bids for which it receives timely direction and related documents, it does not make any guarantees, representations or warranties with respect to its discharge of such duties. In the event of any errors or omissions in the performance of the Bid submissions, the Client's (including any and all persons acting for or on behalf of the Client) sole and exclusive remedy and the sole liability of BNY Mellon and/or its subcustodian, shall be limited to re-performance of the Bids submission, if practicable, at no cost to the Client.

This letter is applicable to those markets for which an authorized person acting on behalf of the Client desires for the Client to participate in Bids associated with certain markets where such Bids are to be submitted through the use of a local subcustodian, as more fully described above.

BNY Mellon is hereby authorized and directed to follow the directions provided through this letter unless and until such directions are modified by written notice and direction of an authorized party acting on behalf of the Client.

The undersigned hereby represents and warrants to BNY Mellon that the undersigned is duly authorized to act on behalf of the Client (including, without limitation, to execute this letter on behalf of the Client).

Sincerely,

By: /s/ Fred Bedoya

_________________

Fred Bedoya

Vice President

 

APPENDIX A

 

 

Account

 

Number

Fund Name and Sleeve, as noted

405906

VOYA ASIA PACIFIC HIGH DIVIDEND EQUITY INCOME FUND COMP

405909

VOYA ASIA PACIFIC HIGH DIVIDEND EQUITY INCOME FUND DERIV

405907

VOYA ASIA PACIFIC HIGH DIVIDEND EQUITY INCOME FUND EQUITY

405867

VOYA BALANCED INCOME PORTFOLIO

405874

VOYA BALANCED INCOME PORTFOLIO CASH

405871

VOYA BALANCED INCOME PORTFOLIO INTL HDLV

405872

VOYA BALANCED INCOME PORTFOLIO MASS

405868

VOYA BALANCED INCOME PORTFOLIO SIO

405870

VOYA BALANCED INCOME PORTFOLIO US HDLV

464428

VOYA BALANCED PORTFOLIO

471439

VOYA BALANCED PORTFOLIO COMPOSITE

472950

VOYA BALANCED PORTFOLIO HIGH YIELD

471480

VOYA BALANCED PORTFOLIO INCOME STRAT CASH ACCOUNT

471948

VOYA BALANCED PORTFOLIO INTL VALUE

472969

VOYA BALANCED PORTFOLIO LARGE CAP VALUE

471442

VOYA BALANCED PORTFOLIO MASS

471441

VOYA BALANCED PORTFOLIO MID CAP

472949

VOYA BALANCED PORTFOLIO MID CAP VALUE

471161

VOYA CORPORATE LEADERS 100 FUND

464756

VOYA CORPORATE LEADERS TRUST FUND SERIES B

472953

VOYA EMERGING MARKETS CORPORATE DEBT FUND

472951

VOYA EMERGING MARKETS HARD CURRENCY DEBT FUND

405899

VOYA EMERGING MARKETS HIGH DIVIDEND EQUITY FUND COMP

405904

VOYA EMERGING MARKETS HIGH DIVIDEND EQUITY FUND DERIV

405901

VOYA EMERGING MARKETS HIGH DIVIDEND EQUITY FUND EQUITY

472592

VOYA EMERGING MARKETS INDEX PORTFOLIO

472952

VOYA EMERGING MARKETS LOCAL CURRENCY DEBT FUND

405880

VOYA GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND COMP

405886

VOYA GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND DERIV

405883

VOYA GLOBAL ADVANTAGE AND PREMIUM OPPORTUNITY FUND EQUITY

 

VOYA GLOBAL EQUITY DIVIDEND AND PREMIUM OPPORTUNITY FUND

405889

COMP

 

VOYA GLOBAL EQUITY DIVIDEND AND PREMIUM OPPORTUNITY FUND

405892

DERIV

 

VOYA GLOBAL EQUITY DIVIDEND AND PREMIUM OPPORTUNITY FUND

405890

EQUITY

464773

VOYA GLOBAL BOND FUND

464548

VOYA GLOBAL BOND PORTFOLIO

471174

VOYA GLOBAL DIVERSIFIED PAYMENT FUND

464218

VOYA GLOBAL HIGH DIVIDEND LOW VOLATILITY FUND

464217

VOYA GLOBAL HIGH DIVIDEND LOW VOLATILITY FUND COMPOSITE

Account

 

Number

Fund Name and Sleeve, as noted

471145

VOYA GLOBAL HIGH DIVIDEND LOW VOLATILITY PORTFOLIO

464722

VOYA GLOBAL MULTI-ASSET FUND

473352

VOYA GLOBAL PERSPECTIVES FUND

473354

VOYA GLOBAL PERSPECTIVES PORTFOLIO

464012

VOYA GNMA INCOME FUND

058081

VOYA GOVERNMENT LIQUID ASSETS PORTFOLIO

464064

VOYA GOVERNMENT MONEY MARKET FUND

464412

VOYA GOVERNMENT MONEY MARKET PORTFOLIO

471403

VOYA GROWTH AND INCOME PORTFOLIO COMPOSITE

464402

VOYA GROWTH AND INCOME PORTFOLIO

464010

VOYA HIGH YIELD BOND FUND

464018

VOYA HIGH YIELD PORTFOLIO

464406

VOYA INDEX PLUS LARGECAP PORTFOLIO

464408

VOYA INDEX PLUS MIDCAP PORTFOLIO

464410

VOYA INDEX PLUS SMALLCAP PORTFOLIO

471149

VOYA INFRASTRUCTURE, INDUSTIRALS AND MATERIALS FUND

 

VOYA INFRASTRUCTURE, INDUSTRIALS AND MATERIALS FUND

471153

COMPOSITE

 

VOYA INFRASTRUCTURE, INDUSTRIALS AND MATERIALS FUND

471155

DERVIVATIVE

464006

VOYA INTERMEDIATE BOND FUND

464400

VOYA INTERMEDIATE BOND PORTFOLIO

473009

VOYA INTERNATIONAL HIGH DIVIDEND LOW VOLATILITY FUND

471167

VOYA INTERNATIONAL INDEX PORTFOLIO

405916

VOYA INTERNATONAL HIGH DIVIDEND LOW VOLATILITY PORTFOLIO

470568

VOYA INVESTMENT GRADE CREDIT FUND

464706

VOYA LARGE CAP GROWTH PORTFOLIO

471164

VOYA LARGE CAP VALUE FUND

470567

VOYA LARGE CAP VALUE PORTFOLIO

464733

VOYA LARGE-CAP GROWTH FUND

058082

VOYA LIMITED MATURITY BOND PORTFOLIO

464727

VOYA MID CAP RESEARCH ENHANCED INDEX FUND

464741

VOYA MIDCAP OPPORTUNITIES FUND

464444

VOYA MIDCAP OPPORTUNITIES PORTFOLIO

 

VOYA MULTI-MANAGER EMERGING MARKETS EQUITY FUND

472158

COMPOSITE

472394

VOYA MULTI-MANAGER EMERGING MARKETS EQUITY FUND DELAWARE

941478

VOYA MULTI-MANAGER EMERGING MARKETS EQUITY FUND VIL

473280

VOYA MULTI-MANAGER EMERGING MARKETS EQUITY FUND VAN ECK

405972

VOYA MULTI-MANAGER EMERGING MARKETS EQUITY FUND VIM

472492

VOYA MULTI-MANAGER INTERNATIONAL EQUITY FUND BALGIF

472499

VOYA MULTI-MANAGER INTERNATIONAL EQUITY FUND COMPOSITE

941469

VOYA MULTI-MANAGER INTERNATIONAL EQUITY FUND POLARIS

Account

 

Number

Fund Name and Sleeve, as noted

941473

VOYA MULTI-MANAGER INTERNATIONAL EQUITY FUND VIL

941468

VOYA MULTI-MANAGER INTERNATIONAL EQUITY FUND WELLINGTON

472496

VOYA MULTI-MANAGER INTERNATIONAL FACTORS FUND COMPOSITE

938465

VOYA MULTI-MANAGER INTERNATIONAL FACTORS FUND PANAGORA

941482

VOYA MULTI-MANAGER INTERNATIONAL FACTORS FUND VIL

941467

VOYA MULTI-MANAGER INTERNATIONAL FACTORS FUND VIM

464216

VOYA MULTI-MANAGER INTERNATIONAL SMALL CAP FUND ACADIAN

464301

VOYA MULTI-MANAGER INTERNATIONAL SMALL CAP FUND COMPOSITE

472970

VOYA MULTI-MANAGER INTERNATIONAL SMALL CAP FUND VICTORY

941477

VOYA MULTI-MANAGER INTERNATIONAL SMALL CAP FUND VIL

472138

VOYA MULTI-MANAGER MID CAP VALUE FUND COMPOSITE

472391

VOYA MULTI-MANAGER MID CAP VALUE FUND HAHN

473941

VOYA MULTI-MANAGER MID CAP VALUE FUND LSV

941479

VOYA MULTI-MANAGER MID CAP VALUE FUND VIL

402229

VOYA MULTI-MANAGER MID CAP VALUE FUND VIM

471346

VOYA RUSSELL LARGE CAP GROWTH INDEX PORTFOLIO

471172

VOYA RUSSELL LARGE CAP INDEX PORTFOLIO

471352

VOYA RUSSELL LARGE CAP VALUE INDEX PORTFOLIO

471354

VOYA RUSSELL MID CAP GROWTH INDEX PORTFOLIO

471168

VOYA RUSSELL MID CAP INDEX PORTFOLIO

471166

VOYA RUSSELL SMALL CAP INDEX PORTFOLIO

464208

VOYA RUSSIA FUND

473625

VOYA SECURITIZED CREDIT FUND RMB

473626

VOYA SECURITIZED CREDIT FUND AB

473624

VOYA SECURITIZED CREDIT FUND CMB

473623

VOYA SECURITIZED CREDIT FUND COMPOSITE

473628

VOYA SECURITIZED CREDIT FUND OVERLAY

473565

VOYA SHORT TERM BOND FUND

464729

VOYA SMALL COMPANY FUND

464414

VOYA SMALL COMPANY PORTFOLIO

464743

VOYA SMALLCAP OPPORTUNITIES FUND

464450

VOYA SMALLCAP OPPORTUNITIES PORTFOLIO

473423

VOYA STRATEGIC INCOME OPPORTUNITIES FUND

473318

VOYA STRATEGIC INCOME OPPORTUNITIES FUND-COMPOSITE

473316

VOYA STRATEGIC INCOME OPPORTUNITIES FUND-LOAN ACCOUNT

471169

VOYA US BOND INDEX PORTFOLIO

473010

VOYA US HIGH DIVIDEND LOW VOLATILITY FUND

464701

VOYA US STOCK INDEX PORTFOLIO

 

VY AMERICAN CENTURY SMALL-MID CAP VALUE PORTFOLIO (MID CAP

464521

SLEEVE)

 

VY AMERICAN CENTURY SMALL-MID CAP VALUE PORTFOLIO (SMALL

464515

CAP SLEEVE)

Account

 

Number

Fund Name and Sleeve, as noted

 

VY AMERICAN CENTURY SMALL-MID CAP VALUE PORTFOLIO

464501

COMPOSITE

464504

VY BARON GROWTH PORTFOLIO

470551

VY BLACKROCK INFLATION PROTECTED BOND PORTFOLIO

405973

VY BRANDYWINEGLOBAL – BOND PORTFOLIO

464280

VY CLARION GLOBAL REAL ESTATE PORTFOLIO

058086

VY CLARION REAL ESTATE PORTFOLIO

464546

VY COLUMBIA CONTRARIAN CORE PORTFOLIO

471329

VY COLUMBIA SMALL CAP VALUE II PORTFOLIO COMPOSITE

464785

VY COLUMBIA SMALL CAP VALUE II PORTFOLIO

464512

VY INVESCO COMSTOCK PORTFOLIO

464536

VY INVESCO EQUITY AND INCOME PORTFOLIO

464508

VY INVESCO GLOBAL PORTFOLIO

058090

VY INVESCO GROWTH AND INCOME PORTFOLIO

058096

VY JPMORGAN EMERGING MARKETS EQUITY PORTFOLIO

464506

VYJPMORGAN MID CAP VALUE PORTFOLIO

464550

VY JPMORGAN SMALL CAP CORE EQUITY PORTFOLIO COMPOSITE

464552

VY JPMORGAN SMALL CAP CORE EQUITY PORTFOLIO FUNDAM

464554

VY JPMORGAN SMALL CAP CORE EQUITY PORTFOLIO QUANT

279605

VY MORGAN STANLEY GLOBAL FRANCHISE PORTFOLIO

058084

VY T. ROWE PRICE CAPITAL APPRECIATION.PORTFOLIO

464534

VY T. ROWE PRICE DIVERSIFIED MID CAP GROWTH PORTFOLIO

058087

VY T. ROWE PRICE EQUITY INCOME.PORTFOLIO

464530

VY T. ROWE PRICE GROWTH EQUITY PORTFOLIO

464576

VY T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

(J)(4)

FUND ACCOUNTING AGREEMENT

AGREEMENT made as of January 6, 2003, by and between each entity listed on Exhibit A hereto (each, a "Fund"; collectively, the "Funds"), and The Bank of New York, a New York banking organization ("BNY").

W I T N E S S E T H :

WHEREAS, each Fund is an investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, each Fund desires to retain BNY to provide for the portfolios identified on Exhibit A hereto (each, a "Series") the services described herein, and BNY is willing to provide such services, all as more fully set forth below;

NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereby agree as follows:

1.Appointment.

Each Fund hereby appoints BNY as its agent for the term of this Agreement to perform the services described herein. BNY hereby accepts such appointment and agrees to perform the duties hereinafter set forth.

2.Representations and Warranties.

Each Fund hereby represents and warrants to BNY, which representations and warranties shall be deemed to be continuing, that:

(a)It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;

(b)This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms;

(c)It is conducting its business in compliance in all material respects with all applicable laws and regulations, both state and federal, and has obtained all regulatory licenses, approvals and consents necessary to carry on its business as now conducted; there is no statute, regulation, rule, order or judgment binding on it and except at addressed herein no provision of its charter or by-laws, nor of any mortgage, indenture, credit agreement or other contract binding on it or affecting its property which would prohibit its execution or performance of this Agreement; and

(d)To the extent the performance of any services described in Schedule I attached hereto by BNY that relate to pricing of securities or calculation of net asset value in accordance with the then effective Prospectus (as hereinafter defined) for the Fund would violate any applicable laws or regulations, the Fund shall immediately so notify BNY in writing and thereafter shall either furnish BNY with the appropriate values of securities, net asset value or other computation, as the case may be, or, subject to the prior approval of BNY which BNY shall not unreasonably withhold, instruct BNY in writing to value securities and/or compute net asset value or other computations in a manner the Fund specifies in writing, and either the furnishing of such values or the giving of such instructions shall constitute a representation by the Fund that the same is consistent with all applicable laws and regulations and with its Prospectus.

3.Delivery of Documents.

(a)Each Fund will promptly deliver to BNY true and correct copies of each of the following documents as currently in effect and will promptly deliver to it all future amendments and supplements thereto, if any:

(i)The Fund's Declaration of Trust or other organizational document and all amendments thereto (the "Charter");

(ii)The Fund's bylaws (the "Bylaws");

(iii)Resolutions of the Fund's board of trustees or other governing body (the "Board") authorizing the execution, delivery and performance of this Agreement by the Fund;

(iv)The Fund's registration statement most recently filed with the Securities and Exchange Commission (the "SEC") relating to the shares of the Fund (the

-2 -

"Registration Statement");

(v)The Fund's Notification of Registration under the 1940 Act on Form N-8A filed with the SEC; and

(vi)The Fund's Prospectus and Statement of Additional Information pertaining to the Series (collectively, the "Prospectus").

(b)Each copy of the Charter shall be certified by the Secretary of State (or other appropriate official) of the state of organization, and if the Charter is required by law also to be filed with a county or other officer or official body, a certificate of such filing shall be filed with a certified copy submitted to BNY. Each copy of the Bylaws, Registration Statement and Prospectus, and all amendments thereto, and copies of Board resolutions, shall be certified by the Secretary or an Assistant Secretary of the appropriate Fund.

(c)It shall be the sole responsibility of each Fund to deliver to BNY its currently effective Prospectus and BNY shall not be deemed to have notice of any information contained in such Prospectus until it is actually received by BNY.

4.Duties and Obligations of BNY.

(a)Subject to the direction and control of each Fund's Board and the provisions of this Agreement, BNY shall provide daily to each Fund and each Series specified on Exhibit A attached hereto the services described in Schedule I, as such schedule may be amended from time to time. Subject to the provisions of this Agreement, BNY shall compute the net asset value per share of each class of shares ("Class") of each Series of the Fund and shall value the securities held by the Fund (the "Securities") at such times and dates and in the manner specified in the then currently effective Prospectus of the Fund. To the extent valuation of Securities or computation of a net asset value of a Series or Class, in accordance with the valuation procedures applicable to the calculation of such net asset values as approved by the Fund's Board and as specified in the Fund's then currently effective Prospectus, is at any time inconsistent with any applicable laws or regulations, the Fund shall immediately so notify BNY in writing and thereafter shall either furnish BNY at all appropriate times with the values of such Securities and the net asset value of each Class of each Series', or subject to the prior approval of BNY, which BNY shall not unreasonably withhold, instruct BNY in writing to value Securities

- 3 -

and compute the net asset value of each Class of each Series' in a manner which the Fund then represents in writing to be consistent with all applicable laws and regulations. The Fund may also from time to time instruct BNY in writing to compute the value of the Securities or a Series' or Class' net asset value in a manner other than as specified in this paragraph. By giving such instruction, the Fund shall be deemed to have represented that such instruction is consistent with all applicable laws and regulations and the then currently effective Prospectus of the Fund. The Fund shall have sole responsibility for determining the method of valuation of Securities and the method of computing each Series' and Class' net asset value.

(b)In performing hereunder, BNY shall provide, at its expense, office space, facilities, equipment and personnel.

(c)BNY shall not provide any services relating to the management, investment advisory or sub-advisory functions of any Fund, distribution of shares of any Fund, maintenance of any Fund's financial records other than those listed on Schedule 1 or other services normally performed by the Funds' respective counsel or independent auditors.

(d)Upon receipt of a Fund's prior written consent (which shall not be unreasonably withheld), BNY may delegate any of its duties and obligations hereunder to any delegee or agent whenever and on such terms and conditions as it deems necessary or appropriate. Notwithstanding the foregoing, no Fund consent shall be required for any such delegation to any other subsidiary of The Bank of New York Company, Inc. BNY shall not be liable to any Fund for any loss or damage arising out of, or in connection with, the actions or omissions to act of any delegee or agent utilized hereunder other than a delegee or agent which is a subsidiary or the Bank of New York Company, Inc so long as BNY acts in good faith and without negligence or wilful misconduct in the selection of such delegee or agent. With respect to any delegee or agent which is a subsidiary of The Bank of New York Company, Inc., BNY shall be deemed to have committed any act or omission of such delegee.

(e)Each Fund shall cause its officers, advisors, sponsor, distributor, legal counsel, independent accountants, current administrator (if any) and transfer agent to cooperate with BNY and to provide BNY, upon request, with such information, documents and advice relating to such Fund as is within the possession or knowledge of such persons and is reasonably believed by BNY to be necessary or appropriate in order for BNY to perform its duties

-4 -

hereunder. In connection with its duties hereunder, BNY shall be entitled to rely, and shall be held harmless by each Fund when acting in reliance, upon the instructions, advice or any documents relating to such Fund provided to BNY by a Fund's officers, advisors, sponsor, distributor, legal counsel, independent accountants, current administrator (if any) and transfer agent and reasonably believed to be accurate by BNY. BNY shall not be liable for any loss, damage or expense resulting from or arising out of the failure of the Fund to cause any information, documents or advice to be provided to BNY as provided herein. All fees or costs charged by such persons shall be borne by the appropriate Fund.

(f)Nothing in this Agreement shall limit or restrict BNY, any affiliate of BNY or any officer or employee thereof from acting for or with any third parties, and providing services similar or identical to some or all of the services provided hereunder.

(g)Each Fund shall furnish BNY with any and all instructions, explanations, information, specifications and documentation deemed reasonably necessary by BNY in the performance of its duties hereunder, including, without limitation, the amounts or written formula for calculating the amounts and times of accrual of Fund liabilities and expenses and BNY shall comply with any such instructions, explanations, information, specifications, and documentation. BNY shall not be required to include as Fund liabilities and expenses, nor as a reduction of net asset value, any accrual for any federal, state, or foreign income taxes unless the Fund shall have specified to BNY the precise amount of the same to be included in liabilities and expenses or used to reduce net asset value. Each Fund shall also furnish BNY with bid, offer, or market values of Securities if BNY notifies such Fund that same are not available to BNY from a security pricing or similar service utilized, or subscribed to, by BNY which BNY in its judgment deems reliable at the time such information is required for calculations hereunder. At any time and from time to time, the Fund also may furnish BNY with bid, offer, or market values of Securities and instruct BNY to use such information in its calculations hereunder. BNY shall at no time be required or obligated to commence or maintain any utilization of, or subscriptions to, any particular securities pricing or similar service, but shall be required and obligated to maintain a subscription or access to at least one securities pricing or similar service.

(h)BNY may apply to an officer of any Fund for written instructions with respect to any matter arising in connection with BNY's performance hereunder for such Fund,

- 5 -

and BNY shall not be liable for any action reasonably taken or omitted to be taken by it in good faith in accordance with such instructions. Such application for instructions may, at the option of BNY, set forth in writing any action reasonably proposed to be taken or omitted to be taken by BNY with respect to its duties or obligations under this Agreement and the date on and/or after which such action shall be taken, and BNY shall not be liable for any action taken or omitted to be taken in accordance with a proposal included in any such application on or after the date specified therein (provided that BNY has given the officer of the Funds a commercially reasonable amount of time to respond to the request for instructions) unless, prior to taking or omitting to take any such action, BNY has received written instructions in response to such application specifying the action to be taken or omitted.

(i)BNY may consult with counsel to the appropriate Fund or its own counsel, and shall be fully protected with respect to anything done or omitted by it in good faith in accordance with the advice or opinion of such counsel. BNY shall provide prompt notification to the appropriate Fund in the event that it acts upon advice or opinion of counsel that is inconsistent with instructions, procedures, or requests provided by the Fund. The appropriate Fund shall be liable for the fees and expenses of its counsel and for the reasonable fees and expense of BNY's own counsel, not to exceed in any one instance $10,000 without the prior consent of the appropriate fund.

(j)Notwithstanding any other provision contained in this Agreement or Schedule I attached hereto, BNY shall have no duty or obligation with respect to, including, without limitation, any duty or obligation to determine, or advise or notify any Fund of: (i) the taxable nature of any distribution or amount received or deemed received by, or payable to, a Fund, (ii) the taxable nature or effect on a Fund or its shareholders of any corporate actions, class actions, tax reclaims, tax refunds or similar events, (iii) the taxable nature or taxable amount of any distribution or dividend paid, payable or deemed paid, by a Fund to its shareholders; or (iv) the effect under any federal, state, or foreign income tax laws of a Fund making or not making any distribution or dividend payment, or any election with respect thereto.

(k)BNY shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and Schedule I attached hereto, and no covenant or obligation shall be implied against BNY in connection with this

- 6 -

Agreement.

(l)BNY, in performing the services required of it under the terms of this Agreement, shall be entitled to rely fully on the accuracy and validity of any and all instructions, explanations, information, specifications and documentation furnished to it by a Fund and shall have no duty or obligation to review the accuracy, validity or propriety of such instructions, explanations, information, specifications or documentation, including, without limitation, evaluations of securities; the amounts or formula for calculating the amounts and times of accrual of Series' liabilities and expenses; the amounts receivable and the amounts payable on the sale or purchase of Securities; and amounts receivable or amounts payable for the sale or redemption of Fund shares effected by or on behalf of a Fund. In the event BNY's computations hereunder rely, in whole or in part, upon information, including, without limitation, bid, offer or market values of securities or other assets, or accruals of interest or earnings thereon, from a pricing or similar service utilized, or subscribed to, by BNY which BNY in its judgment deems reliable, BNY shall not be responsible for, under any duty to inquire into, or deemed to make any assurances with respect to, the accuracy or completeness of such information except that BNY shall apply its normal tolerance tests. Without limiting the generality of the foregoing, BNY shall not be required to inquire into any valuation of securities or other assets by a Fund or any third party described in this subsection (l) even though BNY in performing services similar to the services provided pursuant to this Agreement for others may receive different valuations of the same or different securities of the same issuers.

(m)BNY, in performing the services required of it under the terms of this Agreement, shall not be responsible for determining whether any interest accruable to a Fund is or will be actually paid, but will accrue such interest until otherwise instructed by such Fund.

(n)BNY shall maintain such back-up system(s), and disaster recovery plan(s), as are required by its regulators and all laws applicable to it. BNY shall not be responsible for delays or errors which occur by reason of circumstances beyond its control in the performance of its duties under this Agreement, including, without limitation, labor difficulties within or without BNY, mechanical breakdowns, flood or catastrophe, acts of God, failures of transportation, interruptions, loss, or malfunctions of utilities, communications or computer (hardware or software) services provided BNY is maintaining such back-up system(s) and disaster recovery

- 7 -

plan(s) as described above, or, provided if it does not, that such delays and errors would have occurred even if it had had maintained the same. BNY should use commercially reasonable best efforts to resume performance as soon as practicable under the circumstances. Nor shall BNY be responsible for delays or failures to supply the information or services specified in this Agreement where such delays or failures are caused by the failure of any person(s) other than BNY to supply any instructions, explanations, information, specifications or documentation deemed necessary by BNY in the performance of its duties under this Agreement.

(o)BNY shall, as agent for the Funds, maintain and keep current the books, accounts and other documents, if any, listed in Schedule I and preserve any such books, accounts and other documents in accordance with the applicable provisions of Rules 31a-1 and 31a-2 of the General Rules and Regulations under the Investment Company Act of 1940, as such Rules may be amended. Such books, accounts and other documents shall be made available upon reasonable request for inspection by officers, employees and auditors of the Funds during BNY's normal business hours.

(p)All records maintained and preserved by BNY pursuant to this Agreement which the Funds are required to maintain and preserve in accordance with the above-mentioned Rules 31a-1 and 31a-2 shall be and remain the property of the Funds and shall be surrendered to the Funds or provided to their regulators promptly upon request by the Funds in the form in which such records have been maintained and preserved. Upon reasonable request of the Funds, BNY shall provide in hard copy, computer disc, on micro-film or other format as the Funds or their regulators shall request, any records included in any such delivery which are maintained by BNY on a computer disc, or are otherwise maintained.

(q)All books, records, information and data pertaining to the business of the Funds, or their prior, present or potential shareholders that are exchanged or received in connection with the performance of BNY's duties under this Agreement shall remain confidential and shall not be disclosed to any other person, except as specifically authorized by the Funds or as may be required by law, and shall not be used for any purpose other than performance of its responsibilities and duties hereunder, and except that BNY retains the right to disclose matters subject to confidentiality to its examiners, regulators, internal or external auditors, its

-8 -

accountants, and its internal and external counsel, or to others, whenever it is advised by its internal or external counsel that it is reasonably likely BNY would be liable for a failure to do so. BNY will provide written notice to the Funds at least five (5) business days prior to any disclosures pursuant to this Paragraph 4(q), but, provided it shall have provided as much notice as is reasonably practicable under the circumstances, BNY shall have no liability for any failure to do so.

(r)BNY hereby specifically agrees that it will provide any sub-certifications reasonably requested by the Funds in connection with any certification required by the Sarbanes-Oxley Act of 2002 or any rules or regulations promulgated by the Securities and Exchange Commission thereunder, provided the same do not change BNY's standard of care.

5.Allocation of Expenses.

Except as otherwise provided herein, all costs and expenses arising or incurred in connection with the performance by the Funds under this Agreement shall be paid by the appropriate Fund, including but not limited to, organizational costs and costs of maintaining corporate existence, taxes, interest, brokerage fees and commissions, insurance premiums, compensation and expenses of such Fund's trustees, directors, officers or employees, legal, accounting and audit expenses, management, advisory, sub-advisory, administration and shareholder servicing fees, charges of custodians, transfer and dividend disbursing agents, expenses (including clerical expenses) incident to the issuance, redemption or repurchase of Fund shares, fees and expenses incident to the registration or qualification under federal or state securities laws of the Fund or its shares, costs (including printing and mailing costs) of preparing and distributing Prospectuses, reports, notices and proxy material to such Fund's shareholders, all expenses incidental to holding meetings of such Fund's trustees, directors and shareholders, and extraordinary expenses as may arise, including litigation affecting such Fund and legal obligations relating thereto for which the Fund may have to indemnify its trustees, directors and officers. BNY shall pay all costs and expenses arising or incurred in connection with its performance under this Agreement, as set forth in paragraph 4(b), including the cost of subscription to at least one securities pricing or similar service.

6.Standard of Care; Indemnification.

(a)Except as otherwise provided herein, BNY shall not be liable for any

- 9 -

costs, expenses, damages, liabilities or claims (including attorneys' and accountants' fees) incurred by a Fund, except those costs, expenses, damages, liabilities or claims arising out of BNY's own negligence or willful misconduct. In no event shall BNY be liable to any Fund or any third party for special, indirect or consequential damages, or lost profits or loss of business, arising under or in connection with this Agreement, even if previously informed of the possibility of such damages and regardless of the form of action. For purposes of this provision, if as a result of the negligence or willful misconduct of BNY or that of its directors, officers or employees, agents or delegates, there is a material error in the net asset value per share of a Fund, the material losses of the Fund on the sale and issuance, or the redemption, of its shares attributable to such material error shall be direct money damages.

(b)Each Fund shall indemnify and hold harmless BNY from and against any and all costs, expenses, damages, liabilities and claims (including claims asserted by a Fund), and reasonable attorneys' and accountants' fees relating thereto, which are sustained or incurred or which may be asserted against BNY, by reason of or as a result of any action reasonably taken or omitted to be taken by BNY in good faith hereunder or in reasonable reliance upon (i) any law, act, regulation or interpretation of the same even though the same may thereafter have been altered, changed, amended or repealed, (ii) such Fund's Registration Statement or Prospectus,

(iii)any instructions of an officer of such Fund, or (iv) any opinion of legal counsel for such Fund or BNY, or arising out of transactions or other activities of such Fund which occurred prior to the commencement of this Agreement; provided, that no Fund shall indemnify BNY for costs, expenses, damages, liabilities or claims for which BNY is liable under preceding 6(a). This indemnity shall be a continuing obligation of each Fund, its successors and assigns, notwithstanding the termination of this Agreement. Without limiting the generality of the foregoing, each Fund shall indemnify BNY against and save BNY harmless from any loss, damage or expense, including reasonable counsel fees and other costs and expenses of a defense against any claim or liability, arising from any one or more of the following.

(i)Errors in records or instructions, explanations, information, specifications or documentation of any kind, as the case may be, supplied to BNY by the Funds;

(ii)Action or inaction taken or omitted to be taken by BNY pursuant to written or oral instructions of the Fund or otherwise without bad faith, negligence or willful

- 10 -

misconduct;

(iii)Any action taken or omitted to be taken by BNY in good faith and with prompt notice to the Funds in accordance with the advice or opinion of counsel for a Fund or its own counsel;

(iv)Any improper use by a Fund or its agents, distributor or investment advisor of any valuations or computations supplied by BNY pursuant to this Agreement;

(v)The method of valuation of the Securities and the method of

computing each Series' and Class' net asset value consistent with paragraph 4(a); or

(vi)Any valuations of securities or net asset value provided by a Fund.

(c)BNY shall indemnify and hold harmless the Funds from and against any loss, damage or expense, including reasonable counsel fees and other costs and expenses of a defense against any claim or liability (including any claims asserted by BNY) arising out of the negligence or willful misconduct of BNY, except that in no event shall BNY be liable for, nor indemnify the Funds for, special, indirect or consequential damages, or for lost profits or loss of business. For purposes of this provision, if as a result of the negligence or willful misconduct of BNY or that of its directors, officers or employees, agents or delegates, there is a material error in the net asset value per share of a Fund, the material losses of the Fund on the sale and issuance, or the redemption, of its shares attributable to such material error shall be direct money damages. This indemnity shall be a continuing obligation of BNY, its successors and assigns, notwithstanding the termination of this Agreement.

7.Compensation.

For the services provided hereunder, each Fund agrees to pay BNY such compensation as is mutually agreed from time to time and such out-of-pocket expenses (e.g., telecommunication charges, postage and delivery charges, and reproduction charges) as are reasonably incurred by BNY in performing its duties hereunder. Except as hereinafter set forth, compensation shall be calculated and accrued daily and paid monthly. Upon termination of this Agreement before the end of any month, the compensation for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the

- 11 -

effective date of termination of this Agreement. For the purpose of determining compensation payable to BNY, each Fund's net asset value shall be computed at the times and in the manner specified in the Fund's Prospectus.

8.Term of Agreement.

(a)This Agreement shall continue until terminated by either BNY giving to a Fund, or a Fund giving to BNY, a notice in writing specifying the date of such termination, which date shall be not less than 60 days after the date of the giving of such notice. Upon termination hereof, the affected Fund(s) shall pay to BNY such compensation as may be due as of the date of such termination, and shall reimburse BNY for any disbursements and expenses made or incurred by BNY and payable or reimbursable hereunder. After payment of such amounts BNY shall deliver to the Funds all records then the property of the Funds.

(b)Notwithstanding the foregoing, BNY may terminate this Agreement by notice to a Fund if such Fund shall terminate its custody agreement with The Bank of New York, effective on the date of termination of the Custody Agreement.

9.Authorized Persons.

Attached hereto as Exhibit B is a list of persons duly authorized by the Board of each Fund to execute this Agreement and give any written or oral instructions, or written or oral specifications, by or on behalf of such Fund. From time to time each Fund may deliver a new Exhibit B to add or delete any person and BNY shall be entitled to rely on the last Exhibit B actually received by BNY.

10.Amendment.

This Agreement may not be amended or modified in any manner except by a written agreement executed by BNY and the Fund to be bound thereby, and authorized or approved by such Fund's Board.

- 12 -

11.Assignment.

This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by any Fund without the written consent of BNY, or by BNY without the written consent of the affected Fund accompanied by the authorization or approval of such Fund's Board.

12.Governing Law; Consent to Jurisdiction.

This Agreement shall be construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof. BNY and Each Fund hereby consents to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder, and waives to the fullest extent permitted by law its right to a trial by jury. To the extent that in any jurisdiction BNY or any Fund may now or hereafter be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (before or after judgment) or other legal process, BNY and such Fund irrevocably agrees not to claim, and it hereby waives, such immunity.

13.Severability.

In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations shall not in any way be affected or impaired thereby, and if any provision is inapplicable to any person or circumstances, it shall nevertheless remain applicable to all other persons and circumstances.

14.No Waiver.

Each and every right granted to BNY hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of BNY to exercise, and no delay in exercising, any right will operate as a waiver thereof, nor will any single or partial exercise by BNY of any right preclude any other or future exercise thereof or the exercise of any other right.

- 13 -

15.Notices.

All notices, requests, consents and other communications pursuant to this Agreement in writing shall be sent as follows:

if to a Fund, at

ING Funds Services, LLC

7337 E. Doubletree Ranch Road

Scottsdale, Arizona 85258

Attention: Michael J. Roland

Title: Chief Financial Officer

if to BNY, at

The Bank of New York

100 Church Street, 10th Floor

New York, NY 10286

Attention: Martha B. Pierce

Title: Vice President

or at such other place as may from time to time be designated in writing. Notices hereunder shall be effective upon receipt.

16.Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but such counterparts together shall constitute only one instrument.

17.Several Obligations.

The parties acknowledge that the obligations of the Funds hereunder are several and not joint, that no Fund shall be liable for any amount owing by another Fund and that the Funds have executed one instrument for convenience only.

This Agreement is an agreement entered into between BNY and the Funds with respect to each Series. With respect to any obligation of a Fund on behalf of a Series arising out of this Agreement, BNY shall look for payment or satisfaction of such obligation solely to the assets of the Series to which such obligation relates as though BNY had separately contracted with the Fund by separate written instrument with respect to each Series.

- 14 -

18.Agreement and Declaration of Trust.

With respect to each Fund that is organized as a Massachusetts Business Trust, a copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of the Commonwealth of Massachusetts. The Agreement and Declaration of Trust has been executed on behalf of the Fund by its trustees in their capacity as trustees and not individually. The obligations of this Agreement shall be binding upon the assets and property of the Fund and shall not be binding upon any trustee, officer, or shareholder of the Fund individually.

- 15 -

IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers and their seals to be hereunto affixed, all as of the day and year first above written.

By: /s/ Michael J. Roland______________

Name: Michael J. Roland

Title: Executive Vice President

on behalf of each Fund identified on Exhibit A attached hereto

THE BANK OF NEW YORK

By: /s/ Edward G. McGann_____________

Name: Edward G. McGann

Title: Vice President

- 16 -

SCHEDULE I

VALUATION AND COMPUTATION SERVICES

I.BNY shall maintain the following records on a daily basis for each Series.

1.Report of priced portfolio securities

2.Statement of net asset value per share per Class

3.General Ledger

II.BNY shall maintain the following records on a monthly basis for each Series:

1.General Journal

2.Cash Receipts Journal

3.Cash Disbursements Journal

4.Subscriptions Journal

5.Redemptions Journal

6.Accounts Receivable Reports

7.Accounts Payable Reports

8.Open Subscriptions/Redemption Reports

9.Transaction (Securities) Journal

10.Broker Net Trades Reports

III.BNY shall prepare a Holdings Ledger on a quarterly basis, and a Buy-Sell Ledger (Broker's Ledger) on a semiannual basis for each Series. Schedule D shall be produced on an annual basis for each Series.

The above reports may be printed according to any other required frequency to meet the requirements of the Internal Revenue Service, The Securities and Exchange Commission and the Fund's Auditors.

IV. For internal control purposes, BNY uses the Account Journals produced by The Bank of New York Custody System to record daily settlements of the following for each Series:

1.Securities bought

2.Securities sold

3.Interest received

4.Dividends received

5.Capital stock sold

6.Capital stock redeemed

7.Other income and expenses

All portfolio purchases for the Fund are recorded to reflect expected maturity value and total cost including any prepaid interest.

V.BNY will also provide those services not already listed above that are included in the Service Guidelines established and agreed between the parties as the same may be revised from time to time by mutual agreement of the parties hereto. The Services Guidelines will also govern the timeliness and performance standards for services where specified therein.


 

(J)(4)(i)

May 1, 2024

Michael Rothemeyer

Vice President

The Bank of New York Mellon

135 Santilli Highway

Room 026-0026

Everett, MA 02149

Dear Mr. Rothemeyer:

Pursuant to the terms and conditions of the Custody Agreement, Foreign Custody Manager Agreement, and Fund Accounting Agreement, each dated January 6, 2003, the Fund Accounting, Custody &Transfer Agency for Voya Funds Fee Schedule, effective January 1, 2023, and the Letter of Instruction and Indemnification Agreement In Connection With Signature Guarantees and Signature Verifications, dated January 12, 2011 (collectively, the "Agreements"), we hereby notify you of the addition of Voya Credit Income Fund and Voya Floating Rate Fund (together, the "Funds"), effective on May 1, 2024, to be included on the Amended Exhibit A to the Agreements. Also effective on May 1, 2024, the name of Voya Global Multi-Asset Fund will change to Voya Global Income & Growth Fund. This Amended Exhibit A supersedes the previous Amended Exhibit A dated March 31, 2024.

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

 

Page 2

Please signify your acceptance to provide services under the Agreements with respect to the aforementioned Fund by signing below where indicated. If you have any questions, please contact me at (480) 477-2190.

Very sincerely,

By:

/s/ Todd Modic

Name:

Todd Modic

Title:

Senior Vice President

 

Voya Credit Income Fund

 

Voya Funds Trust

ACCEPTED AND AGREED TO:

The Bank of New York Mellon

By:

/s/ Michael Green

 

Name:

Michael Green

 

Title:

Managing Director

, Duly Authorized

BNY Mellon Investment Servicing (US) Inc.

(solely with respect to the Transfer Agency Fee Schedule)

By:

/s/ Michael Green

 

Name:

Michael Green

 

Title:

Managing Director

, Duly Authorized

 

AMENDED EXHIBIT A

 

Fund

Effective Date

Voya Asia Pacific High Dividend Equity Income Fund

March 27, 2007

Voya Balanced Portfolio, Inc.

 

Voya Balanced Portfolio

July 7, 2003

Voya Corporate Leaders Trust Fund

 

Voya Corporate Leaders® Trust Fund – Series B

May 17, 2004

Voya Credit Income Fund

May 1, 2024

Voya Emerging Markets High Dividend Equity Fund

April 26, 2011

Voya Equity Trust

 

Voya Corporate Leaders® 100 Fund

November 5, 2019

Voya Global Income & Growth Fund

November 5, 2019

Voya Large-Cap Growth Fund

June 9, 2003

Voya Large Cap Value Fund

December 4, 2007

Voya Mid Cap Research Enhanced Index Fund

November 5, 2019

Voya MidCap Opportunities Fund

June 9, 2003

Voya Multi-Manager Mid Cap Value Fund

September 30, 2011

Voya Small Cap Growth Fund

April 4, 2022

Voya Small Company Fund

November 5, 2019

Voya U.S. High Dividend Low Volatility Fund

December 5, 2016

Voya VACS Series MCV Fund

November 18, 2022

Voya Funds Trust

 

Voya Floating Rate Fund

May 1, 2024

Voya GNMA Income Fund

April 7, 2003

Voya Government Money Market Fund

November 5, 2019

Voya High Yield Bond Fund

April 7, 2003

Voya Intermediate Bond Fund

April 7, 2003

Voya Short Duration High Income Fund

February 9, 2023

Voya Short Term Bond Fund

December 17, 2012

Voya Strategic Income Opportunities Fund

October 15, 2012

Voya VACS Series HYB Fund

November 18, 2022

Voya Global Advantage and Premium Opportunity Fund

October 27, 2005

Voya Global Equity Dividend and Premium Opportunity Fund

March 28, 2005

Voya Government Money Market Portfolio

July 7, 2003

Voya Infrastructure, Industrials and Materials Fund

January 26, 2010

Voya Intermediate Bond Portfolio

July 7, 2003

 

Voya Investors Trust

 

Voya Balanced Income Portfolio

April 28, 2006

Voya Global Perspectives® Portfolio

May 1, 2013

Voya Government Liquid Assets Portfolio

January 6, 2003

Voya High Yield Portfolio

November 5, 2003

Voya Large Cap Growth Portfolio

May 3, 2004

Voya Large Cap Value Portfolio

May 11, 2007

Voya Limited Maturity Bond Portfolio

January 6, 2003

Voya Retirement Conservative Portfolio

August 12, 2009

Voya Retirement Growth Portfolio

August 12, 2009

Voya Retirement Moderate Growth Portfolio

August 12, 2009

Voya Retirement Moderate Portfolio

August 12, 2009

Voya U.S. Stock Index Portfolio

November 5, 2003

Voya VACS Index Series S Portfolio

October 21, 2022

VY® BlackRock Inflation Protected Bond Portfolio

April 30, 2007

VY® CBRE Global Real Estate Portfolio

January 3, 2006

VY® CBRE Real Estate Portfolio

January 3, 2006

VY® Invesco Growth and Income Portfolio

January 13, 2003

VY® JPMorgan Emerging Markets Equity Portfolio

January 13, 2003

VY® JPMorgan Small Cap Core Equity Portfolio

January 13, 2003

VY® Morgan Stanley Global Franchise Portfolio

January 13, 2003

VY® T. Rowe Price Capital Appreciation Portfolio

January 13, 2003

VY® T. Rowe Price Equity Income Portfolio

January 13, 2003

Voya Mutual Funds

 

Voya Global Bond Fund

June 19, 2006

Voya Global Diversified Payment Fund

November 5, 2019

Voya Global High Dividend Low Volatility Fund

November 3, 2003

Voya Global Perspectives® Fund

March 28, 2013

Voya International High Dividend Low Volatility Fund

December 5, 2016

Voya Multi-Manager Emerging Markets Equity Fund

September 30, 2011

Voya Multi-Manager International Equity Fund

December 15, 2010

Voya Multi-Manager International Factors Fund

February 1, 2011

Voya Multi-Manager International Small Cap Fund

November 3, 2003

Voya Russia Fund

November 3, 2003

Voya VACS Series EME Fund

November 18, 2022

Voya Partners, Inc.

 

Voya Global Bond Portfolio

January 10, 2005

Voya Index Solution 2025 Portfolio

March 7, 2008

Voya Index Solution 2030 Portfolio

September 28, 2011

Voya Index Solution 2035 Portfolio

March 7, 2008

Voya Index Solution 2040 Portfolio

September 28, 2011

Voya Index Solution 2045 Portfolio

March 7, 2008

Voya Index Solution 2050 Portfolio

September 28, 2011

Voya Index Solution 2055 Portfolio

December 4, 2009

Voya Index Solution 2060 Portfolio

February 9, 2015

Voya Index Solution 2065 Portfolio

May 1, 2020

Voya Index Solution Income Portfolio

March 7, 2008

 

Voya International High Dividend Low Volatility Portfolio

November 30, 2005

Voya Solution 2025 Portfolio

April 29, 2005

Voya Solution 2030 Portfolio

September 28, 2011

Voya Solution 2035 Portfolio

April 29, 2005

Voya Solution 2040 Portfolio

September 28, 2011

Voya Solution 2045 Portfolio

April 29, 2005

Voya Solution 2050 Portfolio

September 28, 2011

Voya Solution 2055 Portfolio

December 4, 2009

Voya Solution 2060 Portfolio

February 9, 2015

Voya Solution 2065 Portfolio

May 1, 2020

Voya Solution Aggressive Portfolio

May 1, 2013

Voya Solution Balanced Portfolio

June 29, 2007

Voya Solution Conservative Portfolio

April 30, 2010

Voya Solution Income Portfolio

April 29, 2005

Voya Solution Moderately Aggressive Portfolio

April 30, 2010

Voya Solution Moderately Conservative Portfolio

June 29, 2007

VY® American Century Small-Mid Cap Value Portfolio

January 10, 2005

VY® Baron Growth Portfolio

January 10, 2005

VY® Columbia Contrarian Core Portfolio

January 10, 2005

VY® Columbia Small Cap Value II Portfolio

April 28, 2006

VY® Invesco Comstock Portfolio

January 10, 2005

VY® Invesco Equity and Income Portfolio

January 10, 2005

VY® Invesco Global Portfolio

January 10, 2005

VY® JPMorgan Mid Cap Value Portfolio

January 10, 2005

VY® T. Rowe Price Diversified Mid Cap Growth Portfolio

January 10, 2005

VY® T. Rowe Price Growth Equity Portfolio

January 10, 2005

Voya Separate Portfolios Trust

 

Voya Investment Grade Credit Fund

May 16, 2007

Voya Securitized Credit Fund

August 6, 2014

Voya Target In-Retirement Fund

December 19, 2012

Voya Target Retirement 2025 Fund

December 19, 2012

Voya Target Retirement 2030 Fund

December 19, 2012

Voya Target Retirement 2035 Fund

December 19, 2012

Voya Target Retirement 2040 Fund

December 19, 2012

Voya Target Retirement 2045 Fund

December 19, 2012

Voya Target Retirement 2050 Fund

December 19, 2012

Voya Target Retirement 2055 Fund

December 19, 2012

Voya Target Retirement 2060 Fund

October 15, 2015

Voya Target Retirement 2065 Fund

May 1, 2020

Voya VACS Series EMCD Fund

November 18, 2022

Voya VACS Series EMHCD Fund

November 18, 2022

Voya VACS Series SC Fund

November 18, 2022

Voya Strategic Allocation Portfolios, Inc.

 

Voya Strategic Allocation Conservative Portfolio

July 7, 2003

Voya Strategic Allocation Growth Portfolio

July 7, 2003

Voya Strategic Allocation Moderate Portfolio

July 7, 2003

Voya Variable Funds

 

 

Voya Growth and Income Portfolio

July 7, 2003

Voya Variable Insurance Trust

 

VY® BrandywineGLOBAL – Bond Portfolio

February 9, 2015

Voya Variable Portfolios, Inc.

 

Voya Emerging Markets Index Portfolio

November 30, 2011

Voya Global High Dividend Low Volatility Portfolio

January 16, 2008

Voya Index Plus LargeCap Portfolio

July 7, 2003

Voya Index Plus MidCap Portfolio

July 7, 2003

Voya Index Plus SmallCap Portfolio

July 7, 2003

Voya International Index Portfolio

March 4, 2008

Voya Russell™ Large Cap Growth Index Portfolio

May 1, 2009

Voya Russell™ Large Cap Index Portfolio

March 4, 2008

Voya Russell™ Large Cap Value Index Portfolio

May 1, 2009

Voya Russell™ Mid Cap Growth Index Portfolio

May 1, 2009

Voya Russell™ Mid Cap Index Portfolio

March 4, 2008

Voya Russell™ Small Cap Index Portfolio

March 4, 2008

Voya Small Company Portfolio

July 7, 2003

Voya U.S. Bond Index Portfolio

March 4, 2008

Voya VACS Index Series EM Portfolio

October 21, 2022

Voya VACS Index Series I Portfolio

October 21, 2022

Voya VACS Index Series MC Portfolio

October 21, 2022

Voya VACS Index Series SC Portfolio

October 21, 2022

Voya Variable Products Trust

 

Voya MidCap Opportunities Portfolio

October 6, 2003

Voya SmallCap Opportunities Portfolio

October 6, 2003

(J)(4)(ii)

AMENDMENT

This Amendment is an amendment to the Fund Accounting Agreement dated as of January 6, 2003 (as amended) between each entity listed on Exhibit A thereto (each a "Fund" and collectively the "Funds") and The Bank of New York Mellon ("BNY") (the "Agreement").

The date of this Amendment is as of __November 21__, 2022 (the "Effective Date").

Each intending to be legally bound, and each acknowledging receipt of sufficient consideration with respect to the provisions set forth in this Amendment, each Fund and BNY hereby agrees as follows:

1.Paragraph 8 of the Agreement is amended and restated as follows:

"8. Term of Agreement.

(a)As between BNY and a particular Fund, this Agreement shall continue until December 31, 2027 (the "Initial Term") and thereafter shall automatically renew for additional successive one (1) year extension periods (each a "Renewal Term"), unless and until either BNY or such Fund provides prior written notice to the other party of its intention not to renew this Agreement at least one hundred eighty (180) days in advance of the end of the Initial Term or the then-current Renewal Term.

(b)If a Fund or BNY with respect to a particular Fund materially breaches this Agreement (or repeatedly breaches this Agreement where such repeated breaches constitute a material breach of this Agreement) (a "Defaulting Party") the other party (the "Non-Defaulting Party") may give written notice thereof to the Defaulting Party ("Breach Notice"), and if such material breach shall not have been remedied within thirty (30) days after the Breach Notice is given, then the Non-Defaulting Party may terminate this Agreement by giving written notice of termination to the Defaulting Party ("Breach Termination Notice"), in which case this Agreement shall terminate on the 30th day following the date the Breach Termination Notice is given, or such later date as may be specified in the Breach Termination Notice (but not later than the last day of the Initial Term or then-current Renewal Term, as appropriate). In all cases, termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party of any other rights it might have under this Agreement or otherwise against the Defaulting Party.

(c)Upon termination of this Agreement with respect to a particular Fund and upon payment of all amounts due to BNY with respect to such termination, BNY shall deliver to the Fund all records then the property of the Fund.

(d)In addition to the termination provisions set forth in Paragraph 8(a) and Paragraph 8(b), and for clarity subject to the terms of Paragraph 8(c), a Fund shall have the right to terminate all, but not part, of the services provided to it under this Agreement for any reason at any time after January 1, 2023 and before June 30, 2027 by giving BNY written notice of such

termination at least one hundred eighty (180) days prior to the termination date specified in the notice.

(e)Notwithstanding any other provision of this Agreement, BNY may terminate this Agreement by written notice to a Fund if such Fund shall terminate its custody agreement with The Bank of New York Mellon, effective on the date of termination of such custody agreement.

(f)For clarity, a Fund will be deemed to have terminated this Agreement if any of such Fund's assets are moved to a service provider other than BNY without the prior written consent of BNY."

2.Capitalized terms not defined in this Amendment have their respective meanings as defined in the Agreement.

3.As hereby amended and supplemented, the Agreement shall remain in full force and effect. In the event of a conflict between the terms hereof and the Agreement, this Amendment shall control.

4.The Agreement, as amended hereby, together with its Exhibits and Schedules, constitutes the complete understanding and agreement of the parties with respect to the subject matter thereof and supersedes all prior communications with respect thereto.

5.This Amendment may be executed in one or more counterparts and such execution may occur by manual signature on a copy of this Amendment physically delivered, on a copy of this Amendment transmitted by facsimile transmission or on a copy of this Amendment transmitted as an imaged document attached to an email, or by "Electronic Signature", which is hereby defined to mean inserting an image, representation or symbol of a signature into an electronic copy of this Amendment by electronic, digital or other technological methods. Each counterpart executed in accordance with the foregoing shall be deemed an original, with all such counterparts together constituting one and the same instrument. The exchange of executed counterparts of this Amendment or of executed signature pages to counterparts of this Amendment, in either case by facsimile transmission or as an imaged document attached to an email transmission, shall constitute effective execution and delivery of this Amendment and may be used for all purposes in lieu of a manually executed and physically delivered copy of this Amendment.

6.If any provision of the Agreement including this Amendment is found to be invalid, illegal or unenforceable, no other provision of this contract shall be affected and all other provisions shall be enforced to the full extent of the law.

7.This Amendment shall be governed by the laws of the State of New York, without regard to its principles of conflicts of laws.

[Remainder of this page intentionally left blank]

[Signature page follows]

-2-

IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed as of the Effective Date by its duly authorized representative designated below. An authorized representative, if executing this Amendment by Electronic Signature, affirms authorization to execute this Amendment by Electronic Signature and that the Electronic Signature represents an intent to enter into this Amendment and an agreement with its terms.

Agreed:

 

 

Each Entity Listed on Exhibit A to the Agreement

 

The Bank of New York Mellon

By:

/s/ Todd Modic___________

By:

/s/ Sean Brumble__________

Name: Todd Modic

Name: Sean Brumble

Title:

Senior Vice President

Title:

Managing Director

-3-


(J)(4)(iii)

AMENDMENT

This Amendment is an amendment to the Fund Accounting Agreement dated as of January 6, 2003 between each entity listed on Exhibit A hereto (each a "Fund" and collectively the "Funds") and The Bank of New York Mellon ("BNY") (the "Agreement").

The date of this Amendment is as of January 1, 2019.

Each intending to be legally bound, and each acknowledging receipt of sufficient consideration with respect to the provisions set forth in this Amendment, each Fund and BNY hereby agrees as follows:

1.In Paragraph 4(d) of the Agreement, the references to "The [or "the"] Bank of New York Company, Inc." are replaced with "The Bank of New York Mellon Corporation".

2.In Paragraph 4(j) of the Agreement, the following is added at the end of that provision: "Notwithstanding any other provision contained in this Agreement or Schedule I attached hereto, BNY is not responsible for the identification of Securities requiring U.S. tax treatment that differs from treatment under U.S. generally accepted accounting principles. BNY is solely responsible for processing such Securities, as identified by the applicable Fund, in accordance with U.S. tax laws and regulations."

3.In Paragraph 4(k) of the Agreement, the following is added at the end of that provision: "For clarity, the scope of services provided by BNY under this Agreement shall not be increased as a result of new or revised regulatory or other requirements unless specifically agreed in writing between BNY and the applicable Fund."

4.Paragraph 4(q) of the Agreement is amended and restated as follows:

"(q) BNY agrees to use the Confidential Information of a Fund, and a Fund agrees to use the Confidential Information of BNY, solely to accomplish the purposes of this Agreement and, except in connection with such purposes or as otherwise permitted herein, not to disclose such information to any other entity without the prior written consent of the disclosing party. Notwithstanding the foregoing, BNY may (i) use a Fund's Confidential Information in connection with certain functions performed on a centralized basis by BNY, its affiliates and joint ventures and their service providers (including audit, accounting, risk, legal, compliance, sales, administration, product communication, relationship management, compilation and analysis of customer-related data and storage) and (ii) disclose such information to its affiliates and joint ventures and to its and their service providers who are subject to confidentiality obligations with respect to the Fund's Confidential Information at least as comprehensive as those required of BNY hereunder. In addition, BNY may aggregate information regarding one or more Funds on an anonymized basis with other similar client data for BNY's and its affiliates' reporting, research, product development and marketing purposes. A party's confidentiality obligations under this Paragraph 4(q) will not apply to information (1) that is, as of the time of its disclosure or thereafter becomes, part of the public domain through a source other than the

receiving party; (2) that was known to the receiving party as of the time of its disclosure and was not otherwise subject to confidentiality obligations; (3) that is independently developed by the receiving party without reference to such information;

(4)that is subsequently learned from a third party not known to be under a confidentiality obligation to the disclosing party or (5) that is required to be disclosed pursuant to applicable law, rule, regulation, requirement of any law enforcement agency, court order or other legal process or at the request of a regulatory authority. For purposes of this Paragraph 4(q), "Confidential Information" shall mean, with respect to a party, the terms of this Agreement and all non-public business and financial information of such party (including, with respect to a Fund, information regarding the Fund's holdings and including, with respect to the BNY, information regarding its practices and procedures related to the services provided under this Agreement) disclosed in connection with this Agreement."

5.Paragraph 8 of the Agreement is amended and restated as follows:

"8. Term of Agreement.

(a)As between BNY and a particular Fund, this Agreement shall continue until December 31, 2022 and thereafter shall automatically renew for additional successive one (1) year extension periods, unless and until either BNY or such Fund provides in advance of December 31, 2022 or in advance of the end of the applicable one year extension period at least three (3) months prior written notice to the other party of its intention not to further renew this Agreement.

(b)A Fund shall have the right to terminate all, but not part, of the services provided to it under this Agreement, as of a date specified in a written notice of termination, in the event that BNY commits a material breach of this Agreement (or repeatedly breaches this Agreement where such repeated breaches constitute a material breach of this Agreement) and BNY has not reasonably cured or remedied the material breach within sixty (60) days of receipt of a written notice from the Fund specifying in reasonable detail the basis for the claim of material breach; provided that the Fund may terminate immediately upon notice to BNY (or on a date specified in such notice) if the Fund reasonably determines that any such cure is impracticable or would not restore the Fund to the position it would have been in had the breach not occurred.

(c)In addition to the termination provisions set forth in Paragraph 8(a) and Paragraph 8(b), and for clarity subject to the terms of Paragraph 8(d), a Fund shall have the right to terminate all, but not part, of the services provided to it under this Agreement for any reason at any time after January 1, 2019 and before June 30, 2022 by giving BNY written notice of such termination at least one hundred eighty

(180)days prior to the termination date specified in the notice.

(d)Upon termination of this Agreement with respect to a particular Fund, such Fund shall pay to BNY such compensation as may be due as of the date of such termination, and shall reimburse BNY for any disbursements and expenses made

or incurred by BNY and payable or reimbursable under this Agreement; after payment of such amounts BNY shall deliver to the Fund all records then the property of the Fund.

(e)Notwithstanding any other provision of this Agreement, BNY may terminate this Agreement by written notice to a Fund if such Fund shall terminate its custody agreement with The Bank of New York Mellon, effective on the date of termination of such custody agreement."

6.Capitalized terms not defined in this Amendment have their respective meanings as defined in the Agreement.

7.As hereby amended and supplemented, the Agreement shall remain in full force and effect. In the event of a conflict between the terms hereof and the Agreement, this Amendment shall control.

8.The Agreement, as amended hereby, together with its Exhibits and Schedules, constitutes the complete understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior communications with respect thereto.

9.This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The facsimile signature of any party to this Amendment shall constitute the valid and binding execution hereof by such party.

10.If any provision of the Agreement including this Amendment is found to be invalid, illegal or unenforceable, no other provision of this contract shall be affected and all other provisions shall be enforced to the full extent of the law.

11.This Amendment shall be governed by the laws of the State of New York, without regard to its principles of conflicts of laws.

[Remainder of this page intentionally left blank]

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective authorized officers or representatives as of the date first above written.

Agreed:

Each Entity Listed on Exhibit A hereto

The Bank of New York Mellon

By:

 

/s/ Todd Modic

By:

 

/s/ Peter G. Rigopoulos

 

 

Todd Modic

 

 

 

Peter G. Rigopoulos

 

Senior Vice President

 

Director, Business Executive

EXHIBIT A

Fund

Voya Asia Pacific High Dividend Equity Income Fund

Voya Balanced Portfolio, Inc.

Voya Corporate Leaders Trust Fund

Voya Emerging Markets High Dividend Equity Fund

Voya Equity Trust

Voya Funds Trust

Voya Global Advantage and Premium Opportunity Fund

Voya Global Equity Dividend and Premium Opportunity Fund

Voya Government Money Market Portfolio

Voya Infrastructure, Industrials and Materials Fund

Voya Intermediate Bond Portfolio

Voya International High Dividend Equity Income Fund

Voya Investors Trust

Voya Mutual Funds

Voya Natural Resources Equity Income Fund

Voya Partners, Inc.

Voya Separate Portfolios Trust

Voya Series Fund, Inc.

Voya Strategic Allocation Portfolios, Inc.

Voya Variable Funds

Voya Variable Insurance Trust

Voya Variable Portfolios, Inc.

Voya Variable Products Trust


(J)(4)(iv)

INVESTMENT COMPANY REPORTING MODERNIZATION SERVICES

AMENDMENT TO

FUND ACCOUNTING AGREEMENT

This Investment Company Reporting Modernization Services Amendment (the "Amendment") is made as of February ___ 1__, 2018 by and between the investment companies listed on the signature page hereto (each, a "Fund" and collectively, the "Funds") and THE BANK OF NEW YORK MELLON ("BNY Mellon").

BACKGROUND:

A.WHEREAS, the Funds and BNY Mellon are parties to a Fund Accounting Agreement dated as of January 6, 2003, as amended (the "Agreement");

B.WHEREAS, this Amendment is an amendment to the Agreement and shall be applicable solely to the portfolios identified at Exhibit 1 hereto (the "Portfolios");

C.WHEREAS, the Funds desire that BNY Mellon provide the investment company reporting modernization services described in this Amendment;

D.WHEREAS, capitalized terms used in this Amendment shall have the meanings set forth in the Agreement unless otherwise defined herein, and all forms and rules referenced herein are in reference to forms and rules promulgated under the Investment Company Act of 1940, as amended; and

E.WHEREAS, the Funds and BNY Mellon desire to amend the Agreement with respect to the foregoing;

TERMS:

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows:

1.The Agreement is hereby amended to reflect that BNY Mellon shall provide the following services for the Funds:

1.1BNY Mellon shall provide services following a full service operating model which includes the actual filing of the reports as part of the services noted below.

1.2FORM N-PORT. BNY Mellon, subject to the limitations described herein and its timely receipt of all necessary information related thereto, will, or will cause the Print Vendor to: (i) collect, aggregate and normalize the data required for the submission of Form N-PORT; (ii) prepare, on a monthly basis, Form N-PORT; and (iii) file Form N-PORT with the United States Securities and Exchange Commission ("SEC").

1

1.2.1The timely receipt of necessary information referred to above will be determined by mutual agreement of BNY Mellon and the Funds in advance of the preparation of the initial Form N-PORT pursuant to this Amendment.

1.2.2Unless mutually agreed in writing between BNY Mellon and the Funds, BNY Mellon will use the same layout and format for every successive reporting period for Form N-PORT.

1.3FORM N-CEN. BNY Mellon, subject to the limitations described herein and its timely receipt of all necessary information related thereto, will, or will cause the Print Vendor to: (i) collect, aggregate and normalize the data required for the submission of Form N-CEN; (ii) prepare, on an annual basis, Form N-CEN; and (iii) file Form N-CEN with the SEC.

1.3.1The timely receipt of necessary information referred to above will be determined by mutual agreement of BNY Mellon and the Funds in advance of the preparation of the initial Form N-CEN pursuant to this Amendment.

1.3.2Unless mutually agreed in writing between BNY Mellon and the Funds, BNY Mellon will use the same source for obtaining the information and method for performing the required calculations for every successive reporting period for Form N-CEN.

1.4Fixed Income Risk Analytics. BNY Mellon shall calculate the portfolio and security-level risk metrics required within Form N-PORT and Form N-CEN (referenced above).

2.BNY Mellon has entered into an agreement with a financial printer (the "Print Vendor") for the Print Vendor to provide to BNY Mellon the ability to generate the reports described herein for its clients. BNY Mellon will provide the Funds with no less than one-hundred and eighty (180) days' advance notice if BNY Mellon is unable to provide such services as contemplated herein due to an inability to contract with a Print Vendor to provide the necessary functionality to support such services. Upon communication of such information, the Funds may terminate this Amendment by giving BNY Mellon a termination notice in writing specifying the date of such termination. If BNY Mellon is unable to provide such services as contemplated herein, BNY Mellon also agrees to waive any fees it would otherwise be able to collect under the agreement and would return to the Funds any fees already paid for services not yet performed.

3.Except to the extent caused by the lack of good faith, willful misconduct, or negligence of BNY Mellon and/or its agents in carrying out its duties and responsibilities under this Amendment, BNY Mellon shall not be responsible for: (a) delays in the transmission to it by the Funds, the Funds' adviser and entities unaffiliated with BNY Mellon (collectively, for this Amendment, "Third

2

Parties") of data required for the preparation of reports described herein, (b) inaccuracies of, errors in or omissions of, such data provided to it by any Third Party, and (c) validation of such data provided to it by any Third Party. This Section 3 is a limitation of responsibility provision for the benefit of BNY Mellon, and shall not be used to imply any responsibility or liability against BNY Mellon.

4.The Funds, in a timely manner, shall review and comment on, and, as the Funds deem necessary, cause their counsel and/or accountants to review and comment on, each report described herein. The Funds shall provide timely sign-off of, and authorization and direction to file, each such report. Absent such timely sign-off, authorization and direction by the Funds, BNY Mellon shall be excused from its obligations to file the affected report, but only until such time as BNY Mellon receives such sign-off, authorization and direction by the Funds, at which point BNY Mellon shall promptly file the report. BNY Mellon is providing the services related to the filing of such reports based on the acknowledgement of the Funds that such services, together with the activities of the Funds in accordance with their internal policies, procedures and controls, shall together satisfy the requirements of the applicable rules and regulations for each such report.

5.The Funds shall be responsible for the retention of the filed reports described herein in accordance with any applicable rule or regulation.

6.Notwithstanding any provision of this Amendment, the services described herein are not, nor shall they be construed as constituting, legal advice or the provision of legal services for or on behalf of the Funds or any other person. Neither this Amendment nor the provision of the services establishes or is intended to establish an attorney-client relationship between BNY Mellon and the Funds or any other person.

7.As compensation for the services described herein, the Funds will pay to BNY Mellon such fees as may be agreed to in writing by the Funds and BNY Mellon. In turn, BNY Mellon will be responsible for paying the Print Vendor's fees. For the avoidance of doubt, the fees charged by the Print Vendor will not equal the fees charged by BNY Mellon, nor shall such fees be considered an out-of- pocket expense; BNY Mellon anticipates that the fees it charges hereunder will be more than the fees charged to it by the Print Vendor.

8.Miscellaneous.

(a)As hereby amended and supplemented, the Agreement shall remain in full force and effect. In the event of a conflict between the terms of this Amendment and the terms of the Agreement, the terms of this Amendment shall control with respect to the services described herein.

3

(b)This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The facsimile signature of any party to this Amendment shall constitute the valid and binding execution hereof by such party.

(c)If any provision or provisions of this Amendment shall be held to be invalid, unlawful or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

(Signature page follows.)

4

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the date and year first above written.

ON BEHALF OF EACH FUND IDENTIFIED

ON EXHIBIT 1 ATTACHED HERETO

By:_/s/ Todd Modic

Name:_Todd Modic

Title:__Senior Vice President

THE BANK OF NEW YORK MELLON

By:___/s/ Peter G. Rigopoulos

Name:_Peter G. Rigopoulos

Title:__Senior Principal, Relationship Executive

Date: February 1, 2018

5

EXHIBIT 1

Fund

Voya Asia Pacific High Dividend Equity Income Fund

Voya Balanced Portfolio, Inc.

Voya Balanced Portfolio

Voya Corporate Leaders Trust Fund

Voya Corporate Leaders® Trust Fund – Series B

Voya Emerging Markets High Dividend Equity Fund

Voya Equity Trust

Voya Large-Cap Growth Fund

Voya Large Cap Value Fund

Voya MidCap Opportunities Fund

Voya Multi-Manager Mid Cap Value Fund

Voya Real Estate Fund

Voya SmallCap Opportunities Fund

Voya SMID Cap Growth Fund

Voya U.S. High Dividend Low Volatility Fund

Voya Funds Trust

Voya GNMA Income Fund

Voya High Yield Bond Fund

Voya Intermediate Bond Fund

Voya Short Term Bond Fund

Voya Strategic Income Opportunities Fund

Voya Global Advantage and Premium Opportunity Fund Voya Global Equity Dividend and Premium Opportunity Fund Voya Infrastructure, Industrials and Materials Fund

Voya Intermediate Bond Portfolio

Voya International High Dividend Equity Income Fund

Voya Investors Trust

VY® BlackRock Inflation Protected Bond Portfolio VY® Clarion Global Real Estate Portfolio

VY® Clarion Real Estate Portfolio VY® Franklin Income Portfolio Voya Global Perspectives® Portfolio Voya High Yield Portfolio

VY® Invesco Growth and Income Portfolio

VY® JPMorgan Emerging Markets Equity Portfolio VY® JPMorgan Small Cap Core Equity Portfolio

Fund

Voya Large Cap Growth Portfolio

Voya Large Cap Value Portfolio Voya Limited Maturity Bond Portfolio

VY® Morgan Stanley Global Franchise Portfolio Voya Multi-Manager Large Cap Core Portfolio Voya Retirement Conservative Portfolio Voya Retirement Growth Portfolio

Voya Retirement Moderate Growth Portfolio Voya Retirement Moderate Portfolio

VY® T. Rowe Price Capital Appreciation Portfolio VY® T. Rowe Price Equity Income Portfolio VY® T. Rowe Price International Stock Portfolio VY® Templeton Global Growth Portfolio

Voya U.S. Stock Index Portfolio

Voya Mutual Funds

Voya CBRE Global Infrastructure Fund

Voya CBRE Long/Short Fund

Voya Diversified Emerging Markets Debt Fund

Voya Global Bond Fund

Voya Global Corporate Leaders® 100 Fund

Voya Global Equity Dividend Fund

Voya Global Equity Fund

Voya Global High Dividend Low Volatility Fund

Voya Global Perspectives® Fund

Voya Global Real Estate Fund

Voya International Real Estate Fund

Voya Multi-Manager Emerging Markets Equity Fund

Voya Multi-Manager International Equity Fund

Voya Multi-Manager International Factors Fund

Voya Multi-Manager International Small Cap Fund

Voya Russia Fund

Voya Natural Resources Equity Income Fund

Voya Partners, Inc.

VY® American Century Small-Mid Cap Value Portfolio VY® Baron Growth Portfolio

VY® Columbia Contrarian Core Portfolio VY® Columbia Small Cap Value II Portfolio Voya Global Bond Portfolio

Voya Index Solution 2020 Portfolio

Voya Index Solution 2025 Portfolio

Voya Index Solution 2030 Portfolio

Voya Index Solution 2035 Portfolio

Voya Index Solution 2040 Portfolio

Voya Index Solution 2045 Portfolio

Voya Index Solution 2050 Portfolio

Fund

Voya Index Solution 2055 Portfolio

Voya Index Solution 2060 Portfolio

Voya Index Solution Income Portfolio

VY® Invesco Comstock Portfolio

VY® Invesco Equity and Income Portfolio

VY® JPMorgan Mid Cap Value Portfolio

VY® Oppenheimer Global Portfolio

VY® Pioneer High Yield Portfolio

Voya Solution 2020 Portfolio

Voya Solution 2025 Portfolio

Voya Solution 2030 Portfolio

Voya Solution 2035 Portfolio

Voya Solution 2040 Portfolio

Voya Solution 2045 Portfolio

Voya Solution 2050 Portfolio

Voya Solution 2055 Portfolio

Voya Solution 2060 Portfolio

Voya Solution Aggressive Portfolio

Voya Solution Balanced Portfolio

Voya Solution Conservative Portfolio

Voya Solution Income Portfolio

Voya Solution Moderately Aggressive Portfolio

Voya Solution Moderately Conservative Portfolio

VY® T. Rowe Price Diversified Mid Cap Growth Portfolio

VY® T. Rowe Price Growth Equity Portfolio

VY® Templeton Foreign Equity Portfolio

Voya Separate Portfolios Trust

Voya Emerging Markets Corporate Debt Fund Voya Emerging Markets Hard Currency Debt Fund Voya Emerging Markets Local Currency Debt Fund Voya Investment Grade Credit Fund

Voya Securitized Credit Fund Voya Target In-Retirement Fund Voya Target Retirement 2020 Fund Voya Target Retirement 2025 Fund Voya Target Retirement 2030 Fund Voya Target Retirement 2035 Fund Voya Target Retirement 2040 Fund Voya Target Retirement 2045 Fund Voya Target Retirement 2050 Fund Voya Target Retirement 2055 Fund Voya Target Retirement 2060 Fund

Voya Series Fund, Inc.

Voya Global Multi-Asset Fund

Voya Corporate Leaders® 100 Fund

Voya Global Target Payment Fund

Fund

Voya Mid Cap Research Enhanced Index Fund Voya Small Company Fund

Voya Strategic Allocation Portfolios, Inc.

Voya Strategic Allocation Conservative Portfolio

Voya Strategic Allocation Growth Portfolio

Voya Strategic Allocation Moderate Portfolio

Voya Variable Funds

Voya Growth and Income Portfolio

Voya Variable Insurance Trust

VY® Goldman Sachs Bond Portfolio

Voya Variable Portfolios, Inc.

Voya Australia Index Portfolio

Voya Emerging Markets Index Portfolio Voya Euro STOXX 50® Index Portfolio Voya FTSE 100 Index® Portfolio Voya Global Equity Portfolio

Voya Hang Seng Index Portfolio Voya Index Plus LargeCap Portfolio Voya Index Plus MidCap Portfolio Voya Index Plus SmallCap Portfolio Voya International Index Portfolio Voya Japan TOPIX Index® Portfolio

Voya Russell™ Large Cap Growth Index Portfolio Voya Russell™ Large Cap Index Portfolio Voya Russell™ Large Cap Value Index Portfolio Voya Russell™ Mid Cap Growth Index Portfolio Voya Russell™ Mid Cap Index Portfolio

Voya Russell™ Small Cap Index Portfolio Voya Small Company Portfolio

Voya U.S. Bond Index Portfolio

Voya Variable Products Trust

Voya MidCap Opportunities Portfolio

Voya SmallCap Opportunities Portfolio


(k)(1)

FOURTH AMENDED AND RESTATED SHAREHOLDER SERVICE PLAN

VOYA CREDIT INCOME FUND

CLASS A SHARES

EFFECTIVE NOVEMBER 16, 2023

WHEREAS, Voya Credit Income Fund (formerly, Voya Senior Income Fund) (the "Company") engages in business as a closed-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act");

WHEREAS, the Company operates as a closed-end interval fund pursuant to Rule 23c-3 under the Act;

WHEREAS, the series to which this Shareholder Service Plan (the "Plan") applies (collectively the "Fund") are listed on Schedule A hereto, as such schedule may be revised from time to time;

WHEREAS, shares of the Company are divided into two classes of stock consisting of common stock and preferred stock;

WHEREAS, shares of common stock of the Company are divided into classes of shares of common stock, one of which is designated Class A common stock ("Class A Shares");

WHEREAS, the Company employs Voya Investments Distributor, LLC (the "Distributor") as distributor of the securities of which it is the issuer;

WHEREAS, the Company and the Distributor have entered into an Underwriting Agreement pursuant to which the Company has employed the Distributor in such capacity during the continuous offering of shares of the Company; and

WHEREAS, the Company wishes to adopt this Plan of the Fund with respect to Class A Shares as set forth hereinafter.

NOW, THEREFORE, the Company hereby adopts on behalf of the Fund with respect to its Class A Shares, and the Distributor hereby agrees to the terms of the Plan, in accordance with Rule 12b-l under the Act, on the following terms and conditions:

1.The Fund shall pay to the Distributor, as the distributor of the Class A Shares of the Fund, a service fee at the rate of 0.25% on an annualized basis of the average daily net assets of the Fund's Class A Shares, provided that, at any time such payment is made, whether or not this Plan continues in effect, the making thereof will not cause the limitation upon such payments established by this Plan to be exceeded. Such fee shall be calculated and accrued daily and paid monthly or at such intervals as the Board of Trustees shall determine, subject to any applicable restriction imposed by rules of the Financial Industry Regulatory Authority.

2.The amount set forth in paragraph 1 of this Plan may be used by the Distributor to pay securities dealers (which may include the Distributor itself) and other financial institutions and organizations for servicing shareholder accounts, including a continuing fee which may accrue immediately after the sale of shares.

3.This Plan shall not take effect until it, together with any related agreements, has been approved by votes of a majority of both (a) the Company's Board of Trustees and (b) those Trustees of the Company who are not "interested persons" of the Company (as defined in the Act) and who have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-l Trustees"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements.

4.After approval as set forth in paragraph 3, and any other approvals required pursuant to the Act and Rule 12b-1 thereunder, this Plan shall take effect at the time specified by the Company's Board of Trustees. The Plan shall continue in full force and effect as to the Class A Shares of the Fund for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 3.

5.The Distributor shall provide to the Trustees of the Company, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.

6.This Plan may be terminated as to the Fund at any time, without payment of any penalty, by vote of the Trustees of the Company, by vote of a majority of the Rule 12b-l Trustees, or by a vote of a majority of the outstanding voting securities of Class A Shares of the Fund on not more than 30 days' written notice to any other party to the Plan.

7.This Plan may not be amended to increase materially the amount of service fee provided for in paragraph 1 hereof unless such amendment is approved by a vote of the shareholders of the Class A Shares of the Fund, and no material amendment to the Plan shall be made unless approved in the manner provided for approval and annual renewal in paragraph 3 hereof.

8.While this Plan is in effect, the selection and nomination of Trustees who are not interested persons (as defined in the Act) of the Company shall be committed to the discretion of the Trustees who are not such interested persons.

9.The Company shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 5 hereof, for a period of not less than six years from the date of this Plan, any such agreement or any such report, as the case may be, the first two years in an easily accessible place.

10.In providing services under this Plan, the Distributor will comply with all applicable state and federal laws and the rules and regulations of authorized regulatory agencies.

11.The provisions of this Plan are severable as to each Fund, and any action to be taken with respect to this Plan shall be taken separately for each Fund affected by the matter.

-2 -

Date last approved by the Board of Trustees: November 16, 2023

- 3 -

SCHEDULE A

with respect to the

FOURTH AMENDED AND RESTATED SHAREHOLDER SERVICE PLAN

for

VOYA CREDIT INCOME FUND (formerly, Voya Senior Income Fund)

 

CLASS A SHARES

Fund

Maximum Service Fee

(as a percentage of average daily net assets)

Voya Credit Income Fund

0.25%

(formerly, Voya Senior Income Fund)

 

Date last updated: November 16, 2023

- 4 -


(k)(2)

FOURTH AMENDED AND RESTATED SERVICE AND DISTRIBUTION PLAN

VOYA CREDIT INCOME FUND

CLASS C SHARES

EFFECTIVE NOVEMBER 16, 2023

WHEREAS, Voya Credit Income Fund (formerly, Voya Senior Income Fund) (the "Company") engages in business as a closed-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act");

WHEREAS, the Company operates as a closed-end interval fund pursuant to Rule 23c-3 under the Act;

WHEREAS, the series to which this Service and Distribution Plan (the "Plan") applies (collectively the "Fund") are listed on Schedule A hereto, as such schedule may be revised from time to time;

WHEREAS, shares of the Company are divided into two classes of stock consisting of common stock and preferred stock;

WHEREAS, shares of common stock of the Company are divided into classes of common stock, one of which is designated Class C common stock ("Class C Shares");

WHEREAS, the Company employs Voya Investments Distributor, LLC (the "Distributor") as distributor of the securities of which it is the issuer;

WHEREAS, the Company and the Distributor have entered into an Underwriting Agreement pursuant to which the Company has employed the Distributor in such capacity during the continuous offering of shares of the Company; and

WHEREAS, the Company wishes to adopt this Plan of the Fund with respect to Class C Shares as set forth hereinafter.

NOW, THEREFORE, the Company hereby adopts this Plan on behalf of the Fund with respect to its Class C Shares, in accordance with Rule 12b-l under the Act, on the following terms and conditions:

1.A. The Fund shall pay to the Distributor, as the distributor of the Class C Shares of the Fund, a fee for distribution of the shares at the rate of 0.50% on an annualized basis of the average daily net assets of the Fund's Class C Shares, provided that, at any time such payment is made, whether or not this Plan continues in effect, the making thereof will not cause the limitation upon such payments established by this Plan to be exceeded. Such fee shall be calculated and accrued daily and paid monthly or at such intervals as the Board of Trustees shall determine, subject to any applicable restriction imposed by rules of the Financial Industry Regulatory Authority.

B.In addition to the amount provided in 1.A. above, the Fund shall pay to the Distributor, as the distributor of the Class C Shares of the Fund, a service fee at the rate of 0.25% on an annualized basis of the average daily net assets of the Fund's Class C Shares, provided that, at any time such payment is made, whether or not this Plan continues in effect, the making thereof will not cause the limitation upon such payments established by this Plan to be exceeded. Such fee shall be calculated and accrued daily and paid monthly or at such intervals as the Board of Trustees shall determine, subject to any applicable restriction imposed by rules of the FINRA.

2.The amount set forth in paragraph 1.A. of this Plan shall be paid for the Distributor's services as distributor of the shares of the Fund in connection with any activities or expenses primarily intended to result in the sale of the Class C Shares of the Fund, including, but not limited to, payment of compensation, including incentive compensation, to securities dealers (which may include the Distributor itself) and other financial institutions and organizations to obtain various distribution related and/or administrative services for the Fund. These services may include, among other things, processing new shareholder account applications, preparing and transmitting to the Fund's Transfer Agent computer processable tapes of all transactions by customers and serving as the primary source of information to customers in providing information and answering questions concerning the Fund and their transactions with the Fund. The Distributor is also authorized to engage in advertising, the preparation and distribution of sales literature and other promotional activities on behalf of the Fund. In addition, this Plan hereby authorizes payment by the Fund of the cost of printing and distributing Fund Prospectuses and Statements of Additional Information to prospective investors and of implementing and operating the Plan. Distribution expenses also include an allocation of overhead of the Distributor and accruals for interest on the amount of distribution expenses that exceed distribution fees and early withdrawal charges received by the Distributor. Payments under the Plan are not tied exclusively to actual distribution and service expenses, and the payments may exceed distribution and service expenses actually incurred.

The amount set forth in paragraph 1.B. of this Plan may be used by the Distributor to pay securities dealers (which may include the Distributor itself) and other financial institutions and organizations for servicing shareholder accounts, including a continuing fee which may accrue immediately after the sale of shares.

3.This Plan shall not take effect until it, together with any related agreements, has been approved by votes of a majority of both (a) the Company's Board of Trustees and (b) those Trustees of the Company who are not "interested persons" of the Company (as defined in the Act) and who have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-l Trustees"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements.

4.After approval as set forth in paragraph 3, and any other approvals required pursuant to the Act and Rule 12b-1 thereunder, this Plan shall take effect at the time specified by the Company's Board of Trustees. The Plan shall continue in full force and effect as to the Class C Shares of the Fund for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 3.

-2 -

5.The Distributor shall provide to the Trustees of the Company, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.

6.This Plan may be terminated as to the Fund at any time, without payment of any penalty, by vote of a majority of the Rule 12b-l Trustees, or by a vote of a majority of the outstanding voting securities of Class C Shares of the Fund on not more than thirty (30) days' written notice to any other party to the Plan. Any agreement related to this Plan with respect to the Class C shares of the Fund may be likewise terminated at any time, without payment of any penalty, by vote of a majority of the Rule 12b-1 Trustees, or by a vote of a majority of the outstanding voting securities of the Class C shares of the Fund, on not more than sixty (60) days' written notice to the Distributor. Such agreement shall terminate automatically in the event of its assignment.

7.This Plan may not be amended to increase materially the amount of distribution fee (including any service fee) provided for in paragraph 1 hereof unless such amendment is approved by a vote of the shareholders of the Class C Shares of the Fund, and no material amendment to the Plan shall be made unless approved in the manner provided for approval and annual renewal in paragraph 3 hereof.

8.While this Plan is in effect, the selection and nomination of Trustees who are not interested persons (as defined in the Act) of the Company shall be committed to the discretion of the Trustees who are not such interested persons.

9.The Trustees shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 5 hereof, for a period of not less than six years from the date of this Plan, any such agreement or any such report, as the case may be, the first two years in an easily accessible place.

10.In providing services under this Plan, the Distributor will comply with all applicable state and federal laws and the rules and regulations of authorized regulatory agencies.

11.The provisions of this Plan are severable as to each Fund, and any action to be taken with respect to this Plan shall be taken separately for each Fund affected by the matter.

Date last approved by the Board of Trustees: November 16, 2023

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SCHEDULE A

with respect to the

FOURTH AMENDED AND RESTATED SERVICE AND DISTRIBUTION PLAN

for

VOYA CREDIT INCOME FUND (formerly, Voya Senior Income Fund)

 

CLASS C SHARES

 

Maximum Combined Service and

Fund

Distribution Fees

(as a percentage of average daily net assets)

Voya Credit Income Fund

0.75%

(formerly, Voya Senior Income Fund)

Date last updated: November 16, 2023

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July 1, 2024

(K)(4)(b)

Voya Credit Income Fund

7337 E. Doubletree Ranch Road

Suite 100

Scottsdale, AZ 85258-2034

Re: Expense Limitations

Ladies and Gentlemen:

By execution of this letter agreement to the Expense Limitation Agreement ("ELA") between Voya Investments, LLC ("VIL") and Voya Credit Income Fund (the "Fund"), intending to be legally bound hereby, VIL, the investment manager to the Fund, agrees that, from July 1, 2024 through July 1, 2025, VIL shall waive all or a portion of its investment management fee and/or reimburse expenses in amounts necessary so that after such waivers and/or reimbursements, the maximum total operating expense ratios of the Fund shall be as follows:

Name of Fund

 

Maximum Operating Expense Limit

 

 

(as a percentage of managed and average net assets)

 

Class A

Class C

Class I

Class W

 

 

 

 

 

 

0.80% of

0.80% of

0.80% of

0.80% of

 

Managed Assets1

Managed Assets1

Managed

Managed Assets1

Voya Credit Income Fund

 

 

Assets1

 

plus

plus

plus

plus

 

0.45% of average

0.95% of average

0.20% of

0.20% of average

 

daily net assets

daily net assets

average daily

daily net assets

 

 

 

net assets

 

We are willing to be bound by this letter agreement to lower our fees for the period from July 1, 2024 through July 1, 2025. The method of computation to determine the amount of the fee waiver and the definitions as set forth in the ELA shall apply. VIL acknowledges that (1) it shall not be entitled to collect on or make a claim for waived fees at any time in the future, and

(2)it shall not be entitled to collect on or make a claim for reimbursed expenses at any time in the future. This letter agreement shall terminate upon termination of the ELA.

Notwithstanding the foregoing, termination or modification of this letter agreement requires approval by the Board of Trustees of the Fund.

1Managed Assets are defined as the Fund's average daily gross asset value, minus the sum of the Fund's accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of any outstanding preferred shares).

 

 

July 1, 2024

Page 2

Very sincerely,

By: /s/ Todd Modic

Name: Todd Modic

Title: Senior Vice President

Voya Investments, LLC

ACCEPTED AND AGREED TO:

Voya Credit Income Fund

By: /s/ Kimberly A. Anderson

Name: Kimberly A. Anderson

Title: Senior Vice President, Duly Authorized

 


(N)(1)

CONSENT OF COUNSEL

We hereby consent to the use of our name and the references to our firm under the caption “Legal Counsel” included in or made a part of the Registration Statement on Form N-2 for Voya Credit Income Fund under the Securities Act of 1933, as amended and Amendment No. 53 under the Investment Company Act of 1940, as amended.

                                                                                                  /s/ Ropes & Gray LLP                                                                                                                        Ropes & Gray LLP

Boston, MA

June 27, 2024


(N)(2)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the references to our firm under the captions “Financial Highlights” in the Prospectus and “Independent Registered Public Accounting Firm” and “Financial Statements” in the Statement of Additional Information each dated June 28, 2024, included in this Post-Effective Amendment No. 12 on the Registration Statement (Form N-2 No. 333-219011) of Voya Credit Income Fund (the “Registration Statement”).

We also consent to the incorporation by reference of our report dated April 26, 2024, with respect to Voya Credit Income Fund (the “Fund”) included in the Annual Reports to Shareholders (Form N-CSR) for the year ended February 29, 2024, into this Registration Statement filed with the Securities and Exchange Commission.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts

June 27, 2024


(R)

CODE OF ETHICS

Voya Investment Management LLC

Voya Investments, LLC

Voya Investment Management Co. LLC

Voya Investment Management (UK) Limited

Voya Alternative Asset Management LLC

Czech Asset Management, L.P.

Pomona Management LLC

Voya Investments Distributor, LLC

Voya Realty Group LLC

Voya Investment Trust Co.

DECEMBER 29, 2023

1.Adoption of Code of Ethics

This Code of Ethics (the "Code") has been adopted by each of the registered investment companies advised by Voya Investments, LLC (or an affiliate) and operating under the Voya funds umbrella (the "Voya funds") and by each of the following Voya Entities (collectively, referred to as "Voya Entities"):

Voya Alternative Asset Management LLC Voya Investment Management LLC Voya Investments, LLC

Voya Investment Management Co. LLC Voya Investment Management (UK) Limited Czech Asset Management, L.P.

Pomona Management LLC

Voya Investments Distributor, LLC ("VID") Voya Realty Group LLC

Voya Investment Trust Co.

The provisions of the Code are applicable to all directors, trustees, officers and persons employed or appointed by one or more of the Voya Entities as well as their immediate family members living in such designated person's household1 (collectively, referred to as "Employees") unless otherwise noted. Employees on short-term disability, whose access rights have not been revoked will still be subject to the Code. Employees on long-term disability, whose access rights have been revoked will not be subject to the Code during the leave period.

Temporary contract workers, interns, independent contractors, or independent consultants, as well as certain persons of other affiliated entities are considered "Employees" for purposes of this Code if such person provides investment advice to clients on behalf of the Voya Entities, is subject to the supervision and control of the Voya Entities, has access to nonpublic information regarding any client's purchase or sale of securities, is involved in making securities recommendations to clients, or has access to such recommendations that are nonpublic. The Chief Compliance Officer may exempt such persons from any requirement hereunder if the Chief Compliance Officer determines that such exemption would not have a material adverse effect on any client account and for those contingent workers subject to a contractual arrangement with the Voya Entities that addresses insider trading and/or similar potential conflicts of interest.

In addition, the Code is applicable to the trustees/directors of each of the Voya funds (the "Voya funds Directors").

All Employees and the Directors of the Voya funds (collectively, referred to as "Covered Persons") will be provided with a copy of this Code upon employment with the Voya Entities or appointment and notified when any material amendments are made to the Code.

1An "immediate family member" includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse (including domestic partners),

sibling and in-laws, as well as any person sharing the same household with the Employee in which the Employee contributes to the material financial support of such person. A person who holds account(s) in which the Employee is a joint owner, has trading authority, or beneficial ownership would also be considered an immediate family member, regardless of if that person lives in the same household as the Employee.

Beneficial ownership is interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the 1934 Act in determining whether a person is the beneficial owner of a security for purposes of Section 16 of the 1934 Act and the rules and regulations thereunder. Rule 16a-1(2) under the 1934 Act specifies that to have beneficial ownership, a person must have a "direct or indirect pecuniary interest", which is the opportunity to profit directly or indirectly from a transaction in securities. Thus, an Access Person may be deemed to have beneficial ownership of securities held by members of his or her immediate family sharing the same household, or by certain partnerships, trusts, corporations, or other arrangements.

The Code is not intended to supersede or otherwise replace the Voya Code of Business Conduct and Ethics. All of the policies and guidelines contained in the Voya Code of Business Conduct and Ethics shall remain in full force and effect as to Employees.

2.Covered Persons

Certification of Compliance. All Covered Persons are required to certify to the Voya IM Compliance Department annually that they have:

•read and understand the provisions contained in the Code;

•complied with all the requirements of the Code; and

•reported all transactional information required by the Code.

Generally, as an Employee of the Company, you may be held personally liable for any improper or illegal acts committed during the course of your employment; non-compliance with this policy may be deemed to encompass one of these acts. Accordingly, you must read this policy and comply with the spirit and the strict letter of its provisions. Failure to comply may result in the imposition of serious sanctions, which may include, but are not limited to, letter of written reprimand, the disgorgement of profits, cancellation of trades, selling of positions, and suspension of personal trading privileges, dismissal, and referral to law enforcement or regulatory agencies.

Covered Persons are required to certify their receipt and understanding of and compliance with the Code within ten days of becoming a Covered Person. On an annual basis, all Covered Persons are required to re-certify their understanding of and compliance with the Code. Additionally, whenever the Code is materially amended, Covered Persons must certify that they have received the amended Code and that they have read, understand, and will abide by the terms and provisions of the Code. You will be provided with timely notification of these certification requirements and directions on how to complete them by the Code of Ethics Office. Other reporting and certification requirements are set forth in the Gift & Entertainment, Political Contributions, and Personal Securities Transactions sections of this Code.

3.Violations of the Code

Employees are required to report any known or suspected violations of the Code to the Voya IM Compliance Department immediately. An Employee who violates this Code or fails to report a violation of the Code may be subject to sanctions. For example, if the same security is purchased or sold on the same day by an Employee, the Employee following a violation may be required to disgorge profits to charity. In addition, any Employee that violates the Code's pre-clearance or transaction reporting provisions may also be suspended from further trading for a period.

4.Exceptions to the Code

Exceptions to the Code will only be made under extraordinary circumstances. No exception may be granted for those sections of the Code that are mandated by regulation.

Exceptions may be made only upon prior request, and no exception will be granted subsequent to a violation of the Code. To be granted an exception to the Code, a written request regarding the nature of the exception must be made and submitted to Voya IM's Chief Compliance Officer and approved by her or him and a member of Voya IM's Management Committee. Exceptions to the Code shall be reported as applicable to the Chief Compliance Officer of the Voya funds and the Voya funds Directors.

5.Statement of Fiduciary Standards

A fiduciary is a person or organization that manages money or property for another, usually a client, and, as a result, has a legal duty to act in the best interests of that client. This Code is based on the overriding principle that the Employees have a fiduciary duty to clients, including the Voya funds, while the Voya funds' Directors of the have a fiduciary duty only to the Voya funds. Our investment advisers owe a fiduciary duty to the Clients for which they serve as an adviser or sub-adviser. Covered Persons of our investment advisers must avoid activities, interests, and relationships that could interfere or appear to interfere with our advisers' fiduciary duties. Accordingly, Covered Persons shall conduct their activities in accordance with the following standards:

5.1.Clients' Interests Come First. In the course of fulfilling their duties and responsibilities, Covered Persons must at all times place the interests of the clients (or, in the case of the Voya funds Directors, the Voya funds) first. In particular, Covered Persons shall avoid putting their own personal interests ahead of the interests of a client.

5.2.Conflicts of Interest Shall Be Avoided. Covered Persons must avoid any situations involving an actual or potential conflict of interest or possible impropriety with respect to their duties and responsibilities to, in the case of an Employee, a Voya Entity or a client of a Voya Entity or in the case of a Voya funds Director, the Voya funds.

5.3.Compromising Situations Shall Be Avoided. Covered Persons shall never take advantage of their position of trust and responsibility. Covered Persons must avoid any situation that might compromise or call into question their exercise of full independent judgment in the best interests of clients.

All activities of Covered Persons shall be guided by, and adhere to, these fiduciary standards. The remainder of this Code sets forth specific rules and procedures that are consistent with these fiduciary standards. However, all activities by Employees are required to conform to these standards regardless of whether the activity is specifically covered in this Code. Any violation of the Code by an Employee may include but not be limited to reprimand, suspension, disgorgement of trading profits and termination of employment.

6.Duty of Confidentiality

Covered Persons must keep confidential any non-public information regarding Voya, a Voya Entity, a Voya fund, and any client or any entity whose securities they know or should know are under investment review by a portfolio management team acting on behalf of a Voya Entity. Covered Persons have the highest fiduciary obligation not to reveal confidential information of any nature to any party that does not have an explicitly clear and compelling need to know such information.

All information submitted by a Covered Person to the Voya IM Compliance Department pursuant to this Code will be treated as confidential information. It may, however, be made available to senior management, governmental and governmental agencies with regulatory authority over the Voya Entities, as well as to the Voya funds Directors, and each of their auditors and legal advisors, as appropriate.

7.Covered Persons' Duty to Comply with Federal Securities Laws

Voya Entities' activities are governed by the federal securities laws, including the Investment Advisers Act of 1940, as amended (the "Advisers Act") and the Investment Company Act of 1940, as amended. Covered Persons are expected to adhere to the federal securities laws, whether or not the activity is specifically covered in this Code.

8.Personal Trading Restrictions

The restrictions of this section apply to all Employees, covered under the personal trading policies and procedures of Voya Investment Management ("Voya IM"), and to accounts over which they have the authority to make investment decisions, for all transactions involving securities.

8.1.Pre-Clearance of Securities Transactions. Except for the transactions listed below, approval must be obtained from the Voya IM Compliance Department before entering an order to buy or sell or transfer securities by gift, engaging in derivative transactions, or selling of shares in connection with margin calls. An approval to trade is only valid on the business day it is received (note: such approvals terminate at close of business day on the date such approval is granted). If you receive an approval and do not complete the trade that same day, you must seek pre-clearance to complete the trade the next (or any subsequent) business day. Except as noted below, an approval must be received for every transaction. Pre-clearance approvals for securities traded on a U.S. exchange or in a U.S. market are effective until the close of business on the day that your pre-clearance request has been approved. Pre-clearance approvals for securities traded on a foreign exchange or in a foreign market are effective until the close of business on the business day following approval of your pre-clearance request. If you want to modify your trade request previously submitted in any way (e.g., date of execution or share quantity), you must submit a new pre-clearance request.

The Voya Entities utilize a vendor system to process personal trading. All pre-clearance requests shall be made via the system, which can be accessed at: StarCompliance .

Employees assigned portfolio management or trading responsibility are prohibited from knowingly buying or selling the same security traded in an associated client account for a period of 15 days (7 days prior to the client trade and 7 days after the client trade).

8.2.Requirements for Voya Financial securities.

Employees must obtain pre-clearance for transactions involving Voya Financial securities, including:

•Open market purchases and sales;

•Gifting or making a charitable contribution of your holdings;

•Transactions in Voya Company Stock Fund in the 401(k) (other than automatic purchases made pursuant to an established payroll-deduction program, or transactions involving automatic and/or pro-rata rebalances); or

•Sales of performance shares units or restricted stock units.

Employees who wish to transact in Voya securities should consider the following before seeking pre-clearance and transacting:

•Voya Securities must be held for a minimum of 60 calendar days from the acquisition date, including the Voya Company Stock Fund in Voya 401(k) accounts.

•Prohibition of Short Selling and Derivatives of Voya Securities. Because of the heightened legal risk, the potential misalignment of your interests and those of Voya Financial and its shareholders, and the inappropriateness of engaging in speculative transactions involving Voya Financial securities, you may not engage in:

oShort sales of Voya Financial common stock. For example, you cannot sell Voya Financial common stock that you do not own, or if you own the stock, you cannot deliver it against such sale, and borrowing shares to complete the sale; or

oHedging or other transactions involving options (including exchange-traded options), puts, calls, forward contracts or other derivatives involving Voya Financial securities (excluding stock awards granted under any Voya Financial incentive plan).

•Prohibition of Trading in Voya Securities during the "Closed Period." Employees are prohibited from trading Voya Securities, including the Voya Company Stock Fund in Voya's 401(k) plan, during the "Closed Period for Voya's Financial Instruments" as set forth by Voya Financial. The Voya Closed Periods are set forth on the StarCompliance vendor system utilized to process personal trading requests.

Warning: Failure to pre-clear will result in sanctions including suspension of personal trading privileges.

8.3.Exceptions to Pre-Clearance of Securities Transactions.

•Direct obligations of the Government of the United States;

•High quality short-term debt instruments, including bankers' acceptances, bank certificates of deposit, commercial paper, money market securities and repurchase agreements;

•Shares of open-end funds, including shares held in Voya's 401(k) plan (as defined in Transactions in Voya Fund Shares, below);

•Transactions in accounts over which an Employee has no direct or indirect control or influence (managed or discretionary accounts);

•Transactions under any incentive compensation plan sponsored by the Voya Entities;

•Transactions made through an automatic dividend reinvestment plan, automatic payroll deduction or similar program (excluding Self Directed Brokerage Accounts) where the timing of purchases and sales is controlled by someone other than the Employee;

•Transactions involving Bitcoins or other cryptocurrencies;

•Transactions made through a fully discretionary Robo-Advisor program;

•An exercise of pro-rata rights issued by a company to all the holders of a class of its securities;

•On any given day, transactions involving 100 shares or less (per account) of common stock issued by companies included in the S&P 500 Index;

•On any given day, transactions involving an unaffiliated exchange-traded fund (ETF) or an exchange-traded note (ETN), other than single-stock ETFs and ETNs, that in the aggregate across all accounts do not exceed a total value of $25,000;

•Transactions involving penny stocks;

•Transactions involving listed index options, index futures, and other securities with an index as underlying; and

•Transactions involving interval closed-end funds.

While the securities transactions noted above may not need to be pre-cleared, they may need to be held and reported in accordance with the reporting requirements set forth below.

8.4.Prohibition on Initial Public Offerings and Initial Coin Offerings. Employees are prohibited from acquiring securities in initial public offerings, or initial coin offerings; except for transactions made pursuant to an employee incentive compensation, retention or other program put in place by a Voya Entity.

8.5.Restrictions on Private Placements. Employees are prohibited from acquiring non-public securities (a private placement) without the prior approval of the Voya IM Compliance Department. If an Employee is granted approval to make such a personal investment, that Employee will not participate in any consideration of whether clients should invest in the same issuer's public or non-public securities.

8.6.Borrowing Money from Suppliers or Clients. Employees may not borrow money from any of Voya IM's suppliers, consultants, or clients. However, the receipt of credit on customary terms in connection with the purchase of goods or services is not considered to be borrowing within the foregoing prohibition. In addition, acceptance of loans from other banks or financial institutions on customary terms to finance proper and usual activities, such as home mortgage loans, is permitted except where prohibited by law.

9.Intraday Trading Prohibition

Covered persons are prohibited from the purchase and sale, and sale and purchase, of the same

security, on the same day (intraday trading). This prohibition does not apply to transactions that are fully exempt from pre-clearance, reporting, and holding period requirements. Exceptions to this prohibition are subject to prior approval by Compliance.

10.Prohibition on Short-Term Trading Profits

The firm discourages its Employees from engaging short-term trading strategies for their own accounts. Any excessive or inappropriate trading that, in the firm's view, interferes with job performance,

or compromises the duty that the firm owes to its Clients, will not be tolerated. Employees must always conduct their personal trading activities lawfully, properly, and responsibly.

Employees may not profit from short-term trading, which is defined as transactions of securities, except as noted below, that are initiated and closed (the purchase and sale, or sale and purchase, of the same (or related) securities) within 60 calendar days.

Profits made in connection with short-term trades may be subject to disgorgement.

Shares of open-end funds or ETFs advised or sub-advised by the Voya Entities (including 401(k) transactions other than those involving the Voya Company Stock Fund) must be held for 30 calendar days from the purchase date. Note: The 30-calendar day holding period for shares of open-end funds advised or sub-advised by the Voya Entities is measured from the time of the most recent purchase of the shares of the relevant Voya fund.

11.Reporting Obligation

11.1.Disinterested Directors/Trustees

Voya funds Directors who are not deemed to be "interested persons" (as that term is defined under the Investment Company Act of 1940, as amended ("IC Act") of a Voya fund, its investment adviser or the adviser's affiliate (the "Disinterested Directors") must submit a quarterly report containing the information set forth in 11.2 - 11.5 below, only with respect to those transactions for which such person knew or, in the ordinary course of fulfilling his or her official duties as a Disinterested Director, should have known, that during the 15-day period immediately before or after the Disinterested Director's transaction in securities that are otherwise subject to the reporting requirements described herein, an applicable Voya und had purchased or sold the security at issue or that an investment adviser or sub-adviser for an applicable Voya fund had considered purchasing or selling such security.

11.2.Initial Disclosure of Personal Holdings. Employees are required to disclose all their personal securities holdings to the Voya IM Compliance Department within 10 days of commencing employment with a Voya Entity. The holdings report must be current as of a date not more than 45 days prior to the commencement of employment.

11.3.Securities Transaction Records. Employees should be aware that the Voya Entities maintain a list of designated broker-dealers with whom Employees may maintain a brokerage account. Employees shall notify the Voya IM Compliance Department if they intend to open, or have opened, a brokerage account. If requested, Employees shall direct their brokers to supply Compliance with duplicate confirmation statements of their securities transactions and copies of all periodic statements for their accounts. Employees must report new authorized brokerage accounts to the Compliance Department within thirty (30) days of funding the account. Note: Employees may not trade in the new account prior to reporting the account. Any brokerage account opened to facilitate cryptocurrency trading is a reportable account under the Code and must be held with an approved designated broker.

11.4.Quarterly Account and Transaction Reports. Employees are required to submit a report listing their securities transactions made during the previous quarter within 30 days of the end of each calendar quarter.

11.5.Annual Holdings Report. Employees are required to submit a report listing all securities held

as of December 31 of the year reported within 30 days of the end of the calendar year. The holdings reports must be current as of a date not more than 45 days prior to the date the report is submitted.

11.6.Information to be Reported. Employees are required to provide the following information when submitting reports as required by 11.2. through 11.5., above:

11.7.Initial and Annual Holdings Reports must include the:

•title or description and type of security, the exchange ticker symbol or CUSIP number, the number of shares or principal amount of each security;

•broker-dealer or bank where accounts are held; and

•date the report is submitted.

11.8.Quarterly Transaction Reports must include the:

•title or description and type of security, the exchange ticker symbol or CUSIP number, the number of shares and principal amount of each security (as well as the interest rate and maturity date, if applicable);

•trade date and type of transaction (i.e., buy, sell, open, close, etc.):

•price of the security;

•broker-dealer or bank account through which the transaction was affected; and

•date the report is submitted.

All reports, other than the Initial Disclosure of Personal Holdings, shall be made via the vendor system, which can be accessed at: StarCompliance .

12.Transactions in Voya Fund Shares

The following restrictions and requirements apply to all purchases and sales of shares of open-end funds advised or sub-advised by the Voya Entities other than money market and short-term bond funds ("Voya Advised Shares") and all holdings of Voya Advised Shares by Covered Persons, including those in which they have a beneficial ownership interest, except as provided below.

These restrictions and requirements do not apply to purchases of Voya Advised Shares through (1) an automatic dividend reinvestment plan; or (2) through any other automatic investment plan, automatic payroll deduction plan, or other automatic plan approved by the Voya IM Compliance Department.

12.1. Compliance with Prospectus

All transactions in Voya Advised Shares must be in accordance with the policies and procedures set forth in the Prospectus and Statement of Additional Information for the relevant fund, including but not limited to the fund's policies and procedures relating to short-term trading and forward pricing of securities.

12.2. Additional Restrictions

Certain Covered Persons may be considered insiders to a closed-end fund advised or sub- advised by the Voya Entities. In such cases, these persons will be notified of their status as well as advised of additional restrictions imposed on them and their ability to transact in such closed-end fund.

Solely to facilitate compliance with timely Form 4 and 5 filing requirements with the Securities and Exchange Commission, all such insiders must submit a written report of any transaction involving the closed-end fund on the trade date of such transaction to the Voya IM Compliance Department.

13.Voya IM Gift & Entertainment Policy

As a general rule, an Employee should not give or accept an inappropriate or significant gift or entertainment to/from a third party that has any business dealings with Voya Financial. The following provides guidelines related to the giving or acceptance of gifts, entertainment or non-cash compensation by Voya IM Employees. All Voya IM Employees who are also Financial Industry Regulatory Authority ("FINRA") registered representatives ("RRs") are, to the extent they are conducting business on behalf of Voya IM, do so under Voya Investments Distributor, LLC ("VID"), a registered broker-dealer with the SEC and a member of FINRA. VID is a subsidiary of Voya IM(Note: those requirements are described more fully in the VID Written Supervisory Procedures).

This Policy should be read in conjunction with the Voya Financial Gift, Entertainment, and Conflicts of Interest Policy.

13.1. Nominal Business Gifts and Business Entertainment

Giving or receiving gifts in a business setting may give rise to an appearance of impropriety or raise a potential conflict of interest. It could also, depending on facts and circumstances, qualify as paying or receiving non-cash compensation for a testimonial or endorsement under Rule 206(4)-

1.As a general rule, Employees should not give to or accept from a third party (e.g., client, broker, or vendor) any gift or gratuity. However, gifts less than $100 per year per person as well as occasional, normal and customary meals and/or business entertainment (where the person providing the entertainment is present) that on a fair market value basis does not exceed $300 per incident (note: dinner and a show or golf and lunch would be considered one business entertainment event) or $1,000 per year, the cost of which would be paid for by Voya IM as a reasonable business expense if not paid for by the third party, and which is not given or accepted in exchange for a testimonial or endorsement, are permitted. Any gifts or entertainment in excess of these limits should be declined or returned. If it is not practical to return a gift, provide it the Human Resources Department for donation. In the case of a perishable item worth more than $100, the gift may be shared with the Covered Person's entire department.

Ultimately, except for personal gifts explained more fully below, gifts or entertainment must have a clear connection with Voya IM's business and are not permitted if an independent third party might think that the Employee would be influenced in conducting business or might otherwise provide an endorsement of that third party. Any gift or entertainment given or received in connection with Voya IM giving or receiving a testimonial or endorsement will qualify as a paid testimonial or endorsement under Rule 206(4)-1. While gifts and entertainment under $1,000 are considered "de minimis" compensation and testimonials/endorsements given for de minimis compensation are exempt from some of the provisions of Rule 206(4)-1, such arrangements with third parties are still

subject to adviser oversight and required disclosures. Employees should seek prior approval from the Legal and Compliance Departments prior to engaging in a testimonial or endorsement arrangement.

Family members (including domestic partners) of Employees are not permitted to accept fees, gifts, entertainment, invitations to seminars/conferences, payments or other favors in connection with any business of Voya IM. Any questions should be directed to your supervisor or Compliance Officer, and in the case of FINRA registered representatives conducting business on behalf of a Voya IM broker-dealer, your broker-dealer supervisor.

Employees who plan to gift or entertain anyone affiliated with a public entity, including but not limited to state and municipal pension plans, have a special responsibility to both know and adhere to the policy stated above, and to comply fully with additional policies, procedures, and restrictions placed on such Employees by statue statutes, municipal regulations or internal policies. Public entity employees may be under an even more stringent restrictions or outright prohibitions with regard to receipt of meals and entertainment. Any Voya employee seeking to entertain a public entity employee should first check with Compliance/Legal to see what, if any, additional restrictions may apply. Compliance and Legal can assist in determining what such restrictions are prior to the gifting or entertaining of such individuals.

Voya IM generally restricts employees from providing gifts and/or entertainment to government officials. However, under certain circumstances, expenditure for meals, entertainment and other normal social amenities for government officials may be permitted, provided it is not extravagant and otherwise complies with the laws and customs of the state or country in which the expenditure is incurred. Similarly, gifts may be given only if the gifts are of reasonable value and conform to laws and normal social customs in the recipient's state or country.

Any employee seeking to provide gifts, entertainment, or social amenities to a government official should obtain prior authorization from their Executive Leadership Team representative and from Compliance. This request should be submitted through StarCompliance.

•Gifts

The following are some guidelines or examples of acceptable gifts. These guidelines also apply when Employees are attending conferences sponsored by Clients, prospects, brokers, vendors and other third parties.

–An acceptable gift may not exceed a face value of $100 per third party, per year.

–Purely personal gifts are permissible. Personal gifts are gifts that serve a personal (not business) purpose, are paid by the giver (not the giver's employer) and are between close friends or family members (e.g., gifts that are related to commonly recognized personal events, such as births, promotion, wedding, or retirement).

–Discounts or rebates on merchandise or services that do not exceed those available to arm's length clients. The final total cost or value of goods or services is subject to a $100 limit per third party, per year.

–Occasional gifts with a modest nominal value and that are widely distributed and include a company logo (e.g., shirts, caps, pens, books, bags, cups, golf balls, towels, desk ornaments) do not count toward the annual limit as long as they are infrequent and the reasonably estimated value of the item does not exceed $50. Receipt of such gifts is permitted without

any approval or reporting obligation.

•Business Meals and Entertainment

The following are some guidelines regarding acceptable business meals and entertainment. These guidelines also apply when employees are attending conferences sponsored by Clients, prospects, brokers, vendors and other third parties.

–Normal, customary, and occasional business meals or entertainment where the meal or entertainment takes place in one event and the person providing the entertainment is present. A good test is whether Voya IM would consider such an expense reasonable, if not paid for by a third party. Also, a good rule of thumb is whether an Employee can eat, drink, or enjoy the entertainment in one sitting.

–Business meals and entertainment should be consistent with FINRA guidance and advice. As such, the total fair market value of the event may not exceed $300 per Employee, per event (note: dinner and a show or golf and lunch would be considered one event), subject to an annual maximum amount of $1,000 per third party. .2

–Entertainment, such as tickets to sporting events, golf fees, or ski lift tickets, will be evaluated based on the published ticket price. Again, in all cases both the giver and the recipient must be present.

–The cost of local transportation does not count towards the $300 per event/$1,000 annual limit, provided that the mode of transportation must be reasonable. Any travel and lodging related to the event should be paid for by Voya IM subject to the Voya IM Travel and Expenses policies and procedures.

Any exceptions to the above guidelines must be approved by the Employee's manager and an Executive Leadership Team representative prior to acceptance.

In order to monitor compliance, employees are required to regularly report the receipt of gifts and entertainment (via StarCompliance) and regularly certify that they have complied with the Voya IM Gifts

&Entertainment Policy.

14.Outside Business Activities

14.1. Outside Business Interests and Private Investments

All Employees are required to devote their full time and efforts to the business of Voya IM. You are not to maintain outside employment activities that compromise job performance or interfere with your regular duties. In addition, no person may make use of either his or her position as an Employee or information acquired during employment or make personal investments in a manner that may create a conflict, or the appearance of a conflict, between the Employee's personal interests and the interests of Voya IM.

2Nominal lunches (e.g., snacks, sandwiches) provided by a broker-dealer during business-related meetings on company premises are exempt from reporting.

To assist in ensuring that such conflicts are avoided, an Employee must obtain the written approval of the Employee's supervisor and the Compliance Department prior to:

•Serving as a director, officer, general partner or trustee of, or as a consultant to, any business, corporation or partnership, including family-owned businesses and charitable, non-profit and political organizations.

•Serving as a registered representative of any broker-dealer other than VID.

•Making any monetary investment in any non-publicly traded business, corporation or partnership, including passive investments in private companies.

•Accepting employment of any kind or engaging in any other business outside of Voya IM.

•Acting or representing that the Employee is acting as agent for Voya IM, an Adviser or any other firm in any investment banking matter or as a consultant or finder.

•Forming or participating in any stockholders' or creditors' committee that purports to represent security holders or claimants in connection with a bankruptcy or distressed situation or in becoming actively involved in a proxy contest (see also Personal Trading Restrictions above).

•Receiving compensation of any nature, directly or indirectly, from any person, firm, corporation, estate, trust or association other than Voya IM, whether as a fee, commission, bonus or other consideration such as stock, options or warrants other than compensation earned prior to commencement of employment with Voya IM.

Every Employee is required to complete a disclosure form on the StarCompliance site and have such form approved by the Employee's supervisor and Compliance prior to serving in any of the capacities or making any of the investments described heretofore. Similarly, each Employee is required to maintain the data initially disclosed on such form and notify Compliance (and the Employee's supervisor) in the event of any change to the information provided after initial approval. From time to time, Employees may be asked to renew their OBA information.

In addition, an Employee must advise the Legal Department and his or her supervisor if the Employee is or believes that he or she may become a participant, either as a plaintiff, defendant or witness, in any litigation or arbitration that could reasonably relate to the business of Voya IM. Written confirmation of such advice should be obtained from the Employee's supervisor and the Legal Department.

14.2. "Control" Persons of Public Companies

Every Employee must disclose to Voya IM if their spouse, domestic partner, or any of their parents, siblings or children, regardless of living in the same household, ("family members") hold a position as a director or executive officer of any public company. Voya IM may, in its sole discretion, place limitations on an Employee's investment activities in the event an Employee's family member holds a position as a director or executive officer of any public company. Similarly, each Employee is required to maintain the data initially disclosed on such form and notify the Compliance Department (and the Employee's supervisor) in the event of any change after initial approval.

From time to time, an Employee of Voya IM may be offered a position as an executive officer or director of a publicly traded company, which, if accepted, would subject the Employee to requirements arising under Section 16 of the 1934 Act ("Section 16"). Prior to accepting the position,

the Employee must receive clearance from the Chief Compliance Officer and a member of the Voya IM senior management team. If the Employee is permitted to accept the position, the Employee will also be subject to the following procedures:

•Trades for client accounts or funds over which the Employee has sole or shared investment discretion must also comply with the publicly traded company's policies and procedures. It is the responsibility of the Employee to understand and adhere to such company's reporting requirements.

•Appropriate disclosure must be provided to affected clients. The disclosure can be provided via offering documents or other communications sent to affected investors.

•In accordance with Voya IM's policies on confidential information and insider trading, the Employee may not, under any circumstances, trade in the company's securities – whether for personal or client accounts – if the Employee is in possession of material non-public information regarding the company. Likewise, material non- public information regarding the company may not be shared with other Voya IM personnel, other than the Voya IM Legal or Compliance Department.

14.3.Political Activity

While Voya maintains a political action committee, political contributions from Advisers or

their respective Employees may raise various legal and regulatory issues. Most notably, Rule 206(4)- 5 under the Advisers Act prohibits an Adviser from receiving compensation from a government entity for two years if the Adviser or certain Employees contributed money to a government official who is in a position to influence the selection of the Adviser to manage a public fund or provide investment advice to a government entity. Also, some states and municipalities may have laws disqualifying an Adviser from managing assets for various governmental entities if the Adviser or certain of its representatives have made contributions or provided gifts to certain candidates for office. To ensure compliance with these laws and to avoid actual and potential conflicts of interest, Voya IM has adopted the procedures described below, which requires pre-approval by Compliance and the Voya Political Activity Review Committee ("PARC") of certain political activities. The activities requiring pre-approval and the procedures for obtaining pre-approval are set out below.

Prior to making any personal contribution (whether it be monetary, or event driven, such as hosting a fundraiser) in an individual capacity to an incumbent or candidate, political party committee or political action committee at the state or local level (including a current state or local government Employee running for federal office), all Employees of Voya IM must submit a request for approval from Compliance and PARC through the StarCompliance site, which can be accessed at StarCompliance .

•All political contributions to a state or local governmental official in an amount equal to or exceeding $150 will also require pre-approval from the Employee's manager.

•Personal political activities of Employees must be kept separate from employment and any expenses related to these activities may not be charged to an Adviser; personal political contributions will not be reimbursed. Also, Employees are not to use Voya IM's facilities (such as telephones and photocopiers) and may not use working hours for political campaign purposes.

•When acting in a volunteer capacity to a candidate running for office at the state or local level, you must obtain pre-approval from Compliance. All requests must be submitted through the StarCompliance site. For volunteer activity, it is important that your activities cannot be viewed as connected with your position with Voya IM. To the extent that your volunteer activity involves soliciting or fundraising for political contributions, you will also be required to obtain pre-approval from Compliance.

•Employees should take extra care when soliciting fellow Employees to ensure that the solicitation never gives the appearance of being coercive or otherwise related to their employment.

•Employees who seek or are appointed to any government position, federal, state or local, paid or unpaid, must obtain pre-approval from Compliance of such activity to ensure compliance with applicable conflict of interest laws. All requests must be submitted through the StarCompliance site.

•Employees may not engage in any lobbying activities on behalf of Voya IM or any affiliated entity without prior approval from Compliance. Please contact the Compliance Department if you are not sure whether your activities would be considered lobbying.

The use of an Adviser's funds in connection with an election is generally prohibited by law. In order to avoid any allegations of impropriety, it is Voya IM's policy that its funds may not be contributed to federal, state or local election campaigns. Any exception to this item, such as requests for company support of political events, political candidates and their campaigns, political parties or political action committees, must be pre-approved by Compliance. All requests must be submitted through the StarCompliance site, which can be accessed at StarCompliance .

•Employee participation in PARC is strictly voluntary.

•Gifts to government officials, including entertainment and meals, are generally prohibited.

•State and local laws dealing with campaign fund raising vary from jurisdiction to jurisdiction. Some laws expressly prohibit government officials from contracting, on behalf of their political organizations, with any firm(s) whose employees have made a donation to that official's political campaign.

Voya IM Employees are required to complete a Political Contribution/Activity Certification on a quarterly basis. Please note that Compliance will keep necessary records based on the information gathered, in compliance with SEC Rule 204-2.

Note: all references to Employees in this Section also apply to an Employee's immediate family members.

Code of Ethics Guide – Securities Transactions Matrix

Type of Security

Pre-Clearance

Reporting

Holding Period

Required

Required

 

 

 

 

 

 

Covered Securities Transactions for Pre-Clearance

 

 

 

 

Stocks (common or preferred)

Yes

Yes

60 calendar days from purchase

 

 

 

 

Warrants and Rights

Yes

Yes

60 calendar days from purchase

 

 

 

 

Depository Receipts (ADRs or

Yes

Yes

60 calendar days from purchase

GDRs)

 

 

 

 

 

 

 

Fixed Income Securities (excluding

 

 

 

direct obligations of the U.S.

Yes

Yes

60 calendar days from purchase

Government)

 

 

 

 

 

 

 

Closed-End Funds, including. closed-

 

 

 

end funds advised or sub-advised by

Yes

Yes

60 calendar days from purchase

the Voya Entities

 

 

 

 

 

 

 

Single-Stock ETFs and ETNs

Yes

Yes

60 calendar days from purchase

 

 

 

 

On a given day, transactions in an

 

 

 

ETF or ETN that in the aggregate

Yes

Yes

N/A

exceed $25,000

 

 

 

 

 

 

 

Structured Notes

Yes

Yes

60 calendar days from purchase

 

 

 

 

Derivatives on an individual stock

Yes

Yes

60 calendar days from purchase

 

 

 

 

Transactions involving Voya

 

 

 

securities, including the Voya

Yes

Yes

60 calendar days from purchase

Company Stock Fund in Voya's

 

 

 

401(k) plan accounts

 

 

 

 

 

 

 

Sales of Voya performance shares

 

 

 

units (PSU) and restricted stock units

Yes

Yes

N/A

(RSU) acquired from a vesting

 

 

 

 

 

 

 

Sales of Restricted Stock

Yes

Yes

N/A

 

 

 

 

Sales of stock acquired via Stock

 

 

 

Purchase Plans including sales of

Yes

Yes

N/A

Voya stock acquired through Voya's

 

 

 

Stock Purchase Plan

 

 

 

 

 

 

 

Private Investments and Outside Activities

 

 

 

 

Type of Security

Pre-Clearance

Reporting

Holding Period

Required

Required

 

 

 

 

 

 

Private Placements

Yes

Yes

N/A

 

 

 

 

Outside Activities

Yes

Yes

N/A

 

 

 

 

Transactions Exempt from Pre-Clearance

 

 

 

 

Direct obligations of the U.S.

No

No

N/A

Government

 

 

 

 

 

 

 

High quality short-term debt

 

 

 

instruments

 

 

 

Including: Bankers' acceptances,

No

No

N/A

bank certificates of deposit,

 

 

 

commercial paper, money market

 

 

 

securities and repurchase agreements

 

 

 

 

 

 

 

On a given day, transactions in an

 

 

 

ETF or ETN, other than single-stock

 

 

 

ETFs or ETNs, that are not advised

No

Yes

N/A

or sub-advised by the Voya Entities

 

 

 

and in the aggregate, do not exceed

 

 

 

$25,000

 

 

 

 

 

 

 

Open-End Funds that are not advised

No

No

N/A

or sub-advised by the Voya Entities

 

 

 

 

 

 

 

Open-End Funds and ETFs advised

 

 

30 calendar days from the most

or sub-advised by the Voya Entities

No

Yes

Including: funds held within the

recent purchase date of the

 

 

relevant fund

Voya 401(k)

 

 

 

Derivatives on an ETF or ETN

 

 

 

(excluding those on single-stock

No

Yes

N/A

ETFs or ETNs)

 

 

 

 

 

 

 

Managed or discretionary accounts

No

Yes

N/A

 

 

 

 

Incentive compensation plan

No

Yes

N/A

sponsored by the Voya Entities

 

 

 

 

 

 

 

Automatic dividend reinvestment

 

 

 

plan, automatic payroll deduction

No

Yes

N/A

Excluding: Self Directed Brokerage

 

 

 

 

 

 

 

Bitcoin or other cryptocurrencies

No

No

N/A

 

 

 

 

Exercise of pro-rata rights issued by

No

Yes

N/A

a company to all the holders of a

 

 

 

 

 

 

 

Type of Security

Pre-Clearance

Reporting

Holding Period

 

 

Required

Required

 

 

 

 

 

 

 

 

 

class of its securities

 

 

 

 

 

 

 

 

 

On any given day, transactions

 

 

 

 

involving 100 shares or less (per

 

 

 

 

account) of common stock issued by

No

Yes

60 calendar days from purchase

 

companies included in the S&P 500

 

 

 

 

Index

 

 

 

 

 

 

 

 

 

Penny stocks

No

Yes

60 calendar days from purchase

 

 

 

 

 

 

Index options, index futures, and

 

 

 

 

other securities with an index as

No

Yes

N/A

 

underlying

 

 

 

 

 

 

 

 

 

Interval closed-end funds

No

Yes

60 calendar days from purchase

 

 

 

 

 

 

Prohibited Investments

Short sales of Voya Financial common stock

Hedging or other transactions involving options (including exchange-traded options), puts, calls, forward contracts or other derivatives involving Voya Financial securities (excluding stock awards granted under any Voya Financial incentive plan)

Trading in securities issued by Voya during the "Closed Period for Voya Financial Instruments"

Initial Public Offerings

Initial Coin Offerings

Borrowing Money from Clients/Suppliers

Other Key Reminders

Employees assigned portfolio management or trading responsibility are prohibited from knowingly buying or selling the same security traded in an associated client account for a period of 15 days (7 days prior to the client trade and 7 days after the client trade)

Approvals for U.S. securities are effective until the close of business on the day that pre-clearance request is approved.

Approvals for foreign securities are effective until the close of business on the business day following pre-clearance approval.


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v3.24.1.1.u2
N-2
Jun. 27, 2024
USD ($)
shares
Cover [Abstract]  
Entity Central Index Key 0001124959
Amendment Flag false
Entity Inv Company Type N-2
Securities Act File Number 333-219011
Investment Company Act File Number 811-10223
Document Type N-2
Document Registration Statement true
Pre-Effective Amendment false
Post-Effective Amendment true
Post-Effective Amendment Number 12
Investment Company Act Registration true
Investment Company Registration Amendment true
Investment Company Registration Amendment Number 53
Entity Registrant Name VOYA CREDIT INCOME FUND
Entity Address, Address Line One 7337 E. Doubletree Ranch Road
Entity Address, Address Line Two Suite 100
Entity Address, City or Town Scottsdale
Entity Address, State or Province AZ
Entity Address, Postal Zip Code 85258
City Area Code 800
Local Phone Number 992-0180
Approximate Date of Commencement of Proposed Sale to Public As soon as practicable after the effective date of this Registration Statement.
Dividend or Interest Reinvestment Plan Only false
Delayed or Continuous Offering true
Primary Shelf [Flag] false
Effective Upon Filing, 462(e) false
Additional Securities Effective, 413(b) false
Effective when Declared, Section 8(c) false
Effective upon Filing, 486(b) false
Effective on Set Date, 486(b) true
Effective on Date, 486(b) Jun. 28, 2024
Effective after 60 Days, 486(a) false
Effective on Set Date, 486(a) false
New Effective Date for Previous Filing false
Additional Securities. 462(b) false
No Substantive Changes, 462(c) false
Exhibits Only, 462(d) false
Registered Closed-End Fund [Flag] true
Business Development Company [Flag] false
Interval Fund [Flag] true
Primary Shelf Qualified [Flag] false
Entity Well-known Seasoned Issuer No
Entity Emerging Growth Company false
New CEF or BDC Registrant [Flag] false
Fee Table [Abstract]  
Shareholder Transaction Expenses [Table Text Block]
Class
Class A
Class C
Class I
Class W
Shareholder Transaction Expenses
 
 
 
Maximum sales charge on your investment (as a percentage of offering price)
1
2.50%
2
None
None
None
Dividend Reinvestment and Cash Purchase Plan Fees
None
None
None
None
Early Withdrawal Charge
None
3
1.00%
3
None
None
Exchange Fee
None
None
None
None
Annual Expenses (as a percentage of average net assets attributable to Common Shares)
 
 
 
Management Fees
4
1.07%
1.07%
1.07%
1.07%
Service Fee
0.25%
0.25%
None
None
Distribution Fee
5
None
0.50%
None
None
Interest Expense on Borrowed Funds
2.38%
2.38%
2.38%
2.38%
Other Operating Expenses
6
0.50%
0.50%
0.50%
0.50%
Total Annual Expenses
4.20%
4.70%
3.95%
3.95%
Fee Waivers/Reimbursements/Recoupment
7
(0.31)%
(0.31)%
(0.31)%
(0.31)%
Net Annual Expenses
8
3.89%
4.39%
3.64%
3.64%
1
The Distributor will pay a dealer reallowance for Class A Common Shares from the sales charge. The Distributor will pay a sales commission for Class C Common Shares to
authorized dealers from its own assets.
2
Reduced for purchases of $100,000 and over for Class A Common Shares, please see
“
Sales Charges.
”
3
There is no front-end sales charge if you purchase Class A Common Shares in the amount of $500,000 or more. Class A Common Shares purchased in an amount of $500,000
or more are subject to a 1.00% EWC if repurchased by the Fund within 12 months of purchase. Class C Common Shares repurchased by the Fund within the first year after
purchase will incur a 1.00% EWC. See
“
Sales Charges - Early Withdrawal Charge.
”
No EWC will be charged on redemptions that are due to the closing of shareholder accounts
having a value of less than $1,000.
Other Transaction Expenses [Abstract]  
Annual Expenses [Table Text Block]
Class
Class A
Class C
Class I
Class W
Shareholder Transaction Expenses
 
 
 
Maximum sales charge on your investment (as a percentage of offering price)
1
2.50%
2
None
None
None
Dividend Reinvestment and Cash Purchase Plan Fees
None
None
None
None
Early Withdrawal Charge
None
3
1.00%
3
None
None
Exchange Fee
None
None
None
None
Annual Expenses (as a percentage of average net assets attributable to Common Shares)
 
 
 
Management Fees
4
1.07%
1.07%
1.07%
1.07%
Service Fee
0.25%
0.25%
None
None
Distribution Fee
5
None
0.50%
None
None
Interest Expense on Borrowed Funds
2.38%
2.38%
2.38%
2.38%
Other Operating Expenses
6
0.50%
0.50%
0.50%
0.50%
Total Annual Expenses
4.20%
4.70%
3.95%
3.95%
Fee Waivers/Reimbursements/Recoupment
7
(0.31)%
(0.31)%
(0.31)%
(0.31)%
Net Annual Expenses
8
3.89%
4.39%
3.64%
3.64%
4
Pursuant to the investment management agreement with the Fund, the Investment Adviser is paid a fee of 0.80% of the Fund's Managed Assets. For the description of
“
Managed
Assets,
”
please see
“
Description of the Fund – Investment Adviser/Sub-Adviser
”
earlier in this Prospectus.
5
Because the distribution fees payable by Class C Common Shares may be considered an asset-based sales charge, long-term shareholders in that class of the Fund may pay
more than the economic equivalent of the maximum front-end sales charges permitted by the Financial Industry Regulatory Authority.
6
Other Operating Expenses are estimated amounts for the current fiscal year.
7
The Investment Adviser is contractually obligated to limit expenses of the Fund through
July 1, 2025
to the following: Class A Common Shares - 0.90% of Managed Assets
plus 0.45% of average daily net assets; Class C Common Shares - 0.90% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.90% of
Managed Assets plus 0.20% of average daily net assets; and Class W Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets. The obligation is
subject to possible recoupment by the Investment Adviser within 36 months of the waiver or reimbursement. The Investment Adviser is contractually obligated to further limit
expenses of the Fund through
July 1, 2025
to the following: Class A Common Shares - 0.80% of Managed Assets plus 0.45% of average daily net assets; Class C Common
Shares - 0.80% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.80% of Managed Assets plus 0.20% of average daily net assets; and
Class W Common Shares - 0.80% of Managed Assets plus 0.20% of average daily net assets. These limitations do not extend to interest, taxes, investment-related costs,
leverage expenses, extraordinary expenses, and Acquired Fund Fees and Expenses. Termination or modification of these obligations requires approval by the Fund’s Board.
8
If the expenses of the Fund are calculated on the Managed Assets of the Fund (assuming that the Fund has used leverage by borrowing an amount equal to 25% of the Fund’s
Managed Assets), the Net Annual Expenses for the Fund would be lower than the expenses shown in the table. Such lower Net Annual Expense ratios would be as follows:
2.99
%,
3.49
%,
2.74
%, and
2.74
% for Class A, Class C, Class I, and Class W shares, respectively.
Other Annual Expenses [Abstract]  
Expense Example [Table Text Block]
Examples
The following Examples show the amount of the expenses that an investor in the Fund would bear on a $1,000 investment
in the Fund that is held for the different time periods in the table. In the first table, it is assumed that the $1,000
remains invested over the entire 10-year period. As a result, no EWCs are included in the listed expense amounts.
The second table assumes that the $1,000 investment is tendered and repurchased at the end of each period shown.
As a result, EWCs are imposed on certain of those repurchases.
The Examples assume that all dividends and other distributions are reinvested at NAV and that the percentage amounts
listed under Net Annual Expenses in the previous table remain the same in the years shown (except that the Fee
Waivers/Reimbursements only apply for the first year). The tables and the assumption in the Examples of a 5% annual
return are required by regulations of the SEC applicable to all investment companies. The assumed 5% annual return
is not a prediction of, and does not represent, the projected or actual performance of the Fund's Common Shares.
For more complete descriptions of certain of the Fund's costs and expenses, see
“
Classes of Shares,
”
“
Sales Charges,
”
and
“
Investment Management and Other Service Providers.
”
 
Example #1
—
No Repurchases
 
 
1 Year
3 Years
5 Years
10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return and borrowings by the
Fund in an amount equal to 25% of its Managed Assets.
Class A Common Shares
 
$
64
151
241
481
Class C Common Shares
 
$
47
149
253
527
Class I Common Shares
 
$
37
120
206
436
Class W Common Shares
 
$
37
120
206
436
 
 
Example #2
—
With Repurchases at Period End
 
 
1 Year
3 Years
5 Years
10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return, borrowings by the
Fund in an amount equal to 25% of its Managed Assets, and the tender and repurchase of the entire investment at
the end of each period shown.
Class A Common Shares
 
$
64
151
241
481
Class C Common Shares
 
$
57
149
253
527
Class I Common Shares
 
$
37
120
206
436
Class W Common Shares
 
$
37
120
206
436
The purpose of each table is to assist you in understanding the various costs and expenses that an investor in the
Fund will bear directly or indirectly. See
“
Classes of Shares - Choosing a Share Class.
”
The foregoing Examples should not be considered a representation of future expenses and actual expenses may be
greater or less than those shown.
Purpose of Fee Table , Note [Text Block]
This table is intended to assist investors in understanding the various costs and expenses directly or indirectly associated
with investing in the Fund. The cost you pay to invest in the Fund varies depending upon which class of Common
Shares you purchase. In accordance with SEC requirements, the table below shows the expenses of the Fund, including
interest expense on borrowings, as a percentage of the average net assets of the Fund and not as a percentage of
gross assets or Managed Assets. By showing expenses as a percentage of the average net assets, expenses are not
expressed as a percentage of all of the assets that are invested for the Fund. The table below assumes that the Fund
has borrowed an amount equal to 25% of its Managed Assets. For information about the Fund’s expense ratios if the
Fund had not borrowed, see
“
Risk Factors and Special Considerations - Annual Expenses Without Borrowings.
”
Investors
investing in the Fund through an intermediary should consult the Appendix to this Prospectus, which includes information
regarding financial intermediary specific sales charges and related discount policies that apply to purchases through
certain specified intermediaries.
Other Expenses, Note [Text Block] Other Operating Expenses are estimated amounts for the current fiscal year.
General Description of Registrant [Abstract]  
Investment Objectives and Practices [Text Block]
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The Fund's investment objective is to provide investors with a high level of monthly
income
. The investment objective
is fundamental and may not be changed without a majority vote of the shareholders of the Fund. See
“
Description of
the Fund – Fundamental and Non-Fundamental Investment Policies of the Fund
”
later in this Prospectus. The Fund
seeks to achieve this investment objective by investing in the types of assets described below:
The Fund allocates its assets among a broad range of credit sectors, including corporate debt securities, loans, high
yield debt securities, and collateralized loan obligations. The Fund seeks to achieve its investment objective by investing,
under normal market conditions, at least 80% of its net assets (plus borrowings for investment purposes) in floating-rate
obligations, fixed-income securities, and derivative instruments intended to provide economic exposure to such credit
sectors. The Fund will provide shareholders with at least 60 days’ prior notice of any change in this investment policy.
Fundamental Policies
1.
Industry Concentration.
The Fund may invest in any industry. The Fund may not invest more than 25% of its total
assets, measured at the time of investment, in any single industry.
2.
Borrower Diversification.
The Fund is diversified, as such term is defined in the 1940 Act. A diversified fund may
not, as to 75% of its total assets, invest more than 5% of its total assets in any one issuer and may not purchase
more than 10% of the outstanding voting securities of any one issuer (other than securities issues or guaranteed
by the U.S. government or any of its agencies or instrumentalities, or other investment companies). The Fund will
consider the borrower on a loan, including a loan participation, to be the issuer of such loan. With respect to no
more than 25% of its total assets, the Fund may make investments that are not subject to the foregoing restrictions.
These fundamental policies may only be changed with approval by a majority of all shareholders. See
“
Description of
the Fund – Fundamental and Non-Fundamental Investment Policies of the Fund
”
later in this Prospectus.
Investment Policies
The Investment Adviser and Sub-Adviser follow certain investment policies set by the Fund's Board. Some of those
policies are set forth below. Please refer to the SAI for additional information on these and other investment policies.
Use of Leverage.
The Fund may borrow money and issue Preferred Shares to the fullest extent permitted by the 1940
Act. See
“
Investment Objective and Policies - Policy on Borrowing
”
and
“
Investment Objective and Policies - Policy on
Issuance of Preferred Shares.
”
Policy on Borrowing
The Fund has a policy of borrowing for investment purposes. The Fund seeks to use proceeds from borrowing to acquire
loans and other investments which pay interest at a rate higher than the rate the Fund pays on borrowings. Accordingly,
borrowing has the potential to increase the Fund's total income available to holders of its Common Shares. The Fund
may also borrow to finance the repurchase of its Common Shares or to meet cash requirements.
The Fund may issue notes, commercial paper, or other evidences of indebtedness and may be required to secure
repayment by mortgaging, pledging, or otherwise granting a security interest in the Fund's assets. The terms of any
such borrowings will be subject to the provisions of the 1940 Act and they will also be subject to the more restrictive
terms of any credit agreements relating to borrowings and, to the extent the Fund seeks a rating for borrowings, to
additional guidelines imposed by rating agencies, which are expected to be more restrictive than the provisions of
the 1940 Act. The Fund is permitted to borrow an amount up to 33
 1
∕
3
%, or such other percentage permitted by law,
of its total assets (including the amount borrowed) less all liabilities other than borrowings. See
“
Risk Factors and
Special Considerations - Leverage
”
and
“
Risk Factors and Special Considerations - Restrictive Covenants and 1940
Act Restrictions.
”
Policy on Issuance of Preferred Shares
The Fund has a policy which permits it to issue Preferred Shares for investment purposes. The Fund seeks to use the
proceeds from Preferred Shares to acquire loans and other investments which pay interest at a rate higher than the
dividends payable on Preferred Shares. The terms of the issuance of
Preferred
Shares are subject to the 1940 Act
and to additional guidelines imposed by rating agencies, which are more restrictive than the provisions of the 1940
Act. Under the 1940 Act, the Fund may issue Preferred Shares so long as immediately after any issuance of Preferred
Shares the value of the Fund's total assets (less all Fund liabilities and indebtedness that is not senior indebtedness)
is at least twice the amount of the Fund's senior indebtedness plus the involuntary liquidation preference of all outstanding
Preferred Shares. See
“
Risk Factors and Special Considerations - Leverage.
”
As of June 6, 2024 the Fund had
no
Preferred Shares outstanding.
Risk Factors [Table Text Block]
Principal Risks
Company:
 The price of a company’s stock could decline or underperform for many reasons, including, among others, poor
management, financial problems, reduced demand for the company’s goods or services, regulatory fines and judgments, or
business challenges. If a company is unable to meet its financial obligations, declares bankruptcy, or becomes insolvent, its
stock could become worthless.
Covenant-Lite Loans:
 Loans in which the Fund may invest or to which the Fund may gain exposure indirectly through its investments
in collateralized debt obligations, CLOs or other types of structured securities may be considered
“
covenant-lite
”
loans. Covenant-lite
refers to loans which do not incorporate traditional performance-based financial maintenance covenants. Covenant-lite does
not refer to a loan’s seniority in a borrower’s capital structure nor to a lack of the benefit from a legal pledge of the borrower’s
assets and does not necessarily correlate to the overall credit quality of the borrower. Covenant-lite loans generally do not
include terms which allow a lender to take action based on a borrower’s performance relative to its covenants. Such actions
may include the ability
to
renegotiate and/or re-set the credit spread on the loan with a borrower, and even to declare a
default or force the borrower into bankruptcy restructuring if certain criteria are breached. Covenant-lite loans typically still
provide lenders with other covenants that restrict a borrower from incurring additional debt or engaging in certain actions.
Such covenants can only be breached by an affirmative action of the borrower, rather than by a deterioration in the borrower’s
financial condition. Accordingly, the Fund may have fewer rights against a borrower when it invests in, or has exposure to,
covenant-lite loans and, accordingly, may have a greater risk of loss on such
investments
as compared to investments in, or
exposure to, loans with additional or more conventional covenants.
Credit:
 The Fund could lose money if the issuer or guarantor of a debt instrument in which the Fund invests, or the counterparty
to a derivative contract the Fund entered into, is unable or unwilling, or is perceived (whether by market participants, rating
agencies, pricing services, or otherwise) as unable or unwilling, to meet its financial obligations.
Asset-backed (including
mortgage-backed) securities that are not issued by U.S. government agencies may have a greater risk of default because
they are not guaranteed by either the U.S. government or an agency or instrumentality of the U.S. government. The credit
quality of typical asset-backed securities depends primarily on the credit quality of the underlying assets and the structural
support (if any) provided to the securities.
Credit Default Swaps:
 The Fund may enter into credit default swaps, either as a buyer or a seller of the swap. A buyer of a
credit default swap is generally obligated to pay the seller an upfront or a periodic stream of payments over the term of the
contract until a credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller
generally must pay the buyer the
“
par value
”
(full notional value) of the swap in exchange for an equal face amount of deliverable
obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount
if the swap is cash settled. As a seller of a credit default swap, the Fund would effectively add leverage to its portfolio because,
in addition to its total net assets, the Fund would be subject to investment exposure on the full notional value of the swap.
Credit default swaps are particularly subject to counterparty, credit, valuation, liquidity, and leveraging risks, and the risk that
the swap may not correlate with its reference obligation as expected. Certain standardized credit default swaps are subject
to mandatory central clearing. Central clearing is expected to reduce counterparty credit risk and increase liquidity; however,
there is no assurance that it will achieve that result, and in the meantime, central clearing and related requirements expose
the Fund to different kinds of costs and risks. In addition, credit default swaps expose the Fund to the risk of improper valuation.
Credit Facility:
The Fund has a policy of borrowing for cash management and liquidity purposes and for the purpose of investment.
The Fund currently is a party to a credit facility with
The Bank of Nova Scotia
that permits the Fund to borrow up to an aggregate
amount of $
40
million. There is no guarantee that the Fund will continue to be a party to a credit facility or a party to a credit
facility upon similar terms and conditions as currently in place for the Fund. In such cases, the Fund may be limited in its
ability to utilize leverage for investment purposes and this may negatively impact performance. The lender under the credit
facility has a security interest in all assets of the Fund. As of June 6, 2024 the Fund had $
20.0
million in outstanding borrowings
under its credit facility.
Interest is payable on the amounts borrowed under the credit facility at a benchmark rate or the federal funds rate, plus a
facility fee on unused commitments. Under the credit facility, the lender has the right to liquidate Fund assets in the event
of default by the Fund, and the Fund may be prohibited from paying dividends in the event of a material adverse event or
condition regarding the Fund, Investment Adviser, or Sub-Adviser until outstanding debts are paid or until the event or condition
is cured.
Credit (Loans):
Prices of the Fund’s investments are likely to fall if the actual or perceived financial health of the borrowers
on, or issuers of, such investments deteriorates, whether because of broad economic or issuer-specific reasons, or if the
borrower or issuer is late (or defaults) in paying interest or principal. The Fund's investments in U.S. dollar-denominated floating
rate secured senior loans are expected to be rated below investment grade. Below investment grade loans commonly known
as high-yielding, high risk investments or as
“
junk
”
investments involve a greater risk that borrowers may not make timely
payment of the interest and principal due on their loans and are subject to greater levels of credit and liquidity risks. They
also involve a greater risk that the value of such loans could decline significantly. If borrowers do not make timely payments
of the interest due on their loans, the yield on the Common Shares will decrease. If borrowers do not make timely payment
of the principal due on their loans, or if the value of such loans decreases, the net asset value will decrease.
Currency:
To the extent that the Fund invests directly or indirectly in foreign (non-U.S.) currencies or in securities denominated
in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those foreign (non-U.S.) currencies will decline
in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the
currency being hedged by the Fund through foreign currency exchange transactions.
Demand for Loans:
An increase in demand for loans may benefit the Fund by providing increased liquidity for such loans and
higher sales prices, but it may also adversely affect the rate of interest payable on such loans and the rights provided to the
Fund under the terms of the applicable loan agreement, and may increase the price of loans in the secondary market. A
decrease in the demand for loans may adversely affect the price of loans in the Fund’s portfolio, which could cause the
Fund’s net asset value to decline and reduce the liquidity of the Fund’s loan holdings.
Derivative Instruments:
Derivative instruments are subject to a number of risks, including the risk of changes in the market
price of the underlying asset, reference rate, or index credit risk with respect to the counterparty, risk of
loss
due to changes
in market interest rates, liquidity risk, valuation risk, and volatility risk. The amounts required to purchase certain derivatives
may be small relative to the magnitude of exposure assumed by the Fund. Therefore, the purchase of certain derivatives may
have an economic leveraging effect on the Fund and exaggerate any increase or decrease in the net asset value. Derivatives
may not perform as expected, so the Fund may not realize the intended benefits. When used for hedging purposes, the change
in value of a derivative may not correlate as expected with the asset, reference rate, or index being hedged. When used as
an alternative or substitute for direct cash investment, the return provided by the derivative may not provide the same return
as direct cash investment.
Duration:
One measure of risk for debt instruments is duration. Duration measures the sensitivity of a bond’s price to market
interest rate movements and is one of the tools used by a portfolio manager in selecting debt instruments. Duration measures
the average life of a bond on a present value basis by incorporating into one measure a bond’s yield, coupons, final maturity
and call features. As a point of reference, the duration of a non-callable 7% coupon bond with a remaining maturity of 5 years
is approximately 4.5 years and the duration of a non-callable 7% coupon bond with a remaining maturity of 10 years is approximately
8 years. Material changes in market interest rates may impact the duration calculation. For example, the price of a bond with
an average duration of 5 years would be expected to fall approximately 5% if market interest rates rose by 1%. Conversely,
the price of a bond with an average duration of 5 years would be expected to rise approximately 5% if market interest rates
dropped by 1%.
Floating Rate Loans:
In the event a borrower fails to pay scheduled interest or principal payments on a floating rate loan
(which can include certain bank loans), the Fund will experience a reduction in its income and a decline in the market value
of such floating rate loan. If a floating rate loan is held by the Fund through another financial institution, or the Fund relies
upon another financial institution to administer the loan, the receipt of scheduled interest or principal payments may be subject
to the credit risk of such financial institution. Investors in floating rate loans may not be afforded the protections of the anti-fraud
provisions of the Securities Act of 1933,
as amended,
and the Securities Exchange Act of 1934,
as amended,
because loans
may not be considered
“
securities
”
under such laws. Additionally, the value of collateral, if any, securing a floating rate loan
can decline or may be insufficient to meet the borrower’s obligations under the loan, and such collateral may be difficult to
liquidate. No active trading market may exist for many floating rate loans and many floating rate loans are subject to restrictions
on resale. Transactions in loans typically settle on a delayed basis and may take longer than 7 days to settle. As a result,
the Fund may not receive the proceeds from a sale of a floating rate loan for a significant period of time. Delay in the receipts
of settlement proceeds may impair the ability of the Fund to meet its redemption obligations, and may limit the ability of the
Fund to repay debt, pay dividends, or to take advantage of new investment opportunities.
Foreign (Non-U.S.) Investments:
Investing in foreign (non-U.S.) securities may result in the Fund experiencing more rapid and
extreme changes in value than a fund that invests exclusively in securities of U.S. companies due, in part, to: smaller markets;
differing reporting, accounting, auditing and financial reporting standards and practices; nationalization, expropriation, or
confiscatory taxation; foreign currency fluctuations, currency blockage, or replacement; potential for default on sovereign debt;
and political changes or diplomatic developments, which may include the imposition of economic sanctions (or the threat of
new or modified sanctions) or other measures by the U.S. or other governments and supranational organizations. Markets
and economies throughout the world are becoming increasingly interconnected, and conditions or events in one market, country
or region may adversely impact investments or issuers in another market, country or region.
Foreign (Non-U.S.) and Non-Canadian Issuers:
Investment in foreign (non-U.S.) borrowers involves special risks, including
that foreign (non-U.S.) borrowers may be subject to: less rigorous regulatory, accounting, and reporting requirements than
U.S. borrowers; differing legal systems and laws relating to creditors’ rights; the potential inability to enforce legal judgments;
economic adversity that would result if the value of the borrower’s foreign (non-U.S.) dollar denominated revenues and assets
were to fall because of fluctuations in currency values; and the potential for political, social, and economic adversity in the
foreign (non-U.S.) borrower’s country.
High-Yield Securities:
Lower-quality securities (including securities that are or have fallen below investment grade and are
classified as
“
junk bonds
”
or
“
high-yield securities
”
) have greater credit risk and liquidity risk than higher-quality (investment
grade) securities, and their issuers' long-term ability to make payments is considered speculative. Prices of lower-quality bonds
or other debt instruments are also more volatile, are more sensitive to negative news about the economy or the issuer, and
have greater liquidity risk and price volatility.
Interest in Loans:
The value and the income streams of interests in loans (including participation interests in lease financings
and assignments in secured variable or floating rate loans) will decline if borrowers delay payments or fail to pay altogether.
A significant rise in market interest rates could increase this risk. Although loans may be fully collateralized when purchased,
such collateral may become illiquid or decline in value.
Interest Rate:
Changes in short-term market interest rates will directly affect
the
yield on Common Shares. If short-term
market interest rates fall, the yield on Common Shares will also fall. To the extent that the interest rate spreads on loans in
the Fund’s portfolio experience a general decline, the yield on the Common Shares will fall and the value of the Fund’s assets
may decrease, which will cause the Fund’s net asset value to decrease. Conversely, when short-term market interest rates
rise, because of the lag between changes in such short-term rates and the resetting of the floating rates on assets
in
the
Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. In the case of inverse securities, the
interest rate paid by such securities generally will decrease when the market rate of interest to which the inverse security is
indexed increases. With respect to investments in fixed rate instruments, a rise in market interest rates generally causes
values of such instruments to fall. The values of fixed rate instruments with longer maturities or duration are more sensitive
to changes in market interest rates.
As of the date of this Prospectus, the United States has recently experienced a rising market interest rate environment, which
may increase the Fund’s exposure to risks associated with rising market interest rates. Rising market interest rates could
have unpredictable effects on the markets and may expose debt and related markets to heightened volatility, which could
reduce liquidity for certain investments, adversely affect values, and increase costs. If dealer capacity in debt and related
markets is insufficient for market conditions, it may further inhibit liquidity and increase volatility in the debt and related
markets. Further, recent and potential changes in government policy may affect interest rates.
Interest Rate for Floating Rate Loans:
Changes in short-term market interest rates will directly affect the yield on investments
in floating rate loans. If short-term market interest rates fall, the yield on the Fund’s shares will also fall. To the extent that
the interest rate spreads on loans in the Fund’s portfolio experience a general decline, the yield on the Fund’s shares will
fall and the value of the Fund’s assets may decrease, which will cause the Fund’s net asset value to decrease. Conversely,
when short-term market interest rates rise, because of the lag between changes in such short-term rates and the resetting
of the floating rates on assets in the Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. The
impact of market interest rate changes on the Fund’s yield will also be affected by whether, and the extent to which, the
floating rate loans in the Fund’s portfolio are subject to floors on the secured overnight funding rate (
“
SOFR
”
) base rate on
which interest is calculated for such loans (a
“
benchmark floor
”
). So long as the base rate for a loan remains under the
applicable benchmark floor, changes in short-term market interest rates will not affect the yield on such loans. In addition,
to the extent that changes in market interest rates are reflected not in a change to a base rate such as SOFR but in a change
in the spread over the base rate which is payable on the floating rate loans of the type and quality in which the Fund invests,
the Fund’s net asset value could also be adversely affected. With respect to investments in fixed rate instruments, a rise in
market interest rates generally causes values of such instruments to fall. The values of fixed rate instruments with longer
maturities or duration are more sensitive to changes in market interest rates. As of the date of this Prospectus, the U.S has
recently experienced a rising market interest rate environment, which may increase the Fund’s exposure to risks associated
with rising market interest rates. Rising market interest rates have unpredictable effects on the markets and may expose
debt and related markets to heightened volatility, which could reduce liquidity for certain investments, adversely affect values,
and increase costs. Increased redemptions may cause the Fund to liquidate portfolio positions when it may not be advantageous
to do so and may lower returns. If dealer capacity in debt and related markets is insufficient for market conditions, it may
further inhibit liquidity and increase volatility in the debt and related markets. Further, recent and potential future changes in
government policy may affect interest rates.
Interest Rate Swaps:
An interest rate swap is an agreement that obligates two parties to exchange a series of cash flows
for a specified period of time based upon or calculated by reference to a specified interest rate(s) for a specified amount.
Interest rate swaps involve the risk that changes in market conditions may affect the value of the contract or the cash flows,
and the possible inability or unwillingness of the counterparty to fulfill its obligations under the agreement. An interest rate
swap arrangement may not fully offset adverse changes in interest rates. Interest rate swaps are also subject to liquidity risk
and interest rate risk.
Leverage:
The use of leverage through borrowings or the issuance of Preferred Shares can adversely affect the yield on the
Common Shares. To the extent that the Fund is unable to invest the proceeds from the use of leverage in assets which pay
interest at a rate which exceeds the rate paid on the leverage, the yield on the Common Shares will decrease. In addition,
in the event of a general market decline in the value of assets such as those in which the Fund invests, the effect of that
decline will be magnified in the Fund because of the additional assets purchased with the proceeds of the leverage. Further,
because the fee paid to the Investment Adviser will be calculated on the basis of Managed Assets, the fee will be higher when
leverage is utilized, giving the Investment Adviser an incentive to utilize leverage. The Fund is subject
to
certain restrictions
imposed by lenders to the Fund and may be subject to certain restrictions imposed by guidelines of one or more rating agencies
which may issue ratings for debt or the Preferred Shares issued by the Fund. These restrictions are expected to impose asset
coverage, fund composition requirements and limits on investment techniques, such as the use of financial derivative products
that are more stringent than those imposed on the Fund by the 1940 Act. These restrictions could impede the manager from
fully managing the Fund’s portfolio in accordance with the Fund’s investment objective and policies. As of June 6, 2024 the
Fund had $
20.0
million in outstanding borrowings under its credit facility.
Limited Liquidity For Investors:
The Fund does not repurchase its shares on a daily basis and no market for the Common
Shares is expected to exist. To provide a measure of liquidity, the Fund will normally make monthly repurchase offers for not
less than 5% of its outstanding Common Shares. If more than 5% of Common Shares are tendered, investors may not be
able to completely liquidate their holdings in any one month. Shareholders also will not have liquidity between these monthly
repurchase dates.
Limited Secondary Market for Loans:
Because of the limited secondary market for loans, the Fund may be limited in its
ability to sell loans in its portfolio in a timely fashion and/or at a favorable price. Transactions in loans typically settle on a
delayed basis and typically take longer than 7 days to settle. As a result the Fund may not receive the proceeds from a sale
of a floating rate loan for a significant period of time. Delay in the receipts of settlement proceeds may impair the ability of
the Fund to meet its repurchase obligations and may increase the amounts the Fund may be required to borrow. It may also
limit the ability of the Fund to repay debt, pay dividends, or to take advantage of new investment opportunities.
Liquidity:
If a security is illiquid, the Fund might be unable to sell the security at a time when the Fund’s manager might wish
to sell, or at all. Further, the lack of an established secondary market may make it more difficult to value illiquid securities,
exposing the Fund to the risk that the prices at which it sells illiquid securities will be less than the prices at which they were
valued when held by the Fund, which could cause the Fund to lose money. The prices of illiquid securities may be more volatile
than more liquid securities, and the risks associated with illiquid securities may be greater in times of financial stress.
Certain
securities that are liquid when purchased may later become illiquid, particularly in times of overall economic distress or due
to geopolitical events such as sanctions, trading halts, or wars.
Market:
The market values of securities will fluctuate, sometimes sharply and unpredictably, based on overall economic conditions,
governmental actions or intervention, market disruptions caused by trade disputes or other factors, political developments,
and other factors. Prices of equity securities tend to rise and fall more dramatically than those of debt instruments. Additionally,
legislative, regulatory or tax policies or developments may adversely impact the investment techniques available to a manager,
add to costs, and impair the ability of the Fund to achieve its investment objectives.
Market Disruption and Geopolitical:
The Fund is subject to the risk that geopolitical events will disrupt securities markets
and adversely affect global economies and markets. Due to the increasing interdependence among global economies and
markets, conditions in one country, market, or region might adversely impact markets, issuers and/or foreign exchange rates
in other countries, including the United States. Wars, terrorism, global health crises and pandemics, and other geopolitical
events that have led, and may continue to lead, to increased market volatility and may have adverse short- or long-term effects
on U.S. and global economies and markets, generally. For example, the COVID-19 pandemic resulted in significant market
volatility, exchange suspensions and closures, declines in global financial markets, higher default rates, supply chain disruptions,
and a substantial economic downturn in economies throughout the world. The economic impacts of COVID-19 have created
a unique challenge for real estate markets. Many businesses have either partially or fully transitioned to a remote-working
environment and this transition may negatively impact the occupancy rates of commercial real estate over time. Natural and
environmental disasters and systemic market dislocations are also highly disruptive to economies and markets. In addition,
military action by Russia in Ukraine has, and may continue to, adversely affect global energy and financial markets and therefore
could affect the value of the Fund’s investments, including beyond the Fund’s direct exposure to Russian issuers or nearby
geographic regions. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible
to predict and could be substantial. A number of U.S. domestic banks and foreign (non-U.S.) banks have recently experienced
financial difficulties and, in some cases, failures. There can be no certainty that the actions taken by regulators to limit the
effect of those financial difficulties and failures on other banks or other financial institutions or on the U.S. or foreign (non-U.S.)
economies generally will be successful. It is possible that more banks or other financial institutions will experience financial
difficulties or fail, which may affect adversely other U.S. or foreign (non-U.S.) financial institutions and economies. These
events as well as other changes in foreign (non-U.S.) and domestic economic, social, and political conditions also could adversely
affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment,
and other factors affecting the value of the Fund’s investments. Any of these occurrences could disrupt the operations of the
Fund and of the Fund’s service providers.
Other Investment Companies:
The main risk of investing in other investment companies, including ETFs, is the risk that the
value of an investment company’s underlying investments might decrease. Shares of investment companies that are listed
on an exchange may trade at a discount or premium from their net asset value. You will pay a proportionate share of the
expenses of those other investment companies (including management fees, administration fees, and custodial fees) in addition
to the Fund’s expenses. The investment policies of the other investment companies may not be the same as those of the
Fund; as a result, an investment in the other investment companies may be subject to additional or different risks than those
to which the Fund is typically subject. In addition, shares of ETFs may trade at a premium or discount to net asset value and
are subject to secondary market trading risks. Secondary markets may be subject to irregular trading activity, wide bid/ask
spreads, and extended trade settlement periods in times of market stress because market makers and authorized participants
may step away from making a market in an ETF’s shares, which could cause a material decline in the ETF’s net asset value.
Prepayment and Extension:
Many types of debt instruments are subject to prepayment and extension risk. Prepayment risk
is the risk that the issuer of a debt instrument will pay back the principal earlier than expected. This risk is heightened in a
falling market interest rate environment. Prepayment may expose the Fund to a lower rate of return upon reinvestment of
principal. Also, if a debt instrument subject to prepayment has been purchased at a premium, the value of the premium would
be lost in the event of prepayment. Extension risk is the risk that the issuer of a debt instrument will pay back the principal
later than expected. This risk is heightened in a rising market interest rate environment. This may negatively affect performance,
as the value of the debt instrument decreases when principal payments are made later than expected. Additionally, the Fund
may be prevented from investing proceeds it would have received at a given time at the higher prevailing interest rates.
Loans
typically have a 6-12 month call protection and may be prepaid partially or in full after the call protection period without penalty.
Securities Lending:
Securities lending involves two primary risks:
“
investment risk
”
and
“
borrower default risk.
”
When lending
securities, the Fund will receive cash or U.S. government securities as collateral. Investment risk is the risk that the Fund
will lose money from the investment of the cash collateral received from the borrower. Borrower default risk is the risk that
the Fund will lose money due to the failure of a borrower to return a borrowed security. Securities lending may result in leverage.
The use of
leverage
may exaggerate any increase or decrease in the net asset value, causing the Fund to be more volatile.
The use of leverage may increase expenses and increase the impact of the Fund’s other risks.
Special Situations:
A
“
special situation
”
arises when, in a manager’s opinion, securities of a particular company will appreciate
in value within a reasonable period because of unique circumstances applicable to the company. Special situations investments
often involve much greater risk than is inherent in ordinary investments. Investments in special situation companies may not
appreciate and the Fund’s performance could suffer if an anticipated development does not occur or does not produce the
anticipated result.
Temporary Defensive Positions:
When market conditions make it advisable, the Fund may hold a portion of its assets in
cash and short-term interest bearing instruments. Moreover, in periods when, in the opinion of the manager, a temporary
defensive position is appropriate, up to 100% of the Fund’s assets may be held in cash, short-term interest bearing instruments
and/or any other securities the manager considers consistent with a temporary defensive position. The Fund may not achieve
its investment objective when pursuing a temporary defensive position.
Valuation of Loans:
The Fund values its assets every day the New York Stock Exchange is open for regular trading. However,
because the secondary market for floating rate loans is limited, it may be difficult to value loans, exposing the Fund to the
risk that the price at which it sells loans will be less than the price at which they were valued when held by the
Fund
. Reliable
market value quotations may not be readily available for some loans, and determining the fair valuation of such loans may
require more research than for securities that trade in a more active secondary market. In addition, elements of judgment
may play a greater role in the valuation of loans than for more securities that trade in a more developed secondary market
because there is less reliable, objective market value data available. If the Fund purchases a relatively large portion of a
loan, the limitations of the secondary market may inhibit the Fund from selling a portion of the loan and reducing its exposure
to a borrower when the manager deems it advisable to do so. Even if the Fund itself does not own a relatively large portion
of a particular loan, the Fund, in combination with other similar accounts under management by the same portfolio managers,
may own large portions of loans. The aggregate amount of holdings could create similar risks if and when the portfolio managers
decide to sell those loans. These risks could include, for example, the risk that the sale of an initial portion of the loan could
be at a price lower than the price at which the loan was valued by the Fund, the risk that the initial sale could adversely impact
the price at which additional portions of the loan are sold, and the risk that the foregoing events could warrant a reduced
valuation being assigned to the remaining portion of the loan still owned by the Fund.
When-Issued, Delayed Delivery, and Forward Commitment
Transactions
:
When-issued, delayed delivery, and forward commitment
transactions involve the risk that the security the Fund buys will lose value prior to its delivery. These transactions may result
in leverage. The use of leverage may exaggerate any increase or decrease in the net asset value,
causing
the Fund to be
more volatile. The use of leverage may increase expenses and increase the impact of the Fund’s other risks. There also is
the risk that the security will not be issued or that the other party will not meet its obligation. If this occurs, the Fund loses
both the investment opportunity for the assets it set aside to pay for the security and any gain in the security’s price.
Effects of Leverage [Text Block]
Effect of Leverage
To cover the annual interest payments on the borrowings for the current fiscal year (assuming that the current rate
remains in effect for the entire fiscal year and assuming that the Fund borrows an amount equal to 25% of its Managed
Assets as of June 6, 2024) the Fund would need to experience an annual return of
1.62
% on its portfolio (including
the assets purchased with the assumed leverage) to cover such annual interest.
The following table is designed to illustrate the effect on return to a holder of the Fund's Common Shares of the
leverage created by the Fund's use of borrowing, using the average annual interest rate of
7.15
% for the fiscal year
ended February 29, 2024, assuming the Fund has used leverage by borrowing an amount equal to 25% of the Fund's
Managed Assets and assuming hypothetical annual returns on the Fund's portfolio of minus 10% to plus 10%. As
can be seen, leverage generally increases the return to shareholders when portfolio return is positive and decreases
return when the portfolio return is negative. Actual returns may be greater or less than those appearing in the table.
 
Assumed Portfolio Return, net of expenses
1
-
10
%
-
5
%
0
%
5
%
10
%
Corresponding Return to Common Shareholders
2
-15.72%
-9.05%
-2.38%
4.28%
10.95%
1
The Assumed Portfolio Return is required by regulation of the SEC and is not a prediction of, and does not represent, the projected or actual performance of the Fund.
2
In order to compute the Corresponding Return to Common Shares Shareholders, the Assumed Portfolio Return is multiplied by the total value of the Fund's assets at the
beginning of the Fund's fiscal year to obtain an assumed return to the Fund. From this amount, all interest accrued during the year is subtracted to determine the return
available to shareholders. The return available to shareholders is then divided by the total value of the Fund's net assets attributable to Common Shares as of the beginning
of the fiscal year to determine the Corresponding Return to Common Shareholders.
Effects of Leverage [Table Text Block]
Assumed Portfolio Return, net of expenses
1
-
10
%
-
5
%
0
%
5
%
10
%
Corresponding Return to Common Shareholders
2
-15.72%
-9.05%
-2.38%
4.28%
10.95%
1
The Assumed Portfolio Return is required by regulation of the SEC and is not a prediction of, and does not represent, the projected or actual performance of the Fund.
2
In order to compute the Corresponding Return to Common Shares Shareholders, the Assumed Portfolio Return is multiplied by the total value of the Fund's assets at the
beginning of the Fund's fiscal year to obtain an assumed return to the Fund. From this amount, all interest accrued during the year is subtracted to determine the return
available to shareholders. The return available to shareholders is then divided by the total value of the Fund's net assets attributable to Common Shares as of the beginning
of the fiscal year to determine the Corresponding Return to Common Shareholders.
Return at Minus Ten [Percent] (15.72%) [1]
Return at Minus Five [Percent] (9.05%) [1]
Return at Zero [Percent] (2.38%) [1]
Return at Plus Five [Percent] 4.28% [1]
Return at Plus Ten [Percent] 10.95% [1]
Effects of Leverage, Purpose [Text Block]
The following table is designed to illustrate the effect on return to a holder of the Fund's Common Shares of the
leverage created by the Fund's use of borrowing, using the average annual interest rate of
7.15
% for the fiscal year
ended February 29, 2024, assuming the Fund has used leverage by borrowing an amount equal to 25% of the Fund's
Managed Assets and assuming hypothetical annual returns on the Fund's portfolio of minus 10% to plus 10%. As
can be seen, leverage generally increases the return to shareholders when portfolio return is positive and decreases
return when the portfolio return is negative. Actual returns may be greater or less than those appearing in the table.
Capital Stock, Long-Term Debt, and Other Securities [Abstract]  
Outstanding Securities [Table Text Block]
Status of Shares
The following table sets forth information about the Fund's outstanding Common Shares as of June 6, 2024:
 
Title of Class
Number Authorized
Number Held By

the Fund or for its

Own Account
Number

Outstanding
Class A Common Shares
Unlimited
0
10,274,029.217
Class C Common Shares
Unlimited
0
444,231.714
Class I Common Shares
Unlimited
0
730,442.925
Class W Common Shares
Unlimited
0
320,955.397
Company [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Company:
 The price of a company’s stock could decline or underperform for many reasons, including, among others, poor
management, financial problems, reduced demand for the company’s goods or services, regulatory fines and judgments, or
business challenges. If a company is unable to meet its financial obligations, declares bankruptcy, or becomes insolvent, its
stock could become worthless.
CovenantLite Loans [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Covenant-Lite Loans:
 Loans in which the Fund may invest or to which the Fund may gain exposure indirectly through its investments
in collateralized debt obligations, CLOs or other types of structured securities may be considered
“
covenant-lite
”
loans. Covenant-lite
refers to loans which do not incorporate traditional performance-based financial maintenance covenants. Covenant-lite does
not refer to a loan’s seniority in a borrower’s capital structure nor to a lack of the benefit from a legal pledge of the borrower’s
assets and does not necessarily correlate to the overall credit quality of the borrower. Covenant-lite loans generally do not
include terms which allow a lender to take action based on a borrower’s performance relative to its covenants. Such actions
may include the ability
to
renegotiate and/or re-set the credit spread on the loan with a borrower, and even to declare a
default or force the borrower into bankruptcy restructuring if certain criteria are breached. Covenant-lite loans typically still
provide lenders with other covenants that restrict a borrower from incurring additional debt or engaging in certain actions.
Such covenants can only be breached by an affirmative action of the borrower, rather than by a deterioration in the borrower’s
financial condition. Accordingly, the Fund may have fewer rights against a borrower when it invests in, or has exposure to,
covenant-lite loans and, accordingly, may have a greater risk of loss on such
investments
as compared to investments in, or
exposure to, loans with additional or more conventional covenants.
Credits [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Credit:
 The Fund could lose money if the issuer or guarantor of a debt instrument in which the Fund invests, or the counterparty
to a derivative contract the Fund entered into, is unable or unwilling, or is perceived (whether by market participants, rating
agencies, pricing services, or otherwise) as unable or unwilling, to meet its financial obligations.
Asset-backed (including
mortgage-backed) securities that are not issued by U.S. government agencies may have a greater risk of default because
they are not guaranteed by either the U.S. government or an agency or instrumentality of the U.S. government. The credit
quality of typical asset-backed securities depends primarily on the credit quality of the underlying assets and the structural
support (if any) provided to the securities.
Credit Default Swaps [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Credit Default Swaps:
 The Fund may enter into credit default swaps, either as a buyer or a seller of the swap. A buyer of a
credit default swap is generally obligated to pay the seller an upfront or a periodic stream of payments over the term of the
contract until a credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller
generally must pay the buyer the
“
par value
”
(full notional value) of the swap in exchange for an equal face amount of deliverable
obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount
if the swap is cash settled. As a seller of a credit default swap, the Fund would effectively add leverage to its portfolio because,
in addition to its total net assets, the Fund would be subject to investment exposure on the full notional value of the swap.
Credit default swaps are particularly subject to counterparty, credit, valuation, liquidity, and leveraging risks, and the risk that
the swap may not correlate with its reference obligation as expected. Certain standardized credit default swaps are subject
to mandatory central clearing. Central clearing is expected to reduce counterparty credit risk and increase liquidity; however,
there is no assurance that it will achieve that result, and in the meantime, central clearing and related requirements expose
the Fund to different kinds of costs and risks. In addition, credit default swaps expose the Fund to the risk of improper valuation.
Credit Facility [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Credit Facility:
The Fund has a policy of borrowing for cash management and liquidity purposes and for the purpose of investment.
The Fund currently is a party to a credit facility with
The Bank of Nova Scotia
that permits the Fund to borrow up to an aggregate
amount of $
40
million. There is no guarantee that the Fund will continue to be a party to a credit facility or a party to a credit
facility upon similar terms and conditions as currently in place for the Fund. In such cases, the Fund may be limited in its
ability to utilize leverage for investment purposes and this may negatively impact performance. The lender under the credit
facility has a security interest in all assets of the Fund. As of June 6, 2024 the Fund had $
20.0
million in outstanding borrowings
under its credit facility.
Interest is payable on the amounts borrowed under the credit facility at a benchmark rate or the federal funds rate, plus a
facility fee on unused commitments. Under the credit facility, the lender has the right to liquidate Fund assets in the event
of default by the Fund, and the Fund may be prohibited from paying dividends in the event of a material adverse event or
condition regarding the Fund, Investment Adviser, or Sub-Adviser until outstanding debts are paid or until the event or condition
is cured.
Credit (Loans) [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Credit (Loans):
Prices of the Fund’s investments are likely to fall if the actual or perceived financial health of the borrowers
on, or issuers of, such investments deteriorates, whether because of broad economic or issuer-specific reasons, or if the
borrower or issuer is late (or defaults) in paying interest or principal. The Fund's investments in U.S. dollar-denominated floating
rate secured senior loans are expected to be rated below investment grade. Below investment grade loans commonly known
as high-yielding, high risk investments or as
“
junk
”
investments involve a greater risk that borrowers may not make timely
payment of the interest and principal due on their loans and are subject to greater levels of credit and liquidity risks. They
also involve a greater risk that the value of such loans could decline significantly. If borrowers do not make timely payments
of the interest due on their loans, the yield on the Common Shares will decrease. If borrowers do not make timely payment
of the principal due on their loans, or if the value of such loans decreases, the net asset value will decrease.
Currency [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Currency:
To the extent that the Fund invests directly or indirectly in foreign (non-U.S.) currencies or in securities denominated
in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those foreign (non-U.S.) currencies will decline
in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the
currency being hedged by the Fund through foreign currency exchange transactions.
Demand for Loans [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Demand for Loans:
An increase in demand for loans may benefit the Fund by providing increased liquidity for such loans and
higher sales prices, but it may also adversely affect the rate of interest payable on such loans and the rights provided to the
Fund under the terms of the applicable loan agreement, and may increase the price of loans in the secondary market. A
decrease in the demand for loans may adversely affect the price of loans in the Fund’s portfolio, which could cause the
Fund’s net asset value to decline and reduce the liquidity of the Fund’s loan holdings.
Derivative Instruments [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Derivative Instruments:
Derivative instruments are subject to a number of risks, including the risk of changes in the market
price of the underlying asset, reference rate, or index credit risk with respect to the counterparty, risk of
loss
due to changes
in market interest rates, liquidity risk, valuation risk, and volatility risk. The amounts required to purchase certain derivatives
may be small relative to the magnitude of exposure assumed by the Fund. Therefore, the purchase of certain derivatives may
have an economic leveraging effect on the Fund and exaggerate any increase or decrease in the net asset value. Derivatives
may not perform as expected, so the Fund may not realize the intended benefits. When used for hedging purposes, the change
in value of a derivative may not correlate as expected with the asset, reference rate, or index being hedged. When used as
an alternative or substitute for direct cash investment, the return provided by the derivative may not provide the same return
as direct cash investment.
Duration [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Duration:
One measure of risk for debt instruments is duration. Duration measures the sensitivity of a bond’s price to market
interest rate movements and is one of the tools used by a portfolio manager in selecting debt instruments. Duration measures
the average life of a bond on a present value basis by incorporating into one measure a bond’s yield, coupons, final maturity
and call features. As a point of reference, the duration of a non-callable 7% coupon bond with a remaining maturity of 5 years
is approximately 4.5 years and the duration of a non-callable 7% coupon bond with a remaining maturity of 10 years is approximately
8 years. Material changes in market interest rates may impact the duration calculation. For example, the price of a bond with
an average duration of 5 years would be expected to fall approximately 5% if market interest rates rose by 1%. Conversely,
the price of a bond with an average duration of 5 years would be expected to rise approximately 5% if market interest rates
dropped by 1%.
Floating Rate Loans [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Floating Rate Loans:
In the event a borrower fails to pay scheduled interest or principal payments on a floating rate loan
(which can include certain bank loans), the Fund will experience a reduction in its income and a decline in the market value
of such floating rate loan. If a floating rate loan is held by the Fund through another financial institution, or the Fund relies
upon another financial institution to administer the loan, the receipt of scheduled interest or principal payments may be subject
to the credit risk of such financial institution. Investors in floating rate loans may not be afforded the protections of the anti-fraud
provisions of the Securities Act of 1933,
as amended,
and the Securities Exchange Act of 1934,
as amended,
because loans
may not be considered
“
securities
”
under such laws. Additionally, the value of collateral, if any, securing a floating rate loan
can decline or may be insufficient to meet the borrower’s obligations under the loan, and such collateral may be difficult to
liquidate. No active trading market may exist for many floating rate loans and many floating rate loans are subject to restrictions
on resale. Transactions in loans typically settle on a delayed basis and may take longer than 7 days to settle. As a result,
the Fund may not receive the proceeds from a sale of a floating rate loan for a significant period of time. Delay in the receipts
of settlement proceeds may impair the ability of the Fund to meet its redemption obligations, and may limit the ability of the
Fund to repay debt, pay dividends, or to take advantage of new investment opportunities.
Foreign (NonU.S.) Investments [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Foreign (Non-U.S.) Investments:
Investing in foreign (non-U.S.) securities may result in the Fund experiencing more rapid and
extreme changes in value than a fund that invests exclusively in securities of U.S. companies due, in part, to: smaller markets;
differing reporting, accounting, auditing and financial reporting standards and practices; nationalization, expropriation, or
confiscatory taxation; foreign currency fluctuations, currency blockage, or replacement; potential for default on sovereign debt;
and political changes or diplomatic developments, which may include the imposition of economic sanctions (or the threat of
new or modified sanctions) or other measures by the U.S. or other governments and supranational organizations. Markets
and economies throughout the world are becoming increasingly interconnected, and conditions or events in one market, country
or region may adversely impact investments or issuers in another market, country or region.
Foreign (NonU.S.) and NonCanadian Issuers [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Foreign (Non-U.S.) and Non-Canadian Issuers:
Investment in foreign (non-U.S.) borrowers involves special risks, including
that foreign (non-U.S.) borrowers may be subject to: less rigorous regulatory, accounting, and reporting requirements than
U.S. borrowers; differing legal systems and laws relating to creditors’ rights; the potential inability to enforce legal judgments;
economic adversity that would result if the value of the borrower’s foreign (non-U.S.) dollar denominated revenues and assets
were to fall because of fluctuations in currency values; and the potential for political, social, and economic adversity in the
foreign (non-U.S.) borrower’s country.
HighYield Securities [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
High-Yield Securities:
Lower-quality securities (including securities that are or have fallen below investment grade and are
classified as
“
junk bonds
”
or
“
high-yield securities
”
) have greater credit risk and liquidity risk than higher-quality (investment
grade) securities, and their issuers' long-term ability to make payments is considered speculative. Prices of lower-quality bonds
or other debt instruments are also more volatile, are more sensitive to negative news about the economy or the issuer, and
have greater liquidity risk and price volatility.
Interest in Loans [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Interest in Loans:
The value and the income streams of interests in loans (including participation interests in lease financings
and assignments in secured variable or floating rate loans) will decline if borrowers delay payments or fail to pay altogether.
A significant rise in market interest rates could increase this risk. Although loans may be fully collateralized when purchased,
such collateral may become illiquid or decline in value.
Interest Rate [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Interest Rate:
Changes in short-term market interest rates will directly affect
the
yield on Common Shares. If short-term
market interest rates fall, the yield on Common Shares will also fall. To the extent that the interest rate spreads on loans in
the Fund’s portfolio experience a general decline, the yield on the Common Shares will fall and the value of the Fund’s assets
may decrease, which will cause the Fund’s net asset value to decrease. Conversely, when short-term market interest rates
rise, because of the lag between changes in such short-term rates and the resetting of the floating rates on assets
in
the
Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. In the case of inverse securities, the
interest rate paid by such securities generally will decrease when the market rate of interest to which the inverse security is
indexed increases. With respect to investments in fixed rate instruments, a rise in market interest rates generally causes
values of such instruments to fall. The values of fixed rate instruments with longer maturities or duration are more sensitive
to changes in market interest rates.
As of the date of this Prospectus, the United States has recently experienced a rising market interest rate environment, which
may increase the Fund’s exposure to risks associated with rising market interest rates. Rising market interest rates could
have unpredictable effects on the markets and may expose debt and related markets to heightened volatility, which could
reduce liquidity for certain investments, adversely affect values, and increase costs. If dealer capacity in debt and related
markets is insufficient for market conditions, it may further inhibit liquidity and increase volatility in the debt and related
markets. Further, recent and potential changes in government policy may affect interest rates.
Interest Rate for Floating Rate Loans [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Interest Rate for Floating Rate Loans:
Changes in short-term market interest rates will directly affect the yield on investments
in floating rate loans. If short-term market interest rates fall, the yield on the Fund’s shares will also fall. To the extent that
the interest rate spreads on loans in the Fund’s portfolio experience a general decline, the yield on the Fund’s shares will
fall and the value of the Fund’s assets may decrease, which will cause the Fund’s net asset value to decrease. Conversely,
when short-term market interest rates rise, because of the lag between changes in such short-term rates and the resetting
of the floating rates on assets in the Fund’s portfolio, the impact of rising rates will be delayed to the extent of such lag. The
impact of market interest rate changes on the Fund’s yield will also be affected by whether, and the extent to which, the
floating rate loans in the Fund’s portfolio are subject to floors on the secured overnight funding rate (
“
SOFR
”
) base rate on
which interest is calculated for such loans (a
“
benchmark floor
”
). So long as the base rate for a loan remains under the
applicable benchmark floor, changes in short-term market interest rates will not affect the yield on such loans. In addition,
to the extent that changes in market interest rates are reflected not in a change to a base rate such as SOFR but in a change
in the spread over the base rate which is payable on the floating rate loans of the type and quality in which the Fund invests,
the Fund’s net asset value could also be adversely affected. With respect to investments in fixed rate instruments, a rise in
market interest rates generally causes values of such instruments to fall. The values of fixed rate instruments with longer
maturities or duration are more sensitive to changes in market interest rates. As of the date of this Prospectus, the U.S has
recently experienced a rising market interest rate environment, which may increase the Fund’s exposure to risks associated
with rising market interest rates. Rising market interest rates have unpredictable effects on the markets and may expose
debt and related markets to heightened volatility, which could reduce liquidity for certain investments, adversely affect values,
and increase costs. Increased redemptions may cause the Fund to liquidate portfolio positions when it may not be advantageous
to do so and may lower returns. If dealer capacity in debt and related markets is insufficient for market conditions, it may
further inhibit liquidity and increase volatility in the debt and related markets. Further, recent and potential future changes in
government policy may affect interest rates.
Interest Rate Swaps [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Interest Rate Swaps:
An interest rate swap is an agreement that obligates two parties to exchange a series of cash flows
for a specified period of time based upon or calculated by reference to a specified interest rate(s) for a specified amount.
Interest rate swaps involve the risk that changes in market conditions may affect the value of the contract or the cash flows,
and the possible inability or unwillingness of the counterparty to fulfill its obligations under the agreement. An interest rate
swap arrangement may not fully offset adverse changes in interest rates. Interest rate swaps are also subject to liquidity risk
and interest rate risk.
Leverage [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Leverage:
The use of leverage through borrowings or the issuance of Preferred Shares can adversely affect the yield on the
Common Shares. To the extent that the Fund is unable to invest the proceeds from the use of leverage in assets which pay
interest at a rate which exceeds the rate paid on the leverage, the yield on the Common Shares will decrease. In addition,
in the event of a general market decline in the value of assets such as those in which the Fund invests, the effect of that
decline will be magnified in the Fund because of the additional assets purchased with the proceeds of the leverage. Further,
because the fee paid to the Investment Adviser will be calculated on the basis of Managed Assets, the fee will be higher when
leverage is utilized, giving the Investment Adviser an incentive to utilize leverage. The Fund is subject
to
certain restrictions
imposed by lenders to the Fund and may be subject to certain restrictions imposed by guidelines of one or more rating agencies
which may issue ratings for debt or the Preferred Shares issued by the Fund. These restrictions are expected to impose asset
coverage, fund composition requirements and limits on investment techniques, such as the use of financial derivative products
that are more stringent than those imposed on the Fund by the 1940 Act. These restrictions could impede the manager from
fully managing the Fund’s portfolio in accordance with the Fund’s investment objective and policies. As of June 6, 2024 the
Fund had $
20.0
million in outstanding borrowings under its credit facility.
Limited Liquidity For Investors [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Limited Liquidity For Investors:
The Fund does not repurchase its shares on a daily basis and no market for the Common
Shares is expected to exist. To provide a measure of liquidity, the Fund will normally make monthly repurchase offers for not
less than 5% of its outstanding Common Shares. If more than 5% of Common Shares are tendered, investors may not be
able to completely liquidate their holdings in any one month. Shareholders also will not have liquidity between these monthly
repurchase dates.
Limited Secondary Market for Loans [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Limited Secondary Market for Loans:
Because of the limited secondary market for loans, the Fund may be limited in its
ability to sell loans in its portfolio in a timely fashion and/or at a favorable price. Transactions in loans typically settle on a
delayed basis and typically take longer than 7 days to settle. As a result the Fund may not receive the proceeds from a sale
of a floating rate loan for a significant period of time. Delay in the receipts of settlement proceeds may impair the ability of
the Fund to meet its repurchase obligations and may increase the amounts the Fund may be required to borrow. It may also
limit the ability of the Fund to repay debt, pay dividends, or to take advantage of new investment opportunities.
Liquidity [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Liquidity:
If a security is illiquid, the Fund might be unable to sell the security at a time when the Fund’s manager might wish
to sell, or at all. Further, the lack of an established secondary market may make it more difficult to value illiquid securities,
exposing the Fund to the risk that the prices at which it sells illiquid securities will be less than the prices at which they were
valued when held by the Fund, which could cause the Fund to lose money. The prices of illiquid securities may be more volatile
than more liquid securities, and the risks associated with illiquid securities may be greater in times of financial stress.
Certain
securities that are liquid when purchased may later become illiquid, particularly in times of overall economic distress or due
to geopolitical events such as sanctions, trading halts, or wars.
Market [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Market:
The market values of securities will fluctuate, sometimes sharply and unpredictably, based on overall economic conditions,
governmental actions or intervention, market disruptions caused by trade disputes or other factors, political developments,
and other factors. Prices of equity securities tend to rise and fall more dramatically than those of debt instruments. Additionally,
legislative, regulatory or tax policies or developments may adversely impact the investment techniques available to a manager,
add to costs, and impair the ability of the Fund to achieve its investment objectives.
Market Disruption and Geopolitical [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Market Disruption and Geopolitical:
The Fund is subject to the risk that geopolitical events will disrupt securities markets
and adversely affect global economies and markets. Due to the increasing interdependence among global economies and
markets, conditions in one country, market, or region might adversely impact markets, issuers and/or foreign exchange rates
in other countries, including the United States. Wars, terrorism, global health crises and pandemics, and other geopolitical
events that have led, and may continue to lead, to increased market volatility and may have adverse short- or long-term effects
on U.S. and global economies and markets, generally. For example, the COVID-19 pandemic resulted in significant market
volatility, exchange suspensions and closures, declines in global financial markets, higher default rates, supply chain disruptions,
and a substantial economic downturn in economies throughout the world. The economic impacts of COVID-19 have created
a unique challenge for real estate markets. Many businesses have either partially or fully transitioned to a remote-working
environment and this transition may negatively impact the occupancy rates of commercial real estate over time. Natural and
environmental disasters and systemic market dislocations are also highly disruptive to economies and markets. In addition,
military action by Russia in Ukraine has, and may continue to, adversely affect global energy and financial markets and therefore
could affect the value of the Fund’s investments, including beyond the Fund’s direct exposure to Russian issuers or nearby
geographic regions. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible
to predict and could be substantial. A number of U.S. domestic banks and foreign (non-U.S.) banks have recently experienced
financial difficulties and, in some cases, failures. There can be no certainty that the actions taken by regulators to limit the
effect of those financial difficulties and failures on other banks or other financial institutions or on the U.S. or foreign (non-U.S.)
economies generally will be successful. It is possible that more banks or other financial institutions will experience financial
difficulties or fail, which may affect adversely other U.S. or foreign (non-U.S.) financial institutions and economies. These
events as well as other changes in foreign (non-U.S.) and domestic economic, social, and political conditions also could adversely
affect individual issuers or related groups of issuers, securities markets, interest rates, credit ratings, inflation, investor sentiment,
and other factors affecting the value of the Fund’s investments. Any of these occurrences could disrupt the operations of the
Fund and of the Fund’s service providers.
Other Investment Companie [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Other Investment Companies:
The main risk of investing in other investment companies, including ETFs, is the risk that the
value of an investment company’s underlying investments might decrease. Shares of investment companies that are listed
on an exchange may trade at a discount or premium from their net asset value. You will pay a proportionate share of the
expenses of those other investment companies (including management fees, administration fees, and custodial fees) in addition
to the Fund’s expenses. The investment policies of the other investment companies may not be the same as those of the
Fund; as a result, an investment in the other investment companies may be subject to additional or different risks than those
to which the Fund is typically subject. In addition, shares of ETFs may trade at a premium or discount to net asset value and
are subject to secondary market trading risks. Secondary markets may be subject to irregular trading activity, wide bid/ask
spreads, and extended trade settlement periods in times of market stress because market makers and authorized participants
may step away from making a market in an ETF’s shares, which could cause a material decline in the ETF’s net asset value.
Prepayment and Extension [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Prepayment and Extension:
Many types of debt instruments are subject to prepayment and extension risk. Prepayment risk
is the risk that the issuer of a debt instrument will pay back the principal earlier than expected. This risk is heightened in a
falling market interest rate environment. Prepayment may expose the Fund to a lower rate of return upon reinvestment of
principal. Also, if a debt instrument subject to prepayment has been purchased at a premium, the value of the premium would
be lost in the event of prepayment. Extension risk is the risk that the issuer of a debt instrument will pay back the principal
later than expected. This risk is heightened in a rising market interest rate environment. This may negatively affect performance,
as the value of the debt instrument decreases when principal payments are made later than expected. Additionally, the Fund
may be prevented from investing proceeds it would have received at a given time at the higher prevailing interest rates.
Loans
typically have a 6-12 month call protection and may be prepaid partially or in full after the call protection period without penalty.
Securities Lending [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Securities Lending:
Securities lending involves two primary risks:
“
investment risk
”
and
“
borrower default risk.
”
When lending
securities, the Fund will receive cash or U.S. government securities as collateral. Investment risk is the risk that the Fund
will lose money from the investment of the cash collateral received from the borrower. Borrower default risk is the risk that
the Fund will lose money due to the failure of a borrower to return a borrowed security. Securities lending may result in leverage.
The use of
leverage
may exaggerate any increase or decrease in the net asset value, causing the Fund to be more volatile.
The use of leverage may increase expenses and increase the impact of the Fund’s other risks.
Special Situations [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Special Situations:
A
“
special situation
”
arises when, in a manager’s opinion, securities of a particular company will appreciate
in value within a reasonable period because of unique circumstances applicable to the company. Special situations investments
often involve much greater risk than is inherent in ordinary investments. Investments in special situation companies may not
appreciate and the Fund’s performance could suffer if an anticipated development does not occur or does not produce the
anticipated result.
Temporary Defensive Positions [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Temporary Defensive Positions:
When market conditions make it advisable, the Fund may hold a portion of its assets in
cash and short-term interest bearing instruments. Moreover, in periods when, in the opinion of the manager, a temporary
defensive position is appropriate, up to 100% of the Fund’s assets may be held in cash, short-term interest bearing instruments
and/or any other securities the manager considers consistent with a temporary defensive position. The Fund may not achieve
its investment objective when pursuing a temporary defensive position.
Valuation of Loans [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
Valuation of Loans:
The Fund values its assets every day the New York Stock Exchange is open for regular trading. However,
because the secondary market for floating rate loans is limited, it may be difficult to value loans, exposing the Fund to the
risk that the price at which it sells loans will be less than the price at which they were valued when held by the
Fund
. Reliable
market value quotations may not be readily available for some loans, and determining the fair valuation of such loans may
require more research than for securities that trade in a more active secondary market. In addition, elements of judgment
may play a greater role in the valuation of loans than for more securities that trade in a more developed secondary market
because there is less reliable, objective market value data available. If the Fund purchases a relatively large portion of a
loan, the limitations of the secondary market may inhibit the Fund from selling a portion of the loan and reducing its exposure
to a borrower when the manager deems it advisable to do so. Even if the Fund itself does not own a relatively large portion
of a particular loan, the Fund, in combination with other similar accounts under management by the same portfolio managers,
may own large portions of loans. The aggregate amount of holdings could create similar risks if and when the portfolio managers
decide to sell those loans. These risks could include, for example, the risk that the sale of an initial portion of the loan could
be at a price lower than the price at which the loan was valued by the Fund, the risk that the initial sale could adversely impact
the price at which additional portions of the loan are sold, and the risk that the foregoing events could warrant a reduced
valuation being assigned to the remaining portion of the loan still owned by the Fund.
WhenIssued, Delayed Delivery, and Forward Commitment Transactions [Member]  
General Description of Registrant [Abstract]  
Risk [Text Block]
When-Issued, Delayed Delivery, and Forward Commitment
Transactions
:
When-issued, delayed delivery, and forward commitment
transactions involve the risk that the security the Fund buys will lose value prior to its delivery. These transactions may result
in leverage. The use of leverage may exaggerate any increase or decrease in the net asset value,
causing
the Fund to be
more volatile. The use of leverage may increase expenses and increase the impact of the Fund’s other risks. There also is
the risk that the security will not be issued or that the other party will not meet its obligation. If this occurs, the Fund loses
both the investment opportunity for the assets it set aside to pay for the security and any gain in the security’s price.
Business Contact [Member]  
Cover [Abstract]  
Entity Address, Address Line One 7337 E Doubletree Ranch Road
Entity Address, Address Line Two Suite 100
Entity Address, City or Town Scottsdale
Entity Address, State or Province AZ
Entity Address, Postal Zip Code 85258
Contact Personnel Name Huey P. Falgout, Jr.
Class A Common Shares [Member]  
Fee Table [Abstract]  
Sales Load [Percent] 2.50% [2],[3]
Dividend Reinvestment and Cash Purchase Fees $ 0
Other Transaction Expenses [Abstract]  
Other Transaction Expense 1 [Percent] 0.00% [4]
Other Transaction Expense 2 [Percent] 0.00%
Management Fees [Percent] 1.07% [5]
Interest Expenses on Borrowings [Percent] 2.38%
Distribution/Servicing Fees [Percent] 0.00% [6]
Loan Servicing Fees [Percent] 0.25%
Other Annual Expenses [Abstract]  
Other Annual Expenses [Percent] 0.50% [7]
Total Annual Expenses [Percent] 4.20%
Waivers and Reimbursements of Fees [Percent] (0.31%) [8]
Net Expense over Assets [Percent] 3.89% [9]
Capital Stock, Long-Term Debt, and Other Securities [Abstract]  
Outstanding Security, Title [Text Block] Class A Common Shares
Outstanding Security, Authorized [Shares] | shares 10,274,029.217
Class C Common Shares [Member]  
Fee Table [Abstract]  
Sales Load [Percent] 0.00% [3]
Dividend Reinvestment and Cash Purchase Fees $ 0
Other Transaction Expenses [Abstract]  
Other Transaction Expense 1 [Percent] 1.00% [4]
Other Transaction Expense 2 [Percent] 0.00%
Management Fees [Percent] 1.07% [5]
Interest Expenses on Borrowings [Percent] 2.38%
Distribution/Servicing Fees [Percent] 0.50% [6]
Loan Servicing Fees [Percent] 0.25%
Other Annual Expenses [Abstract]  
Other Annual Expenses [Percent] 0.50% [7]
Total Annual Expenses [Percent] 4.70%
Waivers and Reimbursements of Fees [Percent] (0.31%) [8]
Net Expense over Assets [Percent] 4.39% [9]
Capital Stock, Long-Term Debt, and Other Securities [Abstract]  
Outstanding Security, Title [Text Block] Class C Common Shares
Outstanding Security, Authorized [Shares] | shares 444,231.714
Class I Common Shares [Member]  
Fee Table [Abstract]  
Sales Load [Percent] 0.00% [3]
Dividend Reinvestment and Cash Purchase Fees $ 0
Other Transaction Expenses [Abstract]  
Other Transaction Expense 1 [Percent] 0.00%
Other Transaction Expense 2 [Percent] 0.00%
Management Fees [Percent] 1.07% [5]
Interest Expenses on Borrowings [Percent] 2.38%
Distribution/Servicing Fees [Percent] 0.00% [6]
Loan Servicing Fees [Percent] 0.00%
Other Annual Expenses [Abstract]  
Other Annual Expenses [Percent] 0.50% [7]
Total Annual Expenses [Percent] 3.95%
Waivers and Reimbursements of Fees [Percent] (0.31%) [8]
Net Expense over Assets [Percent] 3.64% [9]
Capital Stock, Long-Term Debt, and Other Securities [Abstract]  
Outstanding Security, Title [Text Block] Class I Common Shares
Outstanding Security, Authorized [Shares] | shares 730,442.925
Class W Common Shares [Member]  
Fee Table [Abstract]  
Sales Load [Percent] 0.00% [3]
Dividend Reinvestment and Cash Purchase Fees $ 0
Other Transaction Expenses [Abstract]  
Other Transaction Expense 1 [Percent] 0.00%
Other Transaction Expense 2 [Percent] 0.00%
Management Fees [Percent] 1.07% [5]
Interest Expenses on Borrowings [Percent] 2.38%
Distribution/Servicing Fees [Percent] 0.00% [6]
Loan Servicing Fees [Percent] 0.00%
Other Annual Expenses [Abstract]  
Other Annual Expenses [Percent] 0.50% [7]
Total Annual Expenses [Percent] 3.95%
Waivers and Reimbursements of Fees [Percent] (0.31%) [8]
Net Expense over Assets [Percent] 3.64% [9]
Capital Stock, Long-Term Debt, and Other Securities [Abstract]  
Outstanding Security, Title [Text Block] Class W Common Shares
Outstanding Security, Authorized [Shares] | shares 320,955.397
Class A Common Shares No Repurchases [Member]  
Other Annual Expenses [Abstract]  
Expense Example, Year 01 $ 64
Expense Example, Years 1 to 3 151
Expense Example, Years 1 to 5 241
Expense Example, Years 1 to 10 481
Class C Common Shares No Repurchases [Member]  
Other Annual Expenses [Abstract]  
Expense Example, Year 01 47
Expense Example, Years 1 to 3 149
Expense Example, Years 1 to 5 253
Expense Example, Years 1 to 10 527
Class I Common Shares No Repurchases [Member]  
Other Annual Expenses [Abstract]  
Expense Example, Year 01 37
Expense Example, Years 1 to 3 120
Expense Example, Years 1 to 5 206
Expense Example, Years 1 to 10 436
Class W Common Shares No Repurchases [Member]  
Other Annual Expenses [Abstract]  
Expense Example, Year 01 37
Expense Example, Years 1 to 3 120
Expense Example, Years 1 to 5 206
Expense Example, Years 1 to 10 436
Class A Common Shares With Repurchases At Period End [Member]  
Other Annual Expenses [Abstract]  
Expense Example, Year 01 64
Expense Example, Years 1 to 3 151
Expense Example, Years 1 to 5 241
Expense Example, Years 1 to 10 481
Class C Common Shares With Repurchases At Period End End [Member]  
Other Annual Expenses [Abstract]  
Expense Example, Year 01 57
Expense Example, Years 1 to 3 149
Expense Example, Years 1 to 5 253
Expense Example, Years 1 to 10 527
Class I Common Shares With Repurchases At Period End [Member]  
Other Annual Expenses [Abstract]  
Expense Example, Year 01 37
Expense Example, Years 1 to 3 120
Expense Example, Years 1 to 5 206
Expense Example, Years 1 to 10 436
Class W Common Shares With Repurchases At Period End [Member]  
Other Annual Expenses [Abstract]  
Expense Example, Year 01 37
Expense Example, Years 1 to 3 120
Expense Example, Years 1 to 5 206
Expense Example, Years 1 to 10 $ 436
Common Shares [Member]  
Capital Stock, Long-Term Debt, and Other Securities [Abstract]  
Security Voting Rights [Text Block]
Each Common Share of the Fund has one vote and shares equally in dividends and distributions, when and if, declared
by the Fund, and in the Fund's net assets upon liquidation.
Security Liquidation Rights [Text Block]
All Common Shares have equal rights to the payment of dividends and the distribution
of assets upon liquidation.
Security Preemptive and Other Rights [Text Block]
There are no preemptive or
conversion rights applicable to any of the Common Shares.
Preferred Shares [Member]  
Capital Stock, Long-Term Debt, and Other Securities [Abstract]  
Security Liquidation Rights [Text Block]
In the event
of any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Fund, holders of Preferred
Shares would be entitled to receive a preferential liquidating distribution (expected to equal the original purchase
price per share plus accumulated and unpaid dividends thereon, whether or not earned or declared) before any distribution
of assets is made to holders of Common Shares.
[1] In order to compute the Corresponding Return to Common Shares Shareholders, the Assumed Portfolio Return is multiplied by the total value of the Fund's assets at the beginning of the Fund's fiscal year to obtain an assumed return to the Fund. From this amount, all interest accrued during the year is subtracted to determine the return available to shareholders. The return available to shareholders is then divided by the total value of the Fund's net assets attributable to Common Shares as of the beginning of the fiscal year to determine the Corresponding Return to Common Shareholders.
[2] Reduced for purchases of $100,000 and over for Class A Common Shares, please see “Sales Charges.”
[3] The Distributor will pay a dealer reallowance for Class A Common Shares from the sales charge. The Distributor will pay a sales commission for Class C Common Shares to authorized dealers from its own assets.
[4] There is no front-end sales charge if you purchase Class A Common Shares in the amount of $500,000 or more. Class A Common Shares purchased in an amount of $500,000 or more are subject to a 1.00% EWC if repurchased by the Fund within 12 months of purchase. Class C Common Shares repurchased by the Fund within the first year after purchase will incur a 1.00% EWC. See “Sales Charges - Early Withdrawal Charge.” No EWC will be charged on redemptions that are due to the closing of shareholder accounts having a value of less than $1,000.
[5] Pursuant to the investment management agreement with the Fund, the Investment Adviser is paid a fee of 0.80% of the Fund's Managed Assets. For the description of “Managed Assets,” please see “Description of the Fund – Investment Adviser/Sub-Adviser” earlier in this Prospectus.
[6] Because the distribution fees payable by Class C Common Shares may be considered an asset-based sales charge, long-term shareholders in that class of the Fund may pay more than the economic equivalent of the maximum front-end sales charges permitted by the Financial Industry Regulatory Authority.
[7] Other Operating Expenses are estimated amounts for the current fiscal year.
[8] The Investment Adviser is contractually obligated to limit expenses of the Fund through July 1, 2025 to the following: Class A Common Shares - 0.90% of Managed Assets plus 0.45% of average daily net assets; Class C Common Shares - 0.90% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets; and Class W Common Shares - 0.90% of Managed Assets plus 0.20% of average daily net assets. The obligation is subject to possible recoupment by the Investment Adviser within 36 months of the waiver or reimbursement. The Investment Adviser is contractually obligated to further limit expenses of the Fund through July 1, 2025 to the following: Class A Common Shares - 0.80% of Managed Assets plus 0.45% of average daily net assets; Class C Common Shares - 0.80% of Managed Assets plus 0.95% of average daily net assets; Class I Common Shares - 0.80% of Managed Assets plus 0.20% of average daily net assets; and Class W Common Shares - 0.80% of Managed Assets plus 0.20% of average daily net assets. These limitations do not extend to interest, taxes, investment-related costs, leverage expenses, extraordinary expenses, and Acquired Fund Fees and Expenses. Termination or modification of these obligations requires approval by the Fund’s Board.
[9] If the expenses of the Fund are calculated on the Managed Assets of the Fund (assuming that the Fund has used leverage by borrowing an amount equal to 25% of the Fund’s Managed Assets), the Net Annual Expenses for the Fund would be lower than the expenses shown in the table. Such lower Net Annual Expense ratios would be as follows: 2.99%, 3.49%, 2.74%, and 2.74% for Class A, Class C, Class I, and Class W shares, respectively.