Company: SWZ
Filing Date: 2025-01-10
Form Type: PRE 14A
Source: 0000894189-25-000129
Chunk: 22

Company: Total Return Securities Fund
Filing Date: 2025-01-10
Form: PRE 14A
Chunk 22
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 manager’s services is inapt. The Non-Bulldog Directors noted that Bulldog proposes adopting a “3-bucket” approach to managing the Fund’s portfolio. Bucket 1 involves the purchase of securities that, in the opinion of Bulldog, are undervalued at the time of purchase and have the potential for growth with the intent of holding such securities for the long-term. Bucket 2 involves the purchase of securities that, in the opinion of Bulldog, are undervalued at the time of purchase with the intent of seeking to influence the management of the applicable portfolio companies to take actions to increase the market price of the Fund’s investments in such companies’ securities, e.g., by repurchasing such securities, paying a special dividend, or by considering restructuring actions, such as selling or liquidating the company. Bucket 3 involves the purchase of securities whose issuer is undergoing a corporate event such as mergers, liquidations, reorganizations, or spin-offs that, in the opinion of Bulldog, will provide attractive returns relative to the risk-free rate. The Non-Bulldog Directors noted that the advisory fee to be paid to Bulldog under the Proposed Agreement is based on average weekly total assets whereas on the Current Agreement it is based on average monthly net assets and that the fee rate is higher than under the Current Agreement. With respect to the proposed fee being based on average weekly total assets and not average monthly net assets, the Non-Bulldog Directors considered that a fee on total assets could benefit the Fund by aligning the interests of the Fund and the investment adviser at a time when it is beneficial to hold cash or cash equivalents. The Non-Bulldog Directors also considered that the Fund is currently unleveraged and that the utilization of leverage requires Board approval. With respect to the increased advisory fee rate, Bulldog explained that the increased advisory fee rate is appropriate on the basis that the human capital requirements to execute the Fund’s proposed investment objective and strategy are expected to be greater than that which has historically been required in connection with the Fund’s investment mandate. In particular, Bulldog noted that in order to gain access to funds with an activist approach to investing, investors have historically been required to invest through hedge funds, which charge performance fees in addition to management fees and that no performance fee is proposed pursuant to the Proposed Agreement. The Non-Bulldog Directors also considered the proposed advisory fee to be paid by the Fund to Bulldog in relation to the fees paid by SPE, PCF and several other funds