FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) For so long as any shares of RP are rated by S&P, the Trust will not purchase or sell futures contracts, write, purchase or sell options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P that engaging in such transactions will not impair the rating then assigned to such shares of RP by S&P, except that the Trust may purchase or sell futures contracts based on the Bond Buyer Municipal Bond Index (the "Municipal Index") or U.S. Treasury Bonds with remaining maturities often years or more ("Treasury Bonds") and write, purchase or sell put and call options on such contracts (collectively "S&P Hedging Transactions"), subject to the following limitations: (A) the Trust will not engage in any S&P Hedging Transaction based on the Municipal Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal; (B) the Trust will not engage in any S&P Hedging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on Treasury Bonds and on the Municipal Index exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (2) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal; (C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date; (D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and (E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust. (b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations: (A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust; (B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 10% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated A or AA by S&P) (for purposes of the foregoing clauses (A) and (B), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust); (C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000; (D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires; (E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter; (F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12; and (G) the Trust will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 days after the date as of which such valuation is made shall be valued at the lesser of (a) Discounted Value and (b) the exercise price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (a) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (b) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the following amounts shall be added to the RP Basic Maintenance Amount required to be maintained by the Trust under paragraph 8(a) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) 10% of the exercise price of a written call option; (ii) the exercise price of any written put option; (iii) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; (iv) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; (v) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract; and (vi) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on futures contracts and does not own the underlying contract. (c) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Transactions that are permitted under paragraph 12(b) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitations: (A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed income securities rated P-l, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇ maturing prior to the date of the Forward Commitment with a face value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party; and (B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
Appears in 2 contracts
Sources: Bylaws (Putnam Municipal Opportunities Trust), Bylaws (Putnam Municipal Opportunities Trust)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) For so long as any shares of RP are rated by S&P, the Trust will not purchase or sell futures contracts, write, purchase or sell options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P that engaging in such transactions will not impair the rating then assigned to such shares of RP by S&P, except that the Trust may purchase or sell futures contracts based on the Bond Buyer Municipal Bond Index (the "Municipal Index") or on U.S. Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") and write, purchase or sell put and call options on such contracts (collectively "S&P Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Hedging Transaction Transactions based on the Municipal Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite opposition position thereto ("Closing Transactions")), which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded open interest in futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures exceeding in number 2550% of the quotient of the Market Value of the Trust's total assets divided by $100,000 ($200,000 in the case of futures on the two year Treasury Note and $1,000,000 in the case of futures on Treasury Bills) or (2) outstanding futures contracts based on a particular Treasury Bonds instrument exceeding in number 10% of the average number of daily traded open interest in such futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract contracts which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i1) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii2) the Trust is required to pay Variation Margin on the second such Valuation Date;; and
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of engages in an underlying security)S&P Hedging Transaction, it will either maintain an amount of cash, cash equivalents or short-term, fixed-money market securities or longer term fixed income securities obligations rated, in the case of longer term securities, at least A in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the following: Writing covered call options on futures: the higher of the Market Value of the instruments underlying the options contract or the strike price of the options contract. Writing covered put options on futures: the strike price of the options contract. Buying futures: the Trust's purchase obligation under the futures contract. Selling futures: the higher of the Market Value of the instruments or index underlying the futures contract or option, or, in and the event market price at which the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfoliowill settle at expiration. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shallamounts deposited as Initial Margin and, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding for futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement valueonly, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will Variation Margin shall not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio constitute S&P Eligible Assets and securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index held in the thirty days preceding the time of effecting such transaction as reported segregated account contemplated by The Wall Street Journal or paragraph 12 (2a) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 10% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated A or AA by S&P) (for purposes of the foregoing clauses (A) and (B), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12; and
(G) the Trust will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 days after the date as of which such valuation is made shall be valued at the lesser of (a) Discounted Value and (b) the exercise price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence above shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (a) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (b) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the following amounts shall be added to the RP Basic Maintenance Amount required to be maintained by the Trust under paragraph 8(a) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) 10% of the exercise price of a written call option; (ii) the exercise price of any written put option; (iii) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; (iv) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; (v) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract; and (vi) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on futures contracts and does not own the underlying contractDiscount Factors.
(c) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Transactions that are permitted under paragraph 12(b) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitations:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed income securities rated P-l, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇ maturing prior to the date of the Forward Commitment with a face value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
Appears in 2 contracts
Sources: Bylaws (Putnam Municipal Opportunities Trust), Bylaws (Putnam Municipal Opportunities Trust)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&P▇▇▇▇▇'▇, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P ▇▇▇▇▇'▇ that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&P▇▇▇▇▇'▇, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AAA by S&P), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated A or AA by S&P) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇▇▇▇▇'▇ ▇▇▇gible Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇▇▇▇▇'▇ ▇▇▇gible Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇▇▇▇▇'▇ ▇▇▇gible Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇▇▇▇▇'▇ ▇▇▇gible Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the ▇▇▇▇▇'▇ Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇-▇ or MIG-1 by Moody's and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇▇▇▇▇'▇ ▇▇▇gible Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇▇▇▇▇'▇ ▇▇▇gible Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Real Estate Securities constituting Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated ▇-▇, ▇▇▇-▇ or MIG-1 by Moody's) and maturing prior to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of a Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as any Series is rated by Moody's: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust ▇▇▇▇▇▇ the anticipated purchase of an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue to have Eligible Ass
Appears in 1 contract
Sources: Bylaws (RMR Real Estate Income Fund)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇’▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&P▇▇▇▇▇’▇, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody’s that engaging in such transactions will not impair the rating then assigned to such shares of RP by S&P, except that the Trust may purchase or sell futures contracts based on the Bond Buyer Municipal Bond Index (the "Municipal Index") or U.S. Treasury Bonds with remaining maturities often years or more ("Treasury Bonds") and write, purchase or sell put and call options on such contracts (collectively "S&P Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Hedging Transaction based on the Municipal Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Hedging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on Treasury Bonds and on the Municipal Index exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (2) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating ratings then assigned to any shares of RP such Preferred Shares by Mood▇'▇Moody’s, ▇▇cept except that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal NAREIT Index (the “Real Estate Index”) or United States Treasury Bonds Bonds, Bills or Notes (“Treasury Futures”), and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging collectively, “Moody’s Hedging Transactions"”), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Moody’s Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust’s taking an opposite position thereto (“Closing Transactions”)) which would cause the Trust at the time of such transaction to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any Moody’s Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1i) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1020% of the aggregate Market Value of Moody’s Eligible Assets owned by the Trust and rated at least Aa by Moody’s (or, if not rated by Moody’s, rated AAA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody’s Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody’s Eligible Assets already subject to a Moody’s Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody’s (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody’s, rated A or AA by S&P) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible ▇▇’▇ Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible ▇▇’▇ Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible ▇▇’▇ Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "“readily reversible" ” or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody’s Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody’s Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody’s, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody’s Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("“Forward Commitments"”), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇▇-▇ ▇▇ ▇▇▇-▇ by Moody’s and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's ’s obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's ’s obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody’s Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody’s Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, “Fitch Hedging Transactions”), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody’s; or, if not rated by Moody’s, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Real Estate Securities constituting Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody’s, or, if not rated by Moody’s, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and “readily reversible” or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated ▇-▇, ▇▇▇-▇ or MIG-1 by Moody’s) and maturing prior to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust’s obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust’s obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody’s or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody’s or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for “temporary purposes,” is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, “temporary purposes” means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody’s Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of a Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as any Series is rated by Moody’s: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust ▇▇▇▇▇▇ the anticipated purchase of an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue to have Eligible Ass
Appears in 1 contract
Sources: Bylaws (RMR Real Estate Income Fund)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If Moody's is rating any Preferred Shares, ▇▇▇▇:
(i) For so long as any shares of RP Preferred Shares are rated by S&PMoody's, the Trust will not purchase n▇▇ ▇▇▇ or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AA by S&P or Fitch), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated Baa or A by S&P or AA by S&PFitch) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has MoodMoody's Eligible Assets w▇'▇▇ ▇▇▇gible Assets with an ▇ aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P-lP-1, MTG-1 or MIG-1 or VMIG-1 by MoodMoody's and mat▇'▇ ▇▇▇▇ maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has MoodMoody's Eligible Assets with ▇'▇ ▇▇▇gible Assets with an aggregate regate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Real Estate Securities constituting Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated P-1, MTG-1 or MIG-1 by Moody's) and ma▇▇▇▇▇▇ ▇▇▇or to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of the Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as the Series is rated by Moody's: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust hedges the anticipated pu▇▇▇▇▇▇ of an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue
Appears in 1 contract
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) For so long as any shares of RP are rated by S&P, the Trust will not purchase or sell futures contracts, write, purchase or sell options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P that engaging in such transactions will not impair the rating then assigned to such shares of RP by S&P, except that the Trust may purchase or sell futures contracts based on the Bond Buyer Municipal Bond Index (the "Municipal Index") or U.S. Treasury Bonds with remaining maturities often of ten years or more ("Treasury Bonds") and write, purchase or sell put and call options on such contracts (collectively "S&P Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Hedging Transaction based on the Municipal Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Hedging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on Treasury Bonds and on the Municipal Index exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (2) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust Trust
writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇Moody's, ▇▇e the Trust will not buy or sell futures contracts, write, purchase ▇▇▇▇▇▇▇e or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t Moody's that engaging in such transactions would not impair the rating then ra▇▇▇▇ ▇▇en assigned to any shares of RP by Mood▇'▇Moody's, ▇▇cept except that the Trust may purchase or sell exchange-traded futures trade▇ ▇▇▇▇▇es contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions"), subject to the following limitationslimitatio▇▇:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Moody's Hedging Transaction based on the Municipal Index (other ▇▇▇▇▇ than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Moody's Hedging Transaction based on Treasury Bonds (other than othe▇ ▇▇▇▇ Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 10% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇ ▇▇▇▇y's, (▇2) outstanding futures contracts based on Treasury Bonds Treas▇▇▇ ▇▇▇ds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust and rated Aa by Mood▇'b▇ (▇▇▇▇▇'s (or, if not rated by MoodMoody's but rated by S&P, ra▇'▇▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures outsta▇▇▇▇▇ ▇utures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust and rated Baa or A by Mood▇'▇ ▇ ▇▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ Moody's but rated by S&P, rated A or ra▇▇▇ ▇ ▇r AA by S&P) (for purposes of purp▇▇▇▇ ▇▇ the foregoing clauses (A) and (B), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions only with respect to futures contracts ▇▇▇▇▇▇cts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll Moody's shall advise the Trust that to do so would not adversely affect Mood▇'▇' ad▇▇en ▇▇▇▇▇ affect Moody's' then current rating of the shares of RP; provided, howeverhoweve▇, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12; and
(G) the Trust will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal Valu▇ ▇▇▇▇▇ to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or eq▇▇▇▇ ▇▇ exceeds the RP Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive ▇▇▇▇▇▇e pursuant to an outstanding futures contract or option shall be as follows (unless the Trust receives written confirmation to the contrary from Mood▇'▇Moody's): (i) assets subject to call options written by the Trust which are ▇▇▇▇▇ ▇re either exchange-traded and "readily reversible" or which expire within 48 days after the date as of which such valuation is made shall be valued at the lesser of (a) Discounted Value and (b) the exercise price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (a) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (b) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or eq▇▇▇▇ ▇▇ exceeds the RP Basic Maintenance Amount, the following amounts shall be added to the RP Basic Maintenance Amount required to be maintained by the Trust under paragraph 8(a) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇Moody's): (i) 10% of the exercise price of a written call option; (ii▇▇) the ▇▇e exercise price of any written put option; (iii) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; (iv) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; (v) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract; and (vi) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on futures contracts and does not own the underlying contract.
(c) For so long as any shares of RP are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities se▇▇▇▇▇▇▇s for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(b12(▇) of ▇▇ this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t Moody's that engaging in such transactions would not impair the rating then ra▇▇▇▇ ▇▇en assigned to such shares of RP by Mood▇'▇ ▇▇▇ept Moody's except that the Trust may enter into such contracts to purchase newlypur▇▇▇▇▇ ▇ewly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitations:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed income securities rated P-lP-1, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇ Moody's and maturing prior to the date of the Forward Commitment ▇▇▇ ▇▇▇▇▇▇▇ Com▇▇▇▇▇▇▇ with a face value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal Valu▇ ▇▇▇▇▇ to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or eq▇▇▇▇ ▇▇ exceeds the RP Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
Appears in 1 contract
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&P▇▇▇▇▇'▇, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or - 60 - have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10__% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 25__% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AA by S&P or Fitch), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 10__% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated Baa or A by S&P or AA by S&PFitch) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇▇▇▇▇'▇ ▇▇▇gible Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the ▇▇▇▇▇'▇ Eligible Assets held by the Trust under paragraph 8(aTrust:
(A) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10__% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇-▇ or MIG-1 by Moody's and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇▇▇▇▇'▇ ▇▇▇gible Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the - 62 - Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding __% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding __% of the aggregate Market Value of all Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated ▇-▇, ▇▇▇-▇ or MIG-1 by Moody's) and maturing prior to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of the Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as the Series is rated by Moody's: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust ▇▇▇▇▇▇ the anticipated purchase of an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue to have Eligible Assets with an aggregat
Appears in 1 contract
Sources: Bylaws (RMR Preferred Dividend Fund)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&P▇▇▇▇▇'▇, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AAA by S&P), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated A or AA by S&P) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇-▇ or MIG-1 by Moody's and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
Appears in 1 contract
Sources: Bylaws (RMR Real Estate Fund)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&P▇▇▇▇▇'▇, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AA by S&P or Fitch), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated Baa or A by S&P or AA by S&PFitch) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇-▇ or MIG-1 by Moody's and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust); 57
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that 58 are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated ▇-▇, ▇▇▇-▇ or MIG-1 by Moody's) and maturing prior to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
Appears in 1 contract
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&P▇▇▇▇▇'▇, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AAA by S&P), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated A or AA by S&P) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇-▇ or MIG-1 by Moody's and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Preferred Shares Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
Appears in 1 contract
Sources: Bylaws (RMR Real Estate Fund)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&P▇▇▇▇▇'▇, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10__% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 25__% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AA by S&P or Fitch), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 10__% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated Baa or A by S&P or AA by S&PFitch) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(aTrust:
(A) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10__% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇-▇ or MIG-1 by Moody's and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Fitch Eligible Assets -72- owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated ▇-▇, ▇▇▇-▇ or MIG-1 by Moody's) and maturing prior to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of the Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as the Series is rated by Moody's: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust ▇▇▇▇▇▇ the anticipated purchase of an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue to have Eligible Assets with an aggregat
Appears in 1 contract
Sources: Bylaws (RMR Preferred Dividend Fund)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&PMoody's, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond Index (the "Municipal Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street JournalTHE WALL STREET JOURNAL;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1I) outstanding futures contracts based on Treasury Bonds and on the Municipal Index exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (2) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1020% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust and rated Aa by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated A or AA by S&P) (for purposes of the foregoing clauses (A) and (B), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12; and
(G) the Trust will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 days after the date as of which such valuation is made shall be valued at the lesser of (a) Discounted Value and (b) the exercise price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (a) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (b) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the following amounts shall be added to the RP Basic Maintenance Amount required to be maintained by the Trust under paragraph 8(a) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) 10% of the exercise price of a written call option; (ii) the exercise price of any written put option; (iii) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; (iv) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; (v) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract; and (vi) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on futures contracts and does not own the underlying contract.
(c) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Transactions that are permitted under paragraph 12(b) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitations:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed income securities rated P-l, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇ maturing prior to the date of the Forward Commitment with a face value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.or
Appears in 1 contract
Sources: Bylaws Amendment (Putnam Municipal Opportunities Trust)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) For so long as any shares of RP are rated by S&P, the Trust will not purchase or sell futures contracts, write, purchase or sell options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P that engaging in such transactions will not impair the rating then assigned to such shares of RP by S&P, except that the Trust may purchase or sell futures contracts based on the Bond Buyer Municipal Bond Index (the "Municipal Index") or U.S. Treasury Bonds with remaining maturities often of ten years or more ("Treasury Bonds") and write, purchase or sell put and call options on such contracts (collectively "S&P Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Hedging Transaction based on the Municipal Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Hedging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on Treasury Bonds and on the Municipal Index exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (2) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust Trust
writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇Moody's, ▇▇e the Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t Moody's that engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇Moody's, ▇▇cept except that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Moody's Hedging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Moody's Hedging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 10% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇Moody's, (▇2) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust and rated Aa by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ Moody's but rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ Moody's but rated by S&P, rated A or AA by S&P) (for purposes of the foregoing clauses (A) and (B), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll Moody's shall advise the Trust that to do so would not adversely affect Mood▇'▇Moody's' ▇▇en then current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12; and
(G) the Trust will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows (unless the Trust receives written confirmation to the contrary from Mood▇'▇Moody's): (i) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 days after the date as of which such valuation is made shall be valued at the lesser of (a) Discounted Value and (b) the exercise price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (a) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (b) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the following amounts shall be added to the RP Basic Maintenance Amount required to be maintained by the Trust under paragraph 8(a) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇Moody's): (i) 10% of the exercise price of a written call option; (ii) the exercise price of any written put option; (iii) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; (iv) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; (v) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract; and (vi) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on futures contracts and does not own the underlying contract.
(c) For so long as any shares of RP are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(b) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t Moody's that engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept Moody's except that the Trust may enter into such contracts to purchase newly-newly- issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitations:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇▇-▇ ▇▇ ▇▇▇▇-▇ by Moody's and maturing prior to the date of the Forward Commitment with a face value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
Appears in 1 contract
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) For so If Moody's is rating any Preferred Shares, then:
(i) ▇▇▇ ▇o long as any shares of RP Preferred Shares are rated by S&PMoody's, the Trust will not purchase buy or sell futures contractsc▇▇▇▇▇▇▇s, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AAA by S&P), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated A or AA by S&P) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P-lP-1, MTG-1 or MIG-1 or VMIG-1 by MoodMoody's and maturing prior ▇'▇ ▇▇▇ maturing prior to the date ▇▇te of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Preferred Shares Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Real Estate Securities constituting Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated P-1, MTG-1 or MIG-1 by Moody's) and matu▇▇▇▇ ▇▇▇▇▇ to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) change a pricing service (which has been designated by management or the Board of Trustees); and
(vii) enter into reverse repurchase agreements. In the event any Preferred Shares are outstanding and another nationally-recognized statistical rating organization is rating such shares in addition to or in lieu of Moody's or Fitch, the Trust shall comply with any restrictions imposed by such rating agency, which restrictions may be more restrictive than those imposed by Moody's or Fitch.
Appears in 1 contract
Sources: Bylaws (RMR Real Estate Fund)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If Moody's is rating any Preferred Shares, ▇▇▇▇:
(i) For so long as any shares of RP Preferred Shares are rated by S&PMoody's, the Trust will not purchase n▇▇ ▇▇▇ or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AA by S&P or Fitch), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated Baa or A by S&P or AA by S&PFitch) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P-lP-1, MTG-1 or MIG-1 or VMIG-1 by MoodMoody's and mat▇'▇ ▇▇▇▇ maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated P-1, MTG-1 or MIG-1 by Moody's) and ma▇▇▇▇▇▇ ▇▇▇or to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of the Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as the Series is rated by Moody's: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust hedges the anticipated pu▇▇▇▇▇▇ of an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue to have Eligible Assets with an aggr
Appears in 1 contract
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) For so long as any shares of RP Municipal Income Preferred Shares are rated by S&P, the Trust will not purchase or sell futures contracts, write, purchase or sell options on the futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P that engaging in such transactions will not impair the rating then assigned to such shares of RP Municipal Income Preferred Shares by S&P, except that the Trust may purchase or sell futures contracts based on the Bond Buyer Municipal Bond Index (the "Municipal Index") or on U.S. Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") and write, purchase or sell put and call options on such contracts (collectively "S&P Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Hedging Transaction Transactions based on the Municipal Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite opposition position thereto ("Closing Transactions")), which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded open interest in futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Hedging Transaction based on Treasury Bonds (Futures ) other than Closing TransactionsTransaction) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures exceeding in number 2550% of the quotient of the Market Value of the Trust's total assets divided by $100,000 ($200,000 in the case of futures on Treasury Bills) or (2) outstanding futures contracts based on a particular Treasury Bonds instrument exceeding in number 10% of the average number of daily traded open interest in such futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by in The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract contracts which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event that (i1) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount on two consecutive Valuation Dates and (ii2) the Trust is required to pay Variation Margin on the second such Valuation Date;; and
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of engages in an underlying security)S&P Hedging Transaction, it will either maintain an amount of cash, cash equivalents or short-term, fixed-money market securities or longer term fixed income securities obligations rated, in the case of longer term securities, at least A in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the following: Writing covered call options on futures: the higher of the Market Value of the instruments underlying the options contract or the strike price of the options contract. Writing covered put options on futures: the strike price of the options contract. Buying futures: the Trust's purchase obligation under the futures contract. Selling futures: the higher of the Market Value of the instruments or index underlying the futures contract or option, or, in and the event market price at which the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfoliowill settle at expiration. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, such amounts deposited as Initial Margin and, for futures contracts only, Variation Margin shall not constitute S&P Eligible Assets and securities held in the segregated account contemplated by paragraph 12(a)(D) above shall have the following Discount Factors. Type Of Contract Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except Of Segregated Securities Writing covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject futures: The Discounted value of segregated securities is equal to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% lower of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 10% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated A or AA by S&P) (for purposes of the foregoing clauses (A) and (B), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Index if the amount of open interest in the Municipal Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12; and
(G) the Trust will not enter into an option or futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 days after the date as of which such valuation is made shall be valued at the lesser of (a) Discounted Value and (b) the exercise strike price of the call option written by the Trust; (ii) assets subject to call options written by the Trust not meeting the requirements of clause (i) of this sentence shall have no value; (iii) assets subject to put options written by the Trust shall be valued at the lesser of (a) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (b) or the Discounted Value of the subject security, provided that, if a contract matures within 48 days after segregated securities. Writing covered put options on futures: The Discounted Value of segregated securities is equal to the date as lower of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the following amounts shall be added to the RP Basic Maintenance Amount required to be maintained by the Trust under paragraph 8(a) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) 10% of the exercise price of a written call option; (ii) the exercise price of any written put option; (iii) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; (iv) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; (v) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract; segregated securities and (vi) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on futures contracts and does not own the underlying contract.
(c) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Transactions that are permitted under paragraph 12(b) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitations:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed income securities rated P-l, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇ maturing prior to the date of the Forward Commitment with a face value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Assets with an aggregate Discounted Value that equals or exceeds the RP Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zeropurchase obligation.
Appears in 1 contract
Sources: Amendment to by Laws (Putnam Municipal Opportunities Trust)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&P▇▇▇▇▇'▇, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 25% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AA by S&P or Fitch), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 10% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated Baa or A by S&P or AA by S&PFitch) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(aTrust:
(A) of this Part I of Section 12.1 (unless the Trust receives written confirmation to the contrary from Mood▇'▇): (i) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated PP-▇, ▇▇▇-l, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇ r MIG-1 by Moody's and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number % of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding % of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding % of the aggregate Market Value of all Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, % of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated ▇-▇, ▇▇▇-▇ or MIG-1 by Moody's) and maturing prior to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding % of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of the Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as the Series is rated by Moody's: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust ▇▇▇▇▇▇ the anticipated purchase of an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue to have Eligible Assets with an aggregate Discounted Value equal to or
Appears in 1 contract
Sources: Bylaws (RMR Dividend Capture Fund)
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If ▇▇▇▇▇'▇ is rating any Preferred Shares, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&PMoody's, the Trust will not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AAA by S&P), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated A or AA by S&P) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P▇-l▇, MIG-1 or VMIG-1 by Mood▇'▇ ▇▇▇-▇ or MIG-1 by Moody's and maturing prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Real Estate Securities constituting Fitch Eligible Assets owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated ▇-▇, ▇▇▇-▇ or MIG-1 by Moody's) and maturing prior to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:
(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of the Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as the Series is rated by Moody's: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust ▇▇▇▇▇▇ the anticipated purchase of an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue to have Eligible
Appears in 1 contract
FUTURES AND OPTIONS TRANSACTIONS; FORWARD COMMITMENTS. (a) If Moody's is rating any Prefer▇▇▇ ▇▇▇res, then:
(i) For so long as any shares of RP Preferred Shares are rated by S&PMoody's, the Trust will ▇▇▇▇▇ ▇ill not purchase buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write put options (except covered put options) or call options (except covered call options) on portfolio securities unless it receives written confirmation from S&P Moody's that engaging in such transactions will would not impair the rating ratings then assigned to such shares of RP Preferred Shares by S&PMoody's, except that the Trust may purchase or sell exchange-traded futures contracts based on the Bond Buyer Municipal Bond NAREIT Index (the "Municipal Real Estate Index") or U.S. United States Treasury Bonds with remaining maturities often years Bonds, Bills or more Notes ("Treasury BondsFutures") ), and writepurchase, purchase write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively collectively, "S&P Moody's Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any S&P Moody's Hedging Transaction based on the Municipal Real Estate Index (other than transactions which terminate a futures contract or option held by the Trust by the Trust's taking an opposite position thereto ("Closing Transactions")), ) which would cause the Trust at the time of such transaction to own or have sold (1) 1,001 or more outstanding futures contracts based on the Municipal Index, (2) outstanding futures contracts based on the Municipal Index and on Treasury Bonds exceeding in number 25% of the quotient of the Market Value of the Trust's total assets divided by $100,000 or (3) outstanding futures contracts based on the Municipal Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Real Estate Index in the thirty 30 days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(B) the Trust will not engage in any S&P Moody's Hedging Transaction based on Treasury Bonds Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1i) outstanding futures contracts based on Treasury Bonds and on the Municipal Index Futures having an aggregate Market Value exceeding in number 2520% of the quotient of the aggregate Market Value of Moody's Eligible Assets owned by the TrustTrust and rated at least Aa by Moody's total assets divided (or, if not rated by $100,000 Moody's, rated AA by S&P or Fitch), or (2ii) outstanding futures contracts based on Treasury Bonds exceeding in number 10% of the average number of daily traded futures contracts based on Treasury Bonds in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal;
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract which the Trust owns or has sold or any outstanding option thereon owned by the Trust in the event (i) the Trust does not have S&P Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Basic Maintenance Amount on two consecutive Valuation Dates and (ii) the Trust is required to pay Variation Margin on the second such Valuation Date;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract or option thereon in the month prior to the delivery month under the terms of such futures contract or option thereon unless the Trust holds the securities deliverable under such terms; and
(E) when the Trust writes a futures contract or option thereon (including a futures contract or option thereon which requires delivery of an underlying security), it will either maintain an amount of cash, cash equivalents or short-term, fixed-income securities in a segregated account with the Trust's custodian, so that the amount so segregated plus the amount of Initial Margin and Variation Margin held in the account of or on behalf of the Trust's broker with respect to such futures contract or option equals the Market Value of the futures contract or option, or, in the event the Trust writes a futures contract or option thereon which requires delivery of an underlying security, it shall hold such underlying security in its portfolio. For purposes of determining whether the Trust has S&P Eligible Assets with a Discounted Value that equals or exceeds the RP Basic Maintenance Amount, such Discounted Value shall, unless the Trust receives written confirmation from S&P to the contrary, be reduced by an amount equal to (i) 30% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on the Municipal Index which are owned by the Trust plus (ii) 25% of the aggregate settlement value, as marked to market, of any outstanding futures contracts based on Treasury Bonds which contracts are owned by the Trust.
(b) For so long as any shares of RP are rated by Mood▇'▇, ▇▇e Trust will not buy or sell futures contracts, write, purchase or sell put or call options on futures contracts or write put or call options (except covered call or put options) on portfolio securities unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to any shares of RP by Mood▇'▇, ▇▇cept that the Trust may purchase or sell exchange-traded futures contracts based on the Municipal Index or Treasury Bonds and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively "Mood▇'▇ ▇▇▇ging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on the Municipal Index (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (1) outstanding futures contracts based on the Municipal Index exceeding in number 10% of the average number of daily traded futures contracts based on the Municipal Index in the thirty days preceding the time of effecting such transaction as reported by The Wall Street Journal or (2) outstanding futures contracts based on the Municipal Index having a Market Value exceeding the Market Value of Municipal Bonds constituting Mood▇'▇ ▇▇▇gible Assets owned by the Trust;
(B) the Trust will not engage in any Mood▇'▇ ▇▇▇ging Transaction based on Treasury Bonds (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold in the aggregate (1) outstanding futures contracts based on Treasury Bonds Futures having an aggregate Market Value exceeding 1040% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible securities of REITs and Other Real Estate Companies constituting Moody's Eligible Assets owned by the Trust and rated Aaa by Mood▇'▇, (▇other than Moody's Eligible Assets already subject to a Moody's Hedging Transaction) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 50% of the aggregate Market Value of all Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Aa by Mood▇'▇ (▇▇, if not rated by Mood▇'▇ ▇▇▇ rated by S&P, rated AAA by S&P) or (3) outstanding futures contracts based on Treasury Bonds having an aggregate Market Value exceeding 90% of the aggregate Market Value of Mood▇'▇ ▇▇▇gible Assets owned by the Trust and rated Baa or A by Mood▇'▇ Moody's (▇▇or, if not rated by Mood▇'▇ ▇▇▇ rated by S&PMoody's, rated Baa or A by S&P or AA by S&PFitch) (for purposes purpose of the foregoing clauses (AI) and (BII), the Trust shall be deemed to own the number of futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close out any outstanding futures contract based on the Municipal Real Estate Index if the amount of open interest in the Municipal Real Estate Index as reported by The Wall Street Journal is less than 5,000;
(D) the Trust will engage in a Closing Transaction to close out any outstanding futures contract by no later than the fifth Business Day of the month in which such contract expires and will engage in a Closing Transaction to close out any outstanding option on a futures contract by no later than the first Business Day of the month in which such option expires;
(E) the Trust will engage in Mood▇'▇ ▇▇▇ging Transactions only with respect to futures contracts or options thereon having the next settlement date for such type of futures contract or option, or the settlement date immediately thereafter;
(F) the Trust will not engage in options and futures transactions for leveraging or speculative purposes unless Mood▇'▇ ▇▇▇ll advise the Trust that to do so would not adversely affect Mood▇'▇' ▇▇en current rating of the shares of RP; provided, however, that the Trust will not be deemed to have engaged in a futures or options transaction for leveraging or speculative purposes so long as it has done so otherwise in accordance with this paragraph 12100; and
(GD) the Trust will not enter into an option or on futures transaction unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. .
(ii) For purposes of determining whether the Trust has MoodMoody's Eligi▇'▇▇ ▇▇▇gible Assets ets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of Mood▇'▇ ▇▇▇gible Moody's Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows follows:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 48 49 days after the date as of which such valuation is made shall be valued at the lesser of of: (ai) Discounted Value and (bii) the exercise price of the call option written by the Trust; ;
(iiB) assets subject to call options written by the Trust not meeting the requirements of clause (iA) of this sentence shall have no value; ;
(iiiC) assets subject to put options written by the Trust shall be valued at the lesser of of: (ai) the exercise price and (b) the Discounted Value of such security; and (iv) futures contracts shall be valued at the lesser of (a) settlement price and (bii) the Discounted Value of the subject security, provided that, if a contract matures within 48 days after the date as of which such valuation is made, where the Trust is the seller the contract may be valued at the settlement price and where the Trust is the buyer the contract may be valued at the Discounted Value of the subject securities. .
(iii) For purposes of determining whether the Trust has Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the following amounts shall be added to subtracted from the RP Basic Maintenance Amount required to be maintained aggregate Discounted Value of the Moody's Eligible Assets held by the Trust under paragraph 8(a) of this Part I of Section 12.1 Trust:
(unless the Trust receives written confirmation to the contrary from Mood▇'▇): (iA) 10% of the exercise price of a written call option; ;
(iiB) the exercise price of any written put option; ;
(iiiC) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract; ;
(ivD) where the Trust is the purchaser under a futures contract, the settlement price of assets to be purchased under such futures contract; ;
(vE) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and and
(viF) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contracts contract and does not own the underlying contract.
(civ) For so long as any shares of RP Preferred Shares are rated by Mood▇'▇Moody's, ▇▇e the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Mood▇'▇ ▇▇▇ging Moody's Hedging Transactions that are permitted under paragraph 12(bSection 13(a)(ii) of this Part I of Section 12.1) unless it receives written confirmation from Mood▇'▇ ▇▇▇t engaging in such transactions would not impair the rating then assigned to such shares of RP by Mood▇'▇ ▇▇▇ept I), except that the Trust may enter into such contracts to purchase newly-issued securities on the date such securities are issued ("Forward Commitments"), subject to the following limitationslimitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed fixed-income securities rated P-lP-1, MTG-1 or MIG-1 or VMIG-1 by Mood▇Moody'▇ ▇▇▇ maturing ▇▇▇uring prior to the date of the Forward Commitment with a face value Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Mood▇'▇ ▇▇▇gible Moody's Eligible Assets with an aggregate Discounted Value equal to or greater than the RP Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has MoodMoody's Eligible Asse▇'▇ ▇▇▇gible Assets with ▇ an aggregate Discounted Value that equals or exceeds the RP Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(b) If Fitch is rating any Preferred Shares, then:
(i) For so long as any Preferred Shares are rated by Fitch, the Trust will not buy or sell futures contracts, write, purchase or sell call options on futures contracts or purchase put options on futures contracts or write call options (except covered call options) on portfolio securities unless it receives confirmation from Fitch that engaging in such transactions would not impair the ratings then assigned to such Preferred Shares by Fitch, except that the Trust may purchase or sell exchange-traded futures contracts based on the Real Estate Index or Treasury Futures, and purchase, write or sell exchange-traded put options on such futures contracts and purchase, write or sell exchange-traded call options on such futures contracts (collectively, "Fitch Hedging Transactions"), subject to the following limitations:
(A) the Trust will not engage in any Fitch Hedging Transaction based on the Real Estate Index (other than Closing Transactions) which would cause the Trust at the time of such transactions to own or have sold outstanding futures contracts based on the Real Estate Index exceeding in number 10% of the average number of daily traded futures contracts based on the Real Estate Index in the 30 days preceding the time of effecting such transaction (as reported by The Wall Street Journal);
(B) the Trust will not engage in any Fitch Hedging Transaction based on Treasury Futures (other than Closing Transactions) which would cause the Trust at the time of such transaction to own or have sold (i) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 20% of the aggregate Market Value of Fitch Eligible Assets owned by the Trust and rated at least AA by Fitch (or, if not rated by Fitch, rated at least Aa by Moody's; or, if not rated by Moody's, rated at least AA by S&P), or (ii) outstanding futures contracts based on Treasury Futures having an aggregate Market Value exceeding 40% of the aggregate Market Value of all Fitch Eligible Assets -72- owned by the Trust (other than Fitch Eligible Assets already subject to a Fitch Hedging Transaction) and rated at least BBB by Fitch (or, if not rated by Fitch, rated at least Baa by Moody's, or, if not rated by Moody's, rated at least A by S&P) (for purposes of the foregoing clauses (i) and (ii), the Trust shall be deemed to own futures contracts that underlie any outstanding options written by the Trust);
(C) the Trust will engage in Closing Transactions to close any outstanding futures contract based on the Real Estate Index if the amount of open interest in the Real Estate Index as reported by The Wall Street Journal is less than 100; and
(D) the Trust will not enter into an option on future transaction unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount.
(ii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of Fitch Eligible Assets which the Trust is obligated to deliver or receive pursuant to an outstanding futures contract or option shall be as follows:
(A) assets subject to call options written by the Trust which are either exchange-traded and "readily reversible" or which expire within 49 days after the date as of which such valuation is made shall be valued at the lesser of: (i) Discounted Value and (ii) the exercise price of the call option written by the Trust;
(B) assets subject to call options written by the Trust not meeting the requirements of clause (A) of this sentence shall have no value;
(C) assets subject to put options written by the Trust shall be valued at the lesser of: (i) the exercise price and (ii) the Discounted Value of the subject security.
(iii) For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the following amounts shall be subtracted from the aggregate Discounted Value of the Fitch Eligible Assets held by the Trust:
(A) 10% of the exercise price of a written call option;
(B) the exercise price of any written put option;
(C) where the Trust is the seller under a futures contract, 10% of the settlement price of the futures contract;
(D) where the Trust is the purchaser under a futures contract, the settlement price of assets purchased under such futures contract;
(E) the settlement price of the underlying futures contract if the Trust writes put options on a futures contract and does not own the underlying contract; and
(F) 105% of the Market Value of the underlying futures contracts if the Trust writes call options on a futures contract and does not own the underlying contract.
(iv) For so long as any Preferred Shares are rated by Fitch, the Trust will not enter into any contract to purchase securities for a fixed price at a future date beyond customary settlement time (other than such contracts that constitute Fitch Hedging Transactions that are permitted under Section 13(b)(ii) of this Part I), except that the Trust may enter into Forward Commitments, subject to the following limitation:
(A) the Trust will maintain in a segregated account with its custodian cash, cash equivalents or short-term, fixed-income securities rated F-1 by Fitch (or, if not rated by Fitch, rated P-1, MTG-1 or MIG-1 by Moody'▇) ▇▇▇ ▇▇turing prior to the date of the Forward Commitment with a Market Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitments to which it is from time to time a party or long-term fixed income securities with a Discounted Value that equals or exceeds the amount of the Trust's obligations under any Forward Commitment to which it is from time to time a party; and
(B) the Trust will not enter into a Forward Commitment unless, after giving effect thereto, the Trust would continue to have Fitch Eligible Assets with an aggregate Discounted Value equal to or greater than the Preferred Shares Basic Maintenance Amount. For purposes of determining whether the Trust has Fitch Eligible Assets with an aggregate Discounted Value that equals or exceeds the Preferred Shares Basic Maintenance Amount, the Discounted Value of all Forward Commitments to which the Trust is a party and of all securities deliverable to the Trust pursuant to such Forward Commitments shall be zero.
(c) For so long as any Preferred Shares are outstanding and Moody's or Fitch or both is rating such shares, the Trust will not, unless it has received confirmation from Moody's or Fitch or both, as applicable, that any such action would not impair the rating then assigned by such rating agency to such shares, engage in any one or more of the following transactions:
(i) borrow money, except that the Trust may, without obtaining the confirmation described above, borrow money for the purpose of clearing securities transactions if
(A) the Preferred Shares Basic Maintenance Amount would continue to be satisfied after giving effect to such borrowing and
(B) such borrowing (i) is privately arranged with a bank or other person and is evidenced by a promissory note or other evidence of indebtedness that is not intended to be publicly distributed or (ii) is for "temporary purposes," is evidenced by a promissory note or other evidence of indebtedness and is in an amount not exceeding 5% of the value of the total assets of the Trust at the time of the borrowing (for purposes of the foregoing, "temporary purposes" means that the borrowing is to be repaid within sixty days and is not to be extended or renewed);
(ii) except as provided in Section 5 of this Part I, issue additional Preferred Shares or any class or series of shares ranking prior to or on a parity with Preferred Shares with respect to the payment of dividends or other distributions, including the distribution of assets upon dissolution, liquidation or winding up of the Trust, or reissue any Preferred Shares previously purchased or redeemed by the Trust;
(iii) engage in any short sales of securities;
(iv) lend securities;
(v) merge or consolidate into or with any other corporation or entity;
(vi) for purposes of valuation of Moody's Eligible Assets: (A) if the Trust writes a call option, the underlying asset will be valued as follows:(1) if the option is exchange-traded and may be offset readily or if the option expires before the earliest possible redemption of the Series, at the lower of the Discounted Value of the underlying security of the option and the exercise price of the option or (2) otherwise, it has no value; (B) if the Trust writes a put option, the underlying asset will be valued as follows: the lesser of (1) exercise price and (2) the Discounted Value of the underlying security; and (C) call or put option contracts which the Trust buys have no value. For so long as the Series is rated by Moody's: (A) the Trust will not engage in options transactions for leveraging or speculative purposes; (B) the Trust will not write or sell any anticipatory contracts pursuant to which the Trust hedges the anticipated purch▇▇▇ ▇▇ an asset prior to completion of such purchase; (C) the Trust will not enter into an option transaction with respect to portfolio securities unless, after giving effect thereto, the Trust would continue to have Eligible Assets with an
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Sources: Bylaws (RMR Preferred Dividend Fund)