DEFC14A: Saba Capital Urges Pioneer Diversified High Income Fund Shareholders to Vote Against Proposed Victory Capital Advisory Agreement

Saba Capital is soliciting proxies to vote against the proposed investment advisory agreement between Pioneer Diversified High Income Fund and Victory Capital Management, advocating for shareholders to have the option to exit the fund at net asset value (NAV).

Summary

• Saba Capital is seeking shareholder support to vote against a new investment advisory agreement between Pioneer Diversified High Income Fund and Victory Capital Management.
• Amundi, the parent company of the Fund's current advisor, has agreed to combine with Victory Capital, necessitating shareholder approval of the new agreement.
• Saba believes shareholders should have the opportunity to exit the Fund at NAV, which the Fund currently does not offer.
• Saba is urging shareholders to vote against the proposal to express their desire for a NAV exit option.
• The Special Meeting to vote on the proposal is scheduled for March 26, 2025.
• As of February 4, 2025, there were 8,334,759 Shares outstanding.
• Saba beneficially owns 1,000 Shares as of the record date.
• Approval of the New Investment Advisory Agreement requires the affirmative vote of a majority of the outstanding voting securities of the Fund, which is defined under the 40 Act to be the lesser of (a) more than 50% of the outstanding Shares of the Fund, or (b) 67% or more of the Shares of the Fund present (in person or by proxy) at the Special Meeting if more than 50% of the outstanding Shares of the Fund are present at the Special Meeting in person or by proxy.

Sentiment

Score: 7

Explanation: The document is assertive and focused on advocating for shareholder rights, which is generally viewed positively by investors seeking to maximize returns. However, the need for a proxy fight indicates underlying issues with the fund's management, which tempers the overall sentiment.

Positives

• Saba is giving shareholders a voice to express their desire for a NAV exit option.

Negatives

• The Fund currently does not provide shareholders with an option to exit at NAV.

Risks

• If the New Investment Advisory Agreement is approved, shareholders may not have the opportunity to exit the Fund at NAV.
• There is a risk that other matters may be brought before the Special Meeting that are not currently known.

Future Outlook

The outcome of the shareholder vote will determine whether the new investment advisory agreement with Victory Capital is approved, and whether shareholders will have the opportunity to exit the Fund at NAV.

Management Comments

• Saba believes shareholders of the Fund should be given the opportunity to exit the Fund at NAV.
• Saba urges all shareholders who want the option to exit the Fund at NAV to express this desire by voting to oppose the New Investment Advisory Agreement.

Industry Context

This proxy fight reflects a growing trend of activist investors seeking to unlock value in closed-end funds by advocating for shareholder-friendly actions such as NAV exit options.

Comparison to Industry Standards

• Activist investors often target closed-end funds trading at a discount to NAV, similar to Saba's strategy here.
• Other examples of activist campaigns in closed-end funds include efforts by Bulldog Investors and Karpus Management.
• These campaigns often focus on issues such as fund governance, expense ratios, and the potential for liquidation or tender offers to narrow the NAV discount.

Stakeholder Impact

• Shareholders: The outcome of the vote will directly impact their ability to potentially exit the Fund at NAV.
• Fund Management: The vote will determine whether Victory Capital will become the Fund's new investment advisor.
• Amundi: The vote is a step in the process of combining Amundi Holdings US, Inc. with Victory Capital.

Next Steps

• Shareholders should vote on the GOLD proxy card AGAINST the proposal to approve the new investment advisory agreement.
• Saba will continue to solicit proxies and advocate for its position.
• The Special Meeting will be held on March 26, 2025, to determine the outcome of the vote.

Key Dates

Keywords

proxy solicitation, Saba Capital, Pioneer Diversified High Income Fund, Victory Capital, investment advisory agreement, net asset value, NAV, shareholder vote