Legal Matters

On June 1, 2015, the Fund was served with a lawsuit filed in
the United States Bankruptcy Court for the Southern
District of New York, entitled Motors Liquidation Company
Avoidance Action Trust vs. JPMorgan Chase Bank, N.A. et al.
and numbered Adv. No. 09-00504 (MG). In addition to the
Fund, the lawsuit also names over five hundred other
institutional investors as defendants. The lawsuit does not
allege any misconduct by the defendants, but seeks to recover
payments made by General Motors Corporation (n/k/a Motors
Liquidation Company) and its affiliates (collectively, "GM")
to the defendants shortly prior to and after GM's Chapter 11
bankruptcy filing on June 1, 2009 (the "Petition Date"). The
complaint alleges that GM made the payments to the
defendants under a certain term loan agreement, dated as of
November 29, 2006, as amended by that first amendment
dated as of March 4, 2009 (the "Term Loan Agreement"); that
the payments occurred both during the ninety (90) days prior
to the Petition Date (the "Prepetition Transfer") and after the
Petition Date when all amounts due under the Term Loan
Agreement were paid in full in connection with GM's
postpetition financing (the "Postpetition Transfer"); that the
lien purportedly securing the Term Loan Agreement was not
perfected as of the Petition Date; and that the lenders under the
Term Loan Agreement should therefore have been treated as
unsecured creditors rather than paid in full as secured
creditors. The plaintiff seeks avoidance of the lien securing the
Term Loan Agreement as unperfected under Section 544(a) of
the Bankruptcy Code; disgorgement of all amounts paid to the
defendants as Postpetition Transfer (plus interest) under
Section 549 of the Bankruptcy Code; and disallowance of any
bankruptcy claims of the defendants against GM until they
repay all such amounts under Section 502(d) of the
Bankruptcy Code. On November 17, 2016, all claims against
the Fund relating to the Prepetition Transfer were dismissed
from the action. On May 5, 2017, the Bankruptcy Court
concluded the evidentiary portion of a trial on certain legal
issues with respect to the defendants' right to the Postpetition
Transfer. On September 26, 2017, the Bankruptcy Court
issued its decision with respect to (a) the final list of fixtures
that still secure the term loan; and (b) the valuation of those
fixtures. The Bankruptcy Court held that 33 of the 40 assets at
issue were fixtures and that the majority of the assets should
be valued on a going concern basis. The Motors Liquidation
Company Avoidance Action Trust sought leave to appeal
portions of the decision on October 10, 2017. The motion for
leave to appeal was denied on September 7, 2018. The parties
agreed to attend mediation in front of David Geronemus, Esq.
in an attempt to consensually resolve the dispute. While no
resolution was reached on a global settlement, the mediation
sessions helped narrow the remaining issues in the litigation.
The parties are proceeding with additional discovery to
continue narrowing the issues in the case and anticipate having
another trial in the Spring of 2019 to determine whether an
additional 11 representative assets are fixtures. During 2009,
the Fund received pay downs from GM in connection with the
term loan totaling approximately $3.0 million. The Fund
cannot predict the outcome of the lawsuit. If the lawsuit were
to be decided or settled in a manner adverse to the Fund, the
payment of such judgment or settlement could have an adverse
effect on the Fund's NAV. However, no liability for litigation
relating to this matter has been accrued in the financial
statements as neither the likelihood nor the amount of any
liability can reasonably be determined at this time. The Fund
will incur legal expenses associated with the defense of the
lawsuit.