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Canadian Utilities & Telecom Income Fund

 

UTE.UN

Fund Features

Objectives

The Fund’s investment objectives are:

  1. to pay holders of its units monthly distributions in an amount targeted to be 7.0 percent per annum on the net asset value (“NAV”) of the Fund; and
  2. to preserve and enhance the Fund's NAV while reducing portfolio volatility.

Investment Strategy

The Fund will invest in a portfolio consisting principally of equity securities of large capitalization (over $1 billion) utility and, to a lesser degree, telecommunications issuers listed on the Toronto Stock Exchange (“TSX”). Issuers selected for inclusion in the portfolio must have a minimum distribution yield in excess of 2.0% per annum. The investment manager may also invest up to 25% of the Fund's NAV in equity securities of other utilities and telecommunications issuers listed on a North American stock exchange, subject to a minimum market capitalization of $250 million and a minimum distribution yield of 2.0% per annum.

Option Strategy

The Fund employs Strathbridge’s proprietary SSO option strategy to generate additional returns above the distributions earned on its equity securities. The Fund may, from time to time, selectively write covered call options in respect of up to a maximum of 25 percent of the securities in the portfolio. In addition, the Fund may write cash covered put options and may invest up to 10% of net assets to purchase call options, both in respect of securities in which the Fund is permitted to invest.

Click here for a detailed review of the Strathbridge Selective Overwriting (“SSO”) strategy.

Distributions

The Fund intends to pay monthly cash distributions on the last day of each month in an amount targeted to be 7.0% per annum on the NAV of the Fund.

Click here for a complete distribution history including the historical tax allocation.

Redemptions

The Fund is redeemable annually in June of each year beginning in 2012 at the option of the unitholder and monthly at a discount to market price.

Click to expand Redemption Details:

Redemption Deadlines
Units may be surrendered at any time for redemption, but will be redeemed only on a Redemption Date, being the last business day of any month. Units surrendered for redemption by a Unitholder at least twenty business days prior to the last day in June 2012 or any year thereafter (the “Annual Redemption Date”) will be redeemed on such Annual Redemption Date. Units surrendered for redemption by a Unitholder at least ten business days prior to the last day of any other month (a “Monthly Redemption Date”), will be redeemed on such Monthly Redemption Date. Unitholders will receive payment for the Units on or before the 15th day following any such Redemption Date. If a Unitholder surrenders Units after 5:00 p.m. (EST) on the applicable cut-off date, the Units will be redeemed on the following Redemption Date. Redemption notices must be delivered to the Fund by an investor’s advisory form in sufficient time to meet the deadline.

Annual Redemption
Beginning in June 2012, units surrendered for redemption at least 20 business days prior to the last day of June will be redeemed at 100% of net asset value less costs, valued on the last business day of June being the redemption day. Costs may include an amount equal to the aggregate of all brokerage fees, commissions and other costs incurred by the Fund in connection with such payment, including, but not limited to, costs incurred in liquidating securities held in the Fund’s portfolio. Payment will be received on or before the 15th day following the redemption day.

Monthly Redemption
For Unitholders whose Units are redeemed on any other Redemption Date, the redemption price per Unit will be equal to the lesser of:
  1. 95% of the Market Price. For such purposes, “Market Price” means the weighted average trading price of the Units on the principal stock exchange on which the Units are listed for the ten trading days immediately preceding the applicable Redemption Date, and
  2. 100% of the Closing Market Price of the Units on the applicable Redemption Date, minus an amount equal to the aggregate of all brokerage fees, commissions and other costs incurred by the Fund in connection with such payment, including, but not limited to, costs incurred in liquidating securities held in the Fund’s portfolio. For such purposes, the “Closing Market Price” means the closing price of the Units on the principal stock exchange on which the Units are listed or, if there was no trade on the relevant date, the average of the last bid and the last asking prices of the Units on the principal stock exchange on which the Units are listed.

Any unpaid distribution payable on or before the applicable Redemption Date in respect of Units tendered for redemption on such Redemption Date will also be paid on the applicable Redemption Payment Date.


Leverage

The Fund has the ability to employ leverage up to 15% of net assets to enhance the total return of the Fund. Since the Fund also employs a covered call option strategy the use of leverage will be limited to periods when option writing is not attractive.

Termination

There is no fixed termination date as units may be sold daily on the TSX or redeemed annually at net asset value per unit.

CUSIP ISIN

CUSIP – 136715109
ISIN - CA 1367151091

Eligibility

RRSPs, DPSPs, RRIFs, RESPs and TFSAs

Issuer Bid

The Fund may purchase up to 10% of its outstanding units at prices up to net asset value per unit.

Management Fees

The Fund pays a management fee of 1.1% of net asset value annually to Strathbridge Asset Management for acting as the Manager and the Investment Manager.

Service Fee

A service fee of 0.40% of NAV per unit per annum is paid quarterly to Investment Advisors.

MER

The Management Expense Ratio (“MER”) is the sum of all operating expenses, including management and service fees but excluding portfolio transaction costs, expressed as a percentage of average net asset value.

Inception Date

12/17/2010

Manager

Strathbridge Asset Management

Hedging

The Fund may hedge its U.S. dollar exposure back to the Canadian dollar at the discretion of the Manager.

 

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