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Mulvihill Premium Yield Fund

 

Fund Features

Objectives

The Fund is a mutual fund investment trust that seeks to provide unitholders with (i) high quarterly income on a tax efficient basis; (ii) long-term capital appreciation through investment in a portfolio of high quality equity securities; and (iii) lower overall portfolio volatility. The fund will write options to seek to earn tax efficient option premiums, reduce overall portfolio volatility and enhance the portfolio’s total return.

Investment Strategy

The fund will use a quantitative approach to select securities that generate strong free cash flow and have a high shareholder yield, utilizing measures such as dividends and share buybacks. The fund will, from time to time employ various investment strategies (described below), including the use of derivative instruments to generate income, reduce portfolio volatility and protect capital. The fund seeks to achieve a 5% yield, with additional capital growth potential beyond such yield target.

The fund may invest up to 100% of its net assets in foreign securities. The fund may (a) from time to time in response to market conditions write covered call options on individual securities to seek to receive premium income, reduce overall portfolio volatility and enhance the portfolio’s total return, (b) from time to time in response to market conditions write cash-covered put options in respect of individual securities that the fund is permitted to hold and in respect of market indices, in order to receive premium income, reduce overall portfolio volatility and reduce the net cost of acquiring the securities subject to put options, (c) purchase call options in respect of securities in which the fund is permitted to invest, (d) purchase put options on individual securities in its portfolio, indexed put options and unleveraged inverse exchange traded funds that provide exposure to such securities, (e) use derivatives, including but not limited to options, forward contracts, futures contracts and swaps for both hedging and non-hedging purposes to generate income, hedge against losses from changes in the prices of the fund’s investments and market declines and from exposure to foreign currencies and/or (f) hold cash or cash equivalents for strategic reasons or to provide cover for the writing of cash covered put options in respect of securities in which the fund is permitted to invest. Options may be either exchange traded or over-the-counter options.

Distributions

The Fund expects to make distributions quarterly that may consist of net income, net realized capital gains and/or return of capital, if any. As the fund has existing capital losses, Strathbridge expects that distributions payable on the units going forward will be return of capital distributions or will provide the fund with the ability to facilitate growth in NAV. Depending on the size and future performance of the fund, Strathbridge expects that all or substantially all of the quarterly distributions payable by the fund will be characterized as return of capital distributions for the foreseeable future. Strathbridge automatically pays all distributions in cash unless you tell your dealer to inform us that you want them reinvested in additional mutual fund units of the fund.

Redemptions

The Class A, F, UA, UF units will be redeemable daily via FundServ. You may redeem your units of the fund by giving instructions to your registered broker or dealer. The Fund may charge a short-term trading fee of up to 2% of the NAV of any units redeemed within 31 days of purchase.

The Class I, UI units will be redeemable monthly on the last business day of each month, which will be the effective date (the “Monthly Redemption Date”) via Fundserv. In order for a redemption to be effective on a Monthly Redemption Date, a duly completed redemption request must be delivered to the manager at its registered office by 4:00pm on or before the tenth day of the month (or next business day if the 10th day is not a business day).

Eligibility

RRSPs, DPSPs, RRIFs, RESPs and TFSAs

Management Fees

Class A and UA units – 2.0%
Class F and UF units – 1%
Class I and UI units – negotiable but will not exceed the management fee payable on the Class A and UA units
The fund will pay all costs associated with its day to day operation and administration and all portfolio transaction costs.

Performance Fee

Strathbridge is entitled to receive a performance fee from the fund in respect of any calendar quarter equal to 10% of the amount by which the Adjusted NAV per Unit at the end of such calendar quarter exceeds the performance of the reference index (the “Performance Fee Index”) since the end of the period for which the last performance fee was paid, plus applicable taxes. Notwithstanding the foregoing, no performance fee will be payable with respect to a calendar quarter unless the Adjusted NAV per Unit exceeds both (i) the highest calendar quarter end Adjusted NAV per Unit immediately following the last time a performance fee was paid and (ii) an amount equal to the original issue price (being $10.00) of the Units. In addition, the amount of the performance fee in respect of any calendar quarter will be limited such that the Adjusted NAV per Unit after giving effect to the payment of the performance fee may not be less than either (i) or (ii) above. “Adjusted NAV per Unit” means the net asset value per Unit at the end of a calendar quarter without including any accrual for the performance fee plus the aggregate amount of all distributions paid or payable since the last time a performance fee was paid.

Service Fee

A service fee of 1.0% per annum is paid quarterly to dealers whose clients hold Class A and UA units.

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

09/18/2019

Manager

Strathbridge Asset Management

 

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