U.S. Tactical Allocation Fund

Quick Facts+

Discontinued Fund

Fund Overview

Conversion to a Mutual Fund

On January 19, 2016, Unitholders of Gold Participation and Income Fund approved a proposal to change the investment objectives and investment strategy of the Fund and to convert the Fund into a mutual fund. On February 1, 2016 the Fund adopted the new investment objectives and investment strategy and changed the name of the Fund to U.S. Tactical Allocation Fund. In order to provide unitholders with liquidity during the transition period to the mutual fund, the units of the fund continue to be listed on the TSX until the conversion date.

Overview

The Fund is a closed-end investment trust that utilizes a proprietary tactical asset allocation methodology to identify those sectors in the U.S. market that offer the most attractive investment opportunities. The Fund generally invests in equity based exchange-traded funds (ETFs) to obtain various sector exposures. During periods of increased risk, the Fund may allocate a greater portion, and potentially up to 100% of the assets to fixed income ETFs, or cash to preserve capital.

 

Objectives

N/A

 

Name Ticker Current Yield Recent
Distributions
Most Recent
Distribution Date
Distributions
Since Inception
U.S. Tactical Allocation Fund MCM100 NaN% $0.00 $0.00
U.S. Tactical Allocation Fund MCM101 NaN% $0.00 $0.00

Top Holdings Top 1 Holdings as of September 30, 2016

Holding Name % of Fund
CASH 111.7%
Sector Allocations

Historic Net Asset Value Per Unit

The Fund calculates the net asset value per share on a weekly basis as of the close of business on Thursday and generally posts the amount at the close of business on Friday. If the last day of a month falls during the week on a day other than Thursday, the NAVs per share are calculated as of the last day of the month for that week and the regular weekly calculation on Thursdays is resumed the following week.

 

Note:

Class A unit consolidation - The Class A units were consolidated on April 21, 2016 on the basis of 0.374038 new unit for each old unit resulting in a net asset value of $10.00 per new Class A unit.

 

Date:   NAV Per
Class A Share
NAV Per
Class F Share
2016-11-18    $8.72  $8.80 
2016-11-17    $8.72  $8.82 
2016-11-16    $8.72  $8.82 
2016-11-15    $8.72  $8.82 
2016-11-14    $8.73  $8.82 
2016-11-11    $8.73  $8.83 
2016-11-10    $8.73  $8.83 
2016-11-09    $8.74  $8.83 
2016-11-08    $8.74  $8.83 
2016-11-07    $8.74  $8.83 
2016-11-04    $8.76  $8.85 
2016-11-03    $8.77  $8.86 
2016-11-02    $8.77  $8.86 
2016-11-01    $8.77  $8.86 
2016-10-31    $8.77  $8.86 
2016-10-28    $8.78  $8.87 
2016-10-27    $8.78  $8.87 
2016-10-26    $8.79  $8.87 
2016-10-25    $8.79  $8.87 
2016-10-24    $8.79  $8.87 
2016-10-21    $8.80  $8.88 
2016-10-20    $8.80  $8.88 
2016-10-19    $8.80  $8.88 
2016-10-18    $8.81  $8.88 
2016-10-17    $8.81  $8.88 
2016-10-14    $8.82  $8.89 
2016-10-13    $8.82  $8.89 
2016-10-12    $8.82  $8.89 
2016-10-11    $8.82  $8.89 
2016-10-07    $8.82  $8.89 
2016-10-06    $8.82  $8.89 
2016-10-05    $8.82  $8.89 
2016-10-04    $8.83  $8.89 
2016-10-03    $8.83  $8.89 
2016-09-30    $8.84  $8.90 
2016-09-29    $8.87  $8.93 
2016-09-28    $8.87  $8.93 
2016-09-27    $8.87  $8.93 
2016-09-26    $8.88  $8.93 
2016-09-23    $8.88  $8.94 
2016-09-22    $8.88  $8.94 
2016-09-21    $8.89  $8.94 
2016-09-20    $8.89  $8.94 
2016-09-19    $8.89  $8.94 
2016-09-16    $8.90  $8.95 
2016-09-15    $8.90  $8.95 
2016-09-14    $8.90  $8.95 
2016-09-13    $8.90  $8.95 
2016-09-12    $8.95  $8.99 
2016-09-09    $8.89  $8.93 
2016-09-08    $9.23  $9.26 
2016-09-07    $9.27  $9.30 
2016-09-06    $9.28  $9.32 
2016-09-02    $9.24  $9.28 
2016-09-01    $9.21  $9.25 
2016-08-31    $9.22  $9.26 
2016-08-30    $9.22  $9.26 
2016-08-29    $9.27  $9.31 
2016-08-26    $9.22  $9.26 
2016-08-25    $9.27  $9.31 
2016-08-24    $9.30  $9.34 
2016-08-23    $9.35  $9.39 
2016-08-22    $9.35  $9.39 
2016-08-19    $9.33  $9.37 
2016-08-18    $9.37  $9.41 
2016-08-17    $9.34  $9.38 
2016-08-16    $9.30  $9.33 
2016-08-15    $9.36  $9.40 
2016-08-12    $9.41  $9.45 
2016-08-11    $9.45  $9.49 
2016-08-10    $9.46  $9.50 
2016-08-09    $9.48  $9.52 
2016-08-08    $9.47  $9.51 
2016-08-05    $9.49  $9.53 
2016-08-04    $9.47  $9.50 
2016-08-03    $9.47  $9.50 
2016-08-02    $9.48  $9.52 
2016-07-29    $9.58  $9.62 
2016-07-28    $9.60  $9.63 
2016-07-27    $9.60  $9.63 
2016-07-26    $9.63  $9.67 
2016-07-25    $9.67  $9.70 
2016-07-22    $9.70  $9.73 
2016-07-21    $9.60  $9.63 
2016-07-20    $9.60  $9.64 
2016-07-19    $9.62  $9.65 
2016-07-18    $9.62  $9.65 
2016-07-15    $9.62  $9.65 
2016-07-14    $9.63  $9.65 
2016-07-13    $9.68  $9.70 
2016-07-12    $9.67  $9.69 
2016-07-11    $9.71  $9.73 
2016-07-08    $9.73  $9.75 
2016-07-07    $9.58  $9.59 
2016-07-06    $9.72  $9.74 
2016-07-05    $9.66  $9.68 
2016-07-04    $9.74  $9.76 
2016-06-30    $9.79  $9.81 
2016-06-29    $9.68  $9.70 
2016-06-28    $9.54  $9.56 
2016-06-27    $9.37  $9.38 
2016-06-24    $9.59  $9.60 
2016-06-23    $9.89  $9.90 
2016-06-22    $9.75  $9.76 
2016-06-21    $9.77  $9.77 
2016-06-20    $9.79  $9.79 
2016-06-17    $9.75  $9.75 
2016-06-16    $9.79  $9.79 
2016-06-15    $9.78  $9.78 
2016-06-14    $9.79  $9.79 
2016-06-13    $9.83  $9.83 
2016-06-10    $9.92  $9.92 
2016-06-09    $10.03  $10.03 
2016-06-08    $10.08  $10.08 
2016-06-07    $10.06  $10.06 
2016-06-06    $10.03  $10.03 
2016-06-03    $9.97  $9.97 
2016-06-02    $10.03  $10.02 
2016-06-01    $10.01  $10.00 
2016-05-31    $9.99  $9.98 
2016-05-30    $10.01  $10.00 
2016-05-27    $10.01  $10.00 
2016-05-26    $9.98  $9.97 
2016-05-25    $10.01  $10.00 
2016-05-24    $9.94  $9.93 
2016-05-20    $9.87  $9.86 
2016-05-19    $9.82  $9.81 
2016-05-18    $9.81  $9.79 
2016-05-17    $9.85  $9.84 
2016-05-16    $9.91  $9.90 
2016-05-13    $9.83  $9.81 
2016-05-12    $9.92  $9.90 
2016-05-11    $9.90  $9.88 
2016-05-10    $9.94  $9.92 
2016-05-09    $9.83  $9.81 
2016-05-06    $9.87  $9.85 
2016-05-05    $9.83  $9.81 
2016-05-04    $9.84  $9.82 
2016-05-03    $9.91  $9.89 
2016-05-02    $10.04  $10.02 
2016-04-29    $10.00  $9.98 
2016-04-28    $10.01  $10.00 
2016-04-27    $10.06  $10.04 
2016-04-26    $10.00  $9.98 
2016-04-25    $10.00  $9.98 
2016-04-22    $9.99  $9.99 
2016-04-21   Note $10.00  $10.00 
2016-04-14    $3.78  $0.00 
2016-04-07    $3.78  $0.00 
2016-03-31    $3.82  $0.00 
2016-03-24    $3.80  $0.00 
2016-03-17    $3.80  $0.00 
2016-03-10    $3.79  $0.00 
2016-02-29    $3.81  $0.00 
2016-02-25    $3.87  $0.00 
2016-02-18    $3.83  $0.00 
2016-02-11    $3.87  $0.00 
2016-02-04    $3.81  $0.00 

Distributions & Tax

The Fund expects to make distributions that may consist of net income, net realized capital gains and/or return of capital annually, if any.

 

 

Portfolio Manager Updates

 

PM Updates - June 2016

Stock market performance in the first half of 2016 can be characterized by significant weakness to start off the year due to stagnant economic growth and increasingly ineffective monetary policy which led to a lack of investor confidence. However, after most stock markets hit new lows in early February, they staged a meaningful recovery which continued through the second quarter of 2016. Oil prices which declined over 30 percent to a low of $26.21 on February 11, 2016 have maintained a steady uptrend since, topping US$50 per barrel by mid-June and brought much of the energy complex along with it. Soft commodities were also generally higher during the first six months of 2016. The main commodity story, however, was gold. It is the best performing asset class so far in 2016, up over 24% per cent. One might expect to see elevated volatility as investors often flock to gold in times of crisis, however, this was not the case. Interest rates remain low and have even gone into negative levels in some regions, notably Europe and Japan. Surprisingly, stock markets have been calm allowing the VIX to drift lower through much of the period. The first half of 2016 was punctuated with “Brexit.” The word was coined to describe Great Britain’s exit from the European Union. A referendum was held on June 23 and the people voted 52-48 percent to leave the EU in a surprise upset. The news roiled global markets immediately following the event but North American markets have since fully recovered. The longer term impacts on the region and the world are not yet known.

On February 1, 2016, the Gold Participation and Income Fund changed its name to the U.S. Tactical Allocation Fund and adopted its new investment objective to provide stable long term returns over the course of a full market cycle with a focus on capital preservation. To this end, the Fund invests in a diversified basket of exchange traded funds (ETFs) that provide direct or indirect exposure to U.S. equity and fixed income markets. Strathbridge Asset Management Inc. (“Strathbridge”), the manager of the Fund, believes that the change to the investment objectives and investment strategy of the Fund will enhance returns and lower volatility going forward. On April 20, 2016, the fund successfully converted from a closed-end fund into an open-end mutual fund. Upon conversion, the Fund consolidated its Class A units on a 0.374038 to 1 basis, resulting in an initial net asset value of $10.00 per Class A unit.

For the period ended June 30, 2016, the net asset value per Class A unit of the U.S. Tactical Allocation Fund was $9.79 compared to $10.27 per unit on February 1, 2016 (adjusted for the Class A unit consolidation on April 21, 2016). The total return of the Fund since the inception date on February 1, 2016 to June 30, 2016 was negative 4.6 percent per Class A unit. The total return for the S&P 500 Index in Canadian dollar terms was 1.0 percent over the same period, while the total return for the Barclays U.S. Aggregate Bond Index was negative 3.9 percent. The best performing sector ETF during the period was the Materials Select Sector SPDR Trust (XLB) which rose 11.5 percent while the Consumer Discretionary Select SPDR Trust (XLY) lagged the group, down 1.8 percent. The U.S. dollar exposure of the Fund was actively hedged back into Canadian dollars throughout the period and ended June with approximately 50 percent of the U.S. dollar hedged.

PM Updates - March 2016

As of March 31, 2016, the Net Asset Value (“NAV”) per unit of U.S. Tactical Allocation Fund (formerly Gold Participation and Income Fund: GPF.UN) was $3.82 versus $3.80 on December 31, 2015. Unitholders received the final GPF.UN distribution of $0.020580 per unit during the quarter.

The process of converting GPF.UN from a closed-end mutual fund to an open-end mutual fund has progressed over the quarter. The investment mandate of the Fund changed as of February 1, 2016 and the GPF.UN units ceased trading as of March 24, 2016. The date in which the Fund will be set-up to receive new subscription or redemption orders is expected to be April 21, 2016.

The first quarter of 2016 was very volatile across most asset classes and equity markets. The year began with record declines across many widely followed stock indices to start a year. The S&P 500 Index was down 10.27% from the beginning of the year to February 11, 2016, before rallying nearly 13% to close the first quarter up 1.4%. Sector returns were mixed in the first quarter, with the Telecom sector within the Index rising 16.6% and the Health Care sector leading the declines, down 5.5% in the first three months of the year.

Central bank policies around the world continued to have a significant toll across financial markets. Easing by the Bank of Japan and the European Central bank has put downward pressure on bond yields globally. The U.S. 10-year bond yield sits below 1.8%, while Japanese and European bond yields of the same maturity are negative or near zero. The Canadian dollar gained back some ground in the first quarter, rising from $0.7227 at the beginning of the year to $0.7690 on March 31, 2016. The Fund currently hedges 100% of its U.S. dollar exposure back to the Canadian Dollar.

As mentioned earlier, the Fund began investing under its new investment mandate as of February 1, 2016. The Fund was positioned defensively with approximately 35% allocated towards long-term U.S. Treasuries, 19% to the Consumer Staples sector, and 19% to the Utilities sector at the end of the first quarter. The Fund invests in ETFs rather than individual stocks to get broader exposure to individual sectors or asset class.

The recent rise in equity markets to end the first quarter has been impressive. The sectors of the market showing leadership off the February lows are those that are typically much more cyclical in nature, namely the Industrial, Energy and Technology sectors. We will continue to monitor the current economic environment for any indication of a sustained bull market in U.S. stocks.

Fund Features

Objectives

N/A

 

Investment Strategy

N/A

 

Option Strategy

N/A

 

Distributions

N/A

 

Redemptions

N/A

 

Leverage

N/A

 

Termination

N/A

 

CUSIP ISIN

N/A

 

Eligibility

N/A

 

Management Fees

N/A

 

MER

N/A

 

Inception Date

08/07/2009

 

Manager

Strathbridge Asset Management

 

Documentation

Date:      Type:      Description
September 15, 2016 Press Release U.S. Tactical Allocation Fund to be Wound Up
August 26, 2016 Financial Report 2016 Semi-Annual Report
April 22, 2016 Press Release MCM100: Announces Successful Conversion to an Open-Ended Mutual Fund
April 20, 2016 Prospectus Final Prospectus (English)
April 20, 2016 Prospectus Final Prospectus (French)

Administration & Governance

Introduction

Strathbridge Asset Management serves as the Manager and the Investment Manager of the Fund.

 

Manager

The Manager is responsible for providing or arranging for the provision of administrative services to the Fund including but not limited to:

  • authorizing the payment of operating expenses incurred on behalf of the Fund,
  • preparing financial statements and other accounting information,
  • ensuring that unitholders are provided with annual and semi-annual reports and other reports as required by applicable law;
  • ensuring the Fund complies with regulatory requirements and applicable stock exchange listing requirements;
  • providing the Trustee with information and reports as required;
  • calculating and arranging for the payment of distributions;
  • negotiating any contractual agreements with third-party providers of services to the Fund, including auditors, printers, registrar and transfer agent
  • Overseeing and paying monthly and annual redemptions;
  • Managing the issuer bid;
  • Maintaining the website and ongoing communication with investors.

The Management fee payable to the Manager includes any amount payable to the Investment Manager.

 

Investment Manager

The Investment Manager is responsible for making all investment decisions and managing the call option writing program in accordance with the investment objectives, strategies and restrictions of the Fund. Fees for the provision of investment management services are included in the management fee.

The Investment Manager has an asset mix committee consisting of senior members of the firm. The investment process for the Fund begins at the asset mix committee. Members of this committee meet monthly to examine macro-economic variables and relationships among dominant economic factors. This process culminates in an outlook for the various capital markets around the world and provides the Fundamental basis for Strathbridge’s long-term market outlook. These views are integrated into the investment decision making process at the portfolio management level. Summaries of these reports can be viewed in the Insight section under Strathbridge Outlook. The asset mix committee of Strathbridge oversees investment decisions made by the portfolio managers of the Fund.

 

Independent Review Committee

The Fund has established an Independent Review Committee (“IRC”) in accordance with National Instrument 81-107 – Independent Review Committee for Investment Funds (“NI 81-107”) which is comprised of three members who are independent of the Manager. The mandate of the IRC is to review and provide its decisions to the Manager regarding any conflict of interest matters relating to its management of the Fund that the Manager has identified and brought to the committee.

A conflict of interest matter is a situation where a reasonable person would consider the Manager or an entity related to it to have an interest that may conflict with the Manager’s ability to act in good faith and in the best interests of the Funds and Securityholders. Click here for the IRC Report to Securityholders.

Click here to review members of the IRC.

 

Advisory Board

The Fund has established an Advisory Board to assist the Fund in the provision of services by the Manager and the Investment Manager and to provide oversight of these activities. The Advisory Board consists of five members, three of whom are independent of the Manager and Investment Manager. The three independent members of the Advisory Board are also members of the Independent Review Committee. The Advisory Board includes an audit committee whose mandate is to review the annual and semi-annual financial statements and discuss any issues with the auditors.

 

Trustee and Custodian

RBC Investor & Treasury Services

 

Registrar and Transfer Agent

RBC Investor & Treasury Services

 

Legal Counsel

Osler Hoskin & Harcourt LLP

 

Auditors

Deloitte & Touche LLP

Financial & Regulatory

The Annual Report and the Interim Report include the Management Report on Fund Performance and the Financial Statements of the Fund.

Report Year:      Release Date Description
2016 August 26, 2016 2016 Semi-Annual Report

 

The Annual Information Form (“AIF”) is a regulatory filing that provides material information to investors about the Fund’s structure, operations, risks and other factors that may affect the Fund. The AIF is supplemented throughout the year by other filings including press releases, information circulars, prospectuses, material change reports, the annual and interim management report on fund performance and the financial statements.

Date Description
April 20, 2016 Annual Information Form

 

The Fund has adopted the proxy voting guidelines with respect to the voting of proxies received by it relating to voting securities held by the Fund. The proxy guidelines establish standing policies and procedures for dealing with routine matters, as well as circumstances where deviations may occur from such standing policies. Click here for proxy guidelines.

The Fund has retained ISS Governance Services to administer and implement the proxy guidelines for the Fund. Click here to review the proxy voting record.