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Flaherty & Crumrine Investment Grade Preferred Income Fund

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  • Closing Price (Sep 16, 2019) $12.50
  • Distribution $0.07
  • Distribution Rate (Sep 17, 2019) 6.72%
  • Distribution Frequency Monthly
  • Management Style Active
  • Management Fee 1.00%
  • NAV (Sep 13, 2019) $12.75
  • Total Assets (Aug 31, 2019) $136 Million

Why Invest?

  • Portfolio of primarily US Preferred securities, highly diversified by issuer and issue
  • High level of income
  • Fund has an investment-grade P-2(low)f rating from Standard & Poor’s
  • Opportunity for Canadian investors to diversify their investment in preferred shares

Investment Objectives

  • Provide unitholders with a stable stream of monthly distributions
  • Preserve the net asset value per unit; and
  • Enhance the total return per unit by actively managing the portfolio.

This Fund is for Investors who are:

  • Seeking a high level of income
  • Seeking capital preservation
  • Comfortable with an investment that employs leverage

FUND FACTS

  • Ticker
    FFI.UN
  • CUSIP
    33849M107
  • Outstanding (Sep 17, 2019)
    6,813,367
  • Inception Date
    December 15, 2004
  • Currency
    Hedged to CAD
  • Manager/Portfolio Manager
    Brompton Funds Limited
  • Auditor
    PricewaterhouseCoopers LLP
  • Custodian
    CIBC Mellon Trust Company
  • Transfer Agent
    TSX Trust Company
  • Eligibility
    All registered and non-registered accounts
  • Annual Redemption Date
    2nd last business day of November
  • Annual Redemption Notice Deadline
    20 business days prior to Annual Redemption date
  • S&P Rating
    P-2(low)
  • Leverage
    Up to 35% of total assets
  • Sub Advisor
    Flaherty & Crumrine Incorporated

Sub-Advisor

Flaherty & Crumrine Incorporated: Established in 1983, Flaherty & Crumrine Incorporated specializes in US dollar denominated preferred securities and corporate debt instruments. The firm uses intensive credit analysis, thorough analysis of securities’ terms and structures and active portfolio management, exploiting pricing inefficiencies in the fixed income market to provide attractive rates of return on its funds.

Flaherty & Crumrine Investment Grade Preferred Income Fund

Summary of Investment Portfolio as at June 30, 2019

Total Net Asset Value$84,240,717.00

Top 10 Holdings

% of Portfolio% of Net Asset Value
Metlife Inc., 10.75% due August 01, 20397.4%11.5%
Liberty Mutual Insurance Co., 7.697% due October 15, 20975.2%8.1%
Delphi Financial Group, Inc., variable due May 15, 20374.8%7.4%
HSBC Capital Funding LP., 10.176% due December 31, 20494.6%7.1%
Aon Corp., 8.205% due January 01, 20274.5%7.0%
American International Group, 5.75% due April 1, 20484.4%6.8%
Integrys Energy Group, 6.00% due August 1, 20734.1%6.4%
Enterprise Products Operating L.P., 5.25% due August 16, 20773.8%6.0%
Provident Financing Tr I, 7.405% due March 15, 20383.7%5.8%
Australia And New Zealand Banking Group, 6.75% due December 31, 20493.6%5.6%
Total46.1%71.7%
Performance NAV History

Annual Compound Returns(1)

YTD 1-Year 3-Year 5-Year 10-Year Since Inception(2)
Flaherty & Crumrine Investment Grade Preferred Income Fund 20.9% 12.2% 7.9% 7.3% 14.0% 5.9%
ICE BofAML Hybrid Preferred Securities 8% Constrained Index 15.5% 9.3% 5.1% 6.6% 8.1% 5.1%
BofA Merrill Lynch 8% Capped Corp. US Capital Sec. Index 14.8% 10.1% 6.6% 5.2% 9.1% 5.4%

Year-by-Year Returns

Since Inception(2) 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Flaherty & Crumrine Investment Grade Preferred Income Fund 5.9% (9.2%) 15.9% 7.7% 0.9% 20.4% 5.1% 28.0% 7.4% 30.2% 91.4%
ICE BofAML Hybrid Preferred Securities 8% Constrained Index 5.1% (4.2%) 11.8% 0.8% 7.8% 16.0% (3.3%) 11.9% 3.6% 14.4% 19.3%
BofA Merrill Lynch 8% Capped Corp. US Capital Sec. Index 5.4% (3.8%) 10.8% 5.1% (0.5%) 10.9% 3.7% 18.8% 2.7% 16.4% 45.8%

The tables show the past performance of the Fund. Past performance does not necessarily indicate how the Fund will perform in the future. The information shown is based on Net Asset Value per unit and assumes that cash distributions made by the Fund and deemed distributions based on the warrants’ intrinsic value at the approximate exercise date of the warrants in the periods shown were reinvested at Net Asset Value per unit in additional units of the Fund.

The tables show the Fund’s year-by-year and compound returns for each period indicated, compared with the return for the ICE BofAML US Capital Securities US Issuers 8% Constrained Index (‘‘Corporate US Capital Index’’) and the ICE BofAML Hybrid Preferred Securities 8% Constrained Index (‘‘Hybrid Preferred Securities Index’’). The Fund is actively managed and invests in a portfolio of fixed income securities consisting primarily of US dollar denominated corporate debt and preferred securities of North American issuers that are rated investment grade at the time of investments and that are represented by the indices. The Corporate US Capital Index includes investment grade fixed rate or fixed-to-floating rate $1,000 par securities that receive some degree of equity credit from the rating agencies or their regulators. The Hybrid Preferred Securities Index includes taxable, fixed rate, US dollar denominated, investment grade preferred securities listed in a US exchange. The indices are unleveraged and their returns are calculated with the fees and expenses; whereas the performance of the Fund includes the impact of leverage and is calculated after the deduction of fees and Fund expenses.

Returns for Flaherty & Crumrine Investment Grade Fixed Income Fund are unaudited.

You will usually pay brokerage fees to your dealer if you purchase or sell units of the investment fund on the Toronto Stock Exchange or other alternative Canadian trading system (an “exchange”).  If the units are purchased or sold on an exchange, investors may pay more than the current net asset value when buying units of the investment fund and may receive less than the current net asset value when selling them. 

There are ongoing fees and expenses associated with owning units of an investment fund.  An investment fund must prepare disclosure documents that contain key information about the fund.  You can find more detailed information about the fund in the public filings available at www.sedar.com.  The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and does not take into account certain fees such as redemption costs or income taxes payable by any securityholder that would have reduced returns.  Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.

The benchmarks from ICE Data Indices, LLC (“ICE Data”) are used with permission. ICE Data, its affiliates and their respective third party suppliers disclaim any and all warranties and representations, express and/or implied, including any warranties of merchantability or fitness for a particular purpose or use, including the indices, index data and any data included in, related to, or derived therefrom. Neither ICE Data, its affiliates nor their respective third party providers shall be subject to any damages or liability with respect to the adequacy, accuracy, timeliness or completeness of the indices or the index data or any component thereof, and the indices and index data and all components thereof are provided on an “as is” basis and your use is at your own risk. ICE Data, its affiliates and their respective third party suppliers do not sponsor, endorse, or recommend the Fund.

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Distributions

The actual breakdown of distributions for tax purposes will be provided to unitholders annually in March as soon as possible following receipt of the information from the Fund’s individual holdings. This information will also be posted on the website as soon as it is available.

This information is of a general nature only and does not constitute legal or tax advice to any particular investor. Accordingly, prospective investors are advised to consult their own tax advisors with respect to their individual circumstances.

Tax Allocation

The following information is applicable to holders who, for the purposes of the Income Tax Act (Canada), are resident in Canada and hold trust units as capital property. If this is not the case, a tax advisor should be consulted.

Holders of trust units outside of a RRSP, DPSP, RRIF, RESP or TFSA should expect to receive a T3 slip from their investment dealer. T3 supplementary slips will indicate Other Income (Investment Income and Non-Investment Income) in Box 26, Foreign Non-Business Income in Box 25, Capital Gains in Box 21 and Eligible Dividend Income in Box 49. Dividend income is subject to the standard gross up and federal dividend tax credit rules. The return of capital component is a non-taxable amount that serves to reduce the adjusted cost base of the Fund units and is reported in Box 42.

Select a year
Record Date Payment Date Return of Capital Foreign Non- Business Income Foreign Non- Business Income Tax Paid Other Taxable Capital Gains Total Distribution
Sep 30, 2019 Oct 15, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
Aug 30, 2019 Sep 16, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
Jul 31, 2019 Aug 15, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
Jun 28, 2019 Jul 15, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
May 31, 2019 Jun 14, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
Apr 30, 2019 May 14, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
Mar 29, 2019 Apr 12, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
Feb 28, 2019 Mar 14, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
Jan 31, 2019 Feb 14, 2019 0.00000 0.00000 0.00000 0.00000 0.00000 0.07000
Dec 31, 2018 Jan 15, 2019 0.00000 0.07000 0.00000 0.00000 0.00000 0.07000
Dec 31, 2018 Jan 15, 2019 0.00000 0.015000 0.00000 0.00000 0.00000 0.015001
Dec 31, 2018 Jan 15, 2019 0.00000 0.01510 0.00000 0.00000 0.00000 0.015101
Total 0.00000 0.10010 0.00000 0.00000 0.00000 0.73010
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