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Provide holders of Priority Equity Shares of the Company with cumulative preferential quarterly cash dividends in the amount of $0.20625 per share and return the original issue price on the February 1, 2013 termination date.
Provide Class A Shareholders with quarterly dividends in an amount initially targeted to be 10% per annum of the NAV of the Class A Shares and return the original issue price on the Februay 1, 2013 termination date.
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The fund will invest its net assets in a diversified portfolio of common shares selected from the SPTSX 60 Index and up to 40% selected from the Standard & Poors 100 Index
To generate additional returns above the dividend income earned on the portfolio, the company will from time to time write covered call options in respect of all or a part of the common shares in the portfolio
In January, 2009, because of the decline in markets and the Net Asset Value, the Fund was required to adopt the Priority Equity Protection Plan Strategy (see commentary below)
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- Net Asset Value as of April 30, 2010 was $13.96 vs. $14.24 on January 31, 2010.
- The regular quarterly distribution of $0.206250 per Preferred Share was paid to Shareholders of Record as of April 15, 2010 and the Class A Share was paid no distributions.
- The fund adopted a strategy (the "Priority Equity Portfolio Protection Plan") to protect holders of the Priority Equity Shares by assisting the Fund with the payment of the original issue price of $15.00 per share on termination date. Under the Priority Equity Portfolio Protection Plan, the amount of the Company's net assets, if any, to be allocated to Permitted Repayment Securities (the "Required Amount") will be determined such that (i) the NAV of the Fund, less the value of the Permitted Repayment Securities held by the Company, is at least 110% of (ii) the Priority Equity Share Repayment Amount, less the amount anticipated to be received by the Company in respect of its Permitted Repayment Securities on the Termination Date.
- Due to the above strategy to protect the Priority Equity Shares the fund is entirely in cash and cash equivalents. The Priority Equity Shares have residual risk as they will be expected to cover expenses of the Fund in future years.
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