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Provide Preferred Shareholders with quarterly cash distributions to yield 5.75% p.a. based on the shares' par value of $15.00
Provide Class A Shareholders with all excess realized income of the Corporation
The Corporation intends to return at a minimum, the original issue price of the shares upon windup on November 1, 2010
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The fund invests its net assets in a portfolio consisting primarily of common shares issued by Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and Toronto Dominion Bank
To generate additional returns above the dividend income generated by the portfolio, the Corporation will write covered call options |
- The Net Asset Value of the Fund was $22.10 on April 30, 2010 versus $19.33 per unit on January 31, 2010. The Fund’s two share classes are listed on the Toronto Stock Exchange as PIC.A and PIC.PR.A. They closed on April 30, 2010 at $6.38 and $15.12 respectively which, when combined, represent a $0.60 discount (2.7%) to the actual Net Asset Value.
- Distributions totaling $0.15 were paid to the Class A and $0.215625 was paid to the Preferred shareholders during the quarter.
- During the quarter the S&P/TSX Diversified Banks Total Return Index increased to 2828.14 from 2378.23 on October 31, 2009. The Canadian banks broke above the trading range they had been in since September 2009 after posting strong first quarter earnings at the end of February, 2010. During the quarter, all 5 banks posted very strong total returns with the Bank of Montreal leading the way up 22.6%. Even the Bank of Nova Scotia which lagged the group posted a 16.6% total return during the period. These returns are reflective of the strong first quarter earnings growth posted by the banks due to loan loss provisions coming in better than expected and trading revenues remaining elevated.
- Volatility remained subdued during the period and hit new lows in April so the covered call writing activity was limited due to the low volatility and strong share price performance.
- The fund ended the 2nd quarter with a cash position of 2.9%, which was decreased from the 1st quarter’s cash position of 13.2%.
- None of the banks raised their quarterly dividend during the period.
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