Top 10 Split Trust

As of March 28, 2024, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record March 15, 2024, representing a yield of 6.25% based on the original issue price of $12.50.

The March 28, 2024, NAV of TXT.UN was $2.73, up from the December 29, 2023, level of $2.21. A quarterly distribution of $0.04031 per unit was declared and paid to the Class A unitholders of record March 15, 2024, representing a yield of 7.5% based on the NAV at the time it was declared.

The capital unit’s TSX closing price on March 29th was $3.02. This represents a $0.29 premium to its underlying NAV. The preferred security closing price for the quarter was $11.16 representing a $1.34 discount to NAV.The combined capital unit and preferred security closed the quarter at a $1.05 discount to NAV.

The Q1 total fund return was 5.1%. The S&P TSX Composite had a total return of 6.1% over the quarter closing at 22,126 on March 28th. Canadian Financials returned 5.5% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 5.5%. The Banks in the portfolio outperformed the Insurance holdings over the 1st quarter with an average return of 5.7% versus 5.4% respectively. Manulife Financial led with a return of 17.0%. iA Financial trailed, with a return of -5.9%.

At the end of March, the indicated dividend yield on the stocks in the fund averaged 4.7% (equal weight). The bank holdings dividend yield was 4.7% and the insurance holdings dividend yield was 4.5%. The average one-year dividend per share growth rate was 7.9% for calendar Q1 2023 to Q1 2024.

The manager did not engage in option writing or purchasing activity over the course of the quarter. The cash ended the quarter at 1.6%

The CBOE Volatility Index (VIX) opened and ended the quarter at 13.2 and 13.0 respectively. The quarter was generally range bound with a low of 12.4 mid-January and a high of 17.9 mid-February. Volatility in the financials ranged from 11.5% to 21.9% over the quarter starting things off at close to 15% and ending about 14.4%

As of December 29, 2023, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 15, 2023, representing a yield of 6.25% based on the original issue price of $12.50.

The December 29, 2023, NAV of TXT.UN was $2.21, up from the September 29, 2023, level of $0.94. A quarterly distribution of $0.02513 per unit was declared and paid to the Class A unitholders of record September 15, 2023, representing a yield of 7.5% based on the NAV at the time it was declared.

The capital unit’s TSX closing price on December 29th was $2.80. This represents a $0.59 premium to its underlying NAV. The preferred security closing price for the quarter was $11.60 representing a $0.90 discount to NAV. The combined capital unit and preferred security closed the quarter at a $0.31 discount to NAV. The combined capital unit and preferred security closed the quarter at a $0.31 discount to NAV.

The Q4 total fund return was 11.1%. The S&P TSX Composite had a total return of 8.1% over the quarter closing at 20,860 on December 29th. Canadian Financials returned 12.7% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 12.4%. The Banks in the portfolio outperformed the Insurance holdings over the 4rd quarter with an average return of 13.1% versus 11.4% respectively. The Canadian Imperial Bank of Commerce led with a return of 23.4%. Sun Life Financial trailed, with a return of 4.9%

At the end of December, the indicated dividend yield on the stocks in the fund averaged 4.8% (equal weight). The bank holdings dividend yield was 5.0% and the insurance holdings dividend yield was 4.4%. The average one-year dividend per share growth rate was 8.1% for calendar Q3 2022 to Q3 2023.

The CBOE Volatility Index (VIX) started and ended the quarter at 17.6 and 15 respectively. The trend over the quarter was generally lower with two main periods of prices backing up to 26.5 at the end of March and 21.9 mid September.
Short put positions averaged 1.3% over the fourth quarter reaching a high of 3.1%. Calls were not written or purchased. Cash averaged 3.7% with much of that acting as surety for written puts. The cash ended the quarter at 1.7%

Except for a spike to 23.1 & mid September the implied volatility levels in Canadian financial stocks were fairly stable ranging from about 12% to 15%. The fund’s had no written call positions over the quarter. The fund engaged in cash covered put writing to a high of 6.7% averaging 5.2% over the quarter. The cash position averaged 7.7 % over the quarter. Net of cash used to collateralize written puts the net cash position averaged around 2.5%.

As of September 29, 2023, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 15, 2023, representing a yield of 6.25% based on the original issue price of $12.50

The September 29, 2023, NAV of TXT.UN was $0.94, down from the June 30, 2023, level of $1.70. A quarterly distribution of $0.02269 per unit was declared and paid to the Class A unitholders of record September 15, 2023, representing a yield of 7.5% based on the NAV at the time it was declared.

The capital unit’s TSX closing price on September 29th was $2.20. This represents a $1.26 premium to its underlying NAV. The preferred security close for the quarter was $10.89 representing a $1.61 discount to NAV. The combined capital unit and preferred security closed the quarter at a $0.35 discount to NAV.

The Q3 total fund return was -3.8%. The S&P TSX Composite had a total return of – 2.2 % over the quarter closing at 19,541 on September 29th. Canadian Financials returned – 2.8 % over the same period. The return on an equal weighted basket of the ten portfolio stocks was – 3.0 %. The Banks in the portfolio underperformed the Insurance holdings over the 3rd quarter with an average return of – 4.3 % versus -.1.2 % respectively. Great West Lifeco Inc. led with a return of 2.4%. The National Bank of Canada trailed, with a return of – 7.6 %.

At the end of September, the indicated dividend yield on the stocks in the fund averaged 5.2% (equal weight). The bank holdings dividend yield was 5.4% and the insurance holdings dividend yield was 4.8%. The average one-year dividend per share growth rate was 8.9% for calendar Q3 2022 to Q3 2023.

The CBOE Volatility Index (VIX) started and ended the quarter at 13.5 and 17.2 respectively. The trend over the quarter was generally higher with prices oscillating from 12.7 to 19.7. Except for a spike to 23.1 & mid September the implied volatility levels in Canadian financial stocks were fairly stable ranging from about 12% to 15%. The fund’s had no written call positions over the quarter. The fund engaged in cash covered put writing to a high of 6.7% averaging 5.2% over the quarter. The cash position averaged 7.7 % over the quarter ending at 4.8%. Net of cash used to collateralize written puts the net cash position averaged around 2.5%.

As of June 30, 2023, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record June 15, 2023, representing a yield of 6.25% based on the original issue price of $12.50.

The June 30, 2023, NAV of TXT.UN was $1.70, up from the March 31, 2023, level of $1.59. A quarterly distribution of $0.02681 per unit was declared and paid to the Class A unitholders of record June 15, 2023, representing a yield of 7.5% based on the NAV at the time it was declared

The capital unit’s TSX official close price on June 30th was $2.40. This represents a $0.70 premium to its underlying NAV. The preferred security official close price for the quarter was $11.10 representing a $3.90 discount to NAV. The combined capital unit and preferred Security closed the quarter at a $3.20 discount to NAV.

The Q2 total fund return was 2.3%. The S&P TSX Composite had a total return of 1.1% over the quarter closing at 20,155.29 on June 30th. Canadian Financials returned 1.9% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 3.3%. The Banks in the portfolio underperformed the Insurance holdings over the 1st quarter with an average return of 0.7% versus 7.0%. Sun Life Financial led with a return of 10.6%. The Bank of Nova Scotia and the Royal Bank of Canada trailed, both with a return of -1.1%. As was still the case over the past few quarters, the range between the top and bottom performer was quite notable.

At the end of June, the indicated dividend yield on the stocks in the fund averaged 5.0% (equal weight). The bank holdings dividend yield was 5.1% and the insurance holdings dividend yield and was 4.7%. The average one-year dividend per share growth rate was 11.9% for calendar Q2 2022 to Q2 2023.

The CBOE Volatility Index (VIX) started and ended the quarter at 18.7 and 13.6 respectively. June saw a shift downward in the index and it had been in a range of 13 to 15 over the month. Implied volatility levels in Canadian financial stocks ranged from 11.7 % to 23.6 however that was due to a bit of a jump in the later part of June generally the range fell within a range of 12 and18. The fund’s written call position reached a high of 7.7% averaging 3.2% over the quarter. The fund also engaged in cash covered put writing to a high of 18.7% averaging 9.8% over the quarter. The cash position averaged 12.2% over the quarter ending at 7.8%. Of note is that much of the cash was encumbered collateralizing written puts

As of March 31, 2023, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record March 15, 2023, representing a yield of 6.25% based on the original issue price of $12.50.

The March 31, 2023, NAV of TXT.UN was $1.59, up from the December 30, 2022 level of $1.40. A quarterly distribution of $0.04819 per unit was declared and paid to the Class A unitholders of record March 15, 2022, representing a yield of 7.5% based on the NAV at the time it was declared.

The capital unit’s TSX closing mid-price on March 31st was $2.75. This represents a $1.16 premium to its underlying NAV. The preferred security last price for the quarter was $11.49 representing a $1.01 discount to NAV. The combined capital unit and preferred Security closed the quarter at a $0.15 premium to NAV.

The Q4 total fund return was 3.2%. The S&P TSX Composite had a total return of 4.6% over the quarter closing at 20,099.9 on March 31st . Canadian Financials returned 1.5% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 4.3%. The Banks in the portfolio underperformed the Insurance holdings over the 1st quarter with an average return of 2.1% versus 7.7%. Great West Life led with a return of 16.1%. TD was the laggard with a return of -6.6%. As was the case over the past few quarters, the range between the top and bottom performer was quite notable.

At the end of March, the indicated dividend yield on the stocks in the fund averaged 4.9% (equal weight). The bank holdings dividend yield matched that of the insurance holdings dividend yield and was 4.9%. The average one-year dividend per share growth rate was 14.2% for calendar Q1 2022 to Q1 2023.

The CBOE Volatility Index (VIX) started and ended the quarter at 20.9% and 18.7% respectively. A spike to 26.5 mid-March interrupted an otherwise orderly range. Implied volatility levels in Canadian financial stocks followed a similar pattern starting off at 16.8%, ending at 17.1% with a mid-March high of 26.7%. The fund did not engage in overwriting activity over the quarter as the managers opted not to cap the upside of the underlying securities. The cash position averaged 2.9%

As of December 30, 2022, the Net Asset Value (NAV) of TXT.PR.A was $12.50.

A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record December 15, 2022, representing a yield of 6.25% based on the original issue price of $12.50.

The December 30, 2022, NAV of TXT.UN was $1.40, up from the September 30, 2022, level of $1.16. A quarterly distribution of $0.03656 per unit was declared and paid to the Class A unitholders of record December 15, 2022, representing a yield of 7.5% based on the NAV at the time it was declared.

The capital unit’s official TSX closing price on December 30th was $2.53. This represents a $1.13 premium to its underlying NAV. The preferred security last price for the quarter was $10.75 representing a $1.75 discount to NAV. The combined capital unit and preferred Security closed the quarter at a $0.62 discount to NAV.

The Q4 total fund return was 3.4%. The S&P TSX Composite had a total return of 6.0% over the quarter closing at 19,385 on December 30th. Canadian Financials returned 3.1% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 6.1%. The Banks in the portfolio underperformed the Insurance holdings over the 4th quarter with an average return of 1.9% versus 12.3%. Sunlife Financial led with a return of 15.75%. CIBC was an outlier, and the only negative performance with a return of -8.0%. As with the prior quarter, the range between the top and bottom performer was quite notable.

At the end of September, the indicated dividend yield on the stocks in the fund averaged 5.0% (equal weight). The bank holdings dividend yield was also 5.0% and the insurance holdings dividend yield was 4.9%. The average one-year dividend per share growth rate was 16.8% for calendar Q4 2021 to Q4 2022.  

The CBOE Volatility Index (VIX) declined from 31.6 % to 21.7% from September 30th to December 30th. Implied volatility levels in Canadian financial stocks hit a high of 24% mid-October falling to 16.2% at the end of the year. The fund had a 25.5% maximum notional exposure to short calls averaging 7.3%. Cash covered short put positions got as high as 25.9%, averaging 12.3%. Long protective puts were employed in the 4th quarter with a maximum position of 4.1%, averaging 1.1%. The closing cash position for the quarter at 5.0%

As of September 30, 2022, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 15, 2022, representing a yield of 6.25% based on the original issue price of $12.50.

The September 30, 2022, NAV of TXT.UN was $1.16, down from the June 30, 2022, level of $1.69. A quarterly distribution of $0.02963 per unit was declared and paid to the Class A unitholders of record June 15, 2022, representing a yield of 7.5% based on the NAV at the time it was declared.

The capital unit’s official TSX closing price on September 30th was $2.37. This represents a $1.21 premium to its underlying NAV. The preferred security last price for the quarter was $11.25 representing a $1.25 discount to NAV. The combined capital unit and preferred Security closed the quarter at a $0.04 discount to NAV.

The total fund return was – 2.1%. The S&P TSX Composite had a total return of – 1.4% over the quarter closing at 18,444 on September 30th. Canadian Financials essentially matched the broader Canadian market, also posting a total return of – 1.4% over the same period.The return on an equal weighted basket of the ten portfolio stocks was – 1.0%. The Banks in the portfolio underperformed the Insurance holdings over the 2nd quarter with an average return of – 1.6% versus -0.1%. iA Financial led with a return of –10.7% and the Bank of Nova Scotia lagged with a return of – 12.6%. The range between the top and bottom performer was notable.

At the end of September, the indicated dividend yield on the stocks in the fund averaged 5.1% (equal weight). The bank holdings dividend yield was 4.8% and the insurance holdings dividend yield was 5.4%. The average one-year dividend per share growth rate was 17.1% for calendar Q3 2021 to Q3 2022.  

The CBOE Volatility Index (VIX) seemed to be on a less risky trend from the June 30th to mid-August, declining from 28.5 to 19.5. Risk sentiment returned and the index steadily rose t 31.6 by the close of the quarter. Implied volatility levels in Canadian financial stocks spiked to 31.2% mid-July then tapered off to a range of 13% to 21% for the remainder of the quarter. The fund had a 28.4 % maximum notional exposure to short calls. The average exposure was 5.8%. The average cash position was 2.5% closing the quarter at 2.2%

As of June 30, 2022, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record June 15, 2022 representing a yield of 6.25% based on the original issue price of $12.50.

The June 30, 2022, NAV of TXT.UN was $1.69, down from the March 31, 2022 level of $4.50. A quarterly distribution of $0.06038 per unit was declared and paid to the Class A unitholders of record June 15, 2022 representing a yield of 7.5% based on the NAV at the time it was declared.

The capital unit’s official TSX closing price on June 30th was $2.55. This represents a $0.86 premium to its underlying NAV. The preferred security last price for the quarter was $11.20 representing a $1.30 discount to NAV. The combined capital unit and preferred Security closed the quarter at a $0.44 discount to NAV.

The total fund return was – 15.0%. The S&P TSX Composite had a total return of – 13.2% over the quarter closing at 18,861 on June 30th . Canadian Financials underperformed the broader Canadian market slightly posting a total return of – 13.3 % over the same period. The return on an equal weighted basket of the ten portfolio stocks was – 13.6%. The Banks in the portfolio outperformed the Insurance holdings over the 2nd quarter with an average return of – 13.2% versus -14.5%. The Royal Bank of Canada led with a return of – 13.7% and the Canadian Imperial Bank of Commerce lagged with a return of – 16.5%.

At the end of June, the indicated dividend yield on the stocks in the fund averaged 4.9% (equal weight). The bank holdings dividend yield was 4.7% and the insurance holdings dividend yield was 5.2%. The average one-year dividend per share growth rate was 11.8% for calendar Q2 2021 to Q2 2022.  

The CBOE Volatility Index (VIX) has seen a wider range and higher levels than at this time last year. Going back, the second quarter 2021 saw an 18% average with lows of about 15.6% and highs of 27.6% This year, second quarter VIX averaged around 27.3 with a low of 18.6% and high of 34.8%. Implied volatility levels in Canadian financial stocks spiked to 25.5% mid-April but otherwise steadily rose from 13%% in March to 22% by mid-June. The fund did not engage in derivative transactions over the course of the quarter. The average cash position was 2.4%.

As of March 31, 2022, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record March 15, 2022 representing a yield of 6.25% based on the original issue price of $12.50.

The March 31, 2022 NAV of TXT.UN was $4.50, up from the December 31, 2021 level of $4.38. A quarterly distribution of $0.09056 per unit was declared and paid to the Class A unitholders of record March 15, 2022 representing a yield of 7.5% based on the NAV.

The total fund return was 2.4%. The S&P TSX Composite had a total return of 3.8% over the quarter closing at 21,890 on March 31st. Canadian Financials underperformed the broader Canadian market posting a total return of 2.2% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 3.7%.

The Banks in the portfolio underperformed the Insurance holdings over the 1st quarter with an average return of 3.3% versus 4.1%. Manulife Financial led with a return of 12.0% and Great West Lifeco lagged with a return of -1.7%.

At the end of March, the indicated dividend yield on the stocks in the fund averaged 4.0% (equal weight). The bank holdings dividend yield was 3.8% and the insurance holdings dividend yield was 4.3 %. The one-year dividend per share growth rate was 7.1% for calendar Q1 2021 to Q1 2022 on average for all the holdings.
 
Volatility levels in Canadian financial stocks were elevated relative to the prior quarter with a range of about 11% to 18% steadily increasing over the past few months. Volatility, as measured by the CBOE Volatility Index (“VIX”) averaged 25.2% over the fourth quarter ranging from a low of 16.6% to a high of 36.5 spiking as high as 31.1%.

The fund did not engage in derivative transactions over the course of the quarter. The fund managers decided not to write any options in order to fully participate in the price moves. The average cash position was 4.0%.


The capital unit’s mid closing price on March 31st was $4.05. This represents a $0.35 discount to its underlying NAV. The preferred security last price for the quarter on March 31st was $12.36 representing a $0.14 discount to NAV. The combined capital unit and preferred Security closed the quarter at a $0.49 discount to NAV.

The capital unit’s last trading price on December 31st was $3.58. This represents a $0.80 discount to its underlying NAV. The preferred security last price for the quarter on December 31st was $12.67 representing a $0.17 premium to NAV. The combined capital unit and preferred Security closed the quarter at a $0.63 discount to NAV.

The total fund return was 5.6%. The S&P TSX Composite had a total return of 6.5% over the quarter closing at 21,223 on December 31st. Canadian Financials outperformed the broader Canadian market posting a total return of 9.2% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 6.7%.

The Banks in the portfolio outperformed the Insurance holdings over the 4th quarter with an average return of 9.3% versus 2.7%. The Bank of Nova Scotia led with a return of 17.5% and Great West Lifeco lagged with a return of -0.2%

At the end of December, the indicated dividend yield on the stocks in the fund averaged 3.87% (equal weight). This was right between the bank holdings dividend yield of 3.93% and the insurance holdings dividend yield of 3.77 %. The one-year dividend per share growth rate was 1.4% for calendar Q4 2020 to Q4021 on average for all the holdings.

Volatility levels in Canadian financial stocks were relatively stable over the quarter with levels moving about the 10% level until the end of November when they jumped a bit, restabilizing around the 15% level. Volatility, as measured by the CBOE Volatility Index (“VIX”) averaged 19.3% over the fourth quarter moving from a low of 15% spiking as high as 31.1%

The average notional short call exposure for the fund was 1.2% over the quarter reaching a maximum of 5.9%. Long protective put positions were purchased for the fund averaging 2.7% notional value reaching a maximum of 3.3%. The average cash position was 3.8%. The 12.9% cash position at the end of the year was higher than normal due to the annual concurrent retraction on December 31, 2021.

As of September 30, 2021, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 15, 2021 representing a yield of 6.25% based on the original issue price of $12.50.

The September 30, 2021 NAV of TXT.UN was $3.75, down $0.08 from $3.83 at June 30, 2021. A quarterly distribution of $0.0750 per unit was declared and paid to the Class A unitholders of record September 15, 2021, representing a yield of 7.5% based on the NAV.

The capital unit’s last trading price on September 29th was $3.55. This represents a $0.20 discount to its underlying NAV. The preferred security last price for the quarter on September 30th was $12.67 representing a $0.17 premium to NAV. The combined capital unit and preferred Security closed the quarter at a $ 0.03 discount to NAV.

The total fund return was 1.2%. The S&P TSX Composite had a total return of 0.2% over the quarter closing at 20,070 on September 30th. Canadian Financials outperformed the broader Canadian market posting a total return of 0.9% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 2.0%.

The Insurance companies in the portfolio outperformed the Bank holdings over the second quarter with an average return of 4.2% versus 0.6%. iA Financial topped the list with a return of 7.2% while TD Bank trailed with a return of -2.6%.

At the end of September, the indicated dividend yield on the stocks in the fund averaged 3.74% (equal weight). This was right between the bank holdings dividend yield of 3.70% and the insurance holdings dividend yield of 3.80 %. The one-year dividend per share growth rate was 1.2% Q2 2020 to Q2021 on average for all the holdings.

Implied volatility levels in Canadian financial stocks were in a tighter range over the third quarter with the low end registering at around 7.4% and the high at around 11% ending the quarter at around 10%. Volatility as measured by the CBOE Volatility Index (“VIX”) increased over the second quarter moving from about 16% to 24%.

The fund purchased 3.3% notional long put options towards the end of September. An existing short call position representing a notional value of 3.3% expired out of the money (worthless) mid July. The fund has an ending cash position of 3.6%.

As of June 30, 2021, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record June 15, 2021 representing a yield of 6.25% based on the original issue price of $12.50.

The June 30, 2021 NAV of TXT.UN was $3.83, up from $3.29 March 31, 2021. A quarterly distribution of $0.07856 per unit was declared and paid to the Class A unitholders of record June 15, 2021 representing a yield of 7.5% based on the NAV.

The capital unit’s last trading price on June 28th was $3.40. This represents a $0.43 discount to its underlying NAV. The preferred security last price for the quarter on June 30th was $12.90 representing a $0.40 premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a $ 0.03 discount to NAV.

The S&P TSX Composite had a total return of 8.6% over the quarter closing at 20,166 on June 30th. Canadian Financials underperformed the broader Canadian market slightly posting a total return of 8.1% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 6.2%. The total fund return was 5.2%.

The Insurance companies in the portfolio underperformed the Bank holdings over the second quarter with an average return of 0.9% versus 10.0%. CIBC topped the list with a return of 15.8 %. Manulife Financial lagged with a return of -8.8 %.

At the end of June, the indicated dividend yield on the stocks in the fund averaged 3.77 % (equal weight). This was above the bank holdings dividend yield of 3.68% and below of the insurance holdings dividend yield of 3.92 %. The one-year dividend per share growth rate fell 1.76 % points from calendar Q2 2020 to Q2 2021 on average for all the holdings. The one-year earnings per share growth rate was 2.54 (equal weight).

Implied volatility levels in Canadian financial stocks eased off from the low 30’s to the mid 20’s ending the quarter at around 26%. Volatility as measured by the CBOE Volatility Index (“VIX”) continued to decline over the second quarter moving from about 20% to 16%. A healthy spike to the high 20’s in the US volatility markets as measured by VIX was a key divergence from the experience of the volatility in Canadian Financial stocks.
Short call positions reach a high of 8.1% over the quarter, averaging 4.2%. The fund did not engage in long call purchases or any put transactions. The fund has an ending cash position of 0.4% averaging 7.9% over the entire quarter.

TXT 1st Quarter 2021 Commentary:
As of March 31, 2021, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record March 15, 2021 representing a yield of 6.25% based on the original issue price of $12.50.

The March 31, 2021 NAV of TXT.UN was $3.29, up from $1.42 December 31, 2021. A quarterly distribution of $0.04781 per unit was declared and paid to the Class A unitholders of record March 15, 2021 representing a yield of 7.5% based on the NAV.
The capital unit’s last trading price on March 29th was $3.14 This represents a $0.15 discount to its underlying NAV. The preferred security last price for the quarter on March 31st was $12.59 representing a $0.09 premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a $ 0.06 discount to NAV.

The S&P TSX Composite had a total return of 8.1 % over the quarter closing at 18,701 on March 31st. Canadian Financials outperformed the broader Canadian market posting a total return of 13.8 % over the same period. The return on an equal weighted basket of the ten portfolio stocks was 16.5 %. The total fund return was 15.2 %.

The Insurance companies in the portfolio outperformed the Bank holdings over the first quarter with an average return of 17.6 % versus 15.8 %. iA Financial topped the list with a return of 24.7 %. Great West Lifeco trailed the pack with a return of 11.7 %.

At the end of March, the indicated dividend yield on the stocks in the fund averaged 3.97 % (equal weight). This was just shy of the bank holdings at 4.00 % and in excess of the insurance holdings at 3.92 %. The one-year dividends per share growth rate from calendar Q1 2020 to Q1 2021 was 4.09 % on average for all the holdings.

Volatility as measured by the CBOE Volatility Index (“VIX”) continued to decline in the first quarter with the exception of late January as the so-called “Reddit Rally” fueled fierce price jumps in stocks such as Gamestop and AMC before regulators stepped in to limit trading. With the Canadian financial share prices trending higher for most of the quarter and volatility relatively low, the fund chose to not write any options in this quarter in order to fully participate in the price moves.

On March 31, 2021, the fund successfully extended the termination date to March 31, 2026. The final day of the month the fund had a larger than normal cash position of 42%. This was to facilitate the payout for redeeming unitholders and a call of Preferred securities that was done to maintain a balance of Class A to Preferred securities. Netting these payments from the month end cash position would have shown final cash to be 1.2 % The fund had an average cash position of 2.7 % over the quarter as compared to 2.3 % for the 4th quarter of 2020.

As of December 31, 2020, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record December 15, 2020 representing a yield of 6.25% based on the original issue price of $12.50.

The December 31, 2020 NAV of TXT.UN was $1.41, up $1.41 from September 30, 2020. A quarterly distribution of $0.02475 per unit was declared and paid to the Class A unitholders of record December 15, 2020 representing a yield of 7.5% based on the NAV.

The capital unit’s last trading price on December 30th was $1.47. This represents a $0.06 premium to its underlying NAV. The preferred security last price for the quarter on December 29th was $12.11 representing a $0.39 discount to NAV. The combined unit, capital and preferred shares, closed the quarter at a $ 0.33 discount to NAV.

The S&P TSX Composite had a total return of 9.0% over the quarter closing at 17,433 on December 31st. Canadian Financials outperformed the broader Canadian market as the iShares XFN ETF posted a total return of 16.4% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 17.1%. The total fund return was 14.2%.

The Insurance companies in the portfolio underperformed the Bank holdings slightly during the past quarter with an average return of 16.9% versus 17.3%. The Bank of Nova Scotia topped the list with a return of 26.4%. Sunlife Financial trailed the pack with a return of 5.3%.

At the end of December, the indicated dividend yield on the stocks in the fund averaged 4.6 % (equal weight) right in line with both bank holdings and the insurance holdings. The one-year dividends per share growth rate from calendar Q4 2019 to Q4 2020 was 6.1% on average for all the holdings.

The CBOE Volatility Index (VIX) ended the year in the mid to low twenties after experiencing a spike to the low forties at the end of October. While there have been flashes of uncertainty resulting in elevated VIX figures now and then, we are a long way off the extremes of low 80’s that we saw at the end of March. Notional Short Call positions averaged 6.0%, getting as high as 14.1%. The fund had an average cash position of 2.3% over the quarter and the year-end cash position was 1.2%.

As of September 30, 2020, the Net Asset Value (NAV) of TXT.PR.A was $12.38. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 15, 2020 representing a yield of 6.25% based on the original issue price of $12.50.

The September 30, 2020 NAV of TXT.UN was zero, unchanged from June 30, 2020. A quarterly distribution of $0.00788 per unit was declared and paid to the Class A unitholders of record September 15,2020 representing a yield of 7.5% based on the NAV.

The capital unit’s last trading price on September 29th was $1.31. This represents a $1.31 premium to its underlying NAV. The preferred security last price for the quarter on September 29th was $10.76 representing a $1.620 discount to NAV. The combined unit, capital and preferred shares, closed the quarter at a $ 0.31 discount to NAV.

The S&P TSX Composite had a total return of 4.7% over the quarter closing at 16,121.38 on September 30th. Canadian Financials underperformed the broader Canadian market as the iShares XFN ETF posted a total return of 3.8% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 6.1%. The total fund return was 4.7%. The Insurance companies in the portfolio outperformed the Bank holdings during the past quarter with an average return of 6.4% versus 5.8%. Great-West Lifeco and CIBC were the standouts with a total return of 11.2% and 11.1% respectively.

At the end of September, the indicated dividend yield on the stocks in the fund averaged 5.3 % (equal weight) right in line with both bank holdings and the insurance holdings. The one-year dividends per share growth rate from calendar Q3 2019 to Q3 2020 was 6.7% on average for all the holdings.

The 30-day historical volatility in the iShares Capped Financials ETF started the quarter at 33 % level, falling to a low of 12.5 before ending the quarter at 14.4%. This is off the extreme levels encountered earlier in the year. The fund had an average cash position of 4.7% over the quarter. Notional Short Call positions averaged 9.2%, getting as high as 28.3 %. The fund also purchased Long Call positions with premiums that reached a high of 0.5 % of the fund and averaged 0.1 % of the fund over the quarter. Notional Short Put (cash covered) averaged 0.2% with a high of 6.1 %.

As of June 30, 2020, the Net Asset Value (NAV) of TXT.PR.A was $12.02. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record June 15, 2020 representing a yield of 6.25% based on the original issue price of $12.50.

The June 30, 2020 NAV of TXT.UN was zero, unchanged from March 31, 2020. The distribution was omitted on the capital share this past quarter.

The capital unit’s last trading price on June 30th was $1.46. This represents a $1.46 premium to its underlying NAV. The preferred share last price for the quarter on June 25th was $11.30 representing a $0.72 discount to NAV. The combined unit, capital and preferred shares, closed the quarter at a $ 0.74 premium to NAV.

The S&P TSX Composite had a total return of 17.0 % during the quarter closing at 15,515 on June 30th. Canadian Financials underperformed the broader Canadian market as the Financials companies posted a total return of 6.2 % over the same period. The return on an equal weighted basket of the ten portfolio stocks was 6.09 %. The total fund return was 2.6 %.

The Life Insurance stocks outperformed the Bank stocks total return over the past quarter with a return of 7.5 % versus 4.9 % for the banks. The National Bank of Canada was the top performer with a return of 14.4 %. The Bank of Nova Scotia trailed the pack with a return of – 0.7 %

At the end of June, the indicated dividend yield on the stocks in the fund averaged 5.5 % (equal weight) right in line with both bank holdings and the insurance holdings. The one-year earnings per share growth rate from calendar Q2 2019 to Q2 2020 was 7.5 % on average for all the holdings.

The 30-day historical volatility in the Financial companies started the quarter at around the 100 % level, falling to just over 30 %, towards the end. This is extreme by any measure. The trend, however, is encouraging in the era of COVID 19. The fund had an average cash position of 8.7 % over the quarter. Notional Short Call positions averaged 17.1 %, getting as high as 33.0 %. The fund also purchased Long Call positions with premiums that reached a high of 0.5 % of the fund and averaged 0.2 % of the fund over the quarter. Notional Short Put (cash covered) averaged 2.5 % with a high of 6.2 %.

As of March 31, 2020, the Net Asset Value (NAV) of TXT.PR.A was $11.91. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record March 13, 2020 representing a yield of 6.25% based on the original issue price of $12.50.

The March 31, 2020 NAV of TXT.UN was zero, down from $3.74 December 31, 2019. A quarterly distribution of $0.04931 was declared and paid to Capital unit holders of record as at March 13, 2020 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on March 30th was $1.36. This represents a $1.36 premium to its underlying NAV. The preferred share last price for the quarter on March 31st was $12. representing a $0.09 premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a $ 1.49 premium to NAV.

The S&P TSX Composite had a total return of – 20.9 % during the quarter closing at 13,379 on March 31st. Canadian Financials underperformed the broader Canadian market as the S&P/TSX Capped Financials Index (SPTSFN) posted a total return of - 21.1 % over the same period. The return on an equal weighted basket of the ten portfolio stocks was – 24.6 %. The total fund return was – 25.2 %.

The S&P/TSX Life and Health Insurance Index underperformed the S&P/TSX Diversified Bank Index Total Return Index over the past quarter with a return of - 29.1 % versus - 19.6 % for the banks. Royal Bank of Canada was the top performer with a return of – 14.3 %. iA Financial Corp. trailed the pack with a return of – 37.5 %.

At the end of December, the indicated dividend yield on the stocks in the fund averaged 5.6 % (equal weight). Bank holdings and the insurance holdings both averaged 5.8 % and 5.7 % respectively. The one-year dividend growth rate from calendar Q1 2019 to Q1 2020 was 8.5 % on average for all the holdings.

The 30-day historical volatility in the S&P/TSX Capped Financials Index (SPTSFN) started the quarter at around the 5.7 % level, climbing as high as 100.0 %, at the end. The COVID 19 situation created two very different volatility paradigms from the beginning to the end of the quarter. The fund had an average cash position of 3.6% over the quarter. Notional short call positions reached a high of 41.1 % averaging 17.4 %.

As of December 31, 2019, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record December 13, 2019 representing a yield of 6.25% based on the original issue price of $12.50.

The December 31, 2019 NAV of TXT.UN was $3.74, up from $3.47 September 30, 2019. A quarterly distribution of $0.07613 was declared and paid to Capital unit holders of record as at December 13, 2019 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on December 31st was $3.63. This represents a 2.9% discount to its underlying NAV. The preferred share last price for the quarter on December 31st was $12.37 representing a 1.0% discount to NAV. The combined unit, capital and preferred shares, closed the quarter at a 1.5% discount to NAV.

The S&P TSX Composite had a total return of 3.2 % during the quarter closing at 17,063 on December 31st. Canadian Financials underperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 1.0 % over the same period. The return on an equal weighted basket of the ten portfolio stocks was 3.8%. The total fund return was 3.4 %.

The S&P/TSX Life and Health Insurance Index outperformed the S&P/TSX Diversified Bank Index Total Return Index over the past quarter with a return of 7.6 % versus negative 1.8 % for the banks. I.A. Financial was the top performer with a return of 19.1%. TD Bank trailed the pack with a return of minus 4.8 %.

At the end of December, the indicated dividend yield on the stocks in the fund averaged 4.2 % (equal weight). Bank holdings and the insurance holdings both averaged 4.4 % and 3.8 % respectively. The one-year dividend growth rate from calendar Q4 2018 to Q4 2019 was 8.3 % on average for all the holdings.

The 30 day historical volatility in the S&P/TSX Capped Financials Index (SPTSFN) started the quarter at around the 8.0 % level, quickly climbing as high as 11.4 %, and then ending the quarter at levels just in excess of 6.0 %. The fund had an average cash position of 3.0% over the quarter. Notional short call positions reached a high of 8.6 % averaging 4.9 %. Notional long put positions reached a high of 10.5 % averaging 4.5 %.

As of September 30, 2019, the NAV of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 13, 2019 representing a yield of 6.25% based on the original issue price of $12.50.

The September 30, 2019 NAV of TXT.UN was $3.47, up from $2.95 June 28th, 2019. A quarterly distribution of $0.04706 was declared and paid to Capital unit holders of record as at September 13, 2019 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on September 30th was $3.08. This represents an 11.2% discount to its underlying NAV. The preferred share last price for the quarter on September 26th was $12.40 representing a 0.8% discount to NAV. The combined unit, capital and preferred shares, closed the quarter at a 3.1 % discount to NAV.

The S&P TSX Composite had a total return of 2.5 % during the quarter closing at 16,659 on September 30th. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 5.2 % over the same period. The return on an equal weighted basket of the ten portfolio stocks was 6.3%. The total fund return was 4.9 %.

The S&P/TSX Life and Health Insurance Index outperformed the S&P/TSX Diversified Bank Index Total Return Index over the past quarter with a return of 6.8% versus 4.3 % for the banks. I.A. Financial was the top performer with a return of 14.0%. Bank of Montreal trailed the pack with a return of minus -0.3%.

At the end of September, the indicated dividend yield on the stocks in the fund averaged 4.2 % (equal weight). Bank holdings and the insurance holdings both averaged 4.4 % and 4.0 % respectively. The one-year dividend growth rates from calendar Q3 2018 to Q3 2019 were 9.2 % on average for all the holdings.

The 30 day historical volatility in the S&P/TSX Capped Financials Index (SPTSFN) started the quarter at around the 9 % level climbing as high as 10.6 % end the end of June before settling in at 10 % to close the quarter. The fund had an average cash position of 3.8 % over the quarter while the notional short call positions ranged from zero to 23.6 %, averaging 9.6 %.

As of June 28, 2019, the NAV of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record June 14, 2019 representing a yield of 6.25% based on the original issue price of $12.50.

The June 28, 2019 NAV of TXT.UN was $2.95, up from $2.86 March 29st, 2019. A quarterly distribution of $0.05156 was declared and paid to Capital unit holders of record as at June 14, 2019 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on June 28th was $2.905. This represents a 1.5% discount to its underlying NAV. The preferred share last price for the quarter June 26th was $12.53 representing a 0.2% premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a 0.1% discount to NAV.

The S&P TSX Composite had a total return of 2.6% during the quarter closing at 16,382 on June 28th. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 3.5% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 3.1%. The total fund return was 2.2%.

The S&P/TSX Life and Health Insurance Index outperformed the S&P/TSX Diversified Bank Index Total Return Index marginally over the past quarter with a return of 3.6% versus 3.4% for the banks. The insurers prevailed with the I.A. Financial topping the returns at 9.2%. Great West lagged with a return of minus 5.6%

At the end of June, the indicated dividend yield on the stocks in the fund averaged 4.4% (equal weight). Bank holdings and the insurance holdings both averaged 4.5% and 4.3% respectively. The one-year dividend growth rates from calendar Q1 2018 to Q1 2019 were 9.0% on average for the holdings.

The 30-day historical volatility in the S&P/TSX Capped Financials Index (SPTSFN) started the quarter at around the 9% level climbing as high as 10.6% end the end of June before settling in at 10% to close the quarter. The fund had an average cash position of 11.5%. Notional Short Call Positions ranged from 9.3% to 23.5%, averaging 17.0% over the quarter. Notional Short Put (cash covered) positions ranged from zero to 2.3% averaging 0.4% over the quarter. Long puts ranged from zero to 10.5% averaging 3.9% over the quarter.

As of March 29, 2019, the NAV of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record March 15, 2018 representing a yield of 6.25 percent based on the original issue price of $12.50.

The March 29, 2019 NAV of TXT.UN was $2.86, up from $1.9 December 31, 2018. A quarterly distribution of $0.05963 was declared and paid to Capital unit holders of record as at March 15, 2019 in accordance with the distribution policy of 7.5 percent per annum of the NAV of the capital unit.

The capital unit’s last trading price on March 29th was $2.935. This represents a 2.6 percent premium to its underlying NAV. The preferred share last price for the quarter March 28th was $12.51 representing a 0.1 percent premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a 0.6 percent premium to NAV.

The S&P TSX Composite had a total return of 13.3 percent during the quarter closing at 16,102 on March 29th. Canadian Financials underperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 10.4 percent over the same period. The return on an equal weighted basket of the ten portfolio stocks was 11.2 percent. The total Fund return was 8.4 percent.

The S&P/TSX Life and Health Insurance Index outperformed the S&P/TSX Diversified Bank Index Total Return Index over the past quarter handily with a return of 18.0 percent versus 8.0 percent for the banks. The insurers prevailed with the Manulife Financial Corp topping the returns at 18.0 percent. The Bank of Nova Scotia lagged with a return of 4.5 percent.

At the end of March, the indicated dividend yield on the stocks in the fund averaged 4.3 percent (equal weight). Bank holdings and the insurance holdings both averaged 4.4 percent and 4.2 percent respectively. The one-year dividend growth rates from calendar Q1 2018 to Q1 2019 were 7.3 percent on average for the holdings.

The 30 day historical volatility in the S&P/TSX Capped Financials Index (SPTSFN) started the quarter at around the 16 percent to 17 percent level steadily declining to the 7 to 8 percent area. The fund had an average cash position of 3.2 percent over the quarter. Cash covered short put positions started the quarter with a notional value of 3.2 percent. This position was increased to 7.8 percent. All the cash covered puts were closed before the end of March. Average covered call writing strategies increased from 11.2 percent to 15.2 percent as compared to the fourth quarter. The overwritten position reached a high of 29.0 percent. The Fund ended the quarter with 22.9 percent of the portfolio subject to calls.

As of December 31, 2018, the NAV of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record December 14, 2018 representing a yield of 6.25% based on the original issue price of $12.50.

The December 31, 2018 NAV of TXT.UN was at $1.90, down from $3.99 September 28th, 2018. A quarterly distribution of $0.05588 was declared and paid to Capital unit holders of record as at December 14, 2018 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on December 28th was $2.57. This represents a 35.3% premium to its underlying NAV. The preferred share last price for the quarter December 28th was $12.51 representing a 0.1% premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a 12.5% premium to NAV.

The S&P TSX Composite had a total return of -10.1% during the quarter closing at 14,323 on December 31st. Canadian Financials underperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of -11.2% over the same period. The return on an equal weighted basket of the ten portfolio stocks was -12.3%. The total fund return was -11.1%.

The S&P/TSX Life and Health Insurance Index underperformed the S&P/TSX Diversified Bank Index Total Return Index over the past quarter with a return of -12.8% versus -11.6% for the banks. The Royal Bank of Canada was the performance leader with a return of -8.8%. The laggard was the Bank of Montreal with a return of -15.5%

At the end of December, the indicated dividend yield on the stocks in the fund averaged 4.6% (equal weight). Bank holdings and the insurance holdings both averaged 4.6% and 4.7% respectively. The one-year dividend growth rates from calendar Q4 2017 to Q4 2018 were 8.26% on average for the holdings.

The 30-day historical volatility in the S&P/TSX Capped Financials ETF started the quarter at a low of just 5.9%, stabilizing around 10% to 14% for most of the quarter before hitting a high of about 16.2% at year end. The fund had an average cash position of 7.8% over the quarter. Average covered call writing strategies increased from 5.2% to 11.2% as compared to the third quarter. The overwritten position reached a high of 35.7%. The Fund ended 2018 with 13.2 percent of the portfolio subject to calls, 3.1 percent of the portfolio subject to short puts.

As of September 28, 2018, the NAV of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 14, 2018 representing a yield of 6.25% based on the original issue price of $12.50.

The September 28, 2018 NAV of TXT.UN was at $3.99, up from $3.89 June 29, 2018. A quarterly distribution of $0.0810 was declared and paid to Capital unit holders of record as at September 14, 2018 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on September 28th was $3.90. This represents a 2.3% discount to its underlying NAV. The preferred share last price for the quarter September 28th was $12.57 representing a 0.6% premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a 0.1% discount to NAV.

The S&P TSX Composite had a total return of -0.6% during the quarter closing at 16,073 on September 28th. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 3.8% over the same period. The return on an equal weighted basket of the ten portfolio stocks was 2.7%. The total fund return was 2.3%.

The S&P/TSX Life and Health Insurance Index underperformed the S&P/TSX Diversified Bank Index Total Return Index over the past quarter with a return of -1.6% versus 4.8%. The standout performer in the portfolio was the Canadian Imperial Bank of Commerce on the upside with a return of 7.0%. The laggard was Sun Life Financial with a return of -1.9%

At the end of June, the indicated dividend yield on the stocks in the fund averaged 3.9% (equal weight). Bank holdings and the insurance holdings both averaged 3.9%. The one-year dividend growth rates from calendar Q3 2017 to Q3 2018 were 8.0% on average for the holdings.

The 30 Day historical volatility in the S&P/TSX Capped Financials ETF started the quarter at a high of just over 8.7%, stabilizing around 7% before hitting a low of about 5.2% mid-July. The historical volatility finished the quarter at around 6%. The fund had an average cash position of 5.3% over the quarter. Average covered call writing strategies decreased from 6.9% to 5.2% as compared to the second quarter. The overwritten position reached a high of 11.5%. The fund held long call positions at the start of the period representing about 0.2% of the fund’s market value. These positions were sold to close mid-August.

As of June 30, 2018, the NAV of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record June 15, 2018 representing a yield of 6.25% based on the original issue price of $12.50.

The June 30, 2018 NAV of TXT.UN was at $3.89, down from $4.07 March 31, 2018. A quarterly distribution of $0.0780 was declared and paid to Capital unit holders of record as at June 15, 2018 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on June 28th was $3.90. This represents a 0.3 % discount to its underlying NAV. The preferred share last price for the quarter June 27th was $13.00 representing a 4.0 % premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a 3.1 % premium to NAV.

The S&P TSX Composite had a total return of 6.8 % during the quarter closing at 16,278 on June 29th. Canadian Financials underperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 2.1 % over the same period. The return on an equal weighted basket of the ten portfolio stocks was 1.0 %. The total fund return was 0.5 %.

The S&P/TSX Life and Health Insurance Index underperformed the S&P/TSX Diversified Bank Index Total Return Index over the past quarter with a return of -0.2 % versus 1.7 %. The standout performer in the portfolio was the Bank of Montreal on the upside with a return of 5.4 %. The laggard was the Bank of Nova Scotia with a return of -4.1 %

At the end of June, the indicated dividend yield on the stocks in the fund averaged 2.7 % (equal weight). Bank holdings averaged 3.6 % and the insurance holdings averaged 1.5 %. The one year dividend growth rates from Q2 2017 to Q2 2018 were 7.2 % on average for the holdings.

The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) started the quarter at a high of just over 14 %. Shortly thereafter the volatility levels stabilized ranging from 9 % to 10 %. The fund had an average cash position of 5.7 % over the quarter. Average covered call writing strategies decreased marginally from 7.6 % to 7.1 % as compared to the first quarter. The overwritten position reached a high of 19.0 %. The fund engaged in the purchase of some long call positions throughout the month of June. The cost of premiums on these options reached 0.17 percent of the value of the fund.

As of March 31, 2018, the NAV of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record March 15, 2018 representing a yield of 6.25% based on the original issue price of $12.50.

The March 31, 2018 NAV of TXT.UN was at $4.07, down from $5.08 December 31, 2017. A quarterly distribution of $0.08419 was declared and paid to Capital unit holders of record as at March 15, 2018 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on March 29th was $4.19. This represents a 2.9% premium to its underlying NAV. The preferred share last price for the quarter March 27th was $12.84 representing a 2.7% premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a 2.8% premium to NAV.

The S&P TSX Composite had a total return of -4.5% during the quarter closing at 15,367 March 29th. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of -3.5% over the same period. The return on an equal weighted basket of the ten portfolio stocks was -3.7%. The total Fund return was -4.2%.

The S&P/TSX Life and Health Insurance Index underperformed the S&P/TSX Diversified Bank Index Total Return Index over the past quarter with a return of -4.9% versus -2.0%. The standout performers in the portfolio was Sun Life Financial on the upside with a return of 2.9% while Industrial Alliance lagged with a return of -10.8%

At the end of March, the indicated dividend yield on the stocks in the Fund averaged 3.8% (equal weight). Bank holdings averaged 4.0% and the insurance holdings averaged 3.7%. Dividend growth rates of first quarter (calendar) from last year were 7.4%

The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) hit a low of 4.6% in January and reached a high of 12.4% in early March. The Fund had an average cash position of 4.1% over the quarter. Average covered call writing strategies increased to 7.6% from 3.1% in the first quarter. The overwritten position reached a high of 23.8%. The Fund engaged in the purchase of some long call positions throughout the month of January. The cost of premiums on these options reached 0.7 percent of the value of the Fund.

As of December 29, 2017, the Net Asset Value of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record December 15, 2017 representing a yield of 6.25% based on the original issue price of $12.50.

The December 29, 2017 Net Asset Value of TXT.UN was at $5.08, up from $4.55 September 29, 2017. A quarterly distribution of $0.0975 was declared and paid to Capital unit holders of record as at December 15, 2017 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on December 29, 2017 was $4.45. This represents a 12.4 % discount to its underlying net asset value. The preferred's securities last price for the quarter ended December 29, 2017 was $12.65 representing a 1.2 % premium to net asset value. The combined unit, capital and preferred shares, closed the quarter at a 2.7 % discount to net asset value.

The S&P TSX Composite returned 4.4 % including dividends over the quarter closing near it’s high on December 29th. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 5.7 % over the quarter. The return on an equal weighted basket of the ten portfolio stocks was 5.8 %. The total fund return for the fourth quarter was 4.8 %.

The S&P/TSX Life and Health Insurance Index underperformed the S&P Diversified Bank over the past quarter with a total return of 3.9 % versus 6.6 %. The standout performers in the portfolio were the Canadian Imperial Bank of Commerce on the upside with a return of 13.4% and Great West Lifeco on the downside with a return of -1.2%

Calendar fourth quarter annual dividend growth rates averaged 7.7 % for the portfolio holdings. The bank holdings annual dividend growth averaged 7.2 %, lagging the insurance companies 8.4 %. increase. On a five-year basis, the average rate of dividend increases was 7.03 % for the portfolio holdings.

The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) hit a low of 7.3 % in latter part of October reaching a high of 10.4 % early December. The fund had an average cash position of 3.7% over the quarter. Average covered call writing strategies decreased marginally to 3.1 % from 3.5 % in the third quarter. The overwritten position reached a high of 5.6 %. There were no put option transactions executed in the fund in the fourth quarter. The fund engaged in the purchase of some long call positions. Premiums on these options were as high as 0.5 percent of the market value of the fund. At year end the extent of our purchased call positions was reduced slightly to take some profits. The outstanding purchased call premiums at year end were 0.5 percent of the fund.

As of September 30, 2017, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 15, 2017 representing a yield of 6.25% based on the original issuance price of $12.50.

The September 30, 2017 NAV of TXT.UN was $4.55, up from $4.17 June 30, 2017. A quarterly distribution of $0.07556 was declared and paid to Capital unit holders of record as at September 15, 2017 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.
The capital unit’s last trading price on September 29, 2017 was 3.80. This represents a 16.5% discount to its underlying NAV. The preferred share last price for the quarter September 29, 2017 was $13.14 representing a 5.1% premium to NAV. The combined unit, capital and preferred shares, closed the quarter at a 0.6% discount to NAV.

The S&P TSX Composite had a total return of 3.7% during the quarter closing at it’s high of 15,635. The index closed at a low of 14,952 on August 21st. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 4.5% over the quarter. The return on an equal weighted basket of the ten portfolio stocks was 4.9%. The total return for the Fund was 3.9%. Class A share returned 11.1% while the preferred share returned 1.6%.

The S&P/TSX Life and Health Insurance Index outperformed the S&P Diversified Bank Index Total Return Index over the past quarter with a return of 5.8% versus 4.6%. The standout performers in the portfolio were the National Bank of Canada on the upside with a return of 11.2% while the Bank of Montreal was at the lower end of the spectrum, essentially flat for the period.

Annual dividend growth rates averaged 6.9% for the portfolio holdings for four quarters ending calendar Q3. The bank holdings annual dividend growth averaged 5.9% lagging the insurance companies at 8.6%. The five-year average rate of dividend increase was 6.8% for the portfolio holdings on a weighted average basis. This figure is up marginally from the Q2 five year dividend growth rate of 5.7%.

The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) hit a low of 5.9% in early August climbing to a high of 36.9% at the end of September. The Fund had an average cash position of 2.5% over the quarter. Average covered call writing strategies decreased to 3.5% from 6.1% from the second quarter. The overwritten position reached a high of 9.0%. There were no put option transactions executed in the Fund in the third quarter.

As of June 30, 2017, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record June 15, 2017 representing a yield of 6.25% based on the original issue price of $12.50.

The June 30, 2017 Net Asset Value of TXT.UN came in at $4.17, down from $4.94 March 31, 2016. A quarterly distribution of $0.07106 was declared and paid to Capital unit holders of record as at June 15, 2017 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.
The capital unit’s last trading price on June 30, 2017 was 3.90. This represents a 6.5 % discount to its underlying NAV. The preferred share last price for the quarter on June 27, 2017 was $13.34 representing a 6.7 % premium to net asset value. The combined unit, capital and preferred shares, closed the quarter at a 3.4 % premium to NAV.

The S&P TSX Composite had a total return of -1.6 % over the quarter closing at 15,182. The high close of 15,745 occurred on April 25nd and closed at a low of 15,149 on June 21st. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of -0.9 % over the quarter. The return on an equal weighted basket of the ten portfolio stocks was -1.7 %. The total fund return for the second quarter was -2.9 %. Class A share returned -14.22 % while the preferred share returned 1.6 %.

The S&P/TSX Life and Health Insurance Index outperformed the S&P Diversified Bank Index Total Return Index over the past quarter with a return of -0.4 % versus -1.7 %. The top bank and insurance holdings were the Bank of Nova Scotia and Manulife Financial with gains of 1.2 % and 4.0 % respectively. The laggards were CIBC and Sun Life Financial returning -7.0 % and -3.6 % respectively.

Annual dividend increases averaged 6.9 % for the portfolio holdings for four quarters ending calendar Q2. The bank holdings averaged 6.0 % lagging the insurance companies at 8.3 %. The five-year average rate of dividend increase was 6.7 % for the portfolio holdings on a weighted average basis.

The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) hit a low of 8.6 % mid-April climbing to a high of 13.7 % near the end of May then dropping back down to 8.9 % at the end of June. The fund had an average cash position of 3.8 % over the quarter. Average covered call writing strategies increased to 6.0 % in the second quarter from 5.6 % in the first quarter. The overwritten position reached a high of 13.7 %. There were no put option transactions executed in the fund in the second quarter.

As of March 31, 2017, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record on March 15, 2017 representing a yield of 6.25% based on the original issue price of $12.50.

The March 31, 2016 NAV of TXT.UN came in at $4.94, up from $4.80 December 30, 2016. A quarterly distribution of $0.096 was declared and paid to Capital Unit holders of record as of March 15, 2017 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on March 31, 2017 was $4.34. This represents a 12.1 percent discount to its underlying NAV. The Preferred Security closing price on March 31, 2017 was $13.24 representing a 5.9 percent premium to NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 0.8 percent premium to NAV.

The S&P TSX Composite Index returned 2.4 percent, including reinvestment of dividends, over the quarter closing at 15,548. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of 3.4 percent over the quarter. The return on an equal weighted basket of the ten portfolio stocks was 3.6 percent. The total fund return for the fourth quarter was 2.5 percent. The Capital Unit returned 5.1 percent while the Preferred Security returned 1.6 percent.

The S&P/TSX Life and Health Insurance Index underperformed the S&P Diversified Bank Index Total Return Index over the past quarter with a return of 0.1 percent vs. 4.6 percent of the latter. The returns of our portfolio holdings followed the same pattern as the insurance and bank indexes. The insurance company returns underperformed at 2.2 percent vs. 4.5 percent of the banks. The top bank and insurance holdings were Royal Bank of Canada and Industrial Alliance Insurance and Financial Services Inc. with gains of 7.6 percent and 8.6 percent respectively. The laggards were Sun Life Financial Inc. and Manulife Financial Corp. returning -5.0 percent and -0.5 percent respectively.

Annual dividend increases averaged 7.2 percent for the portfolio holdings for the four quarters ending calendar Q1 of 2017. The dividend increases of bank holdings averaged 6.2 percent per annum lagging the insurance companies at 8.4 percent. The five-year average rate of dividend increase was 6.6 percent for the portfolio holdings on a weighted average basis.

The 30-Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) hit a low of 7.0 percent near the end of February climbing to a high of 10.7 at the end of March. The quarter started at just over 8 percent volatility and ended near the highs of about 10.5 percent. The Fund had an average cash position of 3.9 percent. Average covered call writing strategies decreased to 5.6 percent from 6.1 percent in Q4 of 2016 and the overwritten position reached a high of 15.4 percent. There were no put option transactions executed in the Fund in the first quarter.

As of December 31, 2016, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record December 15, 2016 representing a yield of 6.25 percent based on the original issue price of $12.50.
The December 31, 2016 NAV of TXT.UN came in at $4.80, up from $3.20 September 30, 2016. A quarterly distribution of $0.087 was declared and paid to Capital Unit holders of record as of December 15, 2016 in accordance with the distribution policy of 7.5 percent per annum of the NAV of the Capital Unit.
The Capital Unit’s last trading price on December 30, 2016 was $4.19. This represents a 12.7 percent discount to its underlying NAV. The Preferred Security’s closing price on December 23, 2016 was $12.60 representing a 0.8 percent premium to its NAV. The Combined Security, each consisting of one Capital Unit and one Preferred Security, closed the quarter at a 2.9 percent discount to the combined NAV.

The S&P/TSX Composite Index returned 4.5 percent including dividends over the quarter closing at 15,288. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of 11.3 percent during the quarter. The return on an equal weighted basket of the ten portfolio stocks was 15.4 percent. The total fund return for the fourth quarter was 11.9 percent. The Capital Unit returned 52.5 percent while the Preferred Security returned 1.6 percent.

The S&P/TSX Life and Health Insurance Index beat the S&P Diversified Bank Index Total Return Index over the past quarter with a return of 21.4 percent versus 12.5 percent of the latter. It is a very good indication that the Financials stocks were strong when the lowest performer, the Bank of Nova Scotia, returned 8.6 percent over the quarter. Manulife Financial Corp. had the highest return at 30.2 percent.

Common dividends increased an average of 6.4 percent when compared to the same quarter last year. The bank distributions were up 6.5 percent while the insurance holdings were up 8.3 percent. Comparing calendar Q4 to Q3, this year the average dividend increase for the portfolio holdings was 1.0 percent even though less than half of the names chose to increase distributions since September. Sun Life Financial Inc. was the pleasant outlier with a 3.7 percent quarterly increase.

The 30-Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) hit a low of 6.2 percent at the end of October steadily climbing to a high point of 10.5 percent in mid-December. The quarter ended with the volatility levels around 8 percent. The Fund had an average cash position of 4.8 percent. Average covered call writing strategies increased to 6.1 percent from 3.6 percent in Q3 and the Fund ended the quarter with nil percent of the portfolio written. There were no put option transactions executed in the Fund in the fourth quarter.

As of September 30, 2016, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record on September 15, 2016, representing a yield of 6.25 percent based on the original issue price of $12.50.

The September 30, 2016 NAV of TXT.UN came in at $3.20, up from $2.66 at June 30, 2016. A quarterly distribution of $0.06131 was declared and paid to Capital Unit holders of record on September 15, 2016 in accordance with the distribution policy of 7.5 percent per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on September 30, 2016 was $2.72, which represents a 15 percent discount to its underlying NAV. The Preferred Security’s closing price on September 30, 2016 was $12.60 representing a 0.8 percent premium to its NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 2.4 percent discount to its aggregate NAV.

The S&P/TSX Composite returned 5.4 percent including dividends over the quarter closing at 14,726. The index posted a low of 14,134 on July 7th and a high of 14,813 on September 6th. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of 6.6 percent during the quarter. The return on an equal weighted basket of the ten portfolio stocks was 6.4 percent. The total return of the Fund for the third quarter was 5.2 percent.

The S&P Diversified Bank Index beat the S&P/TSX Life and Health Insurance Index over the past quarter with a total return of 7.2 percent versus 3.5 percent. The laggards of last quarter, were Great West Lifeco and Sun Life Financial returning -4.2 and -1.6 percent respectively. Industrial Alliance and the Bank of Nova Scotia (BNS) were the top performers at 17.1 percent and 11.0 percent respectively. The median performers in the portfolio were CIBC at 6.1 percent and Toronto Dominion Bank at 6.0 percent.

For the most part, dividends remained unchanged from the last quarter. BNS and Royal Bank were the exceptions raising their distributions by 2 cents to $0.74 and $0.83 respectively. More impressively, the distributions for the portfolio holdings this quarter compared with the same quarter of 2015 averaged 6.6 percent higher. The banks’ were up 5.9 percent and the insurers’ were up 7.2 percent. Longer term, the five-year dividend growth for all portfolio holdings averaged 6.3 percent. The average five-year earnings growth was 7.2 percent.

The 30-Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) hit a high of 15.6 percent in mid-July then moved down to more moderate levels of about 8 percent in mid-August through the remainder of the quarter. The Fund had an average cash position of 6.0 percent. Average covered call writing strategies decreased to 3.6 percent from 7.8 percent in Q2 and the overwritten position reached a high of 8.6 percent during the period. There were no put option transactions executed in the Fund in the third quarter.

As of June 30, 2016, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record on June 15, 2016, representing a yield of 6.25% based on the original issue price of $12.50.

As of June 30, 2016, NAV of TXT.UN was $2.66, down from $3.00 on March 31, 2016. A quarterly distribution of $0.06356 was declared and paid to Capital Unit holders of record on June 15, 2016 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The Capital Unit’s last trading price on June 30, 2016 was $3.05, which represents a 14.7 percent premium to its underlying NAV. The Preferred Security’s closing price on June 30, 2016 was $12.25, representing a 2.0 percent discount to NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 0.9 percent premium to total NAV.

The S&P TSX Composite Index returned 5.1 percent over the quarter. The Index closed the quarter at 14,065 posting a low of 11,843 in late January and a high of 15,451 in mid-April. Canadian Financials underperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of 0.8 percent during the quarter. The return on an equal weighted basket of the ten portfolio stocks was 1.7 percent. The total return of the Fund for the second quarter was negative 0.6 percent.

The S&P Diversified Bank Index Total Return Index beat the S&P/TSX Life and Health Insurance Index over the past quarter with a return of 2.2 percent vs. negative 2.0 percent. The laggards of last quarter were Great West Lifeco and Manulife Financial returning negative 3.7 and negative 2.9 percent respectively. The National Bank of Canada and the Bank of Montreal were the top performers at 5.3 percent and 5.0 percent respectively..

Quarter over quarter (2016 vs. same period 2015) dividend increases averaged 7.6 percent for all of our holdings. The Insurance companies edged out the banks with an average dividend increase of 9.0 percent vs. 6.8 percent for the banks. Outliers on the upside were Industrial Alliance (14.3 percent), and CIBC (11 percent). Five-year earnings growth on our holdings averaged 13.3 percent. In contrast to the dividend history, the earnings growth story is reversed. The bank earnings growth is lower at 6.7 percent as compared to the insurance holdings growth rate of 23.3 percent.

The 30-day historical volatility in the S&P/TSX Capped Financials ETF (XFN) hit a high of 15.5 percent at the end of the quarter from more sedate levels between 9.5 and 13.5 percent over most of the last three months. The Fund had an average cash position of 5.5percent. Average covered call writing strategies decreased to 7.8 percent from 14.4 percent in Q1.The overwritten position reached a high of 14.8 percent in the quarter. There were no put option transactions executed in the Fund in the second quarter.

As of March 31, 2016, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Securityholders of record on March 15, 2016, representing a yield of 6.25% based on the original issue price of $12.50.

The March 31, 2016 NAV of TXT.UN came in at 3.00, compared to $3.35 at December 31, 2015. A quarterly distribution of $0.04181 was declared and paid to Capital Unitholders of record as of March 16, 2015 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.
The Capital Unit’s last trading price on March 31, 2016 was $3.05, which represents a 1.7 percent premium to its underlying NAV. The Preferred Security closing price on March 31, 2016 was $12.25 representing a 2.0 percent discount to NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 1.3 percent discount to total NAV.

The S&P TSX Composite Index returned 4.5 percent in the quarter. The Index closed the quarter at 13,494 posting a low of 11,530 in late January. Canadian Financials underperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of 3.1 percent during the quarter. The return on an equal weighted basket of the ten portfolio stocks was 1.8 percent. The Fund’s total return for the first quarter was -1.1 percent.
The S&P Diversified Bank Index Total Return Index handily beat the S&P/TSX Life and Health Insurance Index over the past quarter with a return of 5.5 percent vs. -4.2 percent. The laggards of prior quarter, namely The Bank of Nova Scotia, CIBC, and National Bank of Canada, were the Fund’s top performers in Q1 returning 13.4, 7.7, and 6.7 percent respectively. Manulife Financial and Industrial Alliance trailed, returning -10.5, and -10.4 percent respectively.

This past quarter (q4 reporting for insurance companies) Manulife was the only one of our insurance holdings to raise its dividend. They bumped their distribution by 1.5 cents to $0.185 per quarter for an 8.8 percent increase. CIBC, Scotiabank, and RBC all raised their distributions between 2.5 and 3 percent. TD’s dividend increase was 7.8 percent to 55 cents per common share.

The insurance companies reported their fourth quarter earnings in February. All of our insurance holdings reported higher earnings as compared with Q4 2015.The standout was Sun Life Financial with core earnings increasing 26.5 percent over the same quarter last year. Great West Life lagged with a 4.7 percent increase in quarter to quarter (2015 Q4 vs. 2014 Q4) earnings growth. Insurance companies in Canada continued to remain in a strong capital position with very healthy reserves. Canadian banks reported Q1 2016 earning and, with the exception of RBC, they all improved on their Q1 2015 earnings. Royal Bank earnings this year relative to Q1 last year fell by a marginal 1.8 percent.

The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) ranged from a low of 13.7 percent at the beginning of the quarter to a high of around 23.5 over the month of March. The Fund had cash position at the end of the first quarter of 8.3 percent. Average covered call writing strategies increased to 14.4 percent from 7.4 percent in Q4 2015.The overwritten position reached a high of 28.7 percent in the quarter. There were no put option transactions executed in the Fund during the first quarter.

As of December 31, 2015, the Net Asset Value of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record December 15, 2015 representing a yield of 6.25% based on the original issue price of $12.50.

The December 31, 2015 Net Asset Value of TXT.UN came in at $3.35, the same level as of September 30, 2015. A quarterly distribution of $0.0765 was declared and paid to Capital Unit holders of record as of December 15, 2015 in accordance with the distribution policy of 7.5% per annum of the net asset value of the Capital Unit.

The Capital Unit’s last trading price on December 31, 2015 was $3.50, which represents a 4.5 percent premium to its underlying net asset value. The Preferred Security closing price on December 31, 2015 was $12.46 representing a 0.3 percent discount to its net asset value. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 0.7 percent premium to the total net asset value.

The S&P TSX Composite Index returned -1.4 percent in the quarter. The index closed the quarter at 13,010 posting a low of 12,618 in mid-December. The high of 14,053 was reached in mid-October. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of 1.5 percent over the quarter.
The return on an equal weighted basket of the ten portfolio stocks was 2.6 percent. The Fund’s total return for the fourth quarter was 1.7 percent.
The S&P Life and Health Insurance Total Return Index beat the S&P/TSX Diversified banks Total Return over the past quarter with a return of 3.1 percent. The S&P/TSX Diversified Banks Total Return Index was 1.4 percent. The top three performers in the Fund were Industrial Alliance Insurance, Great West Lifeco and the Bank of Montreal returning 11.6, 9.0 and 8.4 percent respectively. The National Bank of Canada, CIBC, and the Bank of Nova Scotia lagged with returns of -4.1, -3.7 and -2.5 percent respectively. Our insurance company holdings’ median return of 5.1 percent far outpaced the bank holdings’ median return of -0.5 percent.

Sun Life Financial was the only one of our insurance holdings to raise its dividend. They bumped up their quarterly distribution by 1 cent to $0.39 for a 2.6 percent increase. The Bank of Montreal, CIBC and the National Bank of Canada raised dividends by 2.4, 2.6 and 3.8 percent respectively. All of our other holdings held their distribution levels constant from the third quarter.

The insurance companies reported their third quarter earnings in November. All of our insurance holdings with the exception of Manulife Financial saw higher earnings as compared with Q3 2014. Once again, the market had factored this in as the quarterly return on Manulife was 1.3 percent , a positive figure but shy of the average 3.1 percent we saw in the S&P Life and Health Total Return Index. Insurance companies in Canada continued to remain in a strong capital position with very healthy reserves. All our bank holding returns were stronger than both consensus estimates and Q4 2014 results across the board.

The Fund maintained an average cash position of 5.4 percent over the period, closing the quarter at 2.2 percent. Average covered call writing strategies decreased to 4.8 percent from 7.8 percent in Q3.The overwritten position got as high as 12.4 percent in the quarter. The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) ranged from a high of 23.9 percent at the beginning of the quarter to a low of 12.6 in early December. There were no put option transactions executed in the Fund over the fourth quarter.

As of September 30, 2015, the Net asset value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record on September 15, 2015, representing a yield of 6.25 percent based on the original issue price of $12.50.

The September 30, 2015 NAV of TXT.UN decreased to $3.35 from $4.27 at June 30, 2015. A quarterly distribution of $0.06881 was declared and paid to Capital Unit holders of record on September 15, 2015 in accordance with the distribution policy of 7.5 percent per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on September 30, 2015 was $3.37, which represents a 0.6 percent premium to its underlying NAV. The Preferred Security’s closing price on September 30, 2015 was $12.60, representing a 0.8 percent premium to NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 0.8 percent premium to total NAV.

The S&P TSX Composite returned negative 7.8 percent in the quarter. The Index closed the quarter at 13,307 posting a low of 13,719 toward the end of August. The high was 13,818 achieved in mid-July. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of negative 3.4 percent over the quarter.

The S&P Life and Health Insurance Total Return Index lagged the S&P/TSX Diversified bank over the past quarter with a return of negative 7.2 percent. The S&P/TSX Diversified Banks Total Return Index was negative 0.3 percent. CIBC and Sun Life Financial were standouts returning 5.4 and 4.2 percent respectively. TD Band got a honorable mention with a 0.1 percent positive result. All the other portfolio holdings failed to find themselves in positive territory. Great West Lifeco and Manulife Financial lagged the group with quarterly negative returns of 11.2 and 10.4 percent respectively.

Scotiabank, CIBC, and the Royal Bank boosted distributions between 2.5 and 3.0 percent during the quarter. Q3 2015 earnings improved on the 2014 results across the board. They also beat earnings per share consensus expectations by an average of 3.6 percent.

While Manulife Financial and Sun Life Financial both raised dividends in Q2, Industrial Alliance was the only one to do so this quarter with an increase of 7.1 percent. The insurance companies reported their second quarter earnings in August. Manulife Financial was the only insurance company in the group with negative earnings growth year on year. Great West Lifeco, despite missing expectations, had a year over year improvement of 6.5 percent on core earnings per share. Insurance companies in Canada continued to remain in a strong capital position with very healthy reserves.

The Fund maintained an average cash position over the quarter of 9.8 percent before closing the quarter at 15.5 percent due to greater market uncertainty. Covered call writing decreased to an average of 7.8 percent from 9.6 percent in Q2.The overwritten position got as high as 11.9 percent in the quarter. The 30-Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) ranged from a low of 11.8 percent at the start of the quarter to a high of 23.9 percent at the close of the quarter. There were no put option transactions executed in the Fund over the third quarter.

As of June 30, 2015, the Net Asset Value of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record on June 15, 2015, representing a yield of 6.25% based on the original issue price of $12.50.

The June 30, 2015 Net Asset Value (“NAV”) of TXT.UN decreased to $4.27 from $4.40 at March 31, 2015. A quarterly distribution of $0.08606 was declared and paid to Capital Unit holders of record as of June 15, 2015 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on June 30, 2015 was $4.12, which represents a 3.5 percent discount to its underlying NAV. The Preferred Security closing price on June 30, 2015 was $12.80, representing a 2.4 percent premium to the NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 0.9 percent premium to the total NAV.

Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of 0.5 percent over the quarter.

The two outstanding performers were Manulife Financial (up 8.7 percent), and Sun Life Financial (up 7.9 percent). The Toronto-Dominion Bank and the Bank of Montreal disappointed somewhat with returns of negative 1.2 percent and negative 1.5 percent respectively.

Great-West Lifeco and Industrial Alliance showed improved earnings per share (“EPS”) over Q1 2014 and also beat analyst consensus EPS expectations. Manulife Financial and Sun Life Financial both suffered EPS declines as well as missing consensus expectations. The market seems to see through these earnings somehow as these two stocks are the same ones that outperformed the whole fund universe. Insurance companies in Canada continue to remain in a strong capital position with very healthy reserves.

The Fund maintained an average cash position over the second quarter of 3.6 percent. Covered call writing strategies increased 2.3 percentage points from last quarter moving to an average of 9.6 percent in Q2. The overwritten position got as high as 15.8 percent in the quarter. The 30-day historical volatility in the S&P/TSX Capped Financials ETF (XFN) ranged from a high of 12.7 percent at the beginning of the quarter to a low of 7.1 percent in mid-May. The 30-day historical volatility closed out the quarter near the high at 12.2 percent. There were no put option transactions executed in the Fund over the second quarter.

As of March 31, 2015, the Net Asset Value of a combined unit (TXT.PR.A +TXT.UN) was $16.90 vs. $17.80 on December 31, 2014.

Preferred security holder’s received a distribution of $0.19531 per security, while Capital Unit security holders’ received distributions of $0.08944 per unit during the quarter.

On March 31, 2015 the closing market price of the Preferred security and the Capital Unit was $12.74 and $4.10 respectively which, when combined, represents 6 cent discount to the combined NAV.

The S&P/TSX Capped Financials Index posted a total return of negative 2.1% for the quarter underperforming the broader market as concerns from declining oil prices affected the outlook for the banks and the drop in the overnight rate by the Bank of Canada reduced the outlook for the insurers

Great West Lifeco was the standout performer this quarter with a return of 10.0%, which is in stark contrast to the balance of the portfolio which had returns ranging from -1.5% to -7.0% amid earnings reports that met or slightly exceeded analyst expectations but which failed to ignite share prices.

Balance sheets among the insurers remain strong with healthy capital reserves.

Call writing increased this quarter to an average of 7.3% written with a high of 15.7% of the fund overwritten during the quarter. Volatility declined generally declined from a high of 18.3 in mid-February to close the quarter at 12.7%.

The Fund was generally fully invested during the period and ended the quarter with a cash position of 2.9% vs 0.9% at the end of the previous quarter.

As of December 31, 2014, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record December 15, 2014 representing a yield of 6.25% based on the original issue price of $12.50.

The December 31, 2014 NAV of TXT.UN decreased to $5.30 from $5.63 September 30, 2014. A quarterly distribution of $0.1170 was declared and paid to Capital unit holders of record as of December 15, 2014 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on December 31, 2014 was $4.79, which represents a 9.6 percent discount to its underlying net asset value. The preferred share closing price on December 31, 2014 was $12.80 representing a 2.4 percent premium to net asset value. The combined unit, each consisting of one capital unit and one preferred security, closed the quarter at a 1.2 percent discount to NAV.

The S&P TSX Composite returned -1.5 percent in the quarter. The index made a high of 15,184 towards the end of November checking back to 14,632 at the end of December. Canadian Financials outperformed the broader market Canadian Market as the S&P/TSX Capped Financials Index posted a total return of 1.2 percent over the quarter. The return on an equal weighted basket of the ten portfolio stocks was 0.8 percent. The total return of the Fund for the fourth quarter was -0.2 percent.

The total return of the ten individual financial stocks within the portfolio was generally mixed this quarter. The Fund was led by Great –West Lifeco, Sun Life Financial, and Manulife financial returning 4.3 percent, 3.3 percent, and 3.0 percent respectively. Laggards were the Bank of Nova Scotia, Industrial Alliance, and the National Bank of Canada returning -4.3 percent, -4.2 percent, and -3.1 percent respectively. With the exception of Industrial Alliance, the insurance companies handily outperformed the bank stocks. The S&P Life and Health Insurance Total Return Index was 3.8 percent and the S&P/TSX Diversified Banks Total Return Index was 0.1 percent.

CIBC and the Bank of Montreal both had earnings that fell short of Q4 2013. The Bank of Montreal dropped 5 cents from the Q4 2013 to $1.57 per share also falling just shy of analysts’ expectations. CIBC Q4 2014 dropped 10 cents from the 4th quarter earnings last year, also shy of consensus expectations. Otherwise the rest of the bank holdings all had earnings that beat the Q4 levels of 2013. Though generally a bit lower than average analysts’ expectations, the earnings results look fairly robust. Dividend levels continued to increase for the Bank of Montreal, CIBC, and the National Bank of Canada as they bumped distributions between 2 and 3 cents per share last quarter. The Bank of Nova Scotia, Royal Bank of Canada, and The TD Bank all held the line on distribution levels but the recent dividend trend for these three banks has been positive.

Industrial Alliance earnings fell $0.16 from Q3 2013 to Q3 2014. The company warned that they would expect continued weakness in the group insurance line. The other Canadian life insurance companies in the portfolio reported third quarter earnings during the period that were in line or better than analysts’ expectations. Industrial Alliance increased their dividend 2 cents to $0.28. All the other insurance companies in the portfolio held their dividends steady over the quarter. All have a strong minimum continuing capital and surplus requirements ratios. The strong financial position of insurers could lead to the other three insurers increasing their payouts or repurchasing shares.

The Fund maintained an average cash position over the fourth quarter of 2.0 percent. Average covered call writing strategies were relatively the same as last quarter moving from with an average of 1.7 percent Q3 to 1.8 percent Q4. The overwritten position got as high as 9.7 percent in Q4 unchanged from Q3. The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) ranged from a low of 8 percent in late November after hitting a high of 16.3 percent at the beginning of the month. 30 day historical volatility closed out the quarter closer to the high at 13.5 percent. There were no put option transactions executed in the Fund over the third quarter.

As of September 30, 2014, the Net Asset Value of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 15, 2014 representing a yield of 6.25% based on the original issue price of $12.50.

The September 30, 2014 Net Asset Value of TXT.UN increased to $5.63 compared to $5.28 June 30, 2014. A quarterly distribution of $0.11456 was declared and paid to Capital unit holders of record as of September 15, 2014 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The capital unit’s last trading price on September 30, 2014 was $4.75, which represents a 15.6 percent discount to its underlying net asset value. The preferred security closing price on September 30, 2014 was $13.40 representing a 7.2 percent premium to net asset value. The combined unit, consisting of a capital unit and a preferred security, closed the quarter at a 0.1% premium to net asset value.

The S&P/TSX Composite returned -0.6 percent in the quarter. The index made a few rallies in the latter half of July then August before dropping off to around the 15,000 level at the end of September. Canadian Financials outperformed the broader market as the S&P/TSX Capped Financials Index posted a total return of 2.7 percent over the quarter. The total fund return for the second quarter was 3.7 percent.

The Canadian bank holdings in the portfolio reported third quarter earnings that were generally in line or higher than analyst’s estimates. All of the major banks improved on third quarter earnings from 2013. The Bank of Nova Scotia, the Royal Bank of Canada, and Toronto-Dominion Bank increased their dividend by 2 cents, 4 cents and 2 cents per share respectively. The Bank of Montreal, the Canadian Imperial Bank of Commerce and the National Bank of Canada all held their dividends steady from the second quarter. The general trend amongst all the major Canadian Banks has been to moderately increase dividends over the last several years.

The Canadian life insurance companies in the portfolio reported second quarter earnings during the period that were in line or better than analysts’ expectations. Manulife Financial Corp. increased its dividend by 2.5 cents per share while each of the other insurance companies in the portfolio held their dividends steady over the quarter. All of the insurance companies in the portfolio have strong minimum continuing capital and surplus requirements ratios. Although dividends for the insurance companies have remained largely unchanged over the past number of years, their strong financial position could lead to some companies increasing their payouts or repurchasing shares.

The fund maintained an average cash position over the fourth quarter of 1.9 percent. Covered call writing strategies declined to an average of 1.7 percent down from 3.7 percent the prior quarter. The highest overwritten position got as high as 9.7 percent in Q3 down from the 12.1 percent high in Q2. The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) ranged from a low of 4.7% percent in July hitting a high of 9.7 percent at the end of September. The historical volatility closed out the quarter just below 9.4 percent. There were no put option transactions executed in the fund over the third quarter.

As of June 30, 2014, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record March 14, 2014, representing a yield of 6.25% based on the original issue price of $12.50.

The June 30, 2014 NAV of TXT.UN increased to $5.28 compared to $4.84 March 31, 2014. A quarterly distribution of $0.09094 was declared and paid to Capital Unit holders of record as of June 13, 2014 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on June 30, 2014 was $4.74, which represents a 10.2% discount to its underlying NAV. The Preferred Security’s closing price on June 30, 2014 was $12.71 representing a 1.7% premium to NAV. The combined unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 1.9% discount to total NAV.

The S&P/TSX Composite returned 6.41% in the quarter. Around half of that return occurred over the month of May. Canadian Financials underperformed the broader market slightly as the S&P/TSX Capped Financials Index posted a total return of 5.7% over the quarter. The return on an equal weighted basket of the ten portfolio stocks was 4.6%. The total return of the Fund for the second quarter was 4.2%.

The total return of the ten financial stocks within the portfolio was positive over the quarter. The bank holdings generally outperformed the Fund’s insurance holdings. Reversing a recent trend, the S&P/TSX Diversified Banks Total Return Index was 7.2% while the S&P Life and Health Insurance Total Return Index was 1.8%. The portfolio was led by the Bank of Nova Scotia at 12.1% and the Bank of Montreal returning 7.2%. The laggards were Manulife and Great West Lifeco both squeaked in at 0.1%.

The Canadian bank holdings in the portfolio reported second quarter earnings that were generally higher than analysts’ estimates. Bank of Nova Scotia, Royal Bank, and TD Bank all held their dividends steady from the first quarter. CIBC increased its dividend by 2 cents per share to $1.00 and the National bank of Canada increased its dividend to 48 cents up 2 cents per share.

The Canadian life insurance companies in the portfolio reported first quarter earnings during the period that were in line with analysts’ expectations. Each of the insurance companies held their dividends steady over the quarter. All have a strong minimum capital and surplus requirements. Although dividends were unchanged, their strong financial position could lead to some companies increasing their payouts or buying back shares.

The Fund maintained an average cash position over the fourth quarter of 1.7%. Covered call writing strategies declined to an average of 3.7% from 5.8% the prior quarter. The overwritten position got as high as 12.1% in Q2. The 30 Day historical volatility in the S&P/TSX Capped Financials ETF (XFN) ranged from a low of 6.3% to a high of 7.9% both in May. The historical volatility closed out the quarter just below 6.5%. There were no put option transactions executed in the Fund over the third quarter.

As of March 31, 2014, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record March 14, 2014 representing a yield of 6.25% based on the original issue price of $12.50.

The March 31, 2014 NAV of TXT.UN decreased to $4.84 compared to $5.02 December 31, 2013. A quarterly distribution of $0.09019 was declared and paid to Capital Unit holders of record as of March 14, 2014 in accordance with the distribution policy of 7.5% per annum of the NAV of the capital unit.

The Capital Unit’s last trading price on March 31, 2014 was $4.30, which represents an 11.2% discount to its underlying NAV. The Preferred Security closing price on March 31, 2014 was $12.83 representing a 2.6% premium to its NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 1.2% discount to the combined NAV.

The S&P TSX Composite returned 5.5% for Q1 of 2014. January was somewhat range bound. Most of the positive move occurred in February with March effectively performing flat. Canadian Financials underperformed the broader Canadian market as the S&P/TSX Capped Financials Index (XFN) posted a total return of 2.5% over the quarter. The return on an equal weighted basket of the ten portfolio stocks was 1.5%. The total fund return for the 1st quarter was 0.59% lagging the benchmark due to an excess cash position that was established in early January to facilitate the December annual redemption. A relatively higher level of option writing at the end of January and into February, on higher volatility attributed to tensions between Ukraine and Russia, contributed to the drag as stocks continued to advance.

Seven of the ten financial stocks within the portfolio had positive returns over the quarter. The bank holdings generally outperformed the Fund’s insurance holdings. The S&P/TSX Diversified Banks Total Return Index was 2.9% while the S&P Life and Health Insurance Total Return Index was 1.3%. The portfolio was led by the Canadian Imperial Bank of Commerce and the Bank of Montreal returning 5.0% and 4.5% respectively. The Bank of Nova Scotia and Great West Lifeco lagged with negative returns of 3.6% and 7.0% respectively.

The Canadian bank holdings in the portfolio reported 1st quarter earnings that were generally higher than analysts’ estimates. All of the banks either increased their dividends in the quarter or announced increases for Q2. National Bank of Canada and The Toronto-Dominion Bank both declared a 2 for 1 stock split. As at the end of the quarter, the Fund is overweight banks as they are expected to continue to perform well.

The Canadian life insurance companies in the portfolio reported 4th quarter earnings during the period that were mostly in line or better than analysts’ expectations. Great-West Lifeco’s earnings were marginally below expectations; however, synergies with the Irish Life acquisition are expected to enhance the company’s business profile. Industrial Alliance Insurance raised its dividend to 26.0 cents per share from 24.5 cents per share. All insurance companies have a strong minimum capital and surplus requirements. Although dividends are largely unchanged, their strong financial position could lead to some companies increasing their payouts or share buybacks. Although the Fund is underweight the insurers relative to its bank holdings, we remain positive on the insurance companies and the financial stocks in general.

The Fund maintained an average cash position over the 1st quarter of 2.2%. Covered call writing strategies for the quarter averaged 5.8% and got as high as 20.4%. The 30-day historical volatility in the S&P/TSX Capped Financials Index (XFN) ranged from 6.7% at the end of the quarter to 13.0% at around mid-February. Average implied volatilities were somewhat higher, ranging from 9.8% to 13.8%. There were no put option transactions executed in the Fund over the 1st quarter.

As of December 31, 2013, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record December 13, 2013 representing a yield of 6.25 percent based on the original issue price of $12.50.

The NAV of TXT.UN on December 31, 2013 increased to $5.02 compared to $3.69 on September 30, 2013. A quarterly distribution of $0.09675 was declared and paid to Capital Unit holders of record as of December 13, 2013 in accordance with the distribution policy of 7.50 percent per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on December 31, 2013 was $4.42, which is a 12.0 percent discount to its underlying NAV. The Preferred Security closing price on December 31, 2013 was $12.68 representing a 1.4% premium to its NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 2.4% discount to the combined NAV.

The S&P/TSX Composite returned 7.3 percent with most of the positive moves occurring in October and December. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 10.7 percent over the quarter. The total fund return for the fourth quarter was 10.0 percent beating the S&P/TSX composite and 70 basis points lower than the S&P/TSX Capped Financials index.

All ten financial stocks within the portfolio had positive returns over the quarter. The insurance holdings outperformed the Fund’s bank holdings. The total return of the S&P/TSX Diversified Banks Index was 9.5 percent while the S&P Life and Health Insurance Index total return was 16.9 percent. The portfolio performance was led by the Manulife Financial, up 23.8 percent. The Bank of Montreal lagged the portfolio with a return of 4.0 percent. Industrial Alliance was the lowest performing insurance holding with a return of 8.4 percent and our best bank holding, Bank of Nova Scotia, returned 12.6 percent.

The Canadian bank holdings in the portfolio reported fourth quarter earnings that were generally higher than analyst’s estimates. Three of the six major banks announced dividend increases in the quarter while the remainder left distributions unchanged. Banks continued to perform very well in the face of slowing loan growth and margin pressures.

The Canadian life insurance companies in the portfolio reported third quarter earnings during the period that were in line or better than analysts’ expectations. All have a strong minimum capital and surplus requirements. Although dividends have remained unchanged over the recent past, their strong financial position could lead to some companies increasing their payouts or buying back shares. We are positive on the Financial Services sector and the insurance space in particular.

The Fund maintained an average cash position over the fourth quarter of 1.8 percent. Covered call writing for the quarter averaged 3.0 percent. This is in contrast to the preceding two quarters at 9.8 percent and 14.7 percent for the second and third quarter respectively. In Q4, the maximum overwritten exposure peaked at 17.2 percent. The 30 Day historical volatility in the S&P/TSX Financials Index was somewhat subdued ranging from 4.5 to 10.1 percent. There were no put option transactions executed in the Fund over the fourth quarter.

As of September 30, 2013, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record September 16, 2013 representing a yield of 6.25% based on the original issue price of $12.50.

The September 30th NAV of TXT.UN increased to $3.69 compared to $2.88 on June 30, 2013. A quarterly distribution of $0.06581 was declared and paid to Capital unit holders of record as of September 16, 2013 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on September 26, 2013 was $2.93, which is a 20.6% discount to the underlying NAV. The Preferred Security’s closing price on September 27, 2013 was $12.90, representing a 3.2% premium to its NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 2.2% discount to the combined NAV.

The S&P/TSX Composite Index returned 5.24% with the bulk of the return occurred in early July. Canadian Financials outperformed the broader market Canadian Market as the S&P/TSX Capped Financials Index posted a total return of 8.45% over the quarter. The total fund return for the third quarter was 6.95% settling between the performance of S&P/TSX Composite Index and the S&P/TSX Capped Financials Index.

All ten financial stocks within the portfolio had positive returns over the quarter. Reversing a recent trend, the banks outperformed the insurers. The S&P/TSX Diversified Banks Total Return Index was 9.94% while the S&P Life and Health Insurance Total Return Index was 4.35%. The portfolio was led by the National Bank of Canada, up 14.53%. The Bank of Nova Scotia lagged the bank holdings with a return of 6.05%. Manulife Financial was the lowest performing holding with a return of 1.99%. Sun Life Financial led the insurance company holdings with a return of 6.77%.

All of the Canadian bank holdings reported third quarter earnings that were higher than analyst’s estimates. Three of the six major banks announced dividend increases in the quarter while the remainder left distributions unchanged. The Canadian banks continued to perform very well in the face of slowing loan growth and margin pressures.

The Canadian life insurance companies reported improved second quarter earnings during the period as the negative effect of low interest rates has diminished from premium increases and product repositioning. All holdings except Manulife Financial beat analysts’ expectations. All four of our insurance company holdings improved on earnings from Q3 of 2012.The Fund maintained an average cash position over the quarter of 2.4%. The Fund employed covered call writing strategies at times as high as 39.2% of the portfolio; however, the average portion overwritten was 29.1%. Historical volatility in the financial indices fluctuated in the range from a high of 18% tapering to around 7% near the end of the period. There were no put option transactions executed in the Fund over the third quarter.

As of June 30, 2013, the Net Asset Value (NAV) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record on June 14, 2013 representing a yield of 6.25% based on the original issue price of $12.50.

The June NAV of TXT.UN was $2.88 versus $2.72 on March 31, 2013. A quarterly distribution of $0.05531 was declared and paid to Capital Unit holders of record on June 14, 2013 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on June 27, 2013 was $2.34, which is an 18.8% discount to its underlying NAV. The Preferred Security’s closing price on June 28, 2013 was $12.60 representing a 0.8% premium to NAV. The Combined Unit, consisting of one Capital Unit and one Preferred Security, closed the quarter at a 2.9% discount to NAV.

North American equity markets traded in a more volatile manner in the second quarter of 2013 ending about 5% lower than at the end of March. In the April Monetary Policy Report, the Bank of Canada reported that Japan has introduced significant policy stimulus while European Central Bank and the U.S. Federal Reserve continue to maintain easy monetary policy.

The U.S. S&P 500 Composite Index outperformed the S&P/TSX Composite Index on a total return basis during the period, up 2.9% vs. down 4.1% respectively. This continued the trend established in the first quarter. Canadian Financials outperformed the broader Canadian market as the S&P/TSX Capped Financials Index posted a total return of 0.9% during the period.

Eight of the ten Financial stocks within the portfolio had positive returns over the period with the insurers outperforming the banks. The S&P/TSX Diversified Banks Total Return Index was down 1.2% while the S&P/TSX Life & Health Insurance Total Return Index increased 10.5%. The portfolio was led by Sun Life Financial, up 13.7% during the period while The Canadian Imperial Bank of Canada lagged the group during the quarter down 5.1%.

Canadian banks reported second quarter earnings that were in line with or slightly higher than analysts’ estimates. Two of the six major banks announced dividend increases of 2 cents per share in the quarter while the remainder left distributions unchanged. Banks continued to perform reasonably well in the face of slowing loan growth and margin pressures.

The Canadian life insurance companies reported improved first quarter earnings during the period as the negative effect of low interest rates has diminished due to premium increases and product repositioning. Capital positions remain strong and companies have shown confidence by setting impressive earnings growth targets for the next 3 years.

Volatility levels for the Canadian Financials picked up at times in April and June; however, they remain moderate by historical standards. Following a light period of overwriting in the first quarter, the Fund was more active in the second quarter with an average overwritten position of 9.8%. The Fund did not engage in any put transaction over the period.

The Fund maintained a relatively high invested position during the period with an average cash position of 1.7%. The Fund ended the quarter with a cash position of 1.1%.

As of March 31, 2013, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record March 15, 2013 representing a yield of 6.25% based on the original issue price of $12.50.

The NAV of TXT.UN was $2.72 versus $2.05 December 31, 2012. A quarterly distribution of $0.05944 was declared and paid to Capital Unit holders of record as of March 15, 2013 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on March 31, 2013 was $2.50, which is an 8.1% discount to its underlying NAV. The Preferred Security’s closing price on March 31, 2013 was $12.53 representing a 0.2% premium to its underlying NAV. The Combined Unit, each consisting of one Capital Unit and one Preferred Security, closed the quarter at a 1.2% discount to NAV per Combined Unit.

North American equity markets rallied in Q1 of 2013 as concerns regarding the US budget imbalance at the end of 2012 did not result in a market disruption. This followed mediocre returns in the previous quarter and continued expectations that both the European Central Bank and the U.S. Federal Reserve would maintain quantitative easing.

The US S&P 500 Composite Index outperformed the S&P / TSX Composite Index on a total return basis during the period, up 10.6% and 3.3% respectively. This reversed a two consecutive quarter trend where the Canadian markets outperformed their US counterparts. Canadian Financials outperformed the broader market as the S&P/TSX Capped Financials Index posted a total return of 4.5% during the period. 

Nine of ten Financial stocks within the portfolio had positive returns over the period with the insurers outperforming the banks. The S&P/TSX Diversified Banks Total Return Index was up 3.0% while the S&P/TSX Life and Health Insurance Total Return Index increased 10.5%. The portfolio was led by Industrial Alliance Inc. up 19.9% during the period while The National Bank of Canada lagged the group during the quarter down 2.3%.

Canadian banks reported steady first quarter earnings that were generally in line with analyst’s estimates. Four of the six major banks announced dividend increases in the quarter. In early February, Royal Bank of Canada completed the takeover of Ally Financial Inc. Canadian banks continue to perform well in the face of slowing loan growth and margin pressures.

The Canadian life insurance companies reported improved fourth quarter earnings during the period as the negative effect of low interest rates has diminished from premium increases and product repositioning. Capital positions remain strong and companies have shown confidence by setting impressive earnings growth targets for the next 3 years.

Volatility levels for the Canadian Financials remain low by historical standards but increased over Q1 of 2013 after a decline in Q4 of 2012. The Fund was less active in its covered-call writing over this quarter with an average of 1.5% of the portfolio subject to covered calls options and none of the portfolio hedged with protective put options.

The Fund maintained a relatively high invested position during most of the period with an average cash position of 2.3%. The Fund ended the quarter with a cash position of 1.1%

Earnings growth will be a key driver of Canadian bank performance. Earnings multiples may improve should the housing market experience a soft landing as expected. Slower growth and margin pressures will be limiting factor in the rate of earnings growth. The profitability of Canadian life insurance companies is likely to improve in 2013 as earnings sensitivities to equity markets and interest rates have diminished. In the context of low interest rates, the valuations of companies in the portfolio remain at attractive levels when measured by price to earnings ratios and current dividend yields.

As of December 31, 2012, the Net Asset Value (“NAV”) of the Preferred Security (TXT.PR.A) was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record December 14, 2012, representing a yield of 6.25% based on the original issue price of $12.50.

The NAV of the capital Unit (TXT.UN) was $2.05 versus $1.33 at September 30, 2012. A quarterly distribution of $0.03225 was declared and paid to Capital Unit holders of record as of December 14, 2012 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on December 31, 2012 was $1.98, which is a 3.4% discount to its underlying NAV.

North American equity markets leveled out in the 4th quarter of 2012 over the uncertainties surrounding the outcome of the U.S. presidential election in November as well as the pending Fiscal Cliff that was expiring on December 31, 2012. This followed very strong returns in the previous quarter on expectations that both the European Central Bank (ECB) and the U.S. Federal Reserve would enter another round of quantitative easing.

For the second consecutive quarter, the S&P/TSX Composite Index outperformed the U.S. S&P 500 Index on a total return basis during the period, marginally up 1.72% and down 0.38% respectively. Canadian Financials outperformed the broader markets as the S&P/TSX Capped Financials Index posted a total return of 6.78% during the period.

All ten Financial stocks within the portfolio had positive returns over the period with the insurers outperforming the banks. The S&P/TSX Diversified Banks Total Return Index was up 5.78% while the S&P/TSX Life and Health Insurance Total Return Index increased 13.29%. The portfolio was led by Sun Life Financial Inc. during the period, up 17.11%, while The Toronto-Dominion Bank lagged the group during the quarter, up 3.11%.

Canadian banks reported steady fourth quarter earnings that were mostly in line with analysts’ estimates. None of the banks raised their dividends in the quarter, which was expected after all five banks raised their dividends in the previous quarter. Following the announcements of issuer bids by the Canadian Imperial Bank of Commerce and the Royal Bank of Canada last quarter, the Bank of Montreal announced it has filed a normal course issuer bid to purchase its shares in the market.

The Canadian life insurance companies reported improved third quarter earnings during the period as the negative effect of low interest rates has diminished with price increases and product repositioning. Capital positions remain strong and companies have shown confidence by setting impressive earnings growth targets for the next three years.

Volatility levels for the Canadian Financials continued to decline in the fourth quarter other than a brief spike around the U.S. presidential election in November and ended the year towards the low end of the range. The Fund was active in its covered-call writing during the period and ended 2012 with 11.92% of the portfolio subject to covered call options and none of the portfolio hedged with protective put options.

The Fund maintained a high invested position during most of the period but ended the quarter with a cash position of 4.36% in order to finance the annual retraction vs. 1.52% at the end of the previous quarter.

The profitability of Canadian banks is likely to continue to grow in 2013, however, at a slower pace than in 2012 due to decelerating consumer loan growth and net interest compression. On the other hand, the profitability of Canadian life insurance companies is likely to improve in 2013 as earnings sensitivities to equity markets and interest rates have diminished. In the context of low interest rates, the valuations of companies in the portfolio remain at attractive levels when measured by price to earnings ratios and current dividend yields.

As of September 30, 2012, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record September 14, 2012 representing a yield of 6.25% based on the original issue price of $12.50.

The NAV of TXT.UN was $1.33 versus $1.07 on June 30, 2012. A quarterly distribution of $0.0195 was declared and paid to Capital Unit holders of record as of September 14, 2012 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on September 28, 2012 was $1.60, which is a $0.27 premium to its underlying NAV.

North American equity markets posted strong gains in the third quarter of 2012 on expectations that both the European Central Bank (ECB) and the U.S. Federal Reserve would enter another round of quantitative easing in response to a slowing global economy.

Central Banks did not disappoint and the ECB announced in August they would soon be implementing a bond purchase program to lower borrowing costs while Ben Bernanke, Chairman of the U.S. Federal Reserve, announced a third round of quantitative easing in order to improve labour market conditions.

Unlike the previous few quarters, the S&P/TSX Composite Index outperformed the U.S. S&P 500 Index on a total return basis during the period, albeit marginally, up 7.0% and 6.4% respectively. Canadian Financials underperformed the broader market as the S&P/TSX Capped Financials Total Return Index was up 5.3% during the period.

All ten Financial stocks within the portfolio had positive returns over the period with the insurers underperforming the banks again after briefly outperforming in the first quarter of 2012. The S&P/TSX Diversified Banks Total Return Index was up 5.8% while the S&P/TSX Life and Health Insurance Total Return Index increased 5.3%. The portfolio was led by Industrial Alliance Insurance and Financial Services Inc. during the period, up 15.8% after significantly lagging the group in the first half of 2012. Meanwhile, Great-West Lifeco Inc. lagged the group during the quarter up only 2.7% after outperforming in the first half.

Canadian banks reported strong third quarter earnings that beat analyst’s estimates. All five banks within the portfolio raised their dividends by 3–7% and The Toronto-Dominion Bank increased its payout ratio to 40-50% from 35-45%. Both the Canadian Imperial Bank of Commerce and the Royal Bank of Canada also announced significant share buybacks that should provide some support for the shares.

The Canadian life insurance companies reported mixed second quarter earnings during the period as low interest rates continue to be the biggest issue. Capital concerns were alleviated during the quarter and most companies remain comfortable with their capital ratios despite regulatory headwinds.

Volatility levels for the Canadian financials remained low in the third quarter, trading in a range of 10% to 20%. The Fund had been active in its covered-call writing, with an average of 34.9% of the portfolio overwritten during the period, but ended the third quarter with no covered calls or protective puts.

The Fund maintained a high investment position during the period and ended the quarter with a cash position of 1.5% vs. 1.6% at the end of the previous quarter.

The profitability of Canadian banks and life insurance companies is likely to continue to grow at a slower pace in 2012 due to decelerating consumer loan growth, volatile capital markets and record low interest rates. In the context of low interest rates, the valuations of companies in the portfolio remain at attractive levels when measured by price to earnings ratios and current dividend yields.

As of June 30, 2012, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record June 15, 2012 representing a yield of 6.25% based on the original issue price of $12.50.

The NAV of TXT.UN was $1.07 versus $2.57 on March 31, 2012. A quarterly distribution of $0.0225 was declared and paid to Capital Unit holders of record as of June 15, 2012 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on June 29, 2012 was $1.45, which is an $0.38 premium to its underlying NAV.

After rallying in the first quarter of 2012, equity markets took a breather and corrected in the second quarter due to continued concerns regarding the European debt crisis as well as growing fears over a decelerating global economy.

Similar to the last few quarters, the S&P/TSX Composite Index underperformed the S&P 500 Index in the U.S. during the period, down 5.7% and down 2.8% respectively. Canadian Financials were down in the second quarter as the S&P/TSX Capped Financials Total Return Index decreased to 255.52 from 273.13.

All ten Financial stocks within the portfolio had negative returns over the period with the insurers underperforming the banks again after briefly outperforming in the first quarter of 2012. The S&P/TSX Diversified Banks Total Return Index was down 6.9% while the S&P/TSX Life and Health Insurance Total Return Index decreased 13.0%. The portfolio was led by the Bank of Montreal and the Bank of Nova Scotia during the period, down 4.0% and 4.6% respectively, while Industrial Alliance Insurance and Financial Services Inc. and Manulife Financial Corp. both lagged the group down 19.22% and 17.1%, due to weaker global equity markets and falling 10-year bond yields in both Canada and the U.S.

Most Canadian banks reported better than expected second quarter earnings. Canadian banks continued to show their strength relative to other nation’s banks as the World Economic Forum named the Canadian banking system the soundest for the fourth year running. The National Bank of Canada was the only bank within the portfolio to raise its dividend in the quarter, up 5.33%.

The Canadian life insurance companies reported mixed first quarter earnings as stronger equity markets were offset by continued low interest rates as well as concerns about their capital ratios. Expectations have been falling for second quarter earnings estimates due to weak equity markets and record low 10-year U.S. Treasury yields which declined by 56 basis points during the period to 1.64%.

Volatility levels for the Canadian financials remained low in the second quarter, trading in a range of 10% to 20%. The fund increased both its covered-call writing and protective put buying during the period and ended the second quarter with 56.9% of the portfolio subject to covered calls options and 28.2% of the portfolio hedged with protective put options.

The Fund maintained a high investment position during the period and ended the quarter with a cash position of 1.6% vs. 1.9% at the end of the previous quarter.

The profitability of Canadian banks and life insurance companies is likely to continue to grow at a slower pace in 2012 due to decelerating consumer loan growth, volatile capital markets and record low interest rates. In the context of record low interest rates, the valuations of companies in the portfolio remain at attractive levels when measured by price to earnings ratios and current dividend yields.

As of March 31, 2012, the Net Asset Value (“NAV”) of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record March 15, 2012 representing a yield of 6.25% based on the original issue price of $12.50.

The NAV of TXT.UN was $2.57 versus $1.29 on December 31, 2011. A quarterly distribution of $0.03656 was declared and paid to Capital Unit holders of record as of March 15, 2012 in accordance with the distribution policy of 7.5% per annum of the NAV of the Capital Unit.

The Capital Unit’s last trading price on March 30, 2012 was $2.80, which is an 8.95% premium to its underlying NAV.

Equity markets continued to rally in the first quarter of 2012 after stabilizing and rallying into year-end 2011 on the back of better U.S. employment and housing numbers as well as reduced risk of a European sovereign default.

Similar to the fourth quarter of 2011, the S&P/TSX Composite Index underperformed the S&P 500 Index in the U.S. in the first quarter of 2012. During the period, the S&P/TSX Composite Total Return Index increased 4.4% while the S&P 500 Total Return Index increased 9.9%. Canadian Financials were the third best performing sector in Canada in the first quarter as the S&P/TSX Capped Financials Total Return Index increased to 273.13 from 245.18.

All ten Financial stocks within the portfolio had positive returns over the period with the insurers outperforming the banks after significantly underperforming in 2011. The S&P/TSX Diversified Banks Total Return Index was up 10.4% while the S&P/TSX Life and Health Insurance Total Return Index increased 22.1%. The portfolio was led by two of the laggards of 2011, Sun Life Financial Inc. and Manulife Financial Corp. which were up 27.3% and 25.8% respectively, due to stronger global equity markets and rising 10-year bond yields in both Canada and the U.S. The Bank of Montreal and Canadian Imperial Bank of Commerce lagged the group but still generated positive total returns of 7.4% and 4.5% respectively.

Canadian banks reported in-line to better than expected first quarter earnings as wholesale bounced back on better than expected trading revenues. However, loan growth continues to moderate and net interest margins are under incremental pressure in the current low interest rate environment. The Toronto-Dominion Bank, Royal Bank of Canada and the Bank of Nova Scotia all raised their dividends in the quarter by an average of 6%.

The Canadian life insurance companies reported mixed fourth quarter earnings due to weak equity markets and continued low interest rates. However, expectations have been rising for first quarter earnings estimates due to strong equity markets and rising 10-year U.S. Treasury yields which have backed up over 30 basis points since year-end to 2.21%.

Volatility continued to decline in the first quarter, reaching levels not seen since July 2011, as economic statistics in the U.S. continued to improve and concerns about European sovereign default subsided. The percent of the portfolio subject to covered calls on average during the period was 14.9% and the Fund ended the first quarter with 6.4% of the portfolio subject to covered calls.

No put protection was purchased during the quarter due to an improved outlook on the securities within the portfolio.

The Fund maintained a high investment position during the period and ended the quarter with a cash position of 1.9% vs. 3.1% at the end of the 2011.

The Canadian banks and life insurance companies profitability is likely to grow at a slower pace in 2012 due to decelerating consumer loan growth, volatile capital markets and net interest margin compression. In the context of record low global interest rates, the valuations of companies in the portfolio remain at attractive levels when measured by price to earnings ratios.

As of December 31, 2011, the Net Asset Value ("NAV") of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record December 15, 2011 representing a yield of 6.25% based on the original issue price of $12.50.

The Net Asset Value of TXT.UN was $1.29 versus $1.97 on September 30, 2011. A quarterly distribution of $0.0105 was declared and paid to Capital unit holders of record as of December 15, 2011 and represents a distribution policy of 7.5% per annum on the NAV of the unit.

The capital unit’s last trading price on December 30, 2011 was $1.89, which is a $0.60 premium to its underlying NAV.

Equity markets continued their volatile ride in the fourth quarter of 2011. After correcting significantly in the 3rd quarter of 2011 due to Standard and Poor’s downgrade of U.S. Government debt and concerns about a potential sovereign default by Greece, equity markets found some footing and rallied into year-end. Although the S&P/TSX 60 Index underperformed the S&P 500 Index in the U.S. which rose 11.8% during the fourth quarter, it still managed to increase 2.8% during the period. Canadian Financials on the other hand were relatively flat during the period as the S&P/TSX Capped Financials Total Return Index increased slightly to 245.18 from 242.94.

The ten Financial stocks within the portfolio had mixed returns over the period with the banks considerably outperforming the insurers again. The S&P/TSX Diversified Banks Total Return Index was up 2.5% while the S&P/TSX Life and Health Insurance Total Return Index declined 8.6%. The portfolio was led by the Royal Bank of Canada up 9.4% on the back of better than expected fourth quarter earnings. Meanwhile, Sun Life Financial Inc. (“SLF”) dragged the life insurance group down with a negative return of 23.1%. This was due to the $500 million charge to fourth quarter income they pre-announced on October 17th due to lower equity markets and lower interest rates.

Canadian banks proved their resilience by reporting better than expected fourth quarter earnings, with the exception of the Bank of Montreal, due to better than expected net interest margins and commercial loan growth. The only stock within the portfolio to increase its dividend in the quarter was the National Bank of Canada, which raised its dividend for the third time in 2011 with a 5.6% annualized increase.

The Canadian life insurance companies reported mixed third quarter earnings due to weak equity markets and continued low interest rates. Due to the tough operating environment for life insurers, SLF announced in mid-December that they will no longer sell individual life insurance or variable annuities in the U.S.

Volatility for the fourth quarter remained high until December as economic statistics in the U.S. gradually improved and concerns about European sovereign default slowly subsided. The Fund was active in its call writing during the quarter and ended the year with 10.8% of the portfolio subject to covered calls.

The Fund also opportunistically purchased some put protection on certain individual holdings within the portfolio in the quarter due to continued concerns of European sovereign default risk increasing as well as the potential for slower than expected global growth.

The Fund maintained a high investment position during the period and ended 2011 with a cash position of 3.1% vs. 4.0% at the end of the third quarter 2011.

The Canadian banks and life insurance companies profitability is likely to grow at a slower pace in 2012 due to decelerating consumer loan growth, volatile capital markets and a low interest rate enviornment. In the context of record low Global interest rates, the valuations of companies in the portfolio remain at attractive levels when measured by price to earnings ratios.

As of September 30, 2011, the Net Asset Value of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security holders of record September 15, 2011 representing a yield of 6.25% based on the original issue price of $12.50.

The Net Asset Value of TXT.UN was $1.97 versus $3.94 on June 30, 2011. A quarterly distribution of $0.04181 was declared and paid to Capital Unit holders of record as of September 15, 2011 and represents a distribution policy of 7.5% per annum on the NAV of the unit.

The Preferred Security's last trading price on September 30, 2011 was $12.51 while the Capital Unit’s last trading price was $2.49, which is a 26.40% premium to its underlying net asset value.

The stock market correction, which began in early March, continued with a vengeance through the third quarter as the S&P/TSX 60 Index was down more than 12% during the period. The S&P/TSX Capped Financials Total Return Index did not escape the broad market decline and decreased to 242.94 from 270.28. All ten Financial stocks within the universe were down over the period with the banks considerably outperforming the insurers. The portfolio was led by the Canadian Imperial Bank of Commerce (“CM”) and the Bank of Montreal (“BMO”) with both stocks down 2.44% and 3.26% respectively. Meanwhile, Manulife Financial Corp. (“MFC”) and Industrial Alliance Insurance and Financial Services Inc. (“IAG”) dragged the life insurance group down with negative returns of 29.36% and 22.27% respectively.

After posting weaker than expected second quarter earnings, the Canadian banks, with the exception of the Royal Bank of Canada (”RY”), proved their resilience by reporting better than expected third quarter earnings, due to better than expected loan growth and capital markets revenue. Both CM and The Toronto-Dominion Bank increased their dividends during the quarter by 3.4% and 3.0% respectively.

The Canadian life insurance companies reported better than expected second quarter earnings during the period although net of one-time items, the numbers were in-line on a normalized basis. Stronger than expected group and individual life sales were offset by weak global equity markets and low long-term interest rates.

Volatility levels picked up in the quarter after being relatively tame during the first half of the year. Volatility levels started to pick up in late July as the deadline for the U.S. Congress vote on the debt ceiling limit on August 2nd was approaching and has remained high since as Standard & Poor’s downgraded the rating of U.S. Government debt and the potential of Greece defaulting on their debt increased. The fund increased the level of call writing over the quarter and ended September 30, 2011 with 22.23 percent of the portfolio subject to covered calls.

The Fund also opportunistically purchased some put protection on the iShares S&P/TSX Capped Financial Index Fund (“XFN”) as well as some individual holdings within the portfolio during the period due to continued concerns of European sovereign default risk increasing as well as the potential for slower than expected global growth.

The Fund maintained a high investment position during the period and ended the third quarter with a cash position of 4.0% vs. 1.8% at the end of the second quarter 2011.

The Canadian banks and life insurance companies profitability is likely to grow at a slower pace than was originally expected at the beginning of 2011 due to decelerating loan growth, weaker equity and capital markets along with lower interest rates and net interest margin compression. In the context of record low Global interest rates, the valuations of companies in the portfolio remain at attractive levels when measured by price to earnings ratios and current dividend yields and this should continue to act as support for the share prices.

As of June 30, 2011, the Net Asset Value of TXT.PR.A was $12.50. A quarterly distribution of $0.19531 was declared and paid to Preferred Security unit holders of record June 15, 2011 representing a yield of 6.25% based on the original issue price of $12.50.

The Net Asset Value of TXT.UN was $3.94 versus $4.96 on March 31, 2011. A quarterly distribution of $0.08363 was declared and paid to Capital unit holders of record as of June 15, 2011 and represents a distribution policy of 7.5% per annum on the NAV of the unit.

The capital unit’s last trading price on June 30, 2011 was $3.94, which is equal to its underlying net asset value.

During the period The S&P/TSX Financials Total Return Index decreased to 2,447.55 from 2,514.27. The financial stocks within the universe had varying returns over the period with the insurers outperforming the banks on average. The portfolio was led by the National Bank of Canada (“NA") and Manulife Financial Corp. (“MFC”) with both stocks relatively flat over the quarter up 0.19% and 0.17% respectively. Meanwhile, the Canadian Imperial Bank of Commerce (“CM”) and the Royal Bank of Canada (“RY”) dragged the bank group down with negative returns of 7.87% and 7.34% respectively.

After posting strong earnings growth in the first quarter of 2011, Canadian banks reported weaker than expected second quarter earnings due to weak trading revenues and lower net interest margins. Capital ratios continued to increase on a year over year basis and both RY and NA increased their dividends during the quarter by 8.0% and 7.6% respectively.

The Canadian life insurance companies demonstrated improving fundamentals and profitability in the first quarter of 2011 benefitting from higher global equity markets and rising ten year bond yields in both Canada and the United States. However, second quarter results are likely to be weaker due to the headwinds of weaker equity markets and lower bond yields.

Due to the low level of volatility in the Canadian financials for the majority of the period, the covered call writing activity was opportunistic as the lower volatility did not compensate the fund enough to justify a passive call writing approach. The fund ended June 30, 2011 with approximately 12 percent of the portfolio subject to covered calls.

The fund also opportunistically purchased some put protection on the iShares S&P/TSX Capped Financial Index Fund (“XFN”) during the period due to concerns of European sovereign default risk increasing as well as the U.S. debt ceiling controversy impacting Canadian financials.

The fund maintained a high investment position during the period and ended the second quarter with a cash position of 1.8% vs. 2.5% at the end of the first quarter 2011.

The Canadian banks and life insurance companies are expected to improve their profitability and capital ratios in 2011 due to improving credit, good expense control and leverage to a slowly improving economy. In the context of record low Global interest rates, the valuations of companies in the portfolio remain at attractive levels when measured by price to earnings ratios and current dividend yields and this should continue to act as major support for the share prices.

Redemption DeadlinesSecurities may be surrendered at any time for retraction by the Fund but will be retracted only on the last day of a month (a “Valuation Date”). Securities surrendered for retraction by a holder of Capital Units or Preferred Securities at least ten business days prior to a Valuation Date will be retracted on such Valuation Date and such security holder will receive payment on or before the tenth business day following such Valuation Date.

Annual Retraction
Capital Units may be surrendered for retraction either alone or combined with a Preferred Security. Capital Units surrendered alone will receive an amount equal to the NAV of a combined unit less the price paid by the Fund to purchase a Preferred Security in the market. Combined Units surrendered for retraction will receive the combined NAV.

Monthly Retraction
The monthly retraction prices for the Capital Units will be equal to 95% of the lesser of:

1. the Combined Value less the aggregate cost to purchase a Preferred Security in the market and $0.50; and
2. the Capital Unit Market Price.

1. the Combined Value less $0.50; and
2. the Combined Security Market Price.

For this purpose, the cost of the purchase of a Preferred Security or a Capital Unit in the market will include the purchase price of the security, commission and such other costs, if any, related to the liquidation of any portion of the Portfolio to fund the purchase. Any declared and unpaid distributions or accrued interest payable on or before a Valuation Date in respect of Capital Units or Preferred Securities tendered for retraction on such Valuation Date will also be paid on the retraction payment date. In addition, the following terms have the meanings set forth below.