World Financial Split Corp.
The Fund’s investment objectives are:
- to provide holders of Preferred shares with fixed cumulative preferential quarterly cash distributions in the amount of $0.13125 per Preferred share representing a yield on the issue price of the Preferred shares of 5.25% per annum;
- to provide holders of Class A shares with regular quarterly cash distributions targeted to be 8.0% per annum; and
- to return the issue price to holders of both Preferred Shares and Class A Shares at the time of redemption of such shares on the termination date.
The Fund invests in an actively managed portfolio of equity securities selected from the ten largest financial services companies by market capitalization in each of Canada, the United States and the Rest of the World. The issuers of the securities in the Fund's Portfolio, other than those of Canadian issuers, must have a minimum local currency issuer credit rating of "A" from Standard & Poor's or a comparable rating from an equivalent agency.
In addition, up to 20% of the Net Asset Value of the Fund may be invested in common equity securities of financial services companies that are not in the portfolio universe as long as such companies have a market capitalization at the time of investment of at least US$10.0 billion and for non-Canadian issuers, a minimum local currency issuer credit rating of "A" from Standard & Poor's or a comparable rating from an equivalent rating agency.
The Fund employs Strathbridge’s proprietary SSO option strategy to generate additional returns above the distributions earned on its equity securities.
Click here for a detailed review of the Strathbridge Selective Overwriting (“SSO”) strategy.
Preferred shares pay fixed cumulative preferential quarterly cash distributions in the amount of $0.13125 per Preferred share representing a yield on the issue price of the Preferred shares of 5.25% per annum.
Class A shares have a targeted distribution of $0.30 per quarter resulting in an 8.0% yield on the original issue price of $15.00. Distributions on the Class A shares have been suspended in accordance with the prospectus as the Net Asset Value per Unit is less than $15.00.
Click here for a complete distribution history including the historical tax allocation.
The Fund is redeemable annually in June of each year beginning in 2012 at the option of the unitholder and monthly at a discount to market price.
Click to expand Redemption Details:
Class A Shares and Preferred Shares 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”). Shares surrendered for retraction by a holder of Class A Shares or Preferred Shares at least ten business days prior to a Valuation Date will be retracted on such Valuation Date and such shareholder will receive payment on or before the tenth business day following such Valuation Date.Annual Retraction:
A shareholder may concurrently retract one Preferred Share and one Class A Share on the June Valuation Date of each year at a retraction price equal to the NAV per Unit on that date.Monthly Retraction:
The monthly retraction prices for the Class A Shares will be equal to 96% of the lesser of:
- the difference between (i) the NAV per Unit on the applicable Valuation Date and (ii) the cost to the Fund of purchasing a Preferred Share in the market for cancellation; and
- the difference between (i) the Unit Market Price (as defined below) and (ii) the cost to the Fund of purchasing a Preferred Share in the market for cancellation.
The monthly retraction prices for the Preferred Shares will be equal to 96% of the lesser of:
- the difference between (i) the NAV per Unit on the applicable Valuation Date and (ii) the cost to the Fund of purchasing a Class A Share in the market for cancellation; and
- the lesser of (i) the Unit Market Price less the cost to the Fund of purchasing a Class A Share in the market for cancellation and (ii) $10.00.
For this purpose, the cost of the purchase of a Preferred Share or a Class A Share will include the purchase price of the share, commission and such other costs, if any, related to the liquidation of any portion of the Portfolio to fund the purchase of such share. Any declared and unpaid distributions payable on or before a Valuation Date in respect of Class A Shares or Preferred Shares 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.
|Class A Market Price||means the weighted average trading price of the Class A Shares on the principal stock exchange on which the Class A Shares are listed (or, if the Class A Shares are not listed on any stock exchange, on the principal market on which the Class A Shares are quoted for trading) for the 10 trading days immediately preceding the applicable Valuation Date.|
|Preferred Market Price||means the weighted average trading price of the Preferred Shares on the principal stock exchange on which the Preferred Shares are listed (or, if the Preferred Shares are not listed on any stock exchange, on the principal market on which the Preferred Shares are quoted for trading) for the 10 trading days immediately preceding the applicable Valuation Date.|
|Unit Market Price||means the sum of the Class A Market Price and the Preferred Market Price.|
The Fund does not employ financial leverage, however Class A shares are considered to be leveraged investments by virtue of the Preferred Shares which rank ahead of the Class A for payment of distributions and proceeds on termination up to the Preferred Share par value of $10.00 per share. Positive or negative changes in the value of the total portfolio will have a greater effect on the value of the Class A shares. As the value of the portfolio increases this effect decreases and conversely as the value of the portfolio decreases, leverage increases.
The Fund is scheduled to terminate on June 30, 2018, subject to an automatic extension of the term for an additional seven years. In addition, shares may be sold daily on the TSX or redeemed concurrently on an annual basis at net asset value per unit.
Class A Shares
CUSIP – 98146P301 (Prior to the consolidation effective July 1, 2011 the CUSIP was 98146P103)
ISIN - CA 98146P3016
CUSIP – 98146P202
ISIN - CA
RRSPs, DPSPs, RRIFs, RESPs and TFSAs
The Fund may purchase up to 10% of its outstanding units at prices up to net asset value per unit. A unit consist of one Preferred Share combined with one Class A Share.
The Fund pays a management fee of 1.10% of net asset value annually to Strathbridge Asset Management for acting as the Manager and the Investment Manager.
A service fee of 0.40% of NAV of the Class A shares per annum is paid quarterly to Investment Advisors whose clients hold the Class A shares.
The Management Expense Ratio (“MER”) is the sum of all operating expenses, including management and service fees but excluding portfolio transaction costs, expressed as a percentage of average net asset value. For the year ended December 31, 2012, the Fund’s MER was 1.88%.
Strathbridge Asset Management
The Fund intends to hedge its U.S. dollar exposure back to the Canadian dollar in order to ensure that at no time will more than 50% of the Fund’s NAV be exposed to the U.S. dollar.