Reply from Quadravest:
Please note that monthly dividend payments to LFE Class A shareholders are a target only and are determined by the Board on a month-to-month basis based on the net asset value per unit (“NAV”), not the trading prices.
As outlined in the latest Annual Information Form and Financials posted under Fund Documents, should the NAV not be greater than $15 in any month, a dividend cannot be paid to the LFE Class A shareholders that month. The LFE.PR.B Preferred shares receive a fixed, cumulative monthly payment.
The NAV is posted on the “Fund Features” page under “VALUATIONS” typically twice a month, mid-month and month end. It is posted once received from RBC, usually within two business days.
As mentioned, the NAV frequency and valuation date requirements of the Company are twice monthly (mid-month and month-end). When determining monthly LFE Class A share payments, the board considers these published NAVs as well as daily changes in market conditions that may impact the asset values of the underlying holdings. Please note monthly dividends may be declared at any time using any NAV, as long as they are declared prior to the TSX deadline which is five trading days before the record date. The record date is always the last business day of the month. The December 29th record date dividends will therefore be announced by press release no later than December 20th.
Should the NAV be greater than $15 in any month going forward, a dividend may be declared for the LFE Class A shares.
The NAV is impacted by movements in the underlying common stocks held in the portfolio and also by weightings, monthly distributions paid (to Class A and/or Preferred), options written on the portfolio, holdings, as well as fees and expenses paid out monthly. Any U.S. holdings would also impacted by currency.
The Class A share monthly dividends are not cumulative, however please keep in mind that in the event of a missed monthly dividend, any income not paid out in any month remains in the fund and accrues to the benefit of Class A shareholders. This is because the Preferred shareholders are not entitled to any growth beyond their $10 repayment value. Missing a monthly payment when the NAV is below the threshold can help to preserve and benefit the fund over the long term.
Detailed portfolio information for the Company may be found in the latest regulatory reports on the web site under “Fund Documents.