Part 2 northsea Preferred shares are more conservative and have a steady income stream due to their fixed, cumulative quarterly payments.
Payments are usually in the form of eligible Canadian dividends which are taxed at a lower rate than other types of income.
Preferred shares have a priority claim ahead of the Class A shares on the fund’s assets in the event of termination. However, the
net asset value of Preferred shares do not benefit from growth in the underlying stocks. The market price of a Preferred share has
historically tended to be fairly steady and investors have a monthly and annual retraction feature. All Brompton Preferred shares
are also non-callable at a price other than the net asset value so you will not be forced to give up your shares for less than their
par value.
A knowledgeable investor, not adverse to the ups and downs of the market, who might be bullish on the underlying portfolio, may
be interested in Class A shares. Buying a Class A share of a Split rather than buying the underlying stocks yourself can result
in magnified gains if the value of the underlying portfolio increases or magnified losses if the value of the underlying portfolio
decreases, due in each case to leverage. The monthly payments to Class A shares are a target (not fixed).1
They can be missed
if the portfolio declines but on the other hand, if the portfolio has realized gains, the Class A shares may be entitled to special
distributions on top of the monthly payments. In the event of termination the Class A shares receive the balance of the portfolio
(net asset value) after the Preferred shares receive their original issue price plus any accrued and unpaid Preferred dividends