Diversified Income Portfolio

Portfolio Objective

The primary portfolio objective is to provide a high level of sustainable, tax-efficient, monthly distributions generated from a diversified portfolio of cash generating investments. The portfolio will initially target a tax-efficient income stream of 6% per annum, payable on a monthly basis, without depleting capital. A secondary objective is conservative growth with excess cash retained within the portfolio to provide flexibility. Capital preservation will be a priority at all times.

Investment Strategy

The portfolio will constructed to provide diversified exposure to a wide range of income generating securities with capital preservation being paramount. Higher yielding individual securities will only be included if there is high degree of confidence in the underlying credit quality of the issuer. Individual securities including government and corporate bonds, preferred shares, convertible debentures, income trust units and dividend paying common shares, along with closed-end funds and exchange-traded funds (ETFs) holding these same types of securities will be included when they are deemed to offer the best value for the portfolio. A special emphasis will be placed on acquiring income generating closed-end funds at significant discounts to their underlying Net Asset Value (NAV) when there is an option to redeem the fund within 12 months of purchase at 100% of NAV. The portfolio will aim to have up to 1/3rd exposure to closed-end funds where the “captured discount to NAV” at the time of purchase will provide downside protection over the holding period, or eventually provide a boost to the portfolios return as the funds market value converges with its NAV as the redemption date approaches. “Bear” ETFs may also be utilized from time-to-time to provide portfolio insurance within the minimum/maximum asset allocation range.

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