EQUITY HIGH YIELD & PREMIUM INCOME FUND.

Transcription

1 EQUITY HIGH YIELD & PREMIUM INCOME FUND

2 Fund Facts Incorporated August 2007 Opened to Investors December 2013 Minimum Investment $/ / 10,000 Fees Tiered Fee Structure Dealing Frequency: Daily Investment Manager Castlestone Management Inc. Investment Advisor Castlestone Management LLC Administrator Circle Investment Support Services B.V. Broker Dealer and Custodian Macquarie Equities Limited, Interactive Brokers LLC Domicile British Virgin Islands Auditors Deloitte Ltd. EQUITY HIGH YIELD & PREMIUM INCOME FUND OVERVIEW Long only, daily traded, liquid, completely transparent fund that does not use leverage Equity fund focusing on semi-monopolistic, price inelastic, high dividend yield stocks that have large capitalizations, quality balance sheets, stated dividend policies and are therefore naturally defensive type stocks. Targeted dividend yield 4% to 6% The Fund receives Annual, Semi-Annual and Quarterly Dividends. Targeted premium income 8% to 12% The Fund aims to enhance the return to investors by writing covered calls against the underlying securities. The Fund collects a premium by writing covered calls and retains all the benefits of owning the underlying stock, such as dividends and voting rights. Stocks like: GlaxoSmithKline, AT&T, CME Group, Sydney Airport, Bouygues, Deutsche Telekom, Wells Fargo and AstraZeneca, targeted weightings of 2% to 6% and the currency is hedged, reducing FX risk. Regulator British Virgin Islands Financial Services Commission

3 FUND PERFORMANCE COMPARISONS SINCE2014 WHY INVEST? 15% 10% 5% 0% -5% -10% -15% Schroder International Global Dividend Max - Distribution -20% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Castlestone Equity High Yield & Premium Income Allianz Global Investors High Payout Fund Source: Castlestone Management & Bloomberg. Equity High Yield & Premium Income Fund AAS class shares. Data range: 9 December April 2017 Note: Past performance cannot be relied on as a guide to future performance.

4 EQUITY HIGH YIELD & PREMIUM INCOME FUND WHAT INVESTORS ARE LOOKING FOR NOW Liquidity The entire portfolio can be liquidated almost instantly, so you feel safe that you can get your money out Exchange Traded Transparency No Leverage The holdings should be exchange traded, in order to ensure transparency and liquidity Complete transparency of the holdings, making sure you understand what you own Does not employ leverage which can distort returns (positively or negatively)

5 TOTAL RETURN PREDICTABLE INCOME VS. UNPREDICTABLE RETURNS Equities rise Dividend Yield 4-6% Premium Income 8-12% Capital appreciation /depreciation Total Return Equities fall

6 EQUITY HIGH YIELD & PREMIUM INCOME FUND PORTFOLIO HOLDINGS Source: Castlestone Management. Note: Past performance cannot be relied on as a guide to future performance.

7 SEMI-MONOPOLISTIC, HIGH DIVIDEND STOCKS TRANSPARENCY OF PORTFOLIO HOLDINGS EXAMPLE* Portfolio % Dividend Yield Option Yield Income - 30 Day Option Yield Income -Annual Mkt Cap Billions $ Industry Sector Country Subgroup Sector Target Income CHL US CHINA MOBILE 2.86% 2.99% 0.86% 6.88% $ Communications CN Telecom Services 9.86% DTE GY DEUTSCHE TELEKOM 3.54% 3.65% 0.93% 7.44% $88.30 Communications DE Telephone-Integrated 11.09% ORA FP ORANGE 2.32% 4.43% 0.96% 7.68% $42.94 Communications FR Telephone-Integrated 12.11% T US AT&T INC 3.23% 4.89% 0.86% 6.86% $ Communications US Telephone-Integrated 11.75% TLS AU TELSTRA CORP 2.48% 10.52% 0.76% 6.10% $37.55 Communications AU Telephone-Integrated 16.62% VOD LN VODAFONE 3.57% 5.82% 0.86% 6.88% $78.23 Communications GB Cellular Telecom 12.70% VZ US VERIZON 2.92% 4.89% 0.91% 7.28% $ Communications US Telephone-Integrated 12.17% TOTAL TELCOM 20.92% AZN LN ASTRAZENECA 3.44% 4.73% 0.89% 7.12% $29.12 Consumer, Non-cyc GB Medical-Drugs 11.85% GSK LN GLAXOSMITHKLINE 2.61% 5.02% 0.95% 7.60% $ Consumer, Non-cyc GB Medical-Drugs 12.62% IMB LN IMPERIAL BRANDS 3.75% 4.06% 0.95% 7.60% $53.19 Consumer, Non-cyc GB Tobacco 11.66% PFE US PFIZER INC 3.58% 3.78% 0.92% 7.36% $ Consumer, Non-cyc US Medical-Drugs 11.14% PG US PROCTOR & GAMBLE 1.87% 3.07% 0.85% 6.80% $ Consumer, Non-cyc US Household Products 9.87% PM US PHILIP MORRIS 1.91% 3.69% 1.02% 8.14% $ Consumer, Non-cyc US Tobacco 11.84% TOTAL CONSUMER NON-CYCLICAL 17.17% ALV GY ALLIANZ 3.71% 4.33% 0.98% 7.84% $91.93 Financial DE P&C Insurance 12.17% ANZ AU AUST AND NZ BANK 1.92% 7.15% 1.10% 8.81% $70.42 Financial AU Commer Banks Non-US 15.96% BNP FP BNP PARIBAS 3.79% 4.03% 0.97% 7.76% $33.17 Financial FR Diversified Banking Inst 11.79% CBA AU C' BANK AUSTRALIA 3.06% 6.97% 0.86% 6.86% $ Financial AU Commer Banks Non-US 13.83% CME US CME GROUP INC 2.13% 2.21% 0.86% 6.88% $40.66 Financial US Finance-Other Services 9.09% HSBA LN HSBC HLDGS PLC 1.42% 6.14% 1.00% 8.01% $ Financial GB Diversified Banking Inst 14.15% MUV2 GY MUNICH RE 1.75% 4.59% 0.56% 4.48% $84.60 Financial DE Reinsurance 9.07% SAN SM BANCO SANTANDER 3.90% 3.46% 0.76% 6.08% $25.52 Financial SP Commer Banks Non-US 9.54% WBC AU WESTPAC BANKING 1.85% 7.76% 1.02% 8.16% $87.13 Financial AU Commer Banks Non-US 15.92% WFC US WELLS FARGO 2.92% 2.77% 1.01% 8.08% $ Financial US Diversified Banking Inst 10.85% TOTAL FINANCIAL 26.44% BA/ LN BAE SYSTEMS PLC 2.52% 3.37% 0.95% 7.62% $86.01 Industrial GB Aerospace/Defense 10.99% EN FP BOUYGUES 2.87% 4.08% 1.12% 8.96% $10.84 Industrial FR Infrastructure 13.04% SYD AU SYDNEY AIRPORT 3.73% 4.58% 1.00% 7.98% $11.42 Industrial AU Airport Develop/Maint 12.56% TCL AU TRANSURBAN GROUP 1.98% 4.38% 1.01% 8.08% $18.61 Industrial AU Public Thoroughfares 12.47% TOTAL INDUSTRIAL 11.10% AEP US AMERICAN ELECTRIC 2.57% 3.48% 0.95% 7.61% $33.39 Utilities US Electric-Integrated 11.08% AGL AU AGL ENERGY LTD 2.20% 3.95% 0.94% 7.55% $13.46 Utilities AU Utility Networks 11.50% CNA LN CENTRICA PLC 1.69% 5.96% 1.10% 8.84% $16.02 Utilities GB Gas-Distribution 14.80% DUK UN DUKE ENERGY CORP 3.44% 4.15% 1.15% 9.22% $57.72 Utilities US Electric-Integrated 13.36% ED US CON EDISON 3.66% 3.49% 1.16% 9.28% $24.12 Utilities US Electric-Integrated 12.77% ELE SM ENDESA 3.95% 6.08% 1.05% 8.40% $15.35 Utilities SP Electric-Integrated 14.48% NG/ LN NATIONAL GRID PL 2.60% 4.30% 1.15% 9.22% $54.97 Utilities GB Gas-Distribution 13.53% VIE FP VEOLIA ENVIRONMENT 3.54% 4.57% 1.10% 8.80% $96.40 Utilities FR Water 13.37% TOTAL UTILITY 23.65% TOTAL % 4.67% 7.66% 12.33% *Portfolio holdings data, weightings & holdings are subject to change. This data is an example and for illustrative purposes only. Note: Past performance cannot be relied on as a guide to future performance

8 REINVESTING DIVIDENDS OVER THE LONG TERM DIVIDENDS REINVESTED 1000% 900% 800% 700% S&P 500 Total Return Index S&P 500 Index 600% 500% 400% 300% 200% 100% 0% Dec-90 Feb-92 Apr-93 Jun-94 Aug-95 Oct-96 Dec-97 Feb-99 Apr-00 Jun-01 Aug-02 Oct-03 Dec-04 Feb-06 Apr-07 Jun-08 Aug-09 Oct-10 Dec-11 Feb-13 Apr-14 Source: Bloomberg and Castlestone Management. Data range January 1990 December 2014 Note: Past performance cannot be relied on as a guide to future performance.

9 DIVIDENDSTOCKS OUTPERFORM DIVIDEND STOCKS HAVE HISTORICALLY OUTPERFORMED IN BULL & BEAR MARKETS 30 Bull & Bear Markets Returns of stocks in 15 Bull and 14 Bear markets from S&P Dividend Payers S&P Equal Weight Index S&P Non-Dividend Payers Source: Bloomberg and Blackrock Data from 1972 covering 15 bear and bull markets Note: Past performance cannot be relied on as a guide to future performance

10 DEFENSIVE STOCKS THROUGH THE BUSINESS CYCLE STANDARD BUSINESS CYCLE Economic recovery Stock prices rise Short-term rates fall Bond prices fall Economy begins overheating Services Technology Transport Commodity prices rise Capital Goods Inflation rises Energy Basic Materials Standard Business Cycle Approximately 4 Years Short term interest rates rise Defensive Sectors Consumer Staples Stock prices fall Utilities Commodity prices fall Financials Consumer Cyclicals GDP decreases Property values fall Recession Bond prices rise Inflation falls Source: Note: Past performance cannot be relied on as a guide to future performance. Business cycle from expansion to contraction showing what happens in financial markets (outside the curve) and how investors invest (inside the curve).

11 INVESTMENT DECISION PROCESS WHY BUY THE EQUITY HIGH YIELD & PREMIUM INCOME FUND? STOCK SELECTION OPTION WRITING IMPLEMENTATION & EXECUTION - Semi-monopolistic - Price inelastic - Dividend yield 4% - 6% - Strong balance sheets - Diversification by sector, industry and country - Management of Option writing - Aiming to write 0.50% - 1.5% per month - Ex dividend date - Currency risk (currency hedging) - American or European options - Execution of portfolio - Currency and corporate risk management - Liquidity

12 EXAMPLE: SYDNEY AIRPORT WHY BUY THE EQUITY HIGH YIELD & PREMIUM INCOME FUND? Source: Bloomberg and Castlestone Management. Note: Past performance cannot be relied on as a guide to future performance.

13 EXAMPLE: SYDNEY AIRPORT WHY BUY THE EQUITY HIGH YIELD & PREMIUM INCOME FUND? Share Price as of 2 nd May = $7.05 Dividend Yield = ($0.15*2)/ $7.05 = 4.40% Payment = Semi Annual Dividend = $0.15*2 = $0.30 Source: Bloomberg and Castlestone Management. Note: Past performance cannot be relied on as a guide to future performance.

14 EQUITY HIGH YIELD & PREMIUM INCOME FUND WHY INVEST? Long-only, liquid, completely transparent, simple to understand, daily traded, unleveraged and currency hedged portfolio The Fund will invest in stocks that are semi-monopolistic, have inelastic demand, strong balance sheets, quality fundamentals and a high dividend yield (targeted yield 4% to 6%) Outperformance with premium income strategy: with the aim of enhancing the return to investors by writing covered call options (targeted premium income 8% to 12%) Since the Fund is unleveraged and long-only, the Fund may/likely will decline when equity markets decline Predictable income vs. unpredictable returns Alternative to developed market stocks in a portfolio

15 DISCLAIMER Disclaimer: This document is intended for and directed at investment professionals and is not intended for retail customer use. Persons who do not have professional experience in matters relating to investments should not rely on it. Note: Please be aware that hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Past performance cannot be relied on as a guide to future performance. This document is intended for and directed at investment professionals and is not intended for retail customer use. Persons who do not have professional experience in matters relating to investments should not rely on it. This document is not offering to sell any product. Any transaction requires our subsequent formal agreement which will be subject to internal approvals and binding transaction documents. 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