Floating Rate Loans - CIFSC

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May 8th, 2015RE:Category Change Proposals; response to comments receivedOn April 1st, 2015 the Canadian Investment Funds Standards Committee (CIFSC) releasedproposala forcategory changes followed by a 30 day comment period. The following is a summary of the commentsand the responses from the CIFSCfor each of the proposed categories:Proposed category:Floating Rate Loans1. One comment was in support of the first proposal, to create a new category for funds investingin floating rate loans, but suggested that the name of the category be reflective of theinvestmentswithin the funds inHighthe Yieldcategory,FloatingsuggestRatYield Bank Loan’.The committeeagrees that the name of the category should represent, to the fullest extentpossible, the investments within the category. The committee also felt that introYield’ into the name might imply that the holdcommittee came to a consensus on the nameFloatingofRate Loansshould the category beapproved.2. Another comment requested clarity on the definition of the Floating Rate Loans category interms of constraints.The committee will finalize the definition if the category is approved however categoryparameters will likely include: the investment mandate of the fund specificallyngstatithat thefund invests in floating rate loans and/or at least 50% of the portfolio is invested in floating rateloans.This thresholdis subject to changebefore thedefinition is finalized andthere will likely beconditions on the high yield content. There would likely not be any restrictions on the averageduration of the funds. The category would exclude funds holdinginvestment gradefixedincome.3. There was a comment requesting a list of the funds that would potentially fall in to the newcategory and what criteria were used to identify the funds. In addition, were the fundssignificantly different enough to warrant a new category?The list of funds can be found in Appendix A below.Please note that this list is subject to changebefore the implementation of the new category.The investment mandate listed in the prospectus as well as the percentage holdings in floatingrate loans was used to identify the funds. The committee determined that the floating ratefunds were significantly different from other fixed income funds due to added liquidity risk anddifferent durations resulting from the strategy.

Proposed category:Global Dividend & U.S. Dividend4. Another comment expressed lack of support eitherfor the U.S.Dividend or Global Dividendcategories. The reason being that foreign dividends are subject to withholding and income tax.The committee does not think the tax treatment of the dividends should be considered in thedevelopment of the categories and doesnot fall under the classification guidelines of the CIFSC.The committee is more concerned with the overall risk/return profile and the behavior of thefunds in different market scenarios.5. One comment requested a list of the funds that would be potentially moving to the newcategories if approved.The lists can be found in Appendix B andPleaseC. note that this list is subject to change beforethe implementation of the new category.6. One comment was seeking clarity on the CIFSC proposal to not enforce the average yieldrequirements for the first year of the category. In particular what would happen after the firstyear?After the first year the committeemeet the dividend yieldwould movethreshold into the most appropriate category, likely Global Equity or U.S. Equity.7. One comment expressed concern regarding the indices chosen to determine the dividend yieldthresholds, stating that the yield for the benchmarksghtmibe “too aggressive fInvestment funds”.In Canada,Alsothe dividendstatingyield multiple of thethatS&P/TSX “Composite Dividend Index over the S&P/TSX Composite index is 1.08x versus a dividend yieldmultiple of 1.65x for the MSCI USA High Dividend Yield Index over the MSCI USA Index and 1.52xĨŽƌ ƚŚĞ D / tŽƌůĚ ,ŝŐŚ ŝǀŝĚĞŶĚ zŝĞůĚ /ŶĚĞdž ŽǀĞƌ ƚŚĞ D / tŽƌůĚ /ŶĚĞdž͘͟The committee feels that if the new categories were approved they would be set up in order toidentify the funds thatseek high yielding investments such thatholdings should be higher than a typical U.S. or Global Equity fund. The committee feels thatboth benchmarks reasonably represent the universe of high yield investments within eachgeographic segment, and that the investment fundsshould be able to invest in any of theconstituent securities.The committee also notes that the number of constituents is relativelysimilar between theS&P/TSX Composite Dividend, MSCI USA High Dividend Yielddex,In and theMSCI World High Dividend Yield Index.The committee also feels that thelower ‘yieldmultiple’for the Canadian indices are directlyrelated to the fact that the largest constituents of the S&P/TSX Composite also happen to besome of the largest dividend payers and are constituents of the S&P/TSX Composite Dividend.

Reid BakerChair of the Canadian Investment Funds Standards ENDIX ʹA If the category is approved these are theotentialpFloating Rate Loan funds. Pleasenotethis list is subject to change before the category is implemented.FundNameCurrent CategoryAGF Floating Rate Income Fund Series AMiscellaneous- Income and Real PropertyBMO Floating Rate Income Fund Series AHigh Yield Fixed IncomeCrystal Enlightened IncomeMiscellaneous- Income and Real PropertyCrystal Enlightened Res and Prec MtlsPrecious Metals EquityCrystal Wealth Medical IncomeGlobal EquityCrystal Wealth Strategic Yld MediaMiscellaneous- Income and Real PropertyFidelity Floating Rate High Income Fund Ser BHigh Yield Fixed IncomeFT Senior Loan ETF CAD Hdg AdvMiscellaneous- Income and Real PropertyHorizons Active Floating Rate Senior Loan ETF(HSL)High Yield Fixed IncomeIA Clarington Floating Rate Income Fund Ser AHigh Yield Fixed IncomeIG Mackenzie Floating Rate Inc AHigh Yield Fixed IncomeMackenzie Floating Rate Income Fund Series AHigh Yield Fixed IncomeManulife Floating Rate Income Fund Advisor Ser High Yield Fixed IncomeManulife RetirementPlus Floating Rate IncomeHigh Yield Fixed IncomeManulife U.S. Dollar Floating Rate Income Fund AdvHigh Yield Fixed IncomeO'Leary Floating Rate Income Fund Series AHigh Yield Fixed IncomePowerShares Senior Loan CAD Hedged ETFMiscellaneous- Income and Real PropertyRenaissance Floating Rate Income Fund Class A High Yield Fixed IncomeTrimark Floating Rate Income Fund Series AHigh Yield Fixed IncomeAPPENDIX -BIf the category is approved these are the potentialGlobal Dividendfunds. Please note thislist is subject to change before the category is implemented.Fund NameFund NameRBC Global Dividend Growth Fund Series AAIC Global Premium Dividend Income Seg 75%Dynamic Global Dividend Fund Series AFirst Trust DJ Global Select Dividend ETF (FGD)Manulife Global Dividend Fund Advisor SeriesTrimark Global Dividend Class Series AAIC Global Premium DividendIncome Seg 100%Global Infrastructure Dividend Fund (GIF.UN)Portland Global Dividend Fund Series A2CAN Global Dividend (Setanta) 75/75LON Global Dividend (Setanta) 75/75Cambridge Global Dividend Fund Class AScotia Global Dividend FundSeries AManulife Global Dividend Class Series OPowerShares Global Dividend Achievers Fund Ser A BMO Global Dividend Fund Series AStandard Life Global Dividend Growth Fund-SeriesAGlobal X SuperDividend ETF (SDIV)Cambridge Global Dividend Corporate Class AAGF Global Dividend Fund Mutual Fund SeriesBeutel Goodman Global Dividend Fund Class BSPDR S&P Global Dividend ETF (WDIV)IA Ecxtra Global Dividend (BNP Paribas)Clearpoint Global Dividend Fund Series A- 171/172

First Asset Global Dividend Fund Class AASTRA TD Global Dividend Equity FundTrimark Global Dividend Class Series PTFEmpire Global Dividend Growth Fund-AMackenzie Global Dividend Fund Series T5First Trust Global Dividend Seeker Fund Class FWestwood Global Dividend Fund Adv/ISCGuardian Global Dividend Growth Fund Series WQuadrus Global Dividend Class (Setanta) Quadrus Sr CI Global High Dividend Advantage Fund Class AMiddlefield Global Dividend Growers Class Series A CI Signature Global Dividend Fund Class AIA Ecoflex Global Dividend (Dynamic)BMO Global Dividend Class Series ACI Signature Global Dividend Corporate Class AAdvisorShares Athena High Dividend ETF (DIVI)Horizons Active Global Dividend ETF (HAZ)Desjardins Global Dividend FundSunWise Elite Manulife Global Dividend Fd 100/100 NEI Ethical Global Dividend Fund Series AO'Leary Global Dividend Fund Series AFÉRIQUE World Dividend FundCounsel Global Dividend Series AFidelity Global Dividend Fund Series BGuggenheim S&P Global Dividend Opp Index ETF (LVL)APPENDIX -CIf the category is approved these are the potentialU.S.Dividend funds. Please note thislist is subject to change before the category is implemented.Fund NameFund NameManulife U.S. Dividend Class Advisor SeriesRBC Quant U.S. Dividend Leaders ETF (RUD)NEI Northwest U.S. Dividend Fund Series AMarquest American Dividend Growth Fund Class ACAN U.S. Dividend (GWLIM) 75/75Purpose US Dividend Fund Series ABMO U.S. Dividend Fund Series AFirst Trust AlphaDEX US Dividend Plus ETF (FUD)Fidelity U.S. Dividend Fund Series BManulife U.S. Dividend Registered Fund Adv SerSchwab U.S. Dividend Equity ETF (SCHD)First Trust Value Line Dividend ETF (FVD)IA Clarington U.S. Dividend Growth Fund-Series ACambridge U.S. Dividend Registered Fund Class AStandard Life U.S. Dividend Growth Fund-SeriesAFlexShares Quality Dividend Dynamic Index (QDYN)Horizons Active US Dividend ETF (HAU)Investors U.S. Dividend Registered Fund AiShares U.S. High Dividend Equity Index ETF (XHU) iShares Core Dividend Growth ETF (DGRO)RBC Quant U.S. Dividend Leaders CAD Hgd ETF (RHU)BMO U.S. Dividend ETF (ZDY)National Bank U.S. DividendFund Adv / DSCVanguard Dividend Appreciation ETF (VIG)Roundtable U.S. Dividend & Income Fund Class BFranklin US Rising Dividends Hedged Corp Class AFranklin U.S. Rising Dividends Fund ABMO US High Dividend Covered Call ETF (ZWH)Purpose US Dividend ETF (PUD)Marquest AmericanDividend Growth Fund (Crp Cl)Quadrus U.S. Dividend Class (GWLIM) Quadrus SeriesFidelity U.S. Dividend Currency Neutral Fund Ser BWisdomTree Large Cap Dividend ETF (DLN)ALPS Sector Dividend Dogs ETF (SDOG)BMO U.S. Dollar Dividend Fund- Series AFidelity U.S. Dividend Registered Fund Series BNorrep US Dividend Plus Class MF SeriesFidelity U.S. Dividend Private Pool Series BWisdomTree Total Dividend ETFDTD)(BMO U.S. Dividend Hedged to CAD ETF (ZUD)PH&N U.S. Dividend Income Fund Series DRevenueShares Ultra Dividend ETF (RDIV)Professionals’ American U.S.DividendDividend GrowersFundIncome Corp (US)American Core Sectors DividendFund (ACZ.UN)SPDR S&P Dividend ETF (SDY)Scotia U.S. Dividend Fund- Series ACambridge U.S. Dividend Fund Class DVanguard U.S. Dividend Appreciation Index ETF(VGG)Investors U.S. Dividend Growth Fund Series CFlexShares Quality DividendIndex ETF (QDF)NexGen U.S. Dividend Plus Registered Fd

WisdomTree US Dividend Growth ETF (DGRW)Mackenzie US Dividend Registered FundVanguard High Dividend Yield ETF (VYM)PowerSharesS&P 500 High Dividend Port(SPHD)GWL US Dividend (GWLIM) 75/75FirstTrust NASDAQ Rising Dividend Achievers (RDVY)iShares High Dividend Equity ETF (HDV)Global X SuperDividend US ETF (DIV)FlexShares Quality Dividend Defensive Ix ETF(QDEF)iShares US Dividend Growers Idx ETF C Hgd (CUD.A)LON U.S. Dividend (GWLIM) 75/75IA Ecflx U.S. Dividend GrowthiShares Dow Jones Select Dividend ETF (DVY)First Trust Morningstar Dividend Leaders Id (FDL)WisdomTree Dividend Top 100 ETFN)(DTRBC U.S. Dividend Fund Series AMiddlefield US Dividend Growth Class Series ADynamic U.S. Dividend Advantage Fund Ser AMackenzie US Dividend Fund Series A

May 07, 2015 · Vanguard High Dividend Yield ETF (VYM) PowerShares S&P 500 High Dividend Port (SPHD) GWL US Dividend (GWLIM) 75/75 FirstTrust NASDAQ Rising Dividend Achievers (RDVY) iShares High Dividend Equity ETF (HDV) Global X SuperDividend US ETF (DIV) FlexShares Quality Dividend Defensive Ix ETF(QDEF) iShares

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