Frequently Asked Questions

What is the Canso Corporate Value Fund?

The Canso Corporate Value Fund is an open ended pooled fund that was created December 31st, 2000. It is managed by Canso Investment Counsel Ltd. (CIC). It currently has $183.7 million in assets and its unit holders include pension funds, corporations, endowment funds and high net worth individual clients. It has several classes of units.

The Canso Corporate Value Fund A and F Series are on FundServ and are offered to accredited investors under an Offering Memorandum at RBC-DS, CIBC Wood Gundy, BMO Nesbitt Burns, Scotia McLeod, 3 Mac and Richardson GMP.

How has the performance been confirmed?

The Corporate Value Fund and the other Canso pooled funds have been audited annually since inception. The custodian for the Canso pooled funds has been CIBC Mellon since inception. The auditor performs a comparison of the custodial records and the fund valuation statements as part of its annual audits. The audit includes a confirmation of portfolio holdings and the pricing of its holdings.

The performance information in the prospectus is the net unit value rate of return of the audited unit value. This has been confirmed by the Canso Corporate Value Fund auditor and the proposed auditor for Canso Credit Income Fund, Price Waterhouse, as part of the due diligence process.

What is Canso’s relative performance?

Canso is evaluated on many third party investment surveys and is excellent. The Canso Corporate Value strategy ranks in the 1st percentile over most periods on the Global Manager Research Fixed Income and Corporate Bond Universes. The Canso Corporate Value Strategy also ranks 1st percentile over most periods in the Brockhouse Cooper Performance Appraisal Report of High Yield managers.

Do other investors use the Corporate Value strategy?

The total assets in the Corporate Value strategy are more than $600 million. Several other investors have retained Canso for the Corporate Value Strategy including pension funds, a public mutual fund and a third party pooled fund offered Offering Memorandum.

What clients make up Canso’s $7.5 billion in assets?

Canso Investment Counsel’s $7.5 billion in assets include corporations, pension funds, insurance companies, governments, endowment funds, corporations and wealthy families. Clients include Frank Russell Canada Ltd., CIBC Asset Management, Princess Margaret Hospital Foundation and pension funds of a few Canadian universities.

What is the difference between the Canso Credit Income Fund and the Canso Corporate Value Fund?

The overall investment strategy of the Canso Credit Income Fund (CCIF) will be based on the existing and very successful Corporate Value Strategy. The closed end format will allow Canso to use several techniques to reduce interest rate and credit risk that are not possible with open end mutual and pooled funds. These are disclosed in detail in the prospectus. An example is the ability to hedge the interest rate risk of a corporate long term bond by selling short a similar amount of a Government of Canada issue.

What are the management fees for the Canso Credit Income Fund?

Both the A and F Class units for the Canso Credit Income Fund have a 0.75% management fee and a performance fee based on the performance of the CCIF compared to the DEX Corporate Bond Index. The A Class units have an additional fee to support the 0.4% advisory trailer fee.

How does the performance fee work?

The performance fee is based on the difference between the performance of the fund units and the higher of the DEX Corporate benchmark and zero. This means that no performance fee accrues when the CCIF experiences a negative return, even if the CCIF outperforms the benchmark. The performance fee will not accrue until the issue discount is regained.

Why base the performance fee on the DEX Corporate Bond Index?

The intent is to only pay a performance fee for value added, not market movements. The typical performance fee is based on a flat threshold and we believe that the CCIF performance fee structure is much more reasonable and fairer.

For example, the Canso Corporate Value Fund was up 25% in 2009. The typical performance fee would have been based on a flat threshold of 5% and the performance fee would have been paid on the 20% difference (25-5). The DEX Corporate Index had a return of 16% in 2009 which is much higher than a base of 5%. The CCIF performance fee structure would have had been paid on the 9% difference (25-16) between the CCIF and the DEX Corporate Index.

What is the total management fee expected to be?

Until the original issue discount is regained and unless the CCIF outperforms the DEX Index, the management fee will be 0.75%.

The performance fee will vary. In 2008, with the Corporate Value Fund at 0.9% (??) and the DEX Corporate was 0.2%. The performance fee would have been 0.14% (.2x.7%). The total management fee would have been 0.89%.

In 2009, with the Corporate Value Fund at 25% and the DEX Corporate at 16%, the performance fee would have been 1.8% (.2×9%). The total management fee would have been 2.55%.

We believe that the base fee of 0.75% is very attractive compared to Corporate Bond ETFs at 0.5% and the lowest fee bond mutual funds at 0.8%. If the Canso Credit Income Fund attains the 3% historical value added of the Canso Corporate Value Fund, the performance fee would be 0.6% (.2×3%) for a total management fee of 1.35%. This is very attractive compared to the management fees of many Corporate Bond Mutual funds.

Who is Lysander Funds Limited?

Lysander Funds Limited was created to provide retail distribution of pooled and mutual funds for Canso Investment Counsel Ltd. and other independent investment managers. Lysander currently distributes three Canso pooled funds and two Lysander pooled funds on an OM basis through FundServ. Lysander is controlled by the shareholders of Canso Investment Counsel Ltd. The Lysander Balanced Fund is managed by Canso Investment Counsel Ltd.