UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-22417
Destra Investment Trust
(Exact name of registrant as specified in charter)
443 North Willson Ave.
Bozeman, MT 59715
(Address of principal executive offices) (Zip code)
Robert A. Watson
C/O Destra Capital Advisors LLC
443 North Willson Ave.
Bozeman, MT 59715
(Name and address of agent for service)
Registrant’s telephone number, including area code: (877) 855-3434
Date of fiscal year end: September 30
Date of reporting period: March 31, 2022
ITEM 1. REPORTS TO STOCKHOLDERS.
(a) |
Destra Flaherty & Crumrine Preferred and Income Fund
Destra Granahan Small Cap Advantage Fund
Semi-Annual Report
March 31, 2022
(Unaudited)
Table of Contents
3 | ||
4 | ||
Schedules of Investments | ||
5 | ||
13 | ||
17 | ||
18 | ||
19 | ||
20 | ||
22 | ||
29 | ||
30 |
2
This document may contain forward-looking statements representing Destra Capital Advisors LLC’s (“Destra”), DFC Preferred Advisors LLC’s (“DFC”), the portfolio managers’ or sub-adviser’s beliefs concerning future operations, strategies, financial results or other developments. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond Destra’s, DFC’s, the portfolio managers’ or sub-advisers’ control or are subject to change, actual results could be materially different. There is no guarantee that such forward-looking statements will come to pass.
Certain impacts to public health conditions particular to the coronavirus (COVID-19) outbreak may have a significant negative impact on the operations and profitability of the Funds’ investments. The extent of the impact to the financial performance of the Funds will depend on future developments, including (i) the duration and spread of the outbreak, (ii) the restrictions and advisories, (iii) the effects on the financial markets, and (iv) the effects on the economy overall, all of which are highly uncertain and cannot be predicted.
Investors should consider the investment objective and policies, risk considerations, charges and ongoing expenses of an investment carefully before investing. The prospectus contains this and other information relevant to an investment in each Fund. Please read the prospectus carefully before investing. To obtain a prospectus, please contact your investment representative or Destra Capital Investments LLC at 877-855-3434 or access our website at www.destracapital.com.
3
As a shareholder of the Destra Investment Trust, you incur management fees and other fund expenses. The expense examples below (the “Example”) are intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from October 1, 2021 to March 31, 2022.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not each Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or deferred sales charges. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Destra Flaherty & Crumrine Preferred and Income Fund | Beginning | Ending Account | Annualized | Expenses | ||||
Class I | ||||||||
Actual | $1,000.00 | $949.00 | 1.16% | $5.64 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,019.21 | 1.16% | 5.84 | ||||
Class A | ||||||||
Actual | 1,000.00 | 947.50 | 1.41% | 6.85 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.96 | 1.41% | 7.10 | ||||
Class C | ||||||||
Actual | 1,000.00 | 944.20 | 2.16% | 10.48 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,014.20 | 2.16% | 10.85 |
Destra Granahan Small Cap Advantage Fund | Beginning | Ending | Annualized | Expenses | ||||
Class I | ||||||||
Actual | $1,000.00 | $751.40 | 1.50% | $6.55 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.52 | 1.50% | 7.54 | ||||
Class A | ||||||||
Actual | 1,000.00 | 750.40 | 1.75% | 7.64 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,016.27 | 1.75% | 8.80 |
(1) Expenses are equal to the Destra Flaherty & Crumrine Preferred and Income Fund’s annualized expense ratios for the period October 1, 2021 through March 31, 2022, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
(2) Expenses are equal to the Destra Granahan Small Cap Advantage Fund’s annualized expense ratio for the period Octoberl 1, 2021 through March 31, 2022, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
4
Schedule of Investments |
As of March 31, 2022 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES – 76.7% |
| ||||||
BANKS – 35.6% |
| ||||||
575,000 | American AgCredit Corp., 5.250% to 06/15/26 then USD 5 Year Tsy + 4.500%, Series A(1)(2) | BB+(3) | $ | 569,250 | |||
Bank of America Corp. |
| ||||||
500,000 | 6.100% to 03/17/25 then 3-Month USD Libor + 3.898%, Series AA(2) | Baa3 |
| 521,875 | |||
2,000,000 | 6.250% to 09/05/24 then 3-Month USD Libor + 3.705%, Series X(2) | Baa3 |
| 2,072,400 | |||
250,000 | 6.300% to 03/10/26 then 3-Month USD Libor + 4.553%, Series DD(2) | Baa3 |
| 265,625 | |||
4,525,000 | 6.500% to 10/23/24 then 3-Month USD Libor + 4.174%, Series Z(2) | Baa3 |
| 4,739,937 | |||
11,950 | Bank of Hawaii Corp., 4.375%, Series A(2) | Baa2 |
| 273,416 | |||
28,600 | Cadence Bank, 5.500%, Series A(2) | Ba1 |
| 729,300 | |||
Capital One Financial Corp. |
| ||||||
1,030,000 | 3.950% to 09/01/26 then USD 5 Year Tsy + 3.157%, Series M(2) | Baa3 |
| 957,900 | |||
289,245 | 5.000%, Series I(2) | Baa3 |
| 6,672,882 | |||
Citigroup, Inc. |
| ||||||
550,000 | 3.875% to 02/18/26 then USD 5 Year Tsy + 3.417%, Series X(2) | Ba1 |
| 520,781 | |||
300,000 | 4.000% to 12/10/25 then USD 5 Year Tsy + 3.597%, Series W(2) | Ba1 |
| 289,500 | |||
1,575,000 | 4.150% to 11/15/26 then USD 5 Year Tsy + 3.000%, Series Y(2) | Ba1 |
| 1,479,516 | |||
1,125,000 | 4.700% to 01/30/25 then SOFR + 3.234%, Series V(2) | Ba1 |
| 1,078,594 | |||
4,560,000 | 5.950% to 05/15/25 then 3-Month USD Libor + 3.905%, Series P(2) | Ba1 |
| 4,653,708 | |||
1,700,000 | 6.250% to 08/15/26 then 3-Month USD Libor + 4.517%, Series T(2) | Ba1 |
| 1,779,390 | |||
108,199 | 6.875% to 11/15/23 then 3-Month USD Libor + 4.130%, Series K(2) | Ba1 |
| 2,851,044 | |||
16,400 | 7.125% to 09/30/23 then 3-Month USD Libor + 4.040%, Series J(2) | Ba1 |
| 432,468 | |||
150,000 | Citizens Financial Group, Inc., 6.350% to 04/06/24 then 3-Month USD Libor + 3.642%, | BB+(3) |
| 3,919,500 | |||
CoBank ACB |
| ||||||
11,790 | 6.200% to 01/01/25 then 3-Month USD Libor + 3.744%, Series H(1)(2) | BBB+(3) |
| 1,296,900 | |||
8,400 | 6.250% to 10/01/22 then 3-Month USD Libor + 4.557%, Series F(1)(2) | BBB+(3) |
| 849,492 | |||
500,000 | 6.250% to 10/01/26 then 3-Month USD Libor + 4.660%, Series I(1)(2) | BBB+(3) |
| 521,250 | |||
1,050,000 | Comerica, Inc., 5.625% to 10/01/25 then USD 5 Year Tsy + 5.291%, Series A(2) | Baa2 |
| 1,092,000 | |||
250,000 | Compeer Financial ACA, 4.875% to 08/15/26 then USD 5 Year Tsy + 4.100%, Series B-1(1)(2) | BB+(3) |
| 245,000 | |||
42,300 | ConnectOne Bancorp, Inc., 5.250% to 09/01/26 then USD 5 Year Tsy + 4.420%, Series A(2) | NR(4) |
| 1,016,892 | |||
36,000 | Dime Community Bancshares, Inc., 5.500%, Series A(2) | BB-(5) |
| 860,760 | |||
45,761 | Fifth Third Bancorp, 6.000%, Series A(2) | Baa3 |
| 1,165,075 | |||
20,800 | First Citizens BancShares, Inc., 5.375%, Series A(2) | Ba1 |
| 531,856 | |||
21,822 | First Horizon Corp., 6.500%, Series E(2) | Ba2 |
| 575,119 | |||
20,000 | First Republic Bank, 4.000%, Series M(2) | Baa3 |
| 400,200 | |||
10,100 | Fulton Financial Corp., 5.125%, Series A(2) | Baa3 |
| 225,432 | |||
Goldman Sachs Group, Inc. |
| ||||||
1,600,000 | 4.125% to 11/10/26 then USD 5 Year Tsy + 2.949%, Series V(2) | Ba1 |
| 1,505,840 | |||
925,000 | 4.400% to 02/10/25 then USD 5 Year Tsy + 2.850%, Series S(2) | Ba1 |
| 881,062 | |||
2,500,000 | 4.950% to 02/10/25 then USD 5 Year Tsy + 3.224%, Series R(2) | Ba1 |
| 2,506,250 | |||
600,000 | 5.500% to 08/10/24 then USD 5 Year Tsy + 3.623%, Series Q(2) | Ba1 |
| 614,430 | |||
80,280 | 6.375% to 05/10/24 then 3-Month USD Libor + 3.550%, Series K(2) | Ba1 |
| 2,133,842 | |||
Huntington Bancshares, Inc. |
| ||||||
355,000 | 4.450% to 10/15/27 then USD 7 Year Tsy + 4.045%, Series G(2) | Baa3 |
| 352,338 | |||
1,050,000 | 5.625% to 07/15/30 then USD 10 Year Tsy + 4.945%, Series F(2) | Baa3 |
| 1,098,825 | |||
JPMorgan Chase & Co. |
| ||||||
3,050,000 | 3.534%, 3-Month USD Libor + 3.320%, Series V(2)(6) | Baa2 |
| 3,050,000 | |||
2,150,000 | 3.650% to 06/01/26 then USD 5 Year Tsy + 2.850%, Series KK(2) | Baa2 |
| 2,015,625 | |||
28,200 | 4.200%, Series MM(2) | Baa2 |
| 594,456 |
See accompanying Notes to Financial Statements.
5
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) |
| ||||||
BANKS (continued) |
| ||||||
KeyCorp |
| ||||||
3,740,000 | 5.000% to 09/15/26 then 3-Month USD Libor + 3.606%, Series D(2) | Baa3 | $ | 3,702,600 | |||
25,277 | 5.625%, Series G(2) | Baa3 |
| 635,717 | |||
27,817 | 6.125% to 12/15/26 then 3-Month USD Libor + 3.892%, Series E(2) | Baa3 |
| 770,809 | |||
M&T Bank Corp. |
| ||||||
650,000 | 3.500% to 09/01/26 then USD 5 Year Tsy + 2.679%, Series I(2) | Baa2 |
| 585,800 | |||
700,000 | 6.450% to 02/15/24 then 3-Month USD Libor + 3.610%, Series E(2) | Baa2 |
| 711,813 | |||
18,791 | Merchants Bancorp, 6.000% to 10/01/24 then 3-Month USD Libor + 4.569%, Series B(2) | NR(4) |
| 467,896 | |||
Morgan Stanley |
| ||||||
590,000 | 5.300% to 03/15/23 then 3-Month USD Libor + 3.160%, Series N(2) | Baa3 |
| 579,675 | |||
171,717 | 5.850% to 04/15/27 then 3-Month USD Libor + 3.491%, Series K(2) | Baa3 |
| 4,490,400 | |||
24,190 | 6.375% to 10/15/24 then 3-Month USD Libor + 3.708%, Series I(2) | Baa3 |
| 642,970 | |||
164,500 | 6.875% to 01/15/24 then 3-Month USD Libor + 3.940%, Series F(2) | Baa3 |
| 4,393,795 | |||
165,623 | New York Community Bancorp, Inc., 6.375% to 03/17/27 then 3-Month USD Libor + 3.821%, | Ba2 |
| 4,437,040 | |||
106,311 | People’s United Financial, Inc., 5.625% to 12/15/26 then 3-Month USD Libor + 4.020%, | Ba1 |
| 2,770,465 | |||
1,575,000 | PNC Financial Services Group, Inc., 3.400% to 09/15/26 then USD 5 Year Tsy + 2.595%, | Baa2 |
| 1,423,406 | |||
Regions Financial Corp. |
| ||||||
90,500 | 5.700% to 08/15/29 then 3-Month USD Libor + 3.148%, Series C(2) | Baa3 |
| 2,359,335 | |||
725,000 | 5.750% to 09/15/25 then USD 5 Year Tsy + 5.426%, Series D(2) | Baa3 |
| 756,719 | |||
66,700 | 6.375% to 09/15/24 then 3-Month USD Libor + 3.536%, Series B(2) | Baa3 |
| 1,750,875 | |||
56,000 | Signature Bank, 5.000%, Series A(2) | Ba1 |
| 1,271,200 | |||
SVB Financial Group |
| ||||||
725,000 | 4.000% to 05/15/26 then USD 5 Year Tsy + 3.202%, Series C(2) | Baa2 |
| 671,531 | |||
350,000 | 4.100% to 02/15/31 then USD 10 Year Tsy + 3.064%, Series B(2) | Baa2 |
| 299,250 | |||
550,000 | 4.250% to 11/15/26 then USD 5 Year Tsy + 3.074%, Series D(2) | Baa2 |
| 509,781 | |||
46,000 | Synchrony Financial, 5.625%, Series A(2) | BB-(3) |
| 1,120,560 | |||
127,922 | Synovus Financial Corp., 5.875% to 07/01/24 then USD 5 Year Tsy + 4.127%, Series E(2) | BB-(3) |
| 3,351,556 | |||
32,043 | Texas Capital Bancshares, Inc., 5.750%, Series B(2) | Ba2 |
| 801,075 | |||
15,000 | TriState Capital Holdings, Inc., 6.375% to 07/01/26 then 3-Month USD Libor + 4.088%, | NR(4) |
| 383,250 | |||
Truist Financial Corp. |
| ||||||
9,241 | 4.750%, Series R(2) | Baa2 |
| 211,526 | |||
1,098,000 | 4.800% to 09/01/24 then USD 5 Year Tsy + 3.003%, Series N(2) | Baa2 |
| 1,081,530 | |||
1,050,000 | 4.950% to 12/01/25 then USD 5 Year Tsy + 4.605%, Series P(2) | Baa2 |
| 1,077,825 | |||
Valley National Bancorp |
| ||||||
2,022 | 5.500% to 09/30/22 then 3-Month USD Libor + 3.578%, Series B(2) | BB(3) |
| 50,449 | |||
30,345 | 6.250% to 06/30/25 then 3-Month USD Libor + 3.850%, Series A(2) | BB(3) |
| 807,784 | |||
20,300 | Washington Federal, Inc., 4.875%, Series A(2) | Baa3 |
| 440,510 | |||
20,402 | Webster Financial Corp., 6.500%, Series G(2) | Baa3 |
| 517,395 | |||
Wells Fargo & Co. |
| ||||||
825,000 | 3.900% to 03/15/26 then USD 5 Year Tsy + 3.453%, Series BB(2) | Baa2 |
| 789,669 | |||
46,000 | 4.250%, Series DD(2) | Baa2 |
| 951,740 | |||
36,000 | 4.700%, Series AA(2) | Baa2 |
| 793,800 | |||
1,557,000 | 5.875% to 06/15/25 then 3-Month USD Libor + 3.990%, Series U(2) | Baa2 |
| 1,630,646 | |||
20,000 | 6.625% to 03/15/24 then 3-Month USD Libor + 3.690%, Series R(2) | Baa2 |
| 536,600 | |||
267 | 7.500%, Series L(2)(7) | Baa2 |
| 353,775 |
See accompanying Notes to Financial Statements.
6
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) |
| ||||||
BANKS (continued) |
| ||||||
43,200 | WesBanco, Inc., 6.750% to 11/15/25 then USD 5 Year Tsy + 6.557%, Series A(2) | NR(4) | $ | 1,168,992 | |||
22,900 | Western Alliance Bancorp, 4.250% to 09/30/26 then USD 5 Year Tsy + 3.452%, Series A(2) | Ba1 |
| 556,699 | |||
44,000 | Wintrust Financial Corp., 6.875% to 07/15/25 then USD 5 Year Tsy + 6.507%, Series E(2) | BB(5) |
| 1,239,920 | |||
43,000 | Zions Bancorp NA, 5.800% to 06/15/23 then 3-Month USD Libor + 3.800%, Series I(2) | BB+(3) |
| 42,448 | |||
| 108,478,556 | ||||||
FINANCIAL SERVICES – 2.8% |
| ||||||
450,000 | AerCap Global Aviation Trust, 6.500% to 06/15/25 then 3-Month USD Libor + 4.300%, | Ba1 |
| 441,531 | |||
1,545,000 | AerCap Holdings, 5.875% to 10/10/24 then USD 5 Year Tsy + 4.535%, 10/10/79 | Ba2 |
| 1,485,456 | |||
Ally Financial, Inc. |
| ||||||
1,220,000 | 4.700% to 05/15/26 then USD 5 Year Tsy + 3.868%, Series B(2) | Ba2 |
| 1,146,044 | |||
800,000 | 4.700% to 05/15/28 then USD 7 Year Tsy + 3.481%, Series C(2) | Ba2 |
| 730,000 | |||
700,000 | American Express Co., 3.550% to 09/15/26 then USD 5 Year Tsy + 2.854%, Series D(2) | Baa2 |
| 637,175 | |||
13,400 | Carlyle Finance LLC, 4.625%, 05/15/61 | BBB(3) |
| 291,852 | |||
800,000 | Discover Financial Services, 6.125% to 09/23/25 then USD 5 Year Tsy + 5.783%, Series D(2) | Ba2 |
| 834,544 | |||
General Motors Financial Co., Inc. |
| ||||||
725,000 | 5.700% to 09/30/30 then USD 5 Year Tsy + 4.997%, Series C(2) | Ba2 |
| 762,301 | |||
560,000 | 5.750% to 09/30/27 then 3-Month USD Libor + 3.598%, Series A(2) | Ba2 |
| 557,894 | |||
600,000 | 6.500% to 09/30/28 then 3-Month USD Libor + 3.436%, Series B(2) | Ba2 |
| 612,000 | |||
Stifel Financial Corp. |
| ||||||
20,000 | 4.500%, Series D(2) | BB-(3) |
| 415,600 | |||
21,000 | 6.250%, Series B(2) | BB-(3) |
| 543,900 | |||
| 8,458,297 | ||||||
INSURANCE – 16.4% |
| ||||||
1,151,000 | ACE Capital Trust II, 9.700%, 04/01/30 | Baa1 |
| 1,588,380 | |||
92,000 | American Equity Investment Life Holding Co., 5.950% to 12/01/24 then | BB(3) |
| 2,350,600 | |||
1,515,000 | American International Group, Inc., 8.175% to 05/15/38 then 3-Month USD Libor + 4.195%, | Baa3 |
| 2,059,256 | |||
Aspen Insurance Holdings, Ltd. |
| ||||||
25,000 | 5.625%(2) | Ba1 |
| 630,750 | |||
18,630 | 5.950% to 07/01/23 then 3-Month USD Libor + 4.060%(2) | Ba1 |
| 483,076 | |||
18,003 | Assurant, Inc., 5.250%, 01/15/61 | Ba1 |
| 418,030 | |||
Athene Holding, Ltd. |
| ||||||
25,200 | 4.875%, Series D(2) | BBB(3) |
| 547,596 | |||
88,000 | 6.350% to 06/30/29 then 3-Month USD Libor + 4.253%, Series A(2) | BBB(3) |
| 2,328,480 | |||
29,000 | 6.375% to 09/30/25 then USD 5 Year Tsy + 5.970%, Series C(2) | BBB(3) |
| 769,370 | |||
152,249 | Axis Capital Holdings, Ltd., 5.500%, Series E(2) | Baa3 |
| 3,791,000 | |||
735,000 | Axis Specialty Finance LLC, 4.900% to 01/15/30 then USD 5 Year Tsy + 3.186%, 01/15/40 | Baa2 |
| 720,300 | |||
15,000 | CNO Financial Group, Inc., 5.125%, 11/25/60 | Ba1 |
| 333,000 | |||
100,435 | Delphi Financial Group, Inc., 3.696%, 3-Month USD Libor + 3.190%, 05/15/37(6) | BBB(3) |
| 2,259,787 | |||
Enstar Finance LLC |
| ||||||
670,000 | 5.500% to 01/15/27 then USD 5 Year Tsy + 4.006%, 01/15/42 | BB+(3) |
| 639,850 | |||
825,000 | 5.750% to 09/01/25 then USD 5 Year Tsy + 5.468%, 09/01/40 | BB+(3) |
| 816,750 | |||
45,400 | Enstar Group, Ltd., 7.000% to 09/01/28 then 3-Month USD Libor + 4.015%, Series D(2) | BB+(3) |
| 1,193,112 | |||
125,000 | Equitable Holdings, Inc., 4.950% to 12/15/25 then USD 5 Year Tsy + 4.736%, Series B(2) | Ba1 |
| 123,125 | |||
196,000 | Everest Reinsurance Holdings, Inc., 2.891%, 3-Month USD Libor + 2.385%, 05/15/37(6) | Baa2 |
| 181,300 | |||
1,370,000 | Global Atlantic Fin Co., 4.700% to 10/15/26 then USD 5 Year Tsy + 3.796%, 10/15/51(1) | Baa3 |
| 1,298,075 |
See accompanying Notes to Financial Statements.
7
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) |
| ||||||
INSURANCE (continued) |
| ||||||
875,000 | Kuvare U.S. Holdings, Inc., 7.000% to 05/01/26 then USD 5 Year Tsy + 6.541%, 02/17/51, | NR(4) | $ | 914,375 | |||
Liberty Mutual Group, Inc. |
| ||||||
830,000 | 4.125% to 12/15/26 then USD 5 Year Tsy + 3.315%, 12/15/51(1) | Baa3 |
| 784,279 | |||
7,103,000 | 7.800% to 03/15/37 then 3-Month USD Libor + 3.576%, 03/15/37(1) | Baa3 |
| 9,221,470 | |||
MetLife, Inc. |
| ||||||
1,605,000 | 9.250% to 04/08/38 then 3-Month USD Libor + 5.540%, 04/08/38(1) | Baa2 |
| 2,087,139 | |||
1,937,000 | 10.750% to 08/01/39 then 3-Month USD Libor + 7.548%, 08/01/39 | Baa2 |
| 2,825,967 | |||
4,500,000 | Provident Financing Trust I, 7.405%, 03/15/38 | Ba1 |
| 5,298,750 | |||
100,476 | Reinsurance Group of America, Inc., 5.750% to 06/15/26 then 3-Month USD Libor + 4.040%, | Baa2 |
| 2,753,042 | |||
29,100 | RenaissanceRe Holdings, Ltd., 4.200%, Series G(2) | Baa2 |
| 614,592 | |||
SBL Holdings, Inc. |
| ||||||
1,275,000 | 6.500% to 11/13/26 then USD 5 Year Tsy + 5.620%, Series B(1)(2) | BB(3) |
| 1,166,625 | |||
1,175,000 | 7.000% to 05/13/25 then USD 5 Year Tsy + 5.580%, Series A(1)(2) | BB(3) |
| 1,088,344 | |||
23,000 | Voya Financial, Inc., 5.350% to 09/15/29 then USD 5 Year Tsy + 3.210%, Series B(2) | Ba2 |
| 592,250 | |||
| 49,878,670 | ||||||
UTILITIES – 11.6% |
| ||||||
Algonquin Power & Utilities Corp. |
| ||||||
1,500,000 | 4.750% to 04/18/27 then USD 5 Year Tsy + 3.249%, 01/18/82, Series 2022-B | BB+(3) |
| 1,399,838 | |||
40,645 | 6.200% to 07/01/24 then 3-Month USD Libor + 4.010%, 07/01/79, Series 2019-A | BB+(3) |
| 1,065,305 | |||
1,070,000 | American Electric Power Co., Inc., 3.875% to 02/15/27 then USD 5 Year Tsy + 2.675%, | Baa3 |
| 990,694 | |||
646,000 | CenterPoint Energy, Inc., 6.125% to 09/01/23 then 3-Month USD Libor + 3.270%, Series A(2) | Ba1 |
| 636,714 | |||
109,000 | CMS Energy Corp., 5.875%, 03/01/79 | Baa3 |
| 2,801,300 | |||
3,576,000 | ComEd Financing III, 6.350%, 03/15/33 | Baa2 |
| 4,007,269 | |||
725,000 | Dominion Energy, Inc., 4.350% to 04/15/27 then USD 5 Year Tsy + 3.195%, Series C(2) | Ba1 |
| 704,744 | |||
Edison International |
| ||||||
1,775,000 | 5.000% to 03/15/27 then USD 5 Year Tsy + 3.901%, Series B(2) | Ba2 |
| 1,670,275 | |||
700,000 | 5.375% to 03/15/26 then USD 5 Year Tsy + 4.698%, Series A(2) | Ba2 |
| 677,075 | |||
2,806,000 | Emera, Inc., 6.750% to 06/15/26 then 3-Month USD Libor + 5.440%, 06/15/76, Series 2016-A | Ba2 |
| 2,963,837 | |||
140,000 | NextEra Energy Capital Holdings, Inc., 5.650% to 05/01/29 then 3-Month USD Libor + 3.156%, | Baa2 |
| 143,925 | |||
285,000 | NiSource, Inc., 5.650% to 06/15/23 then USD 5 Year Tsy + 2.843%, Series A(2) | Ba1 |
| 280,725 | |||
21,587 | SCE Trust II, 5.100%, Series G(2) | Ba1 |
| 484,628 | |||
121,730 | SCE Trust V, 5.450% to 03/15/26 then 3-Month USD Libor + 3.790%, Series K(2) | Ba1 |
| 3,042,033 | |||
192,087 | SCE Trust VI, 5.000%, Series L(2) | Ba1 |
| 4,248,964 | |||
Sempra Energy |
| ||||||
1,450,000 | 4.125% to 04/01/27 then USD 5 Year Tsy + 2.868%, 04/01/52 | Baa3 |
| 1,354,064 | |||
1,300,000 | 4.875% to 10/15/25 then USD 5 Year Tsy + 4.550%, Series C(2) | Ba1 |
| 1,309,750 | |||
1,140,000 | Southern California Edison Co., 4.516%, 3-Month USD Libor + 4.199%, Series E(2)(6) | Ba1 |
| 1,134,300 | |||
Southern Co. |
| ||||||
825,000 | 3.750% to 09/15/26 then USD 5 Year Tsy + 2.915%, 09/15/51, Series 2021-A | Baa3 |
| 762,754 | |||
222,388 | 4.950%, 01/30/80, Series 2020A | Baa3 |
| 5,366,222 | |||
4,866 | Spire, Inc., 5.900%, Series A(2) | Ba1 |
| 125,786 | |||
175,000 | Vistra Corp., 7.000% to 12/15/26 then USD 5 Year Tsy + 5.740%, Series B(1)(2) | Ba3 |
| 170,678 | |||
| 35,340,880 |
See accompanying Notes to Financial Statements.
8
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) |
| ||||||
ENERGY – 5.8% |
| ||||||
DCP Midstream LP |
| ||||||
1,300,000 | 7.375% to 12/15/22 then 3-Month USD Libor + 5.148%, Series A(2) | Ba3 | $ | 1,251,250 | |||
3,900 | 7.875% to 06/15/23 then 3-Month USD Libor + 4.919%, Series B(2) | Ba3 |
| 93,561 | |||
Enbridge, Inc. |
| ||||||
340,000 | 5.750% to 07/15/30 then USD 5 Year Tsy + 5.314%, 07/15/80, Series 2020-A | Baa3 |
| 352,750 | |||
1,252,000 | 6.000% to 01/15/27 then 3-Month USD Libor + 3.890%, 01/15/77, Series 2016-A | Baa3 |
| 1,284,817 | |||
Energy Transfer LP |
| ||||||
1,387,000 | 7.125% to 05/15/30 then USD 5 Year Tsy + 5.306%, Series G(2) | Ba2 |
| 1,362,728 | |||
180,186 | 7.375% to 05/15/23 then 3-Month USD Libor + 4.530%, Series C(2) | Ba2 |
| 4,297,436 | |||
160,236 | 7.600% to 05/15/24 then 3-Month USD Libor + 5.161%, Series E(2) | Ba2 |
| 3,967,443 | |||
1,600 | 7.625% to 08/15/23 then 3-Month USD Libor + 4.738%, Series D(2) | Ba2 |
| 39,488 | |||
1,765,000 | MPLX LP, 6.875% to 02/15/23 then 3-Month USD Libor + 4.652%, Series B(2) | BB+(3) |
| 1,738,525 | |||
Transcanada Trust |
| ||||||
2,065,000 | 5.500% to 09/15/29 then SOFR + 4.416%, 09/15/79 | Baa3 |
| 2,068,614 | |||
1,350,000 | 5.875% to 08/15/26 then 3-Month USD Libor + 4.640%, 08/15/76, Series 16-A | Baa3 |
| 1,366,875 | |||
| 17,823,487 | ||||||
COMMUNICATIONS – 1.4% |
| ||||||
33,000 | AT&T, Inc., 4.750%, Series C(2) | Ba1 |
| 722,040 | |||
940,000 | British Telecommunications PLC, 4.875% to 11/23/31 then USD 5 Year Tsy + 3.493%, | Ba1 |
| 895,214 | |||
1,720,000 | Paramount Global, 6.375% to 03/30/27 then USD 5 Year Tsy + 3.999%, 03/30/62 | Baa3 |
| 1,737,621 | |||
700,000 | Vodafone Group PLC, 7.000% to 04/04/29 then USD 5 Year Swap + 4.873%, 04/04/79 | Ba1 |
| 773,462 | |||
| 4,128,337 | ||||||
MISCELLANEOUS – 1.4% |
| ||||||
370,000 | Apollo Management Holdings LP, 4.950% to 12/17/24 then USD 5 Year Tsy + 3.266%, | BBB(3) |
| 350,995 | |||
Land O’ Lakes, Inc. |
| ||||||
700,000 | 7.250%, Series B(1)(2) | BB(3) |
| 744,083 | |||
3,115,000 | 8.000%, Series A(1)(2) | BB(3) |
| 3,323,596 | |||
| 4,418,674 | ||||||
REITS – 1.7% |
| ||||||
Arbor Realty Trust, Inc. |
| ||||||
55,000 | 6.250% to 10/12/26 then SOFR + 5.440%, Series F(2) | NR(4) |
| 1,357,950 | |||
24,049 | 6.375%, Series D(2) | NR(4) |
| 541,103 | |||
87,394 | KKR Real Estate Finance Trust, Inc., 6.500%, Series A(2) | NR(4) |
| 2,132,414 | |||
26,000 | New York Mortgage Trust, Inc., 6.875% to 10/15/26 then SOFR + 6.130%, Series F(2) | NR(4) |
| 598,260 | |||
25,817 | TPG RE Finance Trust, Inc., 6.250%, Series C(2) | NR(4) |
| 577,784 | |||
| 5,207,511 | ||||||
TOTAL PREFERRED SECURITIES |
| 233,734,412 | |||||
| |||||||
CONTINGENT CAPITAL SECURITIES – 19.9% |
| ||||||
BANKS – 18.5% |
| ||||||
4,207,000 | Australia & New Zealand Banking Group, Ltd., 6.750% to 06/15/26 then | Baa2 |
| 4,523,934 | |||
Banco Bilbao Vizcaya Argentaria SA |
| ||||||
2,600,000 | 6.125% to 11/16/27 then USD 5 Year Swap + 3.870%(2) | Ba2 |
| 2,531,750 | |||
800,000 | 6.500% to 03/05/25 then USD 5 Year Tsy + 5.192%, Series 9(2) | Ba2 |
| 805,000 |
See accompanying Notes to Financial Statements.
9
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Shares or |
| Moody’s | Value | ||||
CONTINGENT CAPITAL SECURITIES (continued) | |||||||
BANKS (continued) |
| ||||||
Banco Mercantil del Norte SA |
| ||||||
750,000 | 6.625% to 01/24/32 then USD 10 Year Tsy + 5.034%(1)(2) | Ba2 | $ | 693,000 | |||
360,000 | 7.500% to 06/27/29 then USD 10 Year Tsy + 5.470%(1)(2) | Ba2 |
| 353,671 | |||
640,000 | 7.625% to 01/10/28 then USD 10 Year Tsy + 5.353%(1)(2) | Ba2 |
| 644,227 | |||
10,400,000 | Banco Santander SA, 4.750% to 05/12/27 then USD 5 Year Tsy + 3.753%(1)(2) | Ba1 |
| 9,614,800 | |||
Barclays PLC |
| ||||||
400,000 | 4.375% to 09/15/28 then USD 5 Year Tsy + 3.410%(2) | Ba2 |
| 353,300 | |||
1,270,000 | 6.125% to 06/15/26 then USD 5 Year Tsy + 5.867%(2) | Ba2 |
| 1,298,575 | |||
700,000 | 8.000% to 06/15/24 then USD 5 Year Tsy + 5.672%(2) | Ba2 |
| 741,300 | |||
600,000 | BBVA Bancomer SA Texas, 5.875% to 09/13/29 then USD 5 Year Tsy + 4.308%, 09/13/34(1) | Baa3 |
| 591,906 | |||
BNP Paribas SA |
| ||||||
425,000 | 4.625% to 02/25/31 then USD 5 Year Tsy + 3.340%(1)(2) | Ba1 |
| 383,031 | |||
3,000,000 | 7.375% to 08/19/25 then USD 5 Year Swap + 5.150%(1)(2) | Ba1 |
| 3,234,585 | |||
Credit Agricole SA |
| ||||||
450,000 | 4.750% to 09/23/29 then USD 5 Year Tsy + 3.237%(1)(2) | BBB-(3) |
| 409,469 | |||
500,000 | 8.125% to 12/23/25 then USD 5 Year Swap + 6.185%(1)(2) | Baa3 |
| 557,575 | |||
Credit Suisse Group AG |
| ||||||
500,000 | 5.100% to 01/24/30 then USD 5 Year Tsy + 3.293%(1)(2) | Ba2 |
| 461,250 | |||
1,000,000 | 5.250% to 08/11/27 then USD 5 Year Tsy + 4.889%(1)(2) | Ba2 |
| 927,500 | |||
1,100,000 | 6.375% to 08/21/26 then USD 5 Year Tsy + 4.828%(1)(2) | Ba2 |
| 1,088,527 | |||
2,750,000 | 7.250% to 09/12/25 then USD 5 Year Swap + 4.332%(1)(2) | Ba2 |
| 2,781,350 | |||
HSBC Holdings PLC |
| ||||||
1,500,000 | 4.700% to 09/09/31 then USD 5 Year Tsy + 3.250%(2) | Baa3 |
| 1,348,125 | |||
325,000 | 6.000% to 05/22/27 then USD 5 Year Swap + 3.746%(2) | Baa3 |
| 331,500 | |||
850,000 | 6.500% to 03/23/28 then USD 5 Year Swap + 3.606%(2) | Baa3 |
| 867,000 | |||
ING Groep |
| ||||||
2,550,000 | 3.875% to 11/16/27 then USD 5 Year Tsy + 2.862%(2) | Ba1 |
| 2,231,250 | |||
4,885,000 | 6.750% to 04/16/24 then USD 5 Year Swap + 4.204%(2) | Ba1 |
| 5,048,853 | |||
1,900,000 | Lloyds Banking Group PLC, 7.500% to 09/27/25 then USD 5 Year Swap + 4.496%(2) | Baa3 |
| 2,022,582 | |||
1,530,000 | Macquarie Bank, Ltd., 6.125% to 03/08/27 then USD 5 Year Swap + 3.703%(1)(2) | Ba1 |
| 1,525,923 | |||
350,000 | NatWest Group PLC, 4.600% to 12/28/31 then USD 5 Year Tsy + 3.100%(2) | Ba1 |
| 308,875 | |||
Societe Generale SA |
| ||||||
900,000 | 4.750% to 05/26/26 then USD 5 Year Tsy + 3.931%(1)(2) | Ba2 |
| 841,500 | |||
900,000 | 5.375% to 11/18/30 then USD 5 Year Tsy + 4.514%(1)(2) | Ba2 |
| 840,375 | |||
250,000 | 6.750% to 04/06/28 then USD 5 Year Swap + 3.929%(1)(2) | Ba2 |
| 253,125 | |||
750,000 | 8.000% to 09/29/25 then USD 5 Year Swap + 5.873%(1)(2) | Ba2 |
| 810,581 | |||
Standard Chartered PLC |
| ||||||
400,000 | 4.750% to 07/14/31 then USD 5 Year Tsy + 3.805%(1)(2) | Ba1 |
| 362,250 | |||
4,200,000 | 7.500% to 04/02/22 then USD 5 Year Swap + 6.301%(1)(2) | Ba1 |
| 4,200,000 | |||
250,000 | 7.750% to 04/02/23 then USD 5 Year Swap + 5.723%(1)(2) | Ba1 |
| 259,498 | |||
UBS Group AG |
| ||||||
600,000 | 4.375% to 02/10/31 then USD 5 Year Tsy + 3.313%(1)(2) | Baa3 |
| 543,000 | |||
800,000 | 4.875% to 02/12/27 then USD 5 Year Tsy + 3.404%(1)(2) | BB(3) |
| 773,760 | |||
1,600,000 | 7.000% to 01/31/24 then USD 5 Year Swap + 4.344%(1)(2) | Baa3 |
| 1,670,408 | |||
| 56,233,355 |
See accompanying Notes to Financial Statements.
10
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Shares or |
| Moody’s | Value | ||||
CONTINGENT CAPITAL SECURITIES (continued) | |||||||
FINANCIAL SERVICES – 0.1% |
| ||||||
400,000 | Deutsche Bank AG, 6.000% to 04/30/26 then USD 5 Year Tsy + 4.524%(2) | Ba3 | $ | 392,000 | |||
| |||||||
INSURANCE – 1.3% |
| ||||||
QBE Insurance Group, Ltd. |
| ||||||
600,000 | 5.875% to 05/12/25 then USD 5 Year Tsy + 5.513%(1)(2) | Baa2 |
| 615,750 | |||
3,150,000 | 7.500% to 11/24/23 then USD 10 Year Swap + 6.030%, 11/24/43(1) | Baa1 |
| 3,323,250 | |||
| 3,939,000 | ||||||
TOTAL CONTINGENT CAPITAL SECURITIES |
| 60,564,355 | |||||
| |||||||
CORPORATE DEBT SECURITIES – 0.7% |
| ||||||
BANKS – 0.2% |
| ||||||
575,000 | Texas Capital Bancshares, Inc., 4.000% to 05/06/26 then USD 5 Year Tsy + 3.150%, 05/06/31 | Baa3 |
| 562,336 | |||
| |||||||
COMMUNICATIONS – 0.4% |
| ||||||
Qwest Corp. |
| ||||||
12,347 | 6.500%, 09/01/56 | Ba2 |
| 304,106 | |||
36,585 | 6.750%, 06/15/57 | Ba2 |
| 912,796 | |||
| 1,216,902 | ||||||
INSURANCE – 0.1% |
| ||||||
460,000 | Universal Insurance Holdings, Inc., 5.625%, 11/30/26(1) | NR(4) |
| 439,739 | |||
| |||||||
TOTAL CORPORATE DEBT SECURITIES |
| 2,218,977 | |||||
| |||||||
SHORT-TERM INVESTMENTS – 2.3% |
| ||||||
MONEY MARKET FUND – 2.3% |
| ||||||
7,125,596 | Fidelity Investments Money Market Treasury Portfolio – Class I, 0.140%(8) |
| 7,125,596 | ||||
| |||||||
TOTAL SHORT-TERM INVESTMENTS |
| 7,125,596 | |||||
TOTAL INVESTMENTS – 99.6% |
| 303,643,340 | |||||
Other Assets In Excess Of Liabilities – 0.4% |
| 1,345,272 | |||||
TOTAL NET ASSETS – 100.0% | $ | 304,988,612 |
(1) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities are restricted and may be resold in transactions exempt from registration normally to qualified institutional buyers. At March 31, 2022 the total value of these securities is $68,692,280 representing 22.5% of net assets.
(2) Security is perpetual in nature with no stated maturity date.
(3) Standard & Poor’s Rating.
(4) Security is unrated by Moody’s, S&P and Fitch.
(5) Fitch’s Rating.
(6) The interest rate shown reflects the rate in effect as of March 31, 2022.
(7) Convertible security.
(8) The rate is the annualized seven-day yield as of March 31, 2022.
Libor – London Interbank Offered Rate
LLC – Limited Liability Company
LP – Limited Partnership
PLC – Public Limited Company
SA – Corporation
SOFR – Secured Overnight Financing Rate
Tsy – United States Government Treasury Yield
See accompanying Notes to Financial Statements.
11
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Summary by Country | Value | % of | ||||
Australia | $ | 9,988,857 | 3.3 | % | ||
Bermuda |
| 10,357,976 | 3.4 |
| ||
Canada |
| 10,502,037 | 3.4 |
| ||
France |
| 7,330,241 | 2.4 |
| ||
Germany |
| 392,000 | 0.1 |
| ||
Mexico |
| 2,282,804 | 0.8 |
| ||
Netherlands |
| 8,765,558 | 2.9 |
| ||
Spain |
| 12,951,550 | 4.3 |
| ||
Switzerland |
| 8,245,795 | 2.7 |
| ||
United Kingdom |
| 13,761,680 | 4.5 |
| ||
United States |
| 219,064,842 | 71.8 |
| ||
Total Investments |
| 303,643,340 | 99.6 |
| ||
Other Assets in Excess of Liabilities |
| 1,345,272 | 0.4 |
| ||
Net Assets | $ | 304,988,612 | 100.0 | % |
The following table represents the Fund’s investments carried on the Statement of Assets and Liabilities by caption and by Level within the fair value hierarchy as of March 31, 2022. For information on the Fund’s policy regarding the valuation of investments, please refer to the Investment Valuation section of Note 2 in the accompanying Notes to Financial Statements.
Level 1 | Level 2 | Level 3 | Total | |||||||||
Preferred Securities |
|
|
|
| ||||||||
Banks | $ | 61,804,767 | $ | 46,673,789 | $ | — | $ | 108,478,556 | ||||
Financial Services |
| 1,251,352 |
| 7,206,945 |
| — |
| 8,458,297 | ||||
Insurance |
| 16,804,898 |
| 33,073,772 |
| — |
| 49,878,670 | ||||
Utilities |
| 17,134,239 |
| 18,206,641 |
| — |
| 35,340,880 | ||||
Energy |
| 8,397,928 |
| 9,425,559 |
| — |
| 17,823,487 | ||||
Communications |
| 722,040 |
| 3,406,297 |
| — |
| 4,128,337 | ||||
Miscellaneous |
| — |
| 4,418,674 |
| — |
| 4,418,674 | ||||
REITS |
| 5,207,511 |
| — |
| — |
| 5,207,511 | ||||
Contingent Capital Securities(1) |
|
| 60,564,355 |
|
| 60,564,355 | ||||||
Corporate Debt Securities |
|
|
|
| ||||||||
Banks |
| — |
| 562,336 |
| — |
| 562,336 | ||||
Communications |
| 1,216,902 |
| — |
| — |
| 1,216,902 | ||||
Insurance |
| — |
| 439,739 |
| — |
| 439,739 | ||||
Short-Term Investments |
|
|
|
| ||||||||
Money Market Fund |
| 7,125,596 |
| — |
| — |
| 7,125,596 | ||||
Total Investments in Securities | $ | 119,665,233 | $ | 183,978,107 | $ | — | $ | 303,643,340 |
(1) All sub-categories represent Level 2 evaluation status
During the six months ended March 31, 2021 there were no transfers into or out of any levels.
See accompanying Notes to Financial Statements.
12
Shares |
| Value | |||
COMMON STOCKS – 97.0% |
| ||||
COMMUNICATIONS – 8.8% |
| ||||
INTERNET – 8.8% |
| ||||
9,666 | Bumble, Inc., Class A(1) | $ | 280,121 | ||
4,852 | Etsy, Inc.(1) |
| 603,006 | ||
5,454 | EverQuote, Inc., Class A(1) |
| 88,246 | ||
13,549 | Liquidity Services, Inc.(1) |
| 231,959 | ||
28,412 | Magnite, Inc.(1) |
| 375,322 | ||
4,717 | Overstock.com, Inc.(1) |
| 207,572 | ||
4,590 | Revolve Group, Inc.(1) |
| 246,437 | ||
| 2,032,663 | ||||
CONSUMER, CYCLICAL – 5.8% |
| ||||
ENTERTAINMENT – 0.6% |
| ||||
28,645 | Genius Sports, Ltd.(1) |
| 131,767 | ||
LEISURE TIME – 2.8% |
| ||||
11,308 | Callaway Golf Co.(1) |
| 264,833 | ||
16,650 | Life Time Group Holdings, Inc.(1) |
| 242,091 | ||
12,529 | OneSpaWorld Holdings, Ltd.(1) |
| 127,796 | ||
| 634,720 | ||||
RETAIL – 2.4% |
| ||||
7,539 | First Watch Restaurant Group, Inc.(1) |
| 98,384 | ||
5,318 | Lovesac Co.(1) |
| 287,491 | ||
3,505 | Rush Enterprises, Inc., Class A |
| 178,440 | ||
| 564,315 | ||||
TOTAL CONSUMER, CYCLICAL |
| 1,330,802 | |||
CONSUMER, NON-CYCLICAL – 31.0% | |||||
BIOTECHNOLOGY – 11.8% |
| ||||
2,558 | Apellis Pharmaceuticals, Inc.(1) |
| 129,972 | ||
2,505 | Arcus Biosciences, Inc.(1) |
| 79,058 | ||
1,755 | Beam Therapeutics, Inc.(1) |
| 100,561 | ||
14,251 | BioCryst Pharmaceuticals, Inc.(1) |
| 231,721 | ||
2,196 | Blueprint Medicines Corp.(1) |
| 140,280 | ||
6,861 | Caribou Biosciences, Inc.(1) |
| 62,984 | ||
1,599 | CRISPR Therapeutics AG(1) |
| 100,369 | ||
2,799 | Fate Therapeutics, Inc.(1) |
| 108,517 | ||
17,289 | Harvard Bioscience, Inc.(1) |
| 107,365 | ||
20,990 | ImmunoGen, Inc.(1) |
| 99,912 | ||
7,026 | Insmed, Inc.(1) |
| 165,111 | ||
7,139 | Kiniksa Pharmaceuticals Ltd. – Class A(1) |
| 70,962 | ||
5,079 | NeoGenomics, Inc.(1) |
| 61,710 | ||
9,697 | Olink Holding AB, ADR(1) |
| 171,249 | ||
17,371 | Organogenesis Holdings, Inc.(1) |
| 132,367 | ||
7,353 | Pliant Therapeutics, Inc.(1) |
| 51,545 | ||
2,716 | Prothena Corp. PLC(1) |
| 99,324 | ||
7,851 | Veracyte, Inc.(1) |
| 216,452 | ||
9,757 | Vericel Corp.(1) |
| 372,913 | ||
4,420 | Xencor, Inc.(1) |
| 117,926 | ||
3,095 | Xenon Pharmaceuticals, Inc.(1) |
| 94,614 | ||
| 2,714,912 |
Shares |
| Value | |||
COMMON STOCKS (continued) |
| ||||
CONSUMER, NON-CYCLICAL (continued) | |||||
COMMERCIAL SERVICES – 9.0% |
| ||||
27,188 | Alta Equipment Group, Inc.(1) | $ | 336,044 | ||
2,231 | Bright Horizons Family Solutions, |
| 296,031 | ||
6,933 | Chegg, Inc.(1) |
| 251,529 | ||
12,560 | CoStar Group, Inc.(1) |
| 836,622 | ||
3,805 | HealthEquity, Inc.(1) |
| 256,609 | ||
3,450 | ShotSpotter, Inc.(1) |
| 95,634 | ||
| 2,072,469 | ||||
COSMETICS/PERSONAL CARE – 0.9% | |||||
12,052 | Beauty Health Co.(1) |
| 203,438 | ||
HEALTHCARE-PRODUCTS – 8.0% |
| ||||
4,310 | AtriCure, Inc.(1) |
| 283,038 | ||
10,132 | BioLife Solutions, Inc.(1) |
| 230,300 | ||
7,626 | Castle Biosciences, Inc.(1) |
| 342,102 | ||
1,394 | CONMED Corp. |
| 207,079 | ||
5,186 | OrthoPediatrics Corp.(1) |
| 279,992 | ||
9,199 | Quanterix Corp.(1) |
| 268,519 | ||
10,353 | SI-BONE, Inc.(1) |
| 233,978 | ||
| 1,845,008 | ||||
PHARMACEUTICALS – 1.3% |
| ||||
13,768 | Aerie Pharmaceuticals, Inc.(1) |
| 125,289 | ||
1,239 | Enanta Pharmaceuticals, Inc.(1) |
| 88,192 | ||
1,151 | Intellia Therapeutics, Inc.(1) |
| 83,643 | ||
| 297,124 | ||||
TOTAL CONSUMER, |
| 7,132,951 | |||
ENERGY – 2.1% |
| ||||
ENERGY-ALTERNATE SOURCES – 2.1% | |||||
2,363 | Enphase Energy, Inc.(1) |
| 476,806 | ||
FINANCIAL – 3.6% |
| ||||
BANKS – 0.8% |
| ||||
1,311 | Silvergate Capital Corp. – Class A(1) |
| 197,397 | ||
INSURANCE – 0.6% |
| ||||
5,657 | James River Group Holdings Ltd. |
| 139,954 | ||
PRIVATE EQUITY – 0.7% |
| ||||
5,461 | Victory Capital Holdings, Inc., |
| 157,659 | ||
REITS – 1.5% |
| ||||
1,654 | Innovative Industrial Properties, Inc. |
| 339,732 | ||
TOTAL FINANCIAL |
| 834,742 | |||
INDUSTRIAL – 18.3% |
| ||||
AEROSPACE/DEFENSE – 0.1% |
| ||||
4,862 | Archer Aviation, Inc., Class A(1) |
| 23,386 | ||
COMPUTERS – 3.7% |
| ||||
10,403 | Kornit Digital, Ltd.(1) |
| 860,224 |
See accompanying Notes to Financial Statements.
13
Destra Granahan Small Cap Advantage Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Shares |
| Value | |||
COMMON STOCKS (continued) |
| ||||
INDUSTRIAL (continued) | |||||
ELECTRONICS – 3.1% |
| ||||
13,625 | Enovix Corp.(1) | $ | 194,429 | ||
891 | Mesa Laboratories, Inc. |
| 227,098 | ||
3,339 | OSI Systems, Inc.(1) |
| 284,216 | ||
| 705,743 | ||||
ENGINEERING & CONSTRUCTION – 0.8% | |||||
9,082 | 908 Devices, Inc.(1) |
| 172,649 | ||
ENVIRONMENTAL CONTROL – 1.2% | |||||
3,241 | Casella Waste Systems, Inc. – |
| 284,074 | ||
HAND/MACHINE TOOLS – 0.6% |
| ||||
8,525 | Luxfer Holdings PLC |
| 143,220 | ||
MACHINERY-DIVERSIFIED – 2.8% |
| ||||
1,627 | Chart Industries, Inc.(1) |
| 279,470 | ||
8,826 | Columbus McKinnon Corp. |
| 374,222 | ||
| 653,692 | ||||
METAL FABRICATE/HARDWARE – 1.3% | |||||
1,847 | Lawson Products, Inc.(1) |
| 71,183 | ||
1,129 | RBC Bearings, Inc.(1) |
| 218,891 | ||
| 290,074 | ||||
MISCELLANEOUS MANUFACTURING – 4.7% | |||||
5,823 | Axon Enterprise, Inc.(1) |
| 802,002 | ||
3,210 | Materion Corp. |
| 275,225 | ||
| 1,077,227 | ||||
TOTAL INDUSTRIAL |
| 4,210,289 | |||
TECHNOLOGY – 27.4% |
| ||||
COMPUTERS – 1.8% |
| ||||
357 | Globant SA(1) |
| 93,559 | ||
12,784 | Stratasys Ltd.(1) |
| 324,586 | ||
| 418,145 | ||||
SEMICONDUCTORS – 4.3% |
| ||||
8,268 | Azenta, Inc. |
| 685,252 | ||
3,257 | Power Integrations, Inc. |
| 301,858 | ||
| 987,110 | ||||
SOFTWARE – 21.3% |
| ||||
1,636 | Coupa Software, Inc.(1) |
| 166,267 | ||
9,786 | Datto Holding Corp.(1) |
| 261,482 | ||
10,822 | Definitive Healthcare Corp.(1) |
| 266,762 | ||
5,250 | Digital Turbine, Inc.(1) |
| 230,003 | ||
4,258 | Domo, Inc.(1) |
| 215,327 | ||
8,810 | Evolent Health, Inc., Class A(1) |
| 284,563 | ||
7,981 | Health Catalyst, Inc.(1) |
| 208,544 | ||
12,170 | LivePerson, Inc.(1) |
| 297,191 | ||
2,396 | Paycom Software, Inc.(1) |
| 829,927 | ||
32,137 | Porch Group, Inc.(1) |
| 223,191 |
Shares |
| Value | ||||
COMMON STOCKS (continued) |
|
| ||||
TECHNOLOGY (continued) |
| |||||
SOFTWARE (continued) |
| |||||
8,867 | PROS Holdings, Inc.(1) | $ | 295,360 |
| ||
1,161 | Sprout Social, Inc.(1) |
| 93,019 |
| ||
5,962 | SPS Commerce, Inc.(1) |
| 782,214 |
| ||
2,318 | Workiva, Inc.(1) |
| 273,524 |
| ||
37,432 | Zeta Global Holdings Corp., Class A(1) |
| 477,258 |
| ||
| 4,904,632 |
| ||||
TOTAL TECHNOLOGY |
| 6,309,887 |
| |||
TOTAL COMMON STOCKS |
| 22,328,140 |
| |||
RIGHTS – 0.1% |
|
| ||||
PHARMACEUTICALS – 0.1% |
|
| ||||
25,526 | Flexion Therapeutics, Inc.(1)(2)(3) |
| 15,826 |
| ||
TOTAL RIGHTS |
| 15,826 |
| |||
WARRANTS – 0.0% |
|
| ||||
HOLDING COMPANIES-DIVERSIFIED – 0.0% |
| |||||
1,774 | Executive Network Partnering Corp., Exercise Price $11.50, Expiration Date 9/25/2028(1) |
| 556 |
| ||
TOTAL WARRANTS |
| 556 |
| |||
SHORT-TERM INVESTMENTS – 3.7% |
|
| ||||
MONEY MARKET FUND – 3.7% |
|
| ||||
842,021 | Fidelity Investments Money Market Treasury Portfolio – Class I, 0.140%(4) |
| 842,021 |
| ||
TOTAL SHORT-TERM INVESTMENTS |
| 842,021 |
| |||
TOTAL INVESTMENTS – 100.8% (Cost $24,627,553) |
| 23,186,543 |
| |||
Liabilities in Excess of Other Assets – (0.8)% |
| (178,428 | ) | |||
TOTAL NET ASSETS – 100.0% | $ | 23,008,115 |
|
(1) Non-income producing security.
(2) Fair valued using significant unobservable inputs.
(3) Illiquid and restricted investments as to resale.
(4) The rate is the annualized seven-day yield as of March 31, 2022.
ADR – American Depository Receipt
PLC – Public Limited Company
SA – Corporation
See accompanying Notes to Financial Statements.
14
Destra Granahan Small Cap Advantage Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
Summary by Industry Group | Value | % of | ||||
Common Stocks |
|
| ||||
Aerospace/Defense | $ | 23,386 | 0.1 | % | ||
Banks |
| 197,397 | 0.8 |
| ||
Biotechnology |
| 2,714,912 | 11.8 |
| ||
Commercial Services |
| 2,072,469 | 9.0 |
| ||
Computers |
| 1,278,369 | 5.5 |
| ||
Cosmetics/Personal Care |
| 203,438 | 0.9 |
| ||
Electronics |
| 705,743 | 3.1 |
| ||
Energy-Alternate Sources |
| 476,806 | 2.1 |
| ||
Engineering & Construction |
| 172,649 | 0.8 |
| ||
Entertainment |
| 131,767 | 0.6 |
| ||
Environmental Control |
| 284,074 | 1.2 |
| ||
Hand/Machine Tools |
| 143,220 | 0.6 |
| ||
Healthcare-Products |
| 1,845,008 | 8.0 |
| ||
Insurance |
| 139,954 | 0.6 |
| ||
Internet |
| 2,032,663 | 8.8 |
| ||
Leisure Time |
| 634,720 | 2.8 |
| ||
Machinery-Diversified |
| 653,692 | 2.8 |
| ||
Metal Fabricate/Hardware |
| 290,074 | 1.3 |
| ||
Miscellaneous Manufacturing |
| 1,077,227 | 4.7 |
|
Summary by Industry Group | Value | % of | |||||
Pharmaceuticals | $ | 297,124 |
| 1.3 | % | ||
Private Equity |
| 157,659 |
| 0.7 |
| ||
REITS |
| 339,732 |
| 1.5 |
| ||
Retail |
| 564,315 |
| 2.4 |
| ||
Semiconductors |
| 987,110 |
| 4.3 |
| ||
Software |
| 4,904,632 |
| 21.3 |
| ||
Total Common Stocks |
| 22,328,140 |
| 97.0 |
| ||
Rights |
|
|
| ||||
Pharmaceuticals |
| 15,826 |
| 0.1 |
| ||
Total Rights |
| 15,826 |
| 0.1 |
| ||
Warrants |
|
|
| ||||
Holding Companies-Diversified |
| 556 |
| 0.0 |
| ||
Total Warrants |
| 556 |
| 0.0 |
| ||
Short-Term Investments |
|
|
| ||||
Money Market Fund |
| 842,021 |
| 3.7 |
| ||
Total Short-Term Investments |
| 842,021 |
| 3.7 |
| ||
Total Investments |
| 23,186,543 |
| 100.8 |
| ||
Liabilities in Excess of Other Assets |
| (178,428 | ) | (0.8 | ) | ||
Total Net Assets | $ | 23,008,115 |
| 100.0 | % |
The following table represents the Fund’s investments carried on the Statement of Assets and Liabilities by caption and by Level within the fair value hierarchy as of March 31, 2022. For information on the Fund’s policy regarding the valuation of investments, please refer to the Investment Valuation section of Note 2 in the accompanying Notes to Financial Statements.
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 22,328,140 | $ | — | $ | — | $ | 22,328,140 | ||||
Rights |
| — |
| — |
| 15,826 |
| 15,826 | ||||
Warrants |
| 556 |
| — |
| — |
| 556 | ||||
Short-Term Investments |
| 842,021 |
| — |
| — |
| 842,021 | ||||
Total Investments in Securities | $ | 23,170,717 | $ | — | $ | 15,826 | $ | 23,186,543 |
During the six months ended March 31, 2022 there were no transfers into or out of any levels.
See accompanying Notes to Financial Statements.
15
Destra Granahan Small Cap Advantage Fund |
Schedule of Investments (continued) |
As of March 31, 2022 (unaudited) |
The following is a reconciliation of investments in which significant Level 3 unobservable inputs were used in determining fair value as of March 31, 2022:
Investments | Balance as of | Purchase of | Proceeds | Net Realized | Amortization | Net Change | Balance | ||||||||||||||
Rights |
|
|
|
|
|
|
| ||||||||||||||
Pharmaceuticals | $ | — | $ | 15,826 | $ | — | $ | — | $ | — | $ | — | $ | 15,826 | |||||||
Total Investments | $ | — | $ | 15,826 | $ | — | $ | — | $ | — | $ | — | $ | 15,826 |
(1) Includes acquisitions related to corporate actions.
(2) Includes return of capital.
The following table summarizes the valuation techniques and significant unobservable inputs used for the Fund’s investments that are categorized in Level 3 of the fair value hierarchy as of March 31, 2022:
Investments | Fair Value | Valuation | Unobservable | Discount | Impact on | ||||||
Rights |
| ||||||||||
Pharmaceuticals |
| ||||||||||
Flexion Therapeutics, Inc. | $ | 15,826 | Discounted Future Cash Flows | Discount Rate | 35% | Decrease | |||||
| |||||||||||
Total Investments | $ | 15,826 |
(1) As there was no range for each significant unobservable input, weighted average is not reported.
See accompanying Notes to Financial Statements.
16
Destra Flaherty & | Destra | |||||||
Assets: |
|
|
|
| ||||
Investments, at value (cost $304,845,234 and $24,627,553, respectively) | $ | 303,643,340 |
| $ | 23,186,543 |
| ||
Cash |
| 4,025 |
|
| — |
| ||
Receivables: |
|
|
|
| ||||
Interest |
| 2,180,902 |
|
| 22 |
| ||
Dividends |
| 432,107 |
|
| 3,173 |
| ||
Fund shares sold |
| 315,807 |
|
| 39,357 |
| ||
Investments sold |
| — |
|
| 187,904 |
| ||
Prepaid expenses |
| 92,777 |
|
| 35,088 |
| ||
Total assets |
| 306,668,958 |
|
| 23,452,087 |
| ||
Liabilities: |
|
|
|
| ||||
Payables: |
|
|
|
| ||||
Capital shares redeemed |
| 1,281,988 |
|
| 88,551 |
| ||
Management fee (see note 3) |
| 195,270 |
|
| 5,228 |
| ||
Transfer agent fees and expenses |
| 101,359 |
|
| 9,055 |
| ||
Accounting and administrative fees |
| 39,113 |
|
| 9,126 |
| ||
Distribution fees |
| 32,052 |
|
| 1,761 |
| ||
Professional fees |
| 13,714 |
|
| 10,473 |
| ||
Custody fees |
| 5,561 |
|
| 2,159 |
| ||
Investments purchased |
| — |
|
| 316,471 |
| ||
Accrued other expenses |
| 11,289 |
|
| 1,148 |
| ||
Total liabilities |
| 1,680,346 |
|
| 443,972 |
| ||
Net assets | $ | 304,988,612 |
| $ | 23,008,115 |
| ||
Net assets consist of: |
|
|
|
| ||||
Paid-in capital (unlimited shares authorized at $0.001 par value common stock) | $ | 307,178,792 |
| $ | 25,774,353 |
| ||
Total accumulated deficit |
| (2,190,180 | ) |
| (2,766,238 | ) | ||
Net assets | $ | 304,988,612 |
| $ | 23,008,115 |
| ||
Net assets: |
|
|
|
| ||||
Class I | $ | 242,904,927 |
| $ | 14,156,316 |
| ||
Class A |
| 32,680,903 |
|
| 8,851,799 |
| ||
Class C |
| 29,402,782 |
|
| — |
| ||
Shares outstanding: |
|
|
|
| ||||
Class I |
| 13,733,737 |
|
| 1,097,662 |
| ||
Class A |
| 1,839,900 |
|
| 689,965 |
| ||
Class C |
| 1,647,398 |
|
| — |
| ||
Net asset value per share: |
|
|
|
| ||||
Class I | $ | 17.69 |
| $ | 12.90 |
| ||
Class A |
| 17.76 |
|
| 12.83 |
| ||
Maximum offering price per share(1) |
| 18.60 |
|
| 13.43 |
| ||
Class C |
| 17.85 |
|
| — |
|
(1) Include a sales charge of 4.50%.
See accompanying Notes to Financial Statements.
17
Destra Flaherty & | Destra | |||||||
Investment income: |
|
|
|
| ||||
Interest income | $ | 5,078,989 |
| $ | 57 |
| ||
Dividend income |
| 3,384,752 |
|
| 22,748 |
| ||
Total investment income |
| 8,463,741 |
|
| 22,805 |
| ||
Expenses: |
|
|
|
| ||||
Management fee (see note 3) |
| 1,194,124 |
|
| 142,408 |
| ||
Transfer agent fees and expenses |
| 237,856 |
|
| 33,970 |
| ||
Accounting and administrative fees |
| 124,564 |
|
| 31,173 |
| ||
Professional fees |
| 90,036 |
|
| 16,344 |
| ||
Trustee fees (see note 9) |
| 52,057 |
|
| 2,909 |
| ||
Registration fees |
| 34,875 |
|
| 18,878 |
| ||
Chief financial officer fees (see note 9) |
| 25,779 |
|
| 2,213 |
| ||
Chief compliance officer fees (see note 9) |
| 22,097 |
|
| 1,898 |
| ||
Shareholder reporting fees |
| 21,030 |
|
| 3,149 |
| ||
Insurance expense |
| 19,372 |
|
| 982 |
| ||
Custody fees |
| 16,848 |
|
| 11,596 |
| ||
Distribution fees Class C (see note 4) |
| 155,197 |
|
| — |
| ||
Distribution fees Class A (see note 4) |
| 42,407 |
|
| 12,790 |
| ||
Other expenses |
| 8,674 |
|
| 10,941 |
| ||
Total expenses: |
| 2,044,916 |
|
| 289,251 |
| ||
Expenses waived by adviser (see note 3) |
| — |
|
| (82,269 | ) | ||
Net expenses |
| 2,044,916 |
|
| 206,982 |
| ||
Net investment income (loss) |
| 6,418,825 |
|
| (184,177 | ) | ||
Net realized and unrealized gain (loss): |
|
|
|
| ||||
Net realized gain (loss) on: |
|
|
|
| ||||
Investments |
| 90,319 |
|
| (875,912 | ) | ||
Net change in unrealized depreciation on: |
|
|
|
| ||||
Investments |
| (23,532,619 | ) |
| (6,349,348 | ) | ||
Net realized and unrealized loss |
| (23,442,300 | ) |
| (7,225,260 | ) | ||
Net decrease in net assets resulting from operations | $ | (17,023,475 | ) | $ | (7,409,437 | ) |
See accompanying Notes to Financial Statements.
18
Destra Flaherty & Crumrine | Destra Granahan Small Cap | |||||||||||||||
Six Months | Year Ended | Six Months | Year Ended | |||||||||||||
Increase (decrease) in net assets resulting from operations: |
|
|
|
|
|
|
|
| ||||||||
Net investment income (loss) | $ | 6,418,825 |
| $ | 12,058,560 |
| $ | (184,177 | ) | $ | (281,089 | ) | ||||
Net realized gain (loss) |
| 90,319 |
|
| 1,075,306 |
|
| (875,912 | ) |
| 2,910,180 |
| ||||
Net change in unrealized appreciation (depreciation) |
| (23,532,619 | ) |
| 16,704,443 |
|
| (6,349,348 | ) |
| 3,223,481 |
| ||||
Net increase (decrease) in net assets resulting from operations |
| (17,023,475 | ) |
| 29,838,309 |
|
| (7,409,437 | ) |
| 5,852,572 |
| ||||
|
|
|
|
|
|
|
| |||||||||
Distributions to shareholders: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| (5,230,752 | ) |
| (9,456,926 | ) |
| (1,529,219 | ) |
| (12,281 | ) | ||||
Class A |
| (656,972 | ) |
| (1,277,688 | ) |
| (973,921 | ) |
| (18,110 | ) | ||||
Class C |
| (479,720 | ) |
| (943,251 | ) |
| — |
|
| — |
| ||||
Total distributions to shareholders |
| (6,367,444 | ) |
| (11,677,865 | ) |
| (2,503,140 | ) |
| (30,391 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Capital transactions: |
|
|
|
|
|
|
|
| ||||||||
Proceeds from shares sold: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| 31,389,413 |
|
| 86,702,707 |
|
| 4,994,068 |
|
| 12,831,409 |
| ||||
Class A |
| 5,982,223 |
|
| 7,149,588 |
|
| 1,210,575 |
|
| 3,632,177 |
| ||||
Class C |
| 1,481,024 |
|
| 4,760,601 |
|
| — |
|
| — |
| ||||
Reinvestment of distributions: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| 4,216,756 |
|
| 7,437,140 |
|
| 1,350,562 |
|
| 10,465 |
| ||||
Class A |
| 543,880 |
|
| 937,801 |
|
| 886,159 |
|
| 17,366 |
| ||||
Class C |
| 399,051 |
|
| 792,767 |
|
| — |
|
| — |
| ||||
Cost of shares redeemed: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| (29,492,824 | ) |
| (70,272,154 | ) |
| (2,208,314 | ) |
| (2,212,828 | ) | ||||
Class A |
| (5,242,123 | ) |
| (10,730,844 | ) |
| (1,599,741 | ) |
| (3,049,379 | ) | ||||
Class C |
| (2,196,556 | ) |
| (5,138,058 | ) |
| — |
|
| — |
| ||||
Net increase in net assets from capital transactions |
| 7,080,844 |
|
| 21,639,548 |
|
| 4,633,309 |
|
| 11,229,210 |
| ||||
Total increase (decrease) in net assets |
| (16,310,075 | ) |
| 39,799,992 |
|
| (5,279,268 | ) |
| 17,051,391 |
| ||||
|
|
|
|
|
|
|
| |||||||||
Net assets: |
|
|
|
|
|
|
|
| ||||||||
Beginning of period |
| 321,298,687 |
|
| 281,498,695 |
|
| 28,287,383 |
|
| 11,235,992 |
| ||||
End of period | $ | 304,988,612 |
| $ | 321,298,687 |
| $ | 23,008,115 |
| $ | 28,287,383 |
| ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions: |
|
|
|
|
|
|
|
| ||||||||
Shares sold: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| 1,698,096 |
|
| 4,606,702 |
|
| 311,869 |
|
| 696,337 |
| ||||
Class A |
| 318,925 |
|
| 377,456 |
|
| 88,004 |
|
| 210,308 |
| ||||
Class C |
| 78,928 |
|
| 251,180 |
|
| — |
|
| — |
| ||||
Shares reinvested: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| 229,410 |
|
| 396,301 |
|
| 87,133 |
|
| 612 |
| ||||
Class A |
| 29,467 |
|
| 49,824 |
|
| 57,431 |
|
| 1,017 |
| ||||
Class C |
| 21,511 |
|
| 41,885 |
|
| — |
|
| — |
| ||||
Shares redeemed: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| (1,613,805 | ) |
| (3,752,259 | ) |
| (152,296 | ) |
| (120,891 | ) | ||||
Class A |
| (284,554 | ) |
| (571,411 | ) |
| (101,462 | ) |
| (170,968 | ) | ||||
Class C |
| (117,824 | ) |
| (272,688 | ) |
| — |
|
| — |
| ||||
Net increase from capital share transactions |
| 360,154 |
|
| 1,126,990 |
|
| 290,679 |
|
| 616,415 |
|
See accompanying Notes to Financial Statements.
19
Destra Flaherty & Crumrine Preferred and Income Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||
Period ending | Net asset | Net | Net | Total from | Distributions | Distributions | Total | Redemption | Net asset | Total | Ratios to average net assets(1) | Net assets, | Portfolio | |||||||||||||||||||||||||||||||||||||
Gross | Net | Net | ||||||||||||||||||||||||||||||||||||||||||||||||
Class I |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2022(6) | $ | 19.03 | $ | 0.38 | $ | (1.34 | ) | $ | (0.96 | ) | $ | (0.38 | ) | $ | — |
| $ | (0.38 | ) | $ | — | $ | 17.69 | (5.10 | )% | 1.16 | % | 1.16 | % | 4.16 | % | $ | 242,905 | 4 | % | |||||||||||||||
2021 |
| 17.87 |
| 0.79 |
| 1.14 |
|
| 1.93 |
|
| (0.77 | ) |
| — |
|
| (0.77 | ) |
| — |
| 19.03 | 10.92 |
| 1.14 |
| 1.14 |
| 4.20 |
|
| 255,392 | 15 |
| |||||||||||||||
2020 |
| 18.41 |
| 0.82 |
| (0.44 | ) |
| 0.38 |
|
| (0.81 | ) |
| (0.11 | ) |
| (0.92 | ) |
| — |
| 17.87 | 2.22 |
| 1.17 |
| 1.17 |
| 4.61 |
|
| 217,420 | 19 |
| |||||||||||||||
2019 |
| 17.73 |
| 0.84 |
| 0.86 |
|
| 1.70 |
|
| (0.86 | ) |
| (0.16 | ) |
| (1.02 | ) |
| — |
| 18.41 | 10.13 |
| 1.22 |
| 1.22 |
| 4.75 |
|
| 194,583 | 18 |
| |||||||||||||||
2018 |
| 18.68 |
| 0.83 |
| (0.83 | ) |
| 0.00 |
|
| (0.85 | ) |
| (0.10 | ) |
| (0.95 | ) |
| — |
| 17.73 | 0.02 |
| 1.18 |
| 1.18 |
| 4.59 |
|
| 158,002 | 7 |
| |||||||||||||||
2017 |
| 18.14 |
| 0.82 |
| 0.53 |
|
| 1.35 |
|
| (0.81 | ) |
| — |
|
| (0.81 | ) |
| — |
| 18.68 | 7.70 |
| 1.25 |
| 1.25 |
| 4.48 |
|
| 194,525 | 18 |
| |||||||||||||||
Class A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2022(6) |
| 19.11 |
| 0.36 |
| (1.35 | ) |
| (0.99 | ) |
| (0.36 | ) |
| — |
|
| (0.36 | ) |
| — |
| 17.76 | (5.25 | ) | 1.41 |
| 1.41 |
| 3.91 |
|
| 32,681 | 4 |
| |||||||||||||||
2021 |
| 17.94 |
| 0.75 |
| 1.14 |
|
| 1.89 |
|
| (0.72 | ) |
| — |
|
| (0.72 | ) |
| — |
| 19.11 | 10.66 |
| 1.39 |
| 1.39 |
| 3.96 |
|
| 33,941 | 15 |
| |||||||||||||||
2020 |
| 18.48 |
| 0.77 |
| (0.43 | ) |
| 0.34 |
|
| (0.77 | ) |
| (0.11 | ) |
| (0.88 | ) |
| — |
| 17.94 | 1.96 |
| 1.42 |
| 1.42 |
| 4.34 |
|
| 34,444 | 19 |
| |||||||||||||||
2019 |
| 17.79 |
| 0.80 |
| 0.87 |
|
| 1.67 |
|
| (0.82 | ) |
| (0.16 | ) |
| (0.98 | ) |
| — |
| 18.48 | 9.88 |
| 1.47 |
| 1.47 |
| 4.51 |
|
| 34,088 | 18 |
| |||||||||||||||
2018 |
| 18.75 |
| 0.79 |
| (0.85 | ) |
| (0.06 | ) |
| (0.80 | ) |
| (0.10 | ) |
| (0.90 | ) |
| — |
| 17.79 | (0.29 | ) | 1.43 |
| 1.43 |
| 4.29 |
|
| 31,021 | 7 |
| |||||||||||||||
2017 |
| 18.20 |
| 0.77 |
| 0.55 |
|
| 1.32 |
|
| (0.77 | ) |
| — |
|
| (0.77 | ) |
| — |
| 18.75 | 7.46 |
| 1.50 |
| 1.50 |
| 4.24 |
|
| 67,639 | 18 |
| |||||||||||||||
Class C |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2022(6) |
| 19.20 |
| 0.29 |
| (1.35 | ) |
| (1.06 | ) |
| (0.29 | ) |
| — |
|
| (0.29 | ) |
| — |
| 17.85 | (5.58 | ) | 2.16 |
| 2.16 |
| 3.15 |
|
| 29,403 | 4 |
| |||||||||||||||
2021 |
| 18.02 |
| 0.61 |
| 1.15 |
|
| 1.76 |
|
| (0.58 | ) |
| — |
|
| (0.58 | ) |
| — |
| 19.20 | 9.85 |
| 2.14 |
| 2.14 |
| 3.21 |
|
| 31,966 | 15 |
| |||||||||||||||
2020 |
| 18.56 |
| 0.65 |
| (0.45 | ) |
| 0.20 |
|
| (0.63 | ) |
| (0.11 | ) |
| (0.74 | ) |
| — |
| 18.02 | 1.20 |
| 2.17 |
| 2.17 |
| 3.60 |
|
| 29,634 | 19 |
| |||||||||||||||
2019 |
| 17.87 |
| 0.67 |
| 0.87 |
|
| 1.54 |
|
| (0.69 | ) |
| (0.16 | ) |
| (0.85 | ) |
| — |
| 18.56 | 9.02 |
| 2.22 |
| 2.22 |
| 3.76 |
|
| 29,065 | 18 |
| |||||||||||||||
2018 |
| 18.83 |
| 0.66 |
| (0.85 | ) |
| (0.19 | ) |
| (0.67 | ) |
| (0.10 | ) |
| (0.77 | ) |
| — |
| 17.87 | (1.02 | ) | 2.17 |
| 2.17 |
| 3.60 |
|
| 29,932 | 7 |
| |||||||||||||||
2017 |
| 18.28 |
| 0.64 |
| 0.54 |
|
| 1.18 |
|
| (0.63 | ) |
| — |
|
| (0.63 | ) |
| — |
| 18.83 | 6.64 |
| 2.25 |
| 2.25 |
| 3.51 |
|
| 32,764 | 18 |
|
(1) Annualized for periods less than one year.
(2) Based on average shares outstanding during the period.
(3) Based on the net asset value as of period end. Assumes an investment at net asset value at the beginning of the period and reinvestment of all distributions during the period. The return would have been lower if certain expenses had not been waived or reimbursed by the investment adviser.
(4) Not annualized for periods less than one year.
(5) The contractual fee and expense waiver is reflected in both the net expense and net investment income (loss) ratios (see Note 3).
(6) For the six months ended March 31, 2022 (Unaudited).
See accompanying Notes to Financial Statements.
20
Financial Highlights |
For a share of common stock outstanding throughout the periods indicated (continued) |
Destra Granahan Small Cap Advantage Fund | |||||||||||||||||||||||||||||||||||||||||||||||||||
Period ending | Net asset | Net | Net | Total from | Distributions | Distributions | Total | Redemption | Net asset | Total | Ratios to average net assets(1) | Net assets, | Portfolio | ||||||||||||||||||||||||||||||||||||||
Gross | Net | Net | |||||||||||||||||||||||||||||||||||||||||||||||||
Class I |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2022(7) | $ | 18.93 | $ | (0.10 | ) | $ | (4.34 | ) | $ | (4.44 | ) | $ | — |
| $ | (1.59 | ) | $ | (1.59 | ) | $ | — | $ | 12.90 | (24.86 | )% | 2.14 | % | 1.50 | % | (1.32 | )% | $ | 14,156 | 36 | % | |||||||||||||||
2021 |
| 12.77 |
| (0.23 | ) |
| 6.42 |
|
| 6.19 |
|
| (0.02 | ) |
| (0.01 | ) |
| (0.03 | ) |
| — |
| 18.93 | 48.55 |
| 2.26 |
| 1.50 |
| (1.28 | ) |
| 16,105 | 49 |
| |||||||||||||||
2020 |
| 9.25 |
| (0.13 | ) |
| 3.65 |
|
| 3.52 |
|
| — |
|
| — |
|
| — |
|
| — |
| 12.77 | 38.05 |
| 6.49 |
| 1.50 |
| (1.22 | ) |
| 3,512 | 85 |
| |||||||||||||||
2019(8) |
| 10.00 |
| (0.01 | ) |
| (0.74 | ) |
| (0.75 | ) |
| — |
|
| — |
|
| — |
|
| — |
| 9.25 | (7.50 | ) | 35.78 |
| 1.50 |
| (0.95 | ) |
| 1,093 | 86 |
| |||||||||||||||
Class A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2022(7) |
| 18.86 |
| (0.12 | ) |
| (4.32 | ) |
| (4.44 | ) |
| — |
|
| (1.59 | ) |
| (1.59 | ) |
| — |
| 12.83 | (24.96 | ) | 2.39 |
| 1.75 |
| (1.57 | ) |
| 8,852 | 36 |
| |||||||||||||||
2021 |
| 12.75 |
| (0.27 | ) |
| 6.41 |
|
| 6.14 |
|
| (0.02 | ) |
| (0.01 | ) |
| (0.03 | ) |
| — |
| 18.86 | 48.16 |
| 2.51 |
| 1.75 |
| (1.54 | ) |
| 12,182 | 49 |
| |||||||||||||||
2020 |
| 9.26 |
| (0.17 | ) |
| 3.66 |
|
| 3.49 |
|
| — |
|
| — |
|
| — |
|
| — |
| 12.75 | 37.69 |
| 6.74 |
| 1.75 |
| (1.47 | ) |
| 7,724 | 85 |
| |||||||||||||||
2019(8) |
| 10.00 |
| (0.02 | ) |
| (0.72 | ) |
| (0.74 | ) |
| — |
|
| — |
|
| — |
|
| — |
| 9.26 | (7.40 | ) | 36.03 |
| 1.75 |
| (1.19 | ) |
| 220 | 86 |
|
____________
(1) Annualized for periods less than one year.
(2) Based on average shares outstanding during the period.
(3) Based on the net asset value as of period end. Assumes an investment at net asset value at the beginning of the period and reinvestment of all distributions during the period. The return would have been lower if certain expenses had not been waived or reimbursed by the investment adviser.
(4) Not annualized for periods less than one year.
(5) For the periods ended September 30, 2020 and September 30, 2021, gross expenses ratios are inclusive of deferred service provider fees. For the period ended September 30, 2020, gross expense ratios excluding deferred service provider fees would have been 5.18% and 5.43% for Class I and Class A, respectively. For the period ended September 30, 2021, gross expense ratios excluding deferred service provider fees would have been 1.78% and 2.03% for Class I and Class A, respectively (see Note 3).
(6) The contractual fee and expense waiver is reflected in both the net expense and net investment income (loss) ratios (see Note 3).
(7) For the six months ended March 31, 2022 (Unaudited).
(8) Commenced operations on August 9, 2019.
See accompanying Notes to Financial Statements.
21
1. ORGANIZATION
Destra Investment Trust (the “Trust”) was organized as a Massachusetts business trust on May 25, 2010 as an open-end investment company, under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust consists of two series of diversified portfolios (collectively, the “Funds” and each individually a “Fund”): Destra Flaherty & Crumrine Preferred and Income Fund (“Preferred and Income Fund”), which commenced operations on April 12, 2011, and Destra Granahan Small Cap Advantage Fund (“Small Cap Advantage Fund”), which commenced operations on August 8, 2019. The Preferred and Income Fund’s investment objective is to seek total return with an emphasis on high current income. The Small Cap Advantage Fund’s investment objective is to seek long-term capital appreciation. The Preferred and Income Fund currently offers three classes of shares, Classes A, C, and I. The Small Cap Advantage Fund currently offers two classes of shares, Classes A and I. All share classes have equal rights and voting privileges, except in matters affecting a single class. Each Fund represents shares of beneficial interest (“Shares”) in a separate portfolio of securities and other assets, with its own investment objective, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Funds are investment companies under U.S. GAAP and follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies.
(a) Investment Valuation
Securities listed on an exchange are valued at the last reported sale price on the principal exchange or on the principal over-the-counter (“OTC”) market on which such securities are traded, as of the close of regular trading on the New York Stock Exchange (“NYSE”) on the day the securities are being valued or, if there are no sales, at the mean of the most recent bid and asked prices. Equity securities that are traded primarily on the Nasdaq Stock Market are valued at the Nasdaq Official Closing Price. Debt securities are valued at the prices supplied by the pricing agent for such securities, if available, and otherwise are valued at the available bid price for such securities or, if such prices are not available, at prices for securities of comparable maturity, quality and type. When prices are not readily available, or are determined not to reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before each Fund calculates its net asset value (“NAV”), the Funds value these securities at fair value as determined in accordance with procedures approved by the Board of Trustees (the “Board”). Short-term securities with maturities of 60 days or less at time of purchase and of sufficient credit quality are valued at amortized cost, which approximates fair value.
For those securities where quotations or prices are not available, the valuations are determined in accordance with procedures established in good faith by the Board. Valuations in accordance with these procedures are intended to reflect each security’s (or asset’s) “fair value”.
Such “fair value” is the amount that a Fund might reasonably expect to receive for the security (or asset) upon its current sale. Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the initial cost of the security, (iii) the existence of any contractual restrictions on the security’s disposition, (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies, (v) quotations or evaluated prices from broker-dealers and/or pricing services, (vi) information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), (vii) an analysis of the company’s financial statements, and (viii) an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold (e.g., the existence of pending merger activity, public offerings or tender offers that might affect the value of the security).
In accordance with FASB ASC Section 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), fair value is defined as the price that each Fund would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820-10 establishes three different categories for valuations. Level 1 valuations are those based upon quoted prices in active markets that the Funds have the ability to access. Level 2 valuations are those based upon quoted prices in inactive markets or based upon significant observable inputs (e.g., yield curves; benchmark interest rates; indices). Level 3 valuations are those based upon unobservable inputs (e.g., discounted cash flow analysis; non-market based methods used to determine fair valuation).
22
Notes to Financial Statements (continued) |
March 31, 2022 (Unaudited) |
|
The Funds value Level 1 securities using readily available market quotations in active markets. The Funds value Level 2 fixed income securities using independent pricing providers who employ matrix pricing models utilizing market prices, broker quotes and prices of securities with comparable maturities and qualities. The Funds value Level 2 equity securities using various observable market inputs in accordance with procedures established in good faith by management. For Level 3 securities, the Funds estimate fair value based upon a variety of observable and non-observable inputs using procedures established in good faith by management. The Funds’ valuation policies and procedures are approved by the Board.
(b) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date basis. Realized gains and losses on investments are determined on the identified cost basis. Dividend income is recorded net of applicable withholding taxes on the ex-dividend date and interest income is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized to interest income over the lives of the respective securities using the effective interest method.
(c) Allocation of Income and Expenses
In calculating the NAV per Share of each class, investment income, realized and unrealized gains and losses and expenses other than class specific expenses are allocated daily to each class of Shares based upon the proportion of net assets of each class at the beginning of each day. Each Fund is charged for those expenses that are directly attributable to each series, such as management fees and registration costs.
The Funds record distributions received in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates (if actual amounts are not available) and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Funds adjust the estimated amounts of components of distributions (and consequently its net investment income) as necessary once the issuers provide information about the actual composition of the distributions.
The Funds may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Funds will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
(d) Cash and Cash Equivalents
Cash and cash equivalents may consist of demand deposits and highly liquid investments (e.g., U.S. treasury notes) with original maturities of three months or less. Cash and cash equivalents are carried at cost, which approximates fair value. The Funds deposit cash and cash equivalents with highly-rated banking corporations and, at times, may exceed the insured limits under applicable law.
(e) Indemnification
In the normal course of business, the Funds may enter into contracts that contain a variety of representations which provide general indemnifications for certain liabilities. Each Fund’s maximum exposure under these arrangements is unknown. However, since their commencement of operations, the Funds have not had claims or losses pursuant to these contracts and expect the risk of loss to be remote.
(f) Distributions to Shareholders
The Funds intend to pay substantially all of their net investment income to shareholders. The Preferred and Income Fund expects to pay monthly income distributions and the Small Cap Advantage Fund expects to pay annual income distributions. In addition, the Funds intend to distribute any capital gains to shareholders as capital gain dividends at least annually. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.
(g) Use of Estimates
The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.
23
Notes to Financial Statements (continued) |
March 31, 2022 (Unaudited) |
|
3. INVESTMENT MANAGEMENT AND OTHER AGREEMENTS
Investment Management Agreement
The Funds have entered into an Investment Management Agreement (“the Agreement”) with Destra Capital Advisors LLC (“Destra”). Effective February 11, 2021, (the “Effective Date”) the Preferred and Income Fund entered into a new Investment Management Agreement (“the new Agreement”) with DFC Preferred Advisors LLC (“DFC”). As of the effective date, DFC replaces Destra as the Advisor to the Preferred and Income Fund.
Subject to the oversight of the Trust’s Board, Destra and DFC (collectively, the “Advisers” and each individually an “Adviser”) are responsible for managing the investment and reinvestment of the assets of each Fund in accordance with each Fund’s respective investment objectives and policies and limitations and providing day-to-day administrative services to the Funds either directly or through others selected by it for the Funds. The Adviser receives an annual management fee payable monthly, at an annual rate of 0.75% and 1.10% respectively, of the average daily net assets of the Preferred and Income Fund and Small Cap Advantage Fund. Management fees paid by the Funds for the six months ended March 31, 2022 are disclosed in the Statement of Operations. The Preferred and Income Fund paid management fees totaling $1,194,124 to DFC for the six months ended March 31, 2022. During the six months ended March 31, 2022, the Small Cap Advantage Fund paid management fees totaling $142,408 to Destra.
The Trust and the Adviser have entered into an expense limitation agreement where the Adviser has agreed to cap expenses such that the total annual Fund operating expenses, excluding brokerage commissions and other trading expenses, taxes, interest, acquired fund fees and other extraordinary expenses (such as litigation and other expenses not incurred in the ordinary course of business), do not exceed 1.50%, 2.25%, and 1.25% of the Preferred and Income Fund’s average daily net assets attributable to Class A shares, Class C shares, and Class I shares, respectively, and 1.75%, and 1.50% of the Small Cap Fund’s average daily net assets attributable to Class A shares and Class I shares, respectively (the “Expense Limitation Agreement”). The Expense Limitation Agreement will continue in effect until January 28, 2031, may be terminated or modified prior to that date only with the approval of the Board and will automatically continue in effect for successive twelve-month periods thereafter. Any fee waived and/or expense assumed by the Adviser pursuant to the Expense Limitation Agreement is subject to recovery by the Adviser for up to three years from the date the fee was waived and/or expense assumed, but no reimbursement payment will be made by the Fund if such reimbursement results in the Fund exceeding an expense ratio equal to the Fund’s then-current expense caps or the expense caps that were in place at the time the fee was waived and/or expense assumed by the Adviser.
During the six months ended March 31, 2022, expenses totaling $82,269 were waived by Destra for the Small Cap Advantage Fund and no expenses were waived by DFC for the Preferred and Income Fund. Recognition of eligibility for recapture by the Adviser is affected by the timing of fees paid and invoices received at the time of the calculation.
The following amounts are subject to recapture by Destra by the following dates:
Small Cap | |||
September 30, 2022 | $ | 46,694 | |
September 30, 2023 |
| 211,052 | |
September 30, 2024 |
| 225,041 |
Sub-Advisory Agreements
The Preferred and Income Fund has retained Flaherty & Crumrine Incorporated (“Flaherty”) to serve as its investment sub-adviser. Small Cap Advantage Fund has retained Granahan Investment Management, Inc. (“Granahan”) to serve as its investment sub-adviser.
DFC has agreed to pay from its own assets an annualized sub-advisory fee, quarterly, to Flaherty an amount equal to one half of the net management fees collected by DFC, net of any waivers, reimbursement payments, supermarket fees and alliance fees waived, reimbursed or paid by DFC in respect of the Preferred and Income Fund.
Destra has agreed to pay from its own assets an annualized sub-advisory fee, monthly, to Granahan an amount equal to one half of the net advisory fees collected by Destra, net of any waivers, reimbursement payments, supermarket fees and alliance fees waived, reimbursed or paid by Destra in respect of the Small Cap Advantage Fund.
24
Notes to Financial Statements (continued) |
March 31, 2022 (Unaudited) |
|
Other Service Providers
UMBFS serves as each Fund’s Administrator, Accounting Agent, and Transfer Agent. UMB Bank, N.A. serves as each Fund’s Custodian.
4. DISTRIBUTION AND SERVICE PLANS
The Funds’ Class A Shares and the Preferred and Income Fund’s Class C Shares have adopted a Distribution Plan (“Plan”) in accordance with Rule 12b-1 under the 1940 Act. The Plan is a compensation type plan that permits the payment at an annual rate of up to 0.25% of the average daily net assets of the Funds’ Class A Shares and up to 1.00% of the average daily net assets of the Preferred and Income Fund’s C Shares, respectively. Of the 1.00%, up to 0.75% of this fee is for distribution services and up to 0.25% of this fee is for shareholder services. Under the terms of the Plan, the Funds are authorized to make payments to Destra Capital Investments, LLC, the Funds’ distributor (the “Distributor”) for remittance to retirement plan service providers, broker-dealers, bank trust departments, financial advisers and other financial intermediaries, as compensation for distribution and/or shareholder services performed by such entities for their customers who are investors in the Fund.
5. FEDERAL TAX INFORMATION
Each Fund intends to qualify as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986. If so qualified, the Funds will not be subject to federal income tax to the extent each Fund distributes substantially all of its net investment income and capital gains to shareholders. Therefore, no federal income tax provision is required.
The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. GAAP.
To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts, on the Statements of Assets and Liabilities, based on their Federal tax basis treatment; temporary differences do not require reclassification and had no impact on the NAV of the Funds.
Each Fund complies with FASB interpretation Accounting for Uncertainty in Income Taxes which provides guidance for how uncertain tax provisions should be recognized, measured, presented and disclosed in the financial statements. Accounting for Uncertainty in Income Taxes requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing each Fund’s tax returns to determine whether it is “more-likely-than-not,” (i.e., greater than 50 percent) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold may result in a tax benefit or expense in the current period.
Accounting for Uncertainty in Income Taxes requires management of each Fund to analyze all open tax years, as defined by the statutes of limitations, for all major jurisdictions, which includes federal and certain states. Open tax years are those that are open for exam by the taxing authorities (i.e., the last three tax years and the interim tax period since then). The Funds have no examinations in progress during the six months ended March 31, 2022. For all open tax years and all major taxing jurisdictions through the end of the reporting period, management of the Funds reviewed all tax positions taken or expected to be taken in the preparation of each Fund’s tax returns and concluded that Accounting for Uncertainty in Income Taxes resulted in no effect on each Fund’s reported net assets or results of operations as of and during the period ended March 31, 2022. Management of the Funds also is not aware of any tax positions for which it is reasonably possible that the total amounts of recognized tax benefits will significantly change in the next twelve months.
At September 30, 2021, gross unrealized appreciation/(depreciation) of investments, based on cost for federal income tax purposes were as follows:
Preferred | Small Cap | |||||||
Cost of investments | $ | 297,322,834 |
| $ | 23,618,303 |
| ||
Gross unrealized appreciation |
| 23,514,835 |
|
| 6,750,042 |
| ||
Gross unrealized depreciation |
| (415,427 | ) |
| (2,106,702 | ) | ||
Net unrealized appreciation |
| 23,099,408 |
|
| 4,643,340 |
|
The difference between cost amounts for financial statement and federal income tax purposes, if any, is due primarily to timing differences in recognizing certain gains and losses in security transactions.
U.S. GAAP requires that certain components of net assets be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or NAV per Share.
25
Notes to Financial Statements (continued) |
March 31, 2022 (Unaudited) |
|
For the year ended September 30, 2021, permanent differences in book and tax accounting have been reclassified to paid-in capital and distributable earnings as follows:
Paid-in | Distributable | |||||||
Preferred and Income Fund | $ | (3,287 | ) | $ | 3,287 |
| ||
Small Cap Advantage Fund |
| 1 |
|
| (1 | ) |
As of September 30, 2021, the components of distributable earnings on a tax basis were as follows:
Preferred | Small Cap | ||||||
Undistributed ordinary income | $ | 223,499 |
| $ | 810,272 | ||
Undistributed long-term capital gains |
| — |
|
| 1,692,727 | ||
Tax distributable earnings |
| 223,499 |
|
| 2,502,999 | ||
Accumulated capital and other losses |
| (2,122,168 | ) |
| — | ||
Temporary book and tax differences |
| — |
|
| — | ||
Unrealized appreciation on investments |
| 23,099,408 |
|
| 4,643,340 | ||
Total distributable earnings | $ | 21,200,739 |
| $ | 7,146,339 |
Under current tax law, net capital losses realized after October 31st and net ordinary losses incurred after December 31st may be deferred and treated as occurring on the first day of the following fiscal year. For the tax year ending September 30, 2021, the Preferred and Income Fund and Small Cap Advantage Fund had no qualified post-October capital losses or qualified late year ordinary losses.
The tax character of distributions paid during the years ended September 30, 2021 and 2020 were as follows:
Preferred and | Small Cap | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Distributions paid from: |
|
|
|
| ||||||||
Ordinary income | $ | 11,677,865 | $ | 12,326,533 | $ | 18,814 | $ | — | ||||
Net long-term capital gains |
| — |
| 1,525,485 |
| 11,577 |
| — | ||||
Total distributions paid | $ | 11,677,865 | $ | 13,852,018 | $ | 30,391 | $ | — |
At September 30, 2021, the Funds had accumulated capital loss carry forwards as follows:
Preferred | Small Cap | |||||
Short-term | $ | 1,321,832 | $ | — | ||
Long-term |
| 800,336 |
| — | ||
Total | $ | 2,122,168 | $ | — |
To the extent that the Funds may realize future net capital gains, those gains will be offset by any unused capital loss carry forwards. Future capital loss carry forward utilization in any given year may be subject to Internal Revenue Code limitations.
The Preferred and Income Fund and Small Cap Advantage Fund utilized $0 and $161,647, respectively, of their capital loss carry forward during the year ended September 30, 2021.
6. INVESTMENT TRANSACTIONS
For the six months ended March 31, 2022, the cost of investments purchased and proceeds from sales of investments, excluding short-term investments were as follows:
Purchases | Sales | |||||
Preferred and Income Fund | $ | 23,056,533 | $ | 11,291,183 | ||
Small Cap Advantage Fund |
| 11,304,118 |
| 9,158,483 |
26
Notes to Financial Statements (continued) |
March 31, 2022 (Unaudited) |
7. PURCHASES AND REDEMPTIONS OF SHARES
Purchases of Class A Shares are subject to an initial sales charge of up to 4.50% on purchases of less than $1,000,000. The Funds’ Shares are purchased at NAV per Share as determined at the close of the regular trading session of the NYSE after a purchase order is received in good order by the Funds or their authorized agent. Some authorized agents may charge a separate or additional fee for processing the purchase of Shares. Redemption requests will be processed at the next NAV per Share calculated after a redemption request is accepted.
A contingent deferred sales charge (“CDSC”) of 1.00% applies on Class C Shares redeemed within 12 months of purchase. The CDSC may be waived for certain investors as described in the Preferred and Income Fund’s Prospectus. For the six months ended March 31, 2022, the total CDSC received by affiliates in the Preferred and Income Fund amounted to $1,635.
For the six months ended March 31, 2022, various broker dealers received $130,092 and $36,419 of sales charges from Shares sold of the Preferred and Income Fund and Small Cap Advantage Fund, respectively. Sales charges from Shares sold of the Funds received by affiliates amounted to $15,559 and $4,943 for the Preferred and Income Fund and Small Cap Advantage Fund, respectively.
8. PRINCIPAL RISKS
Risk is inherent in all investing. The value of your investment in the Funds, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. You may lose part or all of your investment in the Funds or your investment may not perform as well as other similar investments. The following is a summary description of certain risks of investing in the Funds.
Recent Market and Economic Developments — Certain impacts to public health conditions particular to the coronavirus (COVID-19) outbreak may have a significant negative impact on the operations and profitability of the Funds’ investments. The extent of the impact to the financial performance of the Funds will depend on future developments, including (i) the duration and spread of the outbreak, (ii) the restrictions and advisories, (iii) the effects on the financial markets, and (iv) the effects on the economy overall, all of which are highly uncertain and cannot be predicted.
Credit and Counterparty Risk — Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and principal payments when due and the related risk that the value of a security may decline because of concerns about the issuer’s ability to make such payments.
Equity Securities Risk — Stock markets are volatile. The price of equity securities fluctuates based on changes in a company’s financial condition and overall market and economic conditions.
Financial Services Companies Risk — The Preferred and Income Fund invests in financial services companies, which may include banks, thrifts, brokerage firms, broker/dealers, investment banks, finance companies and companies involved in the insurance industry. These companies are especially subject to the adverse effects of economic recession; currency exchange rates; government regulation; decreases in the availability of capital; and volatile interest rates.
Interest Rate Risk — If interest rates rise, in particular, if long-term interest rates rise, the prices of fixed-rate securities held by a Fund will fall.
Market Risk and Selection Risk — Market risk is the risk that one or more markets in which the Funds invests will go down in value, including the possibility that the markets will go down sharply and unpredictably. Selection risk is the risk that the securities selected by Funds’ management will underperform the markets, the relevant indices or the securities selected by other Funds with similar investment objectives and investment strategies. This means you may lose money.
Preferred Security Risk — Preferred and other subordinated securities rank lower than bonds and other debt instruments in a company’s capital structure and therefore will be subject to greater credit risk than those debt instruments. Distributions on some types of these securities may also be skipped or deferred by issuers without causing a default. Finally, some of these securities typically have special redemption rights that allow the issuer to redeem the security at par earlier than scheduled.
Smaller Companies Risk — The Small Cap Advantage Fund will hold securities of small- and/or mid-cap companies. Such companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than those of larger, more established companies. Smaller capitalization issuers are often not as diversified in their business activities and frequently have fewer product lines, financial resources and management experience than issuers with larger market capitalizations. Additionally, reduced trading volume of securities of smaller issuers may make such securities more difficult to sell than those of larger companies.
27
Notes to Financial Statements (continued) |
March 31, 2022 (Unaudited) |
9. TRUSTEES AND OFFICERS
The Destra Fund Complex (consisting of the Trust’s, the Destra Multi-Alternative Fund, and the BlueBay Destra International Event-Driven Credit Fund), pays each Independent Trustee a retainer of $39,000 per year, and the Chairman of the Board a retainer of $46,000 per year for their services in this capacity. Each fund in the Destra Fund Complex pays a portion of the retainer received by each Trustee, which is allocated annually across the Destra Fund Complex based on each fund’s respective net assets as of December 31 of the preceding year. Trustees are also reimbursed for travel-related and authorized business expenses. The Trust does not pay compensation to Trustees who also serve in an executive officer capacity for the Trust or the Advisers.
Employees of PINE Advisor Solutions, LLC (“PINE”) serve as the Trust’s Chief Financial Officer and Assistant Treasurer. PINE receives an annual base fee for the services provided to the Fund. PINE is reimbursed for certain out-of-pocket expenses by the Trust. Each Fund pays a portion of these fees on a pro rata basis according to each Fund’s average net assets. Service fees paid by the Trust for the six months ended March 31, 2022 are disclosed in the Statement of Operations as chief financial officer fees.
The Trust’s Chief Compliance Officer monitors and tests the policies and procedures of the Trust in conjunction with requirements under Rule 38a-1 under the 1940 Act and receives an annual base fee. Each Fund pays a portion of these fees on a pro rata basis according to each Fund’s average net assets. Cory Gossard, an employee of PINE, serves as the Chief Compliance Officer of the Trust. Consequently, the fees paid by the Trust for the six months ended March 31, 2022, as disclosed in the Statement of Operations.
10. SUBSEQUENT EVENTS
The Funds evaluated subsequent events through the date the financial statements were issued and determined that there were no additional material events that would require adjustment to or disclosure in the Funds’ financial statements.
28
This report is sent to shareholders of the Funds for their information. It is not a Prospectus, circular or representation intended for use in the purchase or sale of Shares of the Funds or of any securities mentioned in this report.
Corporate Dividends Received Deduction — For the period ended September 30, 2021, the Preferred and Income Fund and Small Cap Advantage Fund had 76% and 0%, respectively, of dividends paid from net investment income qualify for the 70% dividends received deduction available to corporate shareholders.
Qualified Dividend Income — For the period ended September 30, 2021, the Preferred and Income Fund and Small Cap Advantage Fund had 100% and 0%, respectively, of dividends paid from net investment income designated as qualified dividend income.
Long-term Capital Gains — For the period ended September 30, 2021, pursuant to IRC 852 (b)(3) of the Internal Revenue Code, the Preferred and Income Fund and Small Cap Advantage Fund designate $0 and $11,577, respectively, as long-term capital gain distributions.
Proxy Voting — Policies and procedures that the Funds use to determine how to vote proxies as well as information regarding how the Funds voted proxies for portfolio securities is available without charge and upon request by calling 877-855-3434 or visiting Destra Capital Investments LLC’s website at www.destracapital.com or by accessing the Fund’s Form N-PX on the SEC’s website at www.sec.gov.
Disclosure of Portfolio Holdings — The Funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT (or its predecessor Form N-Q). The Funds’ Form N-PORT (or its predecessor Form N-Q) is available on the SEC website at www.sec.gov or by visiting Destra Capital Investments LLC’s website at www.destracapital.com.
Liquidity Risk Management — The Funds have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that each Fund adopt a program that is reasonably designed to assess and manage the Fund’s liquidity risk, which is the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund. Assessment and management of each Fund’s liquidity risk under the Program take into consideration certain factors, such as the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and limiting holdings of illiquid investments. The Funds’ Board approved the appointment of the Liquidity Risk Management Committee as the Program’s administrator to carry out the specific responsibilities set forth in the Program, including reporting to the Board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for the past year (the “Program Administrator Report”). The Board has reviewed the Program Administrator Report covering the period from January 1, 2021, through December 31, 2021 (the “Review Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage each Fund’s liquidity risk.
29
Board of Trustees | Officers | Investment Advisers | ||
John S. Emrich | Robert A. Watson | Destra Capital Advisors LLC | ||
Michael S. Erickson | President | Bozeman, MT | ||
Jeffrey S. Murphy | ||||
Nicholas Dalmaso | Derek Mullins | DFC Preferred Advisors LLC | ||
Chief Financial Officer and Treasurer | Bozeman, MT | |||
Cory Gossard | Sub-Advisers | |||
Chief Compliance Officer | Flaherty & Crumrine Inc. | |||
Pasadena, CA | ||||
Marcie McVeigh | ||||
Assistant Treasurer | Granahan Investment Management Inc. | |||
Waltham, MA | ||||
Jake Schultz | ||||
Secretary | Distributor | |||
Destra Capital Investments LLC | ||||
Ken Merritt | Bozeman, MT | |||
Assistant Secretary | ||||
Custodian | ||||
UMB Bank, N.A. | ||||
Kansas City, MO | ||||
Administrator, Accounting Agent, and | ||||
UMB Fund Services, Inc. | ||||
Milwaukee, WI | ||||
Legal Counsel | ||||
Faegre Drinker Biddle & Reath LLP | ||||
Philadelphia, PA | ||||
Independent Registered Public Accounting Firm | ||||
Cohen & Company, Ltd. | ||||
Chicago, IL |
Privacy Principles of the Trust for Shareholders
The Funds are committed to maintaining the privacy of their shareholders and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information the Funds collect, how we protect that information and why, in certain cases, we may share information with select other parties.
Generally, the Funds do not receive any non-public personal information relating to their shareholders, although certain non-public personal information of their shareholders may become available to the Funds. The Funds do not disclose any non-public personal information about their shareholders or former shareholders to anyone, except as permitted by law or as is necessary in order to service shareholder accounts (for example, to a transfer agent or third party administrator).
The Funds restrict access to non-public personal information about the shareholders to Destra Capital Advisors LLC employees with a legitimate business need for the information. The Funds maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of their shareholders.
Questions concerning your Shares of the Trust?
• If your Shares are held in a Brokerage Account, contact your Broker.
This report is sent to shareholders of the Funds for their information. It is not a Prospectus, circular or representation intended for use in the purchase or sale of Shares of the Funds or of any securities mentioned in this report.
30
(b) | Not applicable. |
ITEM 2. CODE OF ETHICS.
Not applicable to semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the period are included as part of the report to shareholders filed under Item 1 of this Form N-CSR. |
(b) | Not applicable. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) | The Registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the Registrant on Form N-CSR is (i) accumulated and communicated to the Registrant’s management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. |
(b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that have materially affected or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) | Not applicable to semi-annual reports. |
(a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Destra Investment Trust | ||
By (Signature and Title) | /s/ Robert A. Watson | ||
Robert A. Watson, President | |||
(Principal Executive Officer) | |||
Date | 6/6/2022 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title) | /s/ Robert A. Watson | ||
Robert A. Watson, President | |||
(Principal Executive Officer) | |||
Date | 6/6/2022 |
By (Signature and Title) | /s/ Derek J. Mullins | ||
Derek J. Mullins, Chief Financial Officer | |||
(Principal Financial Officer) | |||
Date | 6/6/2022 | ||