06/09/2025 | Press release | Distributed by Public on 06/09/2025 12:03
united states
securities and exchange commission
washington, d.c. 20549
form n-csr
certified shareholder report of registered
management investment companies
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 FISCALYEAR END: SEPTEMBER 30
DATE OF REPORTING PERIOD: MARCH 31, 2025
Item 1. Reports to Stockholders.
(a) |
Semi-Annual Shareholder Report - March 31, 2025
This semi-annual shareholder report contains important information about Destra Flaherty & Crumrine Preferred and Income Fund (the "Fund") for the period of October 1, 2024 to March 31, 2025. You can find additional information about the Fund at https://www.destracapital.com/strategies/destra-preferred-and-income-securities-fund#literature. You can also request this information by contacting us at 1-877-855-3434.
(based on a hypothetical $10,000 investment)
Class Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
Class A
|
$74
|
1.47%Footnote Reference*
|
* Annualized
Value
|
Value
|
Money Market Funds
|
0.7%
|
Corporate Debt Securities
|
1.1%
|
Contingent Capital Securities
|
25.3%
|
Preferred Securities
|
72.9%
|
Value
|
Value
|
Other Assets in Excess of Liabilities
|
0.6%
|
Materials
|
0.2%
|
Health Care
|
0.2%
|
Consumer Discretionary
|
0.6%
|
Money Market Funds
|
0.7%
|
Consumer Staples
|
1.4%
|
Communications
|
1.6%
|
Energy
|
3.6%
|
Utilities
|
13.7%
|
Financials
|
77.4%
|
Holding Name
|
% of Net Assets
|
Banco Santander S.A., 4.750%, 08/12/73
|
4.1%
|
Liberty Mutual Group, Inc., 7.800%, 03/15/37
|
3.3%
|
Comerica, Inc., 5.625%, 10/01/68
|
2.1%
|
Provident Financing Trust I, 7.405%, 03/15/38
|
1.9%
|
New York Community Bancorp, Inc., 6.375%, 03/17/27
|
1.6%
|
KeyCorporation, 5.000%, 12/29/49
|
1.5%
|
Athene Holding Ltd., 6.350%, 06/30/29
|
1.5%
|
Wells Fargo & Company, 6.850%, 07/15/74
|
1.4%
|
Bank of Nova Scotia (The), 4.900%, 09/04/68
|
1.4%
|
Synovus Financial Corporation, 8.397%, 07/01/29
|
1.3%
|
No material changes occurred during the fiscal year ended September 30, 2024.
Semi-Annual Shareholder Report - March 31, 2025
Additional information is available on the Fund's website (https://www.destracapital.com/strategies/destra-preferred-and-income-securities-fund#literature), including its:
Prospectus
Financial information
Holdings
Proxy voting information
TSR-SAR 033125-DPIAX
Semi-Annual Shareholder Report - March 31, 2025
This semi-annual shareholder report contains important information about Destra Flaherty & Crumrine Preferred and Income Fund (the "Fund") for the period of October 1, 2024 to March 31, 2025. You can find additional information about the Fund at https://www.destracapital.com/strategies/destra-preferred-and-income-securities-fund#literature. You can also request this information by contacting us at 1-877-855-3434.
(based on a hypothetical $10,000 investment)
Class Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
Class C
|
$111
|
2.22%Footnote Reference*
|
* Annualized
Value
|
Value
|
Money Market Funds
|
0.7%
|
Corporate Debt Securities
|
1.1%
|
Contingent Capital Securities
|
25.3%
|
Preferred Securities
|
72.9%
|
Value
|
Value
|
Other Assets in Excess of Liabilities
|
0.6%
|
Materials
|
0.2%
|
Health Care
|
0.2%
|
Consumer Discretionary
|
0.6%
|
Money Market Funds
|
0.7%
|
Consumer Staples
|
1.4%
|
Communications
|
1.6%
|
Energy
|
3.6%
|
Utilities
|
13.7%
|
Financials
|
77.4%
|
Holding Name
|
% of Net Assets
|
Banco Santander S.A., 4.750%, 08/12/73
|
4.1%
|
Liberty Mutual Group, Inc., 7.800%, 03/15/37
|
3.3%
|
Comerica, Inc., 5.625%, 10/01/68
|
2.1%
|
Provident Financing Trust I, 7.405%, 03/15/38
|
1.9%
|
New York Community Bancorp, Inc., 6.375%, 03/17/27
|
1.6%
|
KeyCorporation, 5.000%, 12/29/49
|
1.5%
|
Athene Holding Ltd., 6.350%, 06/30/29
|
1.5%
|
Wells Fargo & Company, 6.850%, 07/15/74
|
1.4%
|
Bank of Nova Scotia (The), 4.900%, 09/04/68
|
1.4%
|
Synovus Financial Corporation, 8.397%, 07/01/29
|
1.3%
|
No material changes occurred during the fiscal year ended September 30, 2024.
Semi-Annual Shareholder Report - March 31, 2025
Additional information is available on the Fund's website (https://www.destracapital.com/strategies/destra-preferred-and-income-securities-fund#literature), including its:
Prospectus
Financial information
Holdings
Proxy voting information
TSR-SAR 033125-DPICX
Semi-Annual Shareholder Report - March 31, 2025
This semi-annual shareholder report contains important information about Destra Flaherty & Crumrine Preferred and Income Fund (the "Fund") for the period of October 1, 2024 to March 31, 2025. You can find additional information about the Fund at https://www.destracapital.com/strategies/destra-preferred-and-income-securities-fund#literature. You can also request this information by contacting us at 1-877-855-3434.
(based on a hypothetical $10,000 investment)
Class Name
|
Costs of a $10,000 investment
|
Costs paid as a percentage of a $10,000 investment
|
Class I
|
$61
|
1.22%Footnote Reference*
|
* Annualized
Value
|
Value
|
Money Market Funds
|
0.7%
|
Corporate Debt Securities
|
1.1%
|
Contingent Capital Securities
|
25.3%
|
Preferred Securities
|
72.9%
|
Value
|
Value
|
Other Assets in Excess of Liabilities
|
0.6%
|
Materials
|
0.2%
|
Health Care
|
0.2%
|
Consumer Discretionary
|
0.6%
|
Money Market Funds
|
0.7%
|
Consumer Staples
|
1.4%
|
Communications
|
1.6%
|
Energy
|
3.6%
|
Utilities
|
13.7%
|
Financials
|
77.4%
|
Holding Name
|
% of Net Assets
|
Banco Santander S.A., 4.750%, 08/12/73
|
4.1%
|
Liberty Mutual Group, Inc., 7.800%, 03/15/37
|
3.3%
|
Comerica, Inc., 5.625%, 10/01/68
|
2.1%
|
Provident Financing Trust I, 7.405%, 03/15/38
|
1.9%
|
New York Community Bancorp, Inc., 6.375%, 03/17/27
|
1.6%
|
KeyCorporation, 5.000%, 12/29/49
|
1.5%
|
Athene Holding Ltd., 6.350%, 06/30/29
|
1.5%
|
Wells Fargo & Company, 6.850%, 07/15/74
|
1.4%
|
Bank of Nova Scotia (The), 4.900%, 09/04/68
|
1.4%
|
Synovus Financial Corporation, 8.397%, 07/01/29
|
1.3%
|
No material changes occurred during the fiscal year ended September 30, 2024.
Semi-Annual Shareholder Report - March 31, 2025
Additional information is available on the Fund's website (https://www.destracapital.com/strategies/destra-preferred-and-income-securities-fund#literature), including its:
Prospectus
Financial information
Holdings
Proxy voting information
TSR-SAR 033125-DPIIX
(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 7 of this Form N-CSR. |
(b) | Not applicable. |
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
Destra Flaherty & Crumrine Preferred and Income Fund
Semi-Annual Financial Statements
and
Additional Information
(Form N-CSR Items 7-11)
March 31, 2025
Table of Contents
Item 7. Financial Statements and Financial Highlights | 3 | |
Schedule of Investments | 3 | |
Statement of Assets and Liabilities | 12 | |
Statement of Operations | 13 | |
Statements of Changes in Net Assets | 14 | |
Financial Highlights | 15 | |
Notes to Financial Statements | 16 | |
Approval of Investment Management Agreements | 25 | |
Additional Information | 27 |
2
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments |
As of March 31, 2025 (unaudited) |
Shares or Principal Amount |
|
|
|
|
Moody's Ratings |
|
|
Value |
|
||
PREFERRED SECURITIES - 72.4% | |||||||||||
BANKS - 28.7% | |||||||||||
575,000 | American AgCredit Corp., 5.250% to 06/15/26 then USD 5 Year Tsy + 4.500%, Series A(1)(2) | BB+(3) | $ | 547,688 | |||||||
12,600 | Bank of New York Mellon Corporation (The), 6.150% to 03/20/30 then USD 5 Year Tsy + 2.161%, Series K(2) | Baa1 | 321,300 | ||||||||
1,030,000 | Capital One Financial Corp., 3.950% to 09/01/26 then USD 5 Year Tsy + 3.157%, Series M(2) | Baa3 | 985,809 | ||||||||
Citigroup, Inc. | |||||||||||
300,000 | 4.000% to 12/10/25 then USD 5 Year Tsy + 3.597%, Series W(2) | Ba1 | 296,073 | ||||||||
1,575,000 | 4.150% to 11/15/26 then USD 5 Year Tsy + 3.000%, Series Y(2) | Ba1 | 1,532,585 | ||||||||
1,405,000 | 6.750% to 02/15/30 then USD 5 Year Tsy + 2.572% Series EE(2) | Ba1 | 1,394,335 | ||||||||
630,000 | 6.950% to 02/15/30 then USD 5 Year Tsy + 2.726% Series FF(2) | Ba1 | 629,865 | ||||||||
875,000 | 7.000% to 08/15/34 then USD 10 Year Tsy + 2.757%, Series DD(2) | Ba1 | 909,684 | ||||||||
890,000 | 7.125% to 08/15/29 then USD 5 Year Tsy + 2.693%, Series CC(2) | Ba1 | 912,848 | ||||||||
1,230,000 | 7.375% to 05/15/28 then USD 5 Year Tsy + 3.209%, Series Z(2) | Ba1 | 1,266,040 | ||||||||
1,200,000 | 7.625% to 11/15/28 then USD 5 Year Tsy + 3.211%, Series AA(2) | Ba1 | 1,251,328 | ||||||||
25,700 | Citizens Financial Group, Inc., 7.375%, Series H(2) | Baa3 | 663,831 | ||||||||
CoBank ACB | |||||||||||
500,000 | 6.250% to 10/01/26 then 3-Month CME Term SOFR + 4.922%, Series I(1)(2) | BBB+(3) | 500,577 | ||||||||
420,000 | 7.125% to 01/01/30 then USD 5 Year Tsy + 2.818% Series M (1)(2) | BBB+(3) | 427,614 | ||||||||
5,230,000 | Comerica, Inc., 5.625% to 10/01/25 then USD 5 Year Tsy + 5.291%, Series A(2) | Ba1 | 5,210,042 | ||||||||
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) | 243,750 | ||||||||
42,300 | ConnectOne Bancorp, Inc., 5.250% to 09/01/26 then USD 5 Year Tsy + 4.420%, Series A(2) | NR(4) | 939,060 | ||||||||
36,000 | Dime Community Bancshares, Inc., 5.500%, Series A(2) | NR(4) | 693,000 | ||||||||
17,822 | First Horizon Corp., 6.500%, Series E(2) | Ba2 | 436,995 | ||||||||
165,623 | Flagstar Financial Inc., 6.375% to 03/17/27 then 3-Month USD Libor + 3.821%, Series A(2) | B3 | 3,921,953 | ||||||||
Goldman Sachs Group, Inc. | |||||||||||
1,600,000 | 4.125% to 11/10/26 then USD 5 Year Tsy + 2.949%, Series V(2) | Ba1 | 1,551,468 | ||||||||
640,000 | 6.125% to 11/10/34 then USD 10 Year Tsy + 2.400%, Series Y(2) | Ba1 | 627,643 | ||||||||
395,000 | 6.850% to 02/10/30 then USD 5 Year Tsy + 2.461%, Series Z(2) | Ba1 | 400,639 | ||||||||
320,000 | 7.500% to 02/10/29 then USD 5 Year Tsy + 3.156%, Series W(2) | Ba1 | 337,860 | ||||||||
1,120,000 | 7.500% to 05/10/29 then USD 5 Year Tsy + 2.809%, Series X(2) | Ba1 | 1,177,186 | ||||||||
2,500,000 | 7.560% to 02/10/30 then USD 5 Year Tsy + 3.224%, Series R(2) | Ba1 | 2,509,300 | ||||||||
925,000 | 7.186% to 02/10/30 then USD 5 Year Tsy + 2.850%, Series S(2) | Ba1 | 927,942 | ||||||||
Huntington Bancshares, Inc. | |||||||||||
355,000 | 4.450% to 10/15/27 then USD 7 Year Tsy + 4.045%, Series G(2) | Baa3 | 342,483 | ||||||||
1,050,000 | 5.625% to 07/15/30 then USD 10 Year Tsy + 4.945%, Series F(2) | Baa3 | 1,044,176 | ||||||||
34,400 | 6.876% to 04/15/28 then USD 5 Year Tsy + 2.704%, Series J(2) | Baa3 | 880,640 | ||||||||
500,000 | JPMorgan Chase & Co., 3.650% to 06/01/26 then USD 5 Year Tsy + 2.850%, Series KK(2) | Baa2 | 490,107 | ||||||||
KeyCorp | |||||||||||
3,740,000 | 5.000% to 09/15/26 then 3-Month CME Term SOFR + 3.868%, Series D(2) | Ba1 | 3,647,257 | ||||||||
24,728 | 6.125% to 12/15/26 then 3-Month CME Term SOFR + 4.154%, Series E(2) | Ba1 | 595,450 | ||||||||
45,785 | 6.200% to 12/15/27 then USD 5 Year Tsy + 3.132%, Series H(2) | Ba1 | 1,089,225 | ||||||||
M&T Bank Corp. | |||||||||||
650,000 | 3.500% to 09/01/26 then USD 5 Year Tsy + 2.679%, Series I(2) | Baa3 | 618,008 | ||||||||
96,311 | 5.625% to 12/15/26 then 3-Month CME Term SOFR + 4.282%, Series H(2) | Baa3 | 2,323,021 | ||||||||
14,000 | Morgan Stanley, 6.625%, Series Q(2) | Baa3 | 357,000 |
See accompanying Notes to Financial Statements.
3
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2025 (unaudited) |
Shares or Principal Amount |
|
|
|
|
Moody's Ratings |
|
|
Value |
|
||
PREFERRED SECURITIES (continued) | |||||||||||
BANKS (continued) | |||||||||||
PNC Financial Services Group, Inc. | |||||||||||
476,000 | 3.400% to 09/15/26 then USD 5 Year Tsy + 2.595%, Series T(2) | Baa2 | $ | 455,488 | |||||||
2,135,000 | 6.000% to 05/15/27 then USD 5 Year Tsy + 3.000%, Series U(2) | Baa2 | 2,148,231 | ||||||||
610,000 | 6.200% to 09/15/27 then USD 5 Year Tsy + 3.238%, Series V(2) | Baa2 | 620,093 | ||||||||
1,800,000 | 6.250% to 03/15/30 then USD 7 Year Tsy + 2.808%, Series W(2) | Baa2 | 1,811,598 | ||||||||
Regions Financial Corp. | |||||||||||
90,500 | 5.700% to 08/15/29 then 3-Month CME Term SOFR + 3.410%, Series C(2) | Baa3 | 2,138,515 | ||||||||
89,000 | 6.950% to 09/15/29 then USD 5 Year Tsy + 2.771%, Series F(2) | Baa3 | 2,235,680 | ||||||||
700,000 | State Street Corp., 6.700% to 03/15/29 then USD 5 Year Tsy + 2.613%, Series I(2) | Baa1 | 719,356 | ||||||||
Synchrony Financial | |||||||||||
46,000 | 5.625%, Series A(2) | BB-(3) | 810,980 | ||||||||
44,600 | 8.250% to 05/15/29 then USD 5 Year Tsy + 4.044%, Series B(2) | BB-(3) | 1,115,892 | ||||||||
127,922 | Synovus Financial Corp., 8.397% to 07/01/29 then USD 5 Year Tsy + 4.127%, Series E(2) | BB-(3) | 3,244,102 | ||||||||
32,043 | Texas Capital Bancshares, Inc., 5.750%, Series B(2) | Ba2 | 621,314 | ||||||||
1,098,000 | Truist Financial Corp., 6.669% to 09/01/29 then USD 5 Year Tsy + 3.003%, Series N(2) | Baa3 | 1,094,820 | ||||||||
Valley National Bancorp | |||||||||||
30,345 | 6.250% to 06/30/25 then 3-Month CME Term SOFR + 4.112%, Series A(2) | BB-(3) | 747,094 | ||||||||
6,100 | 8.250% to 09/30/29 then USD 5 Year Tsy + 4.182%, Series C(2) | BB-(3) | 152,927 | ||||||||
2,022 | 8.139%, 3-Month CME Term SOFR + 3.840%, Series B(2)(8) | BB-(3) | 48,831 | ||||||||
20,300 | WaFd, Inc., 4.875%, Series A(2) | Ba1 | 329,672 | ||||||||
Wells Fargo & Co. | |||||||||||
825,000 | 3.900% to 03/15/26 then USD 5 Year Tsy + 3.453%, Series BB(2) | Baa2 | 809,090 | ||||||||
750,000 | 5.875% to 06/15/25 Series U(2) | Baa2 | 749,970 | ||||||||
3,340,000 | 6.850% to 09/15/29 then USD 5 Year Tsy + 2.767%, Series FF(2) | Baa2 | 3,474,878 | ||||||||
267 | 7.500%, Series L(2)(5) | Baa2 | 320,614 | ||||||||
1,790,000 | 7.625% to 09/15/28 then USD 5 Year Tsy + 3.606%, Series EE(2) | Baa2 | 1,918,486 | ||||||||
43,200 | WesBanco, Inc., 6.750% to 11/15/25 then USD 5 Year Tsy + 6.557%, Series A(2) | NR(4) | 1,088,208 | ||||||||
12,900 | Western Alliance Bancorp, 4.250% to 09/30/26 then USD 5 Year Tsy + 3.452%, Series A(2) | Ba2 | 283,026 | ||||||||
48,500 | Wintrust Financial Corp., 6.875% to 07/15/25 then USD 5 Year Tsy + 6.507%, Series E(2) | BB(6) | 1,230,445 | ||||||||
70,173,092 | |||||||||||
FINANCIAL SERVICES - 3.3% | |||||||||||
450,000 | AerCap Global Aviation Trust, 6.500% to 06/15/25 then 3-Month CME Term SOFR + 4.562%, 06/15/45(1) | Baa2 | 450,129 | ||||||||
AerCap Ireland Capital DAC / AerCap Global Aviation Trust | |||||||||||
440,000 | 6.500% to 01/31/31 then USD 5 Year Tsy + 2.441%, 01/31/56(1) | Baa2 | 436,971 | ||||||||
860,000 | 6.950% to 03/10/30 then USD 5 Year Tsy + 2.720%, 03/10/55 | Baa2 | 877,695 | ||||||||
21,200 | Affiliated Managers Group, Inc., 6.750%, 03/30/64 | Baa1 | 508,801 | ||||||||
Ally Financial, Inc. | |||||||||||
1,220,000 | 4.700% to 05/15/26 then USD 5 Year Tsy + 3.868%, Series B(2) | Ba2 | 1,138,747 | ||||||||
800,000 | 4.700% to 05/15/28 then USD 7 Year Tsy + 3.481%, Series C(2) | Ba2 | 690,120 | ||||||||
1,150,000 | Charles Schwab Corp., 4.000% to 06/01/26 then USD 5 Year Tsy + 3.168%, Series I(2) | Baa2 | 1,122,300 | ||||||||
800,000 | Discover Financial Services, 6.125% to 09/23/25 then USD 5 Year Tsy + 5.783%, Series D(2) | Ba1 | 797,739 | ||||||||
General Motors Financial Co., Inc. | |||||||||||
725,000 | 5.700% to 09/30/30 then USD 5 Year Tsy + 4.997%, Series C(2) | Ba1 | 694,087 | ||||||||
330,000 | 5.750% to 09/30/27 then 3-Month USD Libor + 3.598%, Series A(2) | Ba1 | 312,947 | ||||||||
600,000 | 6.500% to 09/30/28 then 3-Month USD Libor + 3.436%, Series B(2) | Ba1 | 590,156 | ||||||||
17,784 | Stifel Financial Corp., 4.500%, Series D(2) | BB(3) | 306,774 | ||||||||
4,494 | TPG Operating Group II LP, 6.950%, 03/15/64 | Baa1 | 112,350 | ||||||||
8,038,816 |
See accompanying Notes to Financial Statements.
4
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2025 (unaudited) |
Shares or Principal Amount |
|
|
|
|
Moody's Ratings |
|
|
Value |
|
||
PREFERRED SECURITIES (continued) | |||||||||||
INSURANCE - 18.6% | |||||||||||
1,151,000 | ACE Capital Trust II, 9.700%, 04/01/30 | A3 | $ | 1,370,215 | |||||||
1,387,000 | American International Group, Inc., 8.175% to 05/15/38 then 3-Month USD Libor + 4.195%, 05/15/58, Series A-6 | Baa3 | 1,555,209 | ||||||||
24,260 | American National Group, Inc., 6.625% to 09/01/25 then USD 5 Year Tsy + 6.297%, Series B(2) | BB+(3) | 607,956 | ||||||||
Aspen Insurance Holdings, Ltd. | |||||||||||
25,000 | 5.625%(2) | Ba1 | 484,500 | ||||||||
Athene Holding, Ltd. | |||||||||||
25,200 | 4.875%, Series D(2) | Baa3 | 430,920 | ||||||||
147,374 | 6.350% to 06/30/29 then 3-Month USD Libor + 4.253%, Series A(2) | Baa3 | 3,585,609 | ||||||||
27,440 | 7.250% to 03/30/29 then USD 5 Year Tsy + 2.986%, 03/30/64 | Baa2 | 691,762 | ||||||||
735,000 | Axis Specialty Finance LLC, 4.900% to 01/15/30 then USD 5 Year Tsy + 3.186%, 01/15/40 | Baa2 | 692,620 | ||||||||
15,000 | CNO Financial Group, Inc., 5.125%, 11/25/60 | Ba1 | 283,500 | ||||||||
620,000 | Corebridge Financial, Inc., 6.375% to 09/15/34 then USD 5 Year Tsy + 2.646%, 09/15/54(1) | Baa3 | 617,512 | ||||||||
540,000 | CVS Health Corporation 7.000%, to 03/10/30 then USD 5 Year Tsy + 2.886%, 03/10/55, Series A | Ba1 | 545,959 | ||||||||
131,885 | Delphi Financial Group, Inc., 7.775%, 3-Month CME Term SOFR + 3.452%, 05/15/37(8) | BBB(3) | 3,214,697 | ||||||||
670,000 | Enstar Finance LLC, 5.500% to 01/15/27 then USD 5 Year Tsy + 4.006%, 01/15/42 | BBB-(3) | 654,682 | ||||||||
Enstar Group, Ltd. | |||||||||||
45,400 | 7.000% to 09/01/28 then 3-Month USD Libor + 4.015%, Series D(2) | BBB-(3) | 946,136 | ||||||||
825,000 | 7.500% to 04/01/35 then USD 5 Year Tsy + 3.186%, 04/01/45(1) | BBB-(3) | 836,238 | ||||||||
Equitable Holdings, Inc. | |||||||||||
125,000 | 4.950% to 12/15/25 then USD 5 Year Tsy + 4.736%, Series B(2) | Baa3 | 124,829 | ||||||||
500,000 | 6.700% to 03/28/35 then USD 5 Year Tsy + 2.390%, 03/28/55 | Baa2 | 498,075 | ||||||||
196,000 | Everest Reinsurance Holdings, Inc., 6.970%, 3-Month CME Term SOFR + 2.647%, 05/15/37(8) | Baa2 | 190,979 | ||||||||
18,800 | F&G Annuities & Life, Inc., 7.300%, 01/15/65 | Ba1 | 465,112 | ||||||||
465,000 | Fortegra Group, Inc. 9.250% to 11/15/34 then USD 5 Year Tsy + 8.720% 11/15/64(1) | NR(4) | 467,303 | ||||||||
Global Atlantic Fin Co. | |||||||||||
1,370,000 | 4.700% to 10/15/26 then USD 5 Year Tsy + 3.796%, 10/15/51(1) | Baa3 | 1,320,209 | ||||||||
585,000 | 7.950% to 10/15/29 then USD 5 Year Tsy + 3.608%, 10/15/54(1) | Baa3 | 608,553 | ||||||||
12,500 | Jackson Financial, Inc., 8.000% to 03/30/28 then USD 5 Year Tsy + 3.728%, Series A(2) | Ba2 | 329,000 | ||||||||
875,000 | Kuvare U.S. Holdings, Inc., 7.000% to 05/01/26 then USD 5 Year Tsy + 6.541%, 02/17/51, Series A(1) | NR(4) | 875,550 | ||||||||
Liberty Mutual Group, Inc. | |||||||||||
830,000 | 4.125% to 12/15/26 then USD 5 Year Tsy + 3.315%, 12/15/51(1) | Baa3 | 794,688 | ||||||||
7,103,000 | 7.800% to 03/15/37 then 3-Month CME Term SOFR + 3.838%, 03/15/37(1) | Baa3 | 8,015,523 | ||||||||
Lincoln National Corp. | |||||||||||
15,900 | 9.000%, Series D(2) | Ba1 | 422,940 | ||||||||
400,000 | 9.250% to 03/01/28 then USD 5 Year Tsy + 5.318%, Series C(2) | Ba1 | 430,836 | ||||||||
MetLife, Inc. | |||||||||||
1,605,000 | 9.250% to 04/08/38 then 3-Month CME Term SOFR + 5.802%, 04/08/38(1) | Baa2 | 1,897,848 | ||||||||
1,591,000 | 10.750% to 08/01/39 then 3-Month CME Term SOFR + 7.810%, 08/01/39 | Baa2 | 2,107,143 | ||||||||
23,498 | PartnerRe Ltd., 4.875%, Series J(2) | Baa2 | 403,461 | ||||||||
4,500,000 | Provident Financing Trust I, 7.405%, 03/15/38 | Baa3 | 4,748,898 | ||||||||
2,610,000 | Prudential Financial, Inc., 6.750% to 03/01/33 then USD 5 Year Tsy + 2.848%, 03/01/53 | Baa1 | 2,725,226 | ||||||||
235,000 | Reinsurance Group of America, Inc., 6.650% to 09/15/35 then USD 5 Year Tsy + 2.392%, 09/15/55 | Baa2 | 231,335 |
See accompanying Notes to Financial Statements.
5
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2025 (unaudited) |
Shares or Principal Amount |
|
|
|
|
Moody's Ratings |
|
|
Value |
|
||
PREFERRED SECURITIES (continued) | |||||||||||
INSURANCE (continued) | |||||||||||
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) | $ | 1,182,563 | |||||||
1,175,000 | 7.000% to 05/13/25 then USD 5 Year Tsy + 5.580%, Series A(1)(2) | BB(3) | 1,160,408 | ||||||||
45,517,994 | |||||||||||
UTILITIES - 13.7% | |||||||||||
695,000 | AES Corp., 7.600% to 01/15/30 then USD 5 Year Tsy + 3.201%, 01/15/55 | Ba1 | 702,856 | ||||||||
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) | 1,429,678 | ||||||||
40,895 | 8.582%, 3-Month CME Term SOFR + 4.272%, 07/01/79, Series 2019-A(8) | BB+(3) | 1,030,554 | ||||||||
535,000 | AltaGas, Ltd., 7.200% to 10/15/34 then USD 5 Year Tsy + 3.573%, 10/15/54(1) | BB(3) | 528,555 | ||||||||
American Electric Power., Inc. | |||||||||||
1,070,000 | 3.875% to 02/15/27 then USD 5 Year Tsy + 2.675%, 02/15/62 | Baa3 | 1,015,660 | ||||||||
865,000 | 6.950% to 12/15/34 then USD 5 Year Tsy + 2.675%, 12/15/54, Series B | Baa3 | 884,274 | ||||||||
2,465,000 | CenterPoint Energy, Inc., 6.850% to 02/15/35 then USD 5 Year Tsy + 2.946%, 02/15/55, Series B | Baa3 | 2,473,152 | ||||||||
370,000 | CMS Energy Corporation, 6.500% to 06/01/35 then USD 5 Year Tsy + 1.961%, 06/01/55 | Baa3 | 361,787 | ||||||||
Dominion Energy, Inc. | |||||||||||
725,000 | 4.350% to 04/15/27 then USD 5 Year Tsy + 3.195%, Series C(2) | Ba1 | 705,295 | ||||||||
865,000 | 6.625%, to 05/15/35 then USD 5 Year Tsy + 2.207%, 05/15/55 Series C | Baa3 | 861,975 | ||||||||
1,170,000 | 7.000% to 06/01/34 then USD 5 Year Tsy + 2.511%, 06/01/54, Series B | Baa3 | 1,232,659 | ||||||||
885,000 | Duke Energy Corp., 6.450% to 09/01/34 then USD 5 Year Tsy + 2.588%, 09/01/54 | Baa3 | 888,381 | ||||||||
Edison International | |||||||||||
1,775,000 | 5.000% to 03/15/27 then USD 5 Year Tsy + 3.901%, Series B(2) | Ba1 | 1,607,559 | ||||||||
490,000 | 5.375% to 03/15/26 then USD 5 Year Tsy + 4.698%, Series A(2) | Ba1 | 467,390 | ||||||||
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 | 2,828,567 | ||||||||
960,000 | Entergy Corp., 7.125% to 12/01/29 then USD 5 Year Tsy + 2.670%, 12/01/54 | Baa3 | 974,117 | ||||||||
1,025,000 | EUSHI Finance, Inc., 7.625% to 12/19/29 then USD 5 Year Tsy + 3.136%, 12/15/54 | Ba1 | 1,069,091 | ||||||||
670,000 | Evergy, Inc. 6.650% to 06/01/30 then USD 5 Year Tsy + 2.558%, 06/01/55 | Baa3 | 660,600 | ||||||||
370,000 | Exelon Corporation 6.500% to 03/15/35 then USD 5 Year Tsy + 1.975%, 03/15/55 | Baa3 | 368,923 | ||||||||
187,000 | Nevada Power Company, 6.250% to 05/15/30 then USD 5 Year Tsy + 1.936%, 05/15/55 | Baa2 | 185,963 | ||||||||
NextEra Energy Capital Holdings, Inc. | |||||||||||
630,000 | 6.375% to 08/15/30 then USD 5 Year Tsy + 2.053%, 08/15/55, Series S | Baa2 | 632,174 | ||||||||
355,000 | 6.700% to 09/01/29 then USD 5 Year Tsy + 2.364%, 09/01/54, Series Q | Baa2 | 359,724 | ||||||||
790,000 | 6.750% to 06/15/34 then USD 5 Year Tsy + 2.475%, 06/15/54, Series R | Baa2 | 808,782 | ||||||||
NiSource, Inc. | |||||||||||
300,000 | 6.375% to 03/31/35 then USD 5 Year Tsy + 2.527%, 03/31/55 | Baa3 | 296,981 | ||||||||
525,000 | 6.950% to 11/30/29 then USD 5 Year Tsy + 2.451%, 11/30/54 | Baa3 | 533,516 | ||||||||
605,000 | Northwest Natural Holding Company, 7.000% to 09/15/35 then USD 5 Year Tsy + 2.701%, 09/15/55 | BBB(3) | 591,464 | ||||||||
16,405 | SCE Trust IV, 5.375% to 09/15/25 then 3-Month CME Term SOFR + 3.394%, Series J(2) | Baa3 | 364,847 | ||||||||
121,730 | SCE Trust V, 5.450% to 03/15/26 then 3-Month CME Term SOFR + 4.052%, Series K(2) | Baa3 | 2,788,834 | ||||||||
39,010 | SCE Trust VI, 5.000%, Series L(2) | Baa3 | 669,022 | ||||||||
19,500 | SCE Trust VII, 7.500%, Series M(2) | Baa3 | 448,500 | ||||||||
20,500 | SCE Trust VIII, 6.950%, Series N(2) | Baa3 | 465,555 |
See accompanying Notes to Financial Statements.
6
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2025 (unaudited) |
Shares or Principal Amount |
|
|
|
|
Moody's Ratings |
|
|
Value |
|
||
PREFERRED SECURITIES (continued) | |||||||||||
UTILITIES (continued) | |||||||||||
Sempra | |||||||||||
1,450,000 | 4.125% to 04/01/27 then USD 5 Year Tsy + 2.868%, 04/01/52 | Baa3 | $ | 1,365,956 | |||||||
1,300,000 | 4.875% to 10/15/25 then USD 5 Year Tsy + 4.550%, Series C(2) | Ba1 | 1,289,572 | ||||||||
620,000 | 6.400% to 10/01/34 then USD 5 Year Tsy + 2.632%, 10/01/54 | Baa3 | 589,973 | ||||||||
1,570,000 | 6.875% to 10/01/29 then USD 5 Year Tsy + 2.789%, 10/01/54 | Baa3 | 1,560,087 | ||||||||
320,000 | Southern Company (The), 6.375% to 03/15/35 then USD 5 Year Tsy + 2.069%, 03/15/55, Series 2025B | Baa2 | 329,078 | ||||||||
175,000 | Vistra Corp., 7.000% to 12/15/26 then USD 5 Year Tsy + 5.740%, Series B(1)(2) | Ba3 | 177,388 | ||||||||
33,548,489 | |||||||||||
ENERGY - 3.7% | |||||||||||
Enbridge, Inc. | |||||||||||
340,000 | 5.750% to 07/15/30 then USD 5 Year Tsy + 5.314%, 07/15/80, Series 2020-A | Ba1 | 329,283 | ||||||||
1,252,000 | 6.000% to 01/15/27 then 3-Month CME Term SOFR + 4.152%, 01/15/77, Series 2016-A | Ba1 | 1,237,034 | ||||||||
1,460,000 | 7.375% to 03/15/30 then USD 5 Year Tsy + 3.122%, 03/15/55, Series A | Baa3 | 1,504,961 | ||||||||
725,000 | 8.500% to 01/15/34 then USD 5 Year Tsy + 4.431%, 01/15/84, Series 2023-B | Ba1 | 800,339 | ||||||||
1,387,000 | Energy Transfer LP, 7.125% to 05/15/30 then USD 5 Year Tsy + 5.306%, Series G(2) | Ba1 | 1,405,128 | ||||||||
505,000 | South Bow Canadian Infrastructure Holdings, Ltd., 7.500% to 03/01/35 then USD 5 Year Tsy + 3.667%, 03/01/55(1) | Ba1 | 510,881 | ||||||||
Transcanada Trust | |||||||||||
2,065,000 | 5.500% to 09/15/29 then 3-Month CME Term SOFR + 4.416%, 09/15/79 | Ba1 | 1,999,553 | ||||||||
1,350,000 | 5.875% to 08/15/26 then 3-Month USD Libor + 4.640%, 08/15/76, Series 2016-A | Ba1 | 1,343,528 | ||||||||
9,130,707 | |||||||||||
COMMUNICATIONS - 1.3% | |||||||||||
740,000 | Bell Canada, 7.000% to 09/15/35 then USD 5 Year Tsy + 2.363%, 09/15/55 | Baa3 | 742,399 | ||||||||
1,720,000 | Paramount Global, 6.375% to 03/30/27 then USD 5 Year Tsy + 3.999%, 03/30/62 | Ba1 | 1,679,698 | ||||||||
560,000 | Rogers Communications, Inc., 7.125% to 04/15/35 then USD 5 Year Tsy + 2.620%, 04/15/55 | Ba1 | 557,078 | ||||||||
225,000 | Vodafone Group PLC, 7.000% to 04/04/29 then USD 5 Year Swap + 4.873%, 04/04/79 | Ba1 | 232,109 | ||||||||
3,211,284 | |||||||||||
REITS - 1.7% | |||||||||||
Arbor Realty Trust, Inc. | |||||||||||
68,190 | 6.250% to 10/30/26 then 3-Month CME Term SOFR + 5.440%, Series F(2) | NR(4) | 1,430,626 | ||||||||
10,859 | 6.375%, Series D(2) | NR(4) | 191,336 | ||||||||
87,394 | KKR Real Estate Finance Trust, Inc., 6.500%, Series A(2) | NR(4) | 1,670,099 | ||||||||
26,000 | New York Mortgage Trust, Inc., 6.875% to 10/15/26 then 3-Month CME Term SOFR + 6.130%, Series F(2) | NR(4) | 564,460 | ||||||||
20,598 | TPG RE Finance Trust, Inc., 6.250%, Series C(2) | NR(4) | 356,551 | ||||||||
4,213,072 | |||||||||||
MISCELLANEOUS - 1.4% | |||||||||||
Land O' Lakes, Inc. | |||||||||||
700,000 | 7.250%, Series B(1)(2) | BB(3) | 595,668 | ||||||||
3,115,000 | 8.000%, Series A(1)(2) | BB(3) | 2,944,940 | ||||||||
3,540,608 | |||||||||||
TOTAL PREFERRED SECURITIES (Cost $181,586,901) |
177,374,062 |
See accompanying Notes to Financial Statements.
7
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2025 (unaudited) |
Shares or Principal Amount |
|
|
|
|
Moody's Ratings |
|
|
Value |
|
||
CONTINGENT CAPITAL SECURITIES - 25.2% | |||||||||||
BANKS - 25.2% | |||||||||||
1,407,000 | Australia & New Zealand Banking Group, Ltd., 6.750% to 06/15/26 then USD 5 Year Swap + 5.168%(1)(2) | Baa2 | $ | 1,428,654 | |||||||
Banco Bilbao Vizcaya Argentaria SA | |||||||||||
2,600,000 | 6.125% to 11/16/27 then USD 5 Year Swap + 3.870%(2) | Ba2 | 2,527,194 | ||||||||
1,000,000 | 9.375% to 09/19/29 then USD 5 Year Tsy + 5.099%, Series 12(2) | Ba2 | 1,088,274 | ||||||||
Banco Mercantil del Norte SA | |||||||||||
750,000 | 6.625% to 01/24/32 then USD 10 Year Tsy + 5.034%(1)(2) | Ba2 | 672,164 | ||||||||
900,000 | 7.500% to 06/27/29 then USD 10 Year Tsy + 5.470%(1)(2) | Ba2 | 884,345 | ||||||||
640,000 | 7.625% to 01/10/28 then USD 10 Year Tsy + 5.353%(1)(2) | Ba2 | 638,657 | ||||||||
625,000 | 8.750% to 05/20/35 then USD 10 Year Tsy + 4.299%(1)(2) | Ba2 | 621,847 | ||||||||
Banco Santander SA | |||||||||||
10,400,000 | 4.750% to 05/12/27 then USD 5 Year Tsy + 3.753%(1)(2) | Ba1 | 9,993,892 | ||||||||
800,000 | 8.000% to 08/01/34 then USD 5 Year Tsy + 3.911%(2) | Ba1 | 832,947 | ||||||||
400,000 | 9.625% to 11/21/33 then USD 5 Year Tsy + 5.298%(1)(2) | Ba1 | 460,450 | ||||||||
Bank of Montreal | |||||||||||
355,000 | 7.300% to 11/26/34 then USD 5 Year Tsy + 3.010%, 11/26/84, Series 5 | Baa3 | 354,131 | ||||||||
670,000 | 7.700% to 05/26/29 then USD 5 Year Tsy + 3.452%, 05/26/84, Series 4 | Baa3 | 682,833 | ||||||||
Bank of Nova Scotia | |||||||||||
3,350,000 | 4.900% to 06/04/25 then USD 5 Year Tsy + 4.551%(2) | Baa3 | 3,334,092 | ||||||||
588,000 | 7.350% to 04/27/30 then USD 5 Year Tsy + 2.903%, 04/27/85, Series 6 | Baa3 | 584,006 | ||||||||
1,000,000 | 8.625% to 10/27/27 then USD 5 Year Tsy + 4.389%, 10/27/82, Series 4 | Baa3 | 1,048,528 | ||||||||
Barclays PLC | |||||||||||
400,000 | 4.375% to 09/15/28 then USD 5 Year Tsy + 3.410%(2) | Ba1 | 361,433 | ||||||||
610,000 | 7.625% to 09/15/35 then SOFR 5 Year Swap + 3.686%(2) | Ba1 | 598,578 | ||||||||
380,000 | 8.000% to 09/15/29 then USD 5 Year Tsy + 5.431%(2) | Ba1 | 392,697 | ||||||||
545,000 | 9.625% to 06/15/30 then SOFR 5 Year Swap + 5.775%(2) | Ba1 | 599,089 | ||||||||
600,000 | BBVA Bancomer SA Texas, 5.875% to 09/13/29 then USD 5 Year Tsy + 4.308%, 09/13/34(1) | Baa2 | 577,969 | ||||||||
BNP Paribas SA | |||||||||||
425,000 | 4.625% to 02/25/31 then USD 5 Year Tsy + 3.340%(1)(2) | Ba1 | 366,834 | ||||||||
3,000,000 | 7.375% to 08/19/25 then USD 5 Year Swap + 5.150%(1)(2) | Ba1 | 3,013,803 | ||||||||
720,000 | 7.375% to 09/10/34 then USD 5 Year Tsy + 3.535%(1)(2) | Ba1 | 721,745 | ||||||||
765,000 | 7.750% to 08/16/29 then USD 5 Year Tsy + 4.899%(1)(2) | Ba1 | 789,820 | ||||||||
2,829,000 | 8.500% to 08/14/28 then USD 5 Year Tsy + 4.354%(1)(2) | Ba1 | 2,965,694 | ||||||||
550,000 | Canadian Imperial Bank of Commerce 6.950% to 01/28/30 then USD 5 Year Tsy + 2.833%, 1/28/85, Series 5 | Baa3 | 539,366 | ||||||||
Credit Agricole SA | |||||||||||
450,000 | 4.750% to 09/23/29 then USD 5 Year Tsy + 3.237%(1)(2) | BBB-(3) | 408,792 | ||||||||
500,000 | 8.125% to 12/23/25 then USD 5 Year Swap + 6.185%(1)(2) | Baa3 | 509,004 | ||||||||
400,000 | Deutsche Bank AG, 6.000% to 04/30/26 then USD 5 Year Tsy + 4.524%(2) | Ba2 | 396,519 | ||||||||
HSBC Holdings PLC | |||||||||||
1,500,000 | 4.700% to 09/09/31 then USD 5 Year Tsy + 3.250%(2) | Baa3 | 1,343,235 | ||||||||
325,000 | 6.000% to 05/22/27 then USD 5 Year Swap + 3.746%(2) | Baa3 | 323,680 | ||||||||
850,000 | 6.500% to 03/23/28 then USD 5 Year Swap + 3.606%(2) | Baa3 | 853,241 | ||||||||
540,000 | 6.950% to 09/11/34 then USD 5 Year Tsy + 3.191%(2) | Baa3 | 539,381 | ||||||||
3,000,000 | 8.000% to 09/07/28 then USD 5 Year Tsy + 3.858%(2) | Baa3 | 3,164,664 | ||||||||
2,550,000 | ING Groep, 3.875% to 11/16/27 then USD 5 Year Tsy + 2.862%(2) | Ba1 | 2,343,389 |
See accompanying Notes to Financial Statements.
8
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2025 (unaudited) |
Shares or Principal Amount |
|
|
|
|
Moody's Ratings |
|
|
Value |
|
||
CONTINGENT CAPITAL SECURITIES (continued) | |||||||||||
BANKS (continued) | |||||||||||
Lloyds Banking Group PLC | |||||||||||
1,900,000 | 7.500% to 09/27/25 then USD 5 Year Swap + 4.496%(2) | Baa3 | $ | 1,911,269 | |||||||
2,320,000 | 8.000% to 03/27/30 then USD 5 Year Tsy + 3.913%(2) | Baa3 | 2,413,591 | ||||||||
NatWest Group PLC | |||||||||||
350,000 | 4.600% to 12/28/31 then USD 5 Year Tsy + 3.100%(2) | Baa3 | 297,047 | ||||||||
200,000 | 8.125% to 05/10/34 then USD 5 Year Tsy + 3.752%(2) | Baa3 | 210,486 | ||||||||
Royal Bank of Canada | |||||||||||
1,100,000 | 6.350% to 11/24/34 then USD 5 Year Tsy + 2.257%, 11/24/84, Series 5 | Baa2 | 1,047,059 | ||||||||
664,000 | 7.500% to 05/02/29 then USD 5 Year Tsy + 2.887%, 05/02/84, Series 4 | Baa2 | 682,320 | ||||||||
Societe Generale SA | |||||||||||
900,000 | 4.750% to 05/26/26 then USD 5 Year Tsy + 3.931%(1)(2) | Ba2 | 874,372 | ||||||||
900,000 | 5.375% to 11/18/30 then USD 5 Year Tsy + 4.514%(1)(2) | Ba2 | 791,077 | ||||||||
250,000 | 6.750% to 04/06/28 then USD 5 Year Swap + 3.929%(1)(2) | Ba2 | 243,930 | ||||||||
750,000 | 8.000% to 09/29/25 then 13.873%(1)(2) | Ba2 | 754,643 | ||||||||
1,700,000 | 8.500% to 09/25/34 then USD 5 Year Tsy + 4.153%(1)(2) | Ba2 | 1,755,678 | ||||||||
700,000 | 9.375% to 05/22/28 then USD 5 Year Tsy + 5.385%(1)(2) | Ba2 | 739,674 | ||||||||
Standard Chartered PLC | |||||||||||
400,000 | 4.750% to 07/14/31 then USD 5 Year Tsy + 3.805%(1)(2) | Ba1 | 354,152 | ||||||||
1,910,000 | 7.750% to 02/15/28 then USD 5 Year Tsy + 4.976%(1)(2) | Ba1 | 1,982,930 | ||||||||
345,000 | Toronto-Dominion Bank, 7.250% to 07/31/29 then USD 5 Year Tsy + 2.977%, 07/31/84 Series 4 | Baa2 | 347,636 | ||||||||
UBS Group AG | |||||||||||
600,000 | 4.375% to 02/10/31 then USD 5 Year Tsy + 3.313%(1)(2) | Baa3 | 515,283 | ||||||||
800,000 | 4.875% to 02/12/27 then USD 5 Year Tsy + 3.404%(1)(2) | BB(3) | 778,185 | ||||||||
TOTAL CONTINGENT CAPITAL SECURITIES (Cost $62,305,266) |
61,660,279 | ||||||||||
CORPORATE DEBT SECURITIES - 1.1% | |||||||||||
BANKS - 0.6% | |||||||||||
13,800 | Dime Community Bancshares, Inc., 9.000% to 07/15/29 then 3-Month CME Term SOFR + 4.951%, 07/15/34 | NR(4) | 355,074 | ||||||||
575,000 | Texas Capital Bancshares, Inc., 4.000% to 05/06/26 then USD 5 Year Tsy + 3.150%, 05/06/31 | Baa3 | 561,115 | ||||||||
500,000 | Zions Bancorp NA 6.816% then 3-Month CME Term SOFR + 2.830%, 11/19/35 | BBB(3) | 509,080 | ||||||||
1,425,269 | |||||||||||
INSURANCE - 0.2% | |||||||||||
460,000 | Universal Insurance Holdings, Inc., 5.625%, 11/30/26 | NR(4) | 451,514 | ||||||||
COMMUNICATIONS - 0.3% | |||||||||||
Qwest Corp. | |||||||||||
12,347 | 6.500%, 09/01/56 | Caa2 | 204,219 | ||||||||
36,585 | 6.750%, 06/15/57 | Caa2 | 610,969 | ||||||||
815,188 | |||||||||||
TOTAL CORPORATE DEBT SECURITIES (cost $3,087,952) |
2,691,971 |
See accompanying Notes to Financial Statements.
9
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2025 (unaudited) |
Shares or Principal Amount |
|
|
|
|
Moody's Ratings |
|
|
Value |
|
||
SHORT-TERM INVESTMENTS - 0.7% | |||||||||||
MONEY MARKET FUND - 0.7% | |||||||||||
1,743,893 | Fidelity Investments Money Market Treasury Portfolio - Class I, 4.20%(7) | $ | 1,743,893 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $1,743,893) |
1,743,893 | ||||||||||
TOTAL INVESTMENTS - 99.4% (Cost $248,724,012) |
$ | 243,470,205 | |||||||||
Other Assets In Excess Of Liabilities - 0.6% | 1,357,537 | ||||||||||
TOTAL NET ASSETS - 100.0% | $ | 244,827,742 |
(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. These securities have been determined to be liquid under guidelines established by management. At March 31, 2025, the total value of these securities is $57,984,150, representing 23.7% of net assets. | |
(2) | Security is perpetual in nature with no stated maturity date. | |
(3) | Standard & Poor's Rating, unaudited. | |
(4) | Security is unrated by Moody's, S&P and Fitch. | |
(5) | Convertible security. | |
(6) | Fitch's Rating, unaudited. | |
(7) | The rate is the annualized seven-day yield as of March 31, 2025. | |
(8) | The interest rate shown reflects the rate in effect as of March 31, 2025. |
LIBOR - London Interbank Offered Rate
LLC - Limited Liability Company
LP - Limited Partnership
PLC - Public Limited Company
REIT - Real Estate Investment Trust
SA - Corporation
SOFR - Secured Overnight Financing Rate
Tsy - United States Government Treasury Yield
See accompanying Notes to Financial Statements.
10
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments (continued) |
As of March 31, 2025 (unaudited) |
Summary by Country |
Value |
% of Net Assets |
||||||
Australia | $ | 1,428,654 | 0.6 | % | ||||
Bermuda | 2,670,335 | 1.1 | ||||||
Canada | 23,462,383 | 9.6 | ||||||
France | 13,935,067 | 5.7 | ||||||
Germany | 396,519 | 0.1 | ||||||
Ireland | 1,314,666 | 0.5 | ||||||
Mexico | 3,394,981 | 1.4 | ||||||
Netherlands | 2,343,390 | 1.0 | ||||||
Spain | 14,902,757 | 6.1 | ||||||
Switzerland | 1,293,468 | 0.5 | ||||||
United Kingdom | 15,577,580 | 6.4 | ||||||
United States | 162,750,406 | 66.4 | ||||||
Total Investments | 243,470,205 | 99.4 | ||||||
Other Assets in Excess of Liabilities | 1,357,537 | 0.6 | ||||||
Net Assets | $ | 244,827,742 | 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, 2025. 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 | $ | 26,588,775 | $ | 43,584,317 | $ | - | $ | 70,173,093 | ||||||||
Financial Services | 927,924 | 7,110,891 | - | 8,038,815 | ||||||||||||
Insurance | 11,865,593 | 33,652,401 | - | 45,517,994 | ||||||||||||
Utilities | 5,767,313 | 27,781,176 | - | 33,548,489 | ||||||||||||
Energy | - | 9,130,707 | - | 9,130,707 | ||||||||||||
Communications | - | 3,211,284 | - | 3,211,284 | ||||||||||||
Miscellaneous | - | 3,540,608 | - | 3,540,608 | ||||||||||||
REITS | 4,213,072 | - | - | 4,213,072 | ||||||||||||
Contingent Capital Securities | ||||||||||||||||
Banks | - | 61,660,279 | - | 61,660,279 | ||||||||||||
Corporate Debt Securities | ||||||||||||||||
Banks | 355,075 | 1,070,194 | - | 1,425,269 | ||||||||||||
Communications | 815,188 | - | - | 815,188 | ||||||||||||
Insurance | - | 451,514 | - | 451,514 | ||||||||||||
Short-Term Investments | ||||||||||||||||
Money Market Fund | 1,743,893 | - | - | 1,743,893 | ||||||||||||
Total Investments in Securities | $ | 52,276,833 | $ | 191,193,372 | $ | - | $ | 243,470,205 |
During the six months ended March 31, 2025, there were no transfers into or out of any levels.
See accompanying Notes to Financial Statements.
11
Destra Flaherty & Crumrine Preferred and Income Fund |
Statement of Assets and Liabilities |
As of March 31, 2025 (unaudited) |
Assets: | ||||
Investments, at value (cost $248,724,012) | $ | 243,470,205 | ||
Receivables: | ||||
Interest | 1,984,817 | |||
Dividends | 133,192 | |||
Fund shares sold | 46,392 | |||
Prepaid expenses | 88,561 | |||
Total assets | 245,723,167 | |||
Liabilities: | ||||
Payables: | ||||
Investments purchased | 440,000 | |||
Management fees, net (see note 3) | 157,086 | |||
Capital shares redeemed | 117,681 | |||
Transfer agency fees and expenses | 84,007 | |||
Accounting and administration fees | 40,359 | |||
Distribution fees | 17,129 | |||
Custody fees | 14,845 | |||
Professional fees | 9,398 | |||
Accrued other expenses | 14,920 | |||
Total liabilities | 895,425 | |||
Net assets | $ | 244,827,742 | ||
Composition of net assets: | ||||
Paid-in capital (unlimited shares authorized at $0.001 par value common stock) | $ | 267,601,133 | ||
Total distributable earnings | (22,773,391 | ) | ||
Net assets | $ | 244,827,742 | ||
Net assets: | ||||
Class I | $ | 201,176,170 | ||
Class A | 31,652,378 | |||
Class C | 11,999,194 | |||
Shares outstanding: | ||||
Class I | 12,051,744 | |||
Class A | 1,886,893 | |||
Class C | 711,113 | |||
Net asset value per share: | ||||
Class I | $ | 16.69 | ||
Class A | 16.77 | |||
Maximum offering price per share(1) | 17.56 | |||
Class C | 16.87 |
(1) | Includes a sales charge of 4.50% |
See accompanying Notes to Financial Statements.
12
Destra Flaherty & Crumrine Preferred and Income Fund |
Statement of Operations |
For the Six Months Ended March 31, 2025 (unaudited) |
Investment Income: | ||||
Dividend income | $ | 1,887,023 | ||
Interest income | 5,937,438 | |||
Total investment income | 7,824,461 | |||
Expenses: | ||||
Management fees (see note 3) | 930,250 | |||
Transfer agent fees and expenses | 180,293 | |||
Accounting and administration fees | 103,504 | |||
Professional fees | 87,259 | |||
Distribution fees Class C (see note 4) | 65,580 | |||
Distribution fees Class A (see note 4) | 40,315 | |||
Trustee fees (see note 9) | 35,830 | |||
Registration fees | 33,901 | |||
Chief financial officer fees (see note 9) | 32,877 | |||
Chief compliance officer fees (see note 9) | 23,814 | |||
Custody fees | 18,610 | |||
Shareholder reporting fees | 16,423 | |||
Insurance expense | 15,014 | |||
Interest expense | 690 | |||
Other expenses | 5,764 | |||
Total expenses | 1,590,124 | |||
Contractual expenses recaptured by adviser (see note 3) | 25,161 | |||
Net expenses | 1,615,285 | |||
Net investment income | 6,209,176 | |||
Net realized and unrealized gain (loss): | ||||
Net realized loss on: | ||||
Investments | (100,832 | ) | ||
Net change in unrealized depreciation on: | ||||
Investments | (2,553,169 | ) | ||
Net realized and unrealized loss | (2,654,001 | ) | ||
Net increase in net assets resulting from operations | $ | 3,555,175 |
See accompanying Notes to Financial Statements.
13
Destra Flaherty & Crumrine Preferred and Income Fund |
Statements of Changes in Net Assets |
Six Months Ended March 31, 2025 |
For the Year Ended September 30, 2024 |
|||||||
(Unaudited) | ||||||||
Increase (decrease) in net assets resulting from operations: | ||||||||
Net investment income | $ | 6,209,176 | $ | 11,139,787 | ||||
Net realized loss | (100,832 | ) | (1,299,610 | ) | ||||
Net change in unrealized appreciation (depreciation) | (2,553,169 | ) | 26,417,391 | |||||
Net increase in net assets resulting from operations | 3,555,175 | 36,257,568 | ||||||
Distributions to shareholders: | ||||||||
Class I | (5,043,790 | ) | (9,000,751 | ) | ||||
Class A | (762,193 | ) | (1,395,740 | ) | ||||
Class C | (252,837 | ) | (734,475 | ) | ||||
Total distributions to shareholders | (6,058,820 | ) | (11,130,966 | ) | ||||
Capital transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class I | 26,929,740 | 82,342,024 | ||||||
Class A | 4,951,138 | 10,805,361 | ||||||
Class C | 148,332 | 535,943 | ||||||
Reinvestment of distributions: | ||||||||
Class I | 4,062,757 | 7,081,668 | ||||||
Class A | 708,988 | 1,277,706 | ||||||
Class C | 213,930 | 592,737 | ||||||
Cost of shares redeemed: | ||||||||
Class I | (33,532,142 | ) | (60,379,535 | ) | ||||
Class A | (5,870,804 | ) | (8,863,504 | ) | ||||
Class C | (2,524,012 | ) | (7,620,937 | ) | ||||
Net increase (decrease) in net assets from capital transactions | (4,912,073 | ) | 25,771,463 | |||||
Total increase (decrease) in net assets | (7,415,718 | ) | 50,898,065 | |||||
Net assets: | ||||||||
Beginning of year/period | 252,243,460 | 201,345,395 | ||||||
End of year/period | $ | 244,827,742 | $ | 252,243,460 | ||||
Capital share transactions: | ||||||||
Shares sold: | ||||||||
Class I | 1,599,957 | 5,102,790 | ||||||
Class A | 292,662 | 669,135 | ||||||
Class C | 8,745 | 32,566 | ||||||
Shares reinvested: | ||||||||
Class I | 242,278 | 442,725 | ||||||
Class A | 42,080 | 79,493 | ||||||
Class C | 12,622 | 36,771 | ||||||
Shares redeemed: | ||||||||
Class I | (1,994,746 | ) | (3,812,853 | ) | ||||
Class A | (347,437 | ) | (556,348 | ) | ||||
Class C | (148,758 | ) | (464,551 | ) | ||||
Net increase (decrease) from capital share transactions | (292,597 | ) | 1,529,728 |
See accompanying Notes to Financial Statements.
14
Destra Flaherty & Crumrine Preferred and Income Fund |
Financial Highlights |
For a share of common stock outstanding throughout the periods indicated. |
Ratios to average net assets(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ending March 31, | Net asset value beginning of period |
Net investment income(2) |
Net realized and unrealized gain (loss) | Total from investment operations | Distributions to shareholders from net investment income | Distributions to shareholders from net realized gain | Total distributions |
Redemption fees |
Net asset value end of period | Total return(3),(4) | Gross expenses | Net expenses | Net investment income | Net assets, end of period (in thousands) | Portfolio turnover rate(4) | |||||||||||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2025(5) | $ | 16.86 | $ | 0.43 | $ | (0.18 | ) | $ | 0.25 | $ | (0.42 | ) | $ | - | $ | (0.42 | ) | $ | - | $ | 16.69 | 1.50 | % | 1.20 | % | 1.22 | %(6) | 5.09 | % | $ | 201,176 | 7 | % | |||||||||||||||||||||||||||
2024 | 14.99 | 0.85 | 1.87 | 2.72 | (0.85 | ) | - | (0.85 | ) | - | 16.86 | 18.57 | 1.26 | 1.25 | 5.31 | 205,776 | 17 | |||||||||||||||||||||||||||||||||||||||||||
2023 | 15.60 | 0.82 | (0.58 | ) | 0.24 | (0.85 | ) | - | (0.85 | ) | - | 14.99 | 1.53 | 1.24 | 1.24 | 5.31 | 156,961 | 12 | ||||||||||||||||||||||||||||||||||||||||||
2022 | 19.03 | 0.78 | (3.42 | ) | (2.64 | ) | (0.79 | ) | - | (0.79 | ) | - | 15.60 | (14.19 | ) | 1.20 | 1.20 | 4.43 | 175,230 | 12 | ||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2025(5) | 16.94 | 0.41 | (0.18 | ) | 0.23 | (0.40 | ) | - | (0.40 | ) | - | 16.77 | 1.37 | 1.45 | 1.47 | (6) | 4.85 | 31,652 | 7 | |||||||||||||||||||||||||||||||||||||||||
2024 | 15.06 | 0.81 | 1.88 | 2.69 | (0.81 | ) | - | (0.81 | ) | - | 16.94 | 18.26 | 1.51 | 1.50 | 5.06 | 32,182 | 17 | |||||||||||||||||||||||||||||||||||||||||||
2023 | 15.67 | 0.79 | (0.59 | ) | 0.20 | (0.81 | ) | - | (0.81 | ) | - | 15.06 | 1.28 | 1.49 | 1.49 | 5.06 | 25,709 | 12 | ||||||||||||||||||||||||||||||||||||||||||
2022 | 19.11 | 0.74 | (3.43 | ) | (2.69 | ) | (0.75 | ) | - | (0.75 | ) | - | 15.67 | (14.40 | ) | 1.45 | 1.45 | 4.21 | 27,277 | 12 | ||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2025(5) | 17.04 | 0.34 | (0.18 | ) | 0.16 | (0.33 | ) | - | (0.33 | ) | - | 16.87 | 0.97 | 2.20 | 2.22 | (6) | 4.07 | 11,999 | 7 | |||||||||||||||||||||||||||||||||||||||||
2024 | 15.14 | 0.69 | 1.89 | 2.58 | (0.68 | ) | - | (0.68 | ) | - | 17.04 | 17.40 | 2.26 | 2.25 | 4.31 | 14,286 | 17 | |||||||||||||||||||||||||||||||||||||||||||
2023 | 15.74 | 0.67 | (0.58 | ) | 0.09 | (0.69 | ) | - | (0.69 | ) | - | 15.14 | 0.57 | 2.24 | 2.24 | 4.29 | 18,676 | 12 | ||||||||||||||||||||||||||||||||||||||||||
2022 | 19.20 | 0.61 | (3.46 | ) | (2.85 | ) | (0.61 | ) | - | (0.61 | ) | - | 15.74 | (15.08 | ) | 2.20 | 2.20 | 3.46 | 25,158 | 12 | ||||||||||||||||||||||||||||||||||||||||
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 |
(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, reinvestment of all distributions during the period and does not include payment of the maximum sales charge. 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 six months ended March 31, 2025 (Unaudited). | |
(6) | Inclusive of Advisor's recapture of waived/reimbursed fees from prior periods. |
See accompanying Notes to Financial Statements.
15
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements |
March 31, 2025 (unaudited) |
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"). As of March 31, 2025, the Trust consists of the Destra Flaherty & Crumrine Preferred and Income Fund (the "Fund"), which commenced operations on April 12, 2011. The Fund's investment objective is to seek total return with an emphasis on high current income. The Fund currently offers three classes of shares, Classes A, C, and I. All share classes have equal rights and voting privileges, except in matters affecting a single class. The Fund represents shares of beneficial interest ("Shares") in a separate portfolio of securities and other assets. The Fund has retained Flaherty & Crumrine Incorporated ("Flaherty" or the "Sub-Adviser") to serve as its investment sub-adviser.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Fund in preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Fund is an investment company under U.S. GAAP and follows 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
The Board has approved valuation procedures for the Trust (the "Valuation Procedures"), which are used for determining the fair value of any Fund investment for which a market quotation is not readily available. The valuation of the Fund's investments is performed in accordance with the principles found in Rule 2a-5 of the 1940 Act and in conjunction with FASB's Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures ("ASC 820").
The Board has designated DFC Preferred Advisors LLC (the "Adviser"), the investment adviser to the Fund, as the valuation designee of the Fund. As valuation designee, the Adviser performs the fair value determination relating to any and all investments of the Fund, subject to the conditions and oversight requirements described in the Valuation Procedures. In furtherance of its duties as valuation designee, the Adviser has formed a valuation committee (the "Valuation Committee"), to perform fair value determinations and oversee the day-to-day functions related to the fair valuation of the Fund's investments. The Valuation Committee may consult with representatives from the Trust's outside legal counsel or other third-party consultants in their discussions and deliberations.
ASC 820 defines fair value as the price that a 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 establishes three different categories for valuations. Level 1 valuations are those based upon quoted prices in active markets that the Fund has 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).
The Fund values Level 1 securities using readily available market quotations in active markets. The Fund values 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 Fund values Level 2 equity securities using various observable market inputs in accordance with procedures established in good faith by the valuation designee. For Level 3 securities, the Fund estimates fair value based upon a variety of observable and non-observable inputs as outlined in the Valuation Procedures.
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 the Fund calculates its net asset value ("NAV"), the Fund values these securities at fair value as determined in accordance with the Valuation Procedures. 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.
16
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements (continued) |
March 31, 2025 (unaudited) |
(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. The Fund is charged for those expenses that are directly attributable to each series, such as management fees and registration costs.
The Fund records 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 Fund adjusts 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 Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund 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 Fund deposits 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 Fund may enter into contracts that contain a variety of representations which provide general indemnifications for certain liabilities. The Fund's maximum exposure under these arrangements is unknown. However, since their commencement of operations, the Fund has not had claims or losses pursuant to these contracts and expect the risk of loss to be remote.
(f) Distributions to Shareholders
The Fund intends to pay substantially all of its net investment income to shareholders monthly. In addition, the Fund intends 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 of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the reporting period. Actual results could differ from these estimates.
(h) Recent Accounting Pronouncements
The Fund has adopted FASB Accounting Standards Update 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures ("ASU 2023-07"). Adoption of the standard impacted financial statement disclosures only and did not affect the Fund's financial position or the results of its operations. An operating segment is defined in Topic 280 as a component of a public entity that engages in business activities from which it may recognize revenues and incur expenses, has operating results that are regularly reviewed by the public entity's chief operating decision
17
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements (continued) |
March 31, 2025 (unaudited) |
maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information available. The CODM is the President of the Fund. The Fund operates as a single operating segment. The Fund's income, expenses, assets, changes in net assets resulting from operations and performance are regularly monitored and assessed as a whole by the CODM responsible for oversight functions of the Fund, using the information presented in the financial statements and financial highlights.
3. INVESTMENT MANAGEMENT AND OTHER AGREEMENTS
Investment Management Agreement
Subject to the oversight of the Trust's Board, the Adviser is responsible for managing the investment and reinvestment of the assets of the Fund in accordance with the Fund's investment objectives and policies and limitations and providing day-to-day administrative services to the Fund either directly or through others selected by it for the Fund. The Adviser receives an annual management fee payable monthly, at an annual rate of 0.75% of the average daily net assets of the Fund. The Fund paid management fees totaling $930,250 to the Adviser for the six months ended March 31, 2025.
The Trust and 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 Fund's average daily net assets attributable to Class A shares, Class C shares, and Class I shares, respectively (the "Expense Limitation Agreement"). The Expense Limitation Agreement will continue in effect until January 31, 2035, 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, 2025, the Advisor recaptured $25,161 of previously waived fees and has $0 remaining waived fees to recapture. 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.
Sub-Advisory Agreements
Flaherty serves as the investment sub-adviser to the Fund. The Adviser has agreed to pay from its own assets an annualized sub-advisory fee, quarterly, to Flaherty in an amount equal to one half of the net management fees collected by the Adviser, net of any waivers, reimbursement payments, supermarket fees and alliance fees waived, reimbursed or paid by the Adviser in respect of the Fund.
Other Service Providers
UMB Fund Services, Inc. ("UMBFS") served as the Fund's Administrator, Accounting Agent, and Transfer Agent through October 20, 2024. Effective October 21, 2024, Ultimus Fund Solutions, LLC replaced UMBFS as the Fund's administrator, accountant, and transfer agent. UMB Bank, N.A., serves as the Fund's Custodian.
4. DISTRIBUTION AND SERVICE PLANS
The Fund's Class A Shares and 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 Fund's Class A Shares and up to 1.00% of the average daily net assets of the Fund's C Shares. 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 Fund is authorized to make payments to Destra Capital Investments, LLC, the Fund's 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.
18
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements (continued) |
March 31, 2025 (unaudited) |
5. FEDERAL TAX INFORMATION
The Fund qualifies and intends to continue to qualify as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986. If so qualified, the Fund will not be subject to federal income tax to the extent the 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 Statement 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 Fund.
The 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 the 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. The Fund's policy is to classify any interest or penalties associated with underpayment of federal and state income taxes as an income tax expense on the Statement of Operations.
Accounting for Uncertainty in Income Taxes requires management of the 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 Fund has no examinations in progress during the six months ended March 31, 2025. For all open tax years and all major taxing jurisdictions through the end of the reporting period, management of the Fund reviewed all tax positions taken or expected to be taken in the preparation of the Fund's tax returns and concluded that Accounting for Uncertainty in Income Taxes resulted in no effect on the Fund's reported net assets or results of operations as of and during the six months ended March 31, 2025. Management of the Fund 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 March 31, 2025, gross unrealized appreciation/(depreciation) of investments, based on cost for federal income tax purposes were as follows:
Cost of investments | $ | 247,973,374 | ||
Gross unrealized appreciation | 2,910,307 | |||
Gross unrealized depreciation | (7,413,476 | ) | ||
Net unrealized appreciation (depreciation) | $ | (4,503,169 | ) |
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. For the year ended September 30, 2024, the Fund did not have any reclassifications.
As of September 30, 2024, the components of distributable earnings (accumulated deficit) on a tax basis were as follows:
Undistributed ordinary income | $ | 116,152 | ||
Undistributed long-term capital gains | - | |||
Tax distributable earnings | 116,152 | |||
Accumulated capital and other losses | (18,435,809 | ) | ||
Temporary book and tax differences | - | |||
Unrealized appreciation (depreciation) on investments | (1,950,090 | ) | ||
Total distributable earnings | $ | (20,269,746 | ) |
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. As of September 30, 2024, the Fund had qualified post-October losses of $859,236.
19
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements (continued) |
March 31, 2025 (unaudited) |
The tax character of distributions paid during the years ended September 30, 2024 and 2023 were as follows:
2024 | 2023 | |||||||
Distributions paid from: | ||||||||
Ordinary income | $ | 11,130,966 | $ | 11,554,338 | ||||
Net long-term capital gains | - | - | ||||||
Total distributions paid | $ | 11,130,966 | $ | 11,554,338 |
At September 30, 2024, the Fund had accumulated non-expiring capital loss carry forwards as follows:
Short-term | $ | 2,029,637 | ||
Long-term | 15,546,936 | |||
Total | $ | 17,576,573 |
To the extent that the Fund may realize future net capital gains, those gains will be offset by any unused non-expiring capital loss carry forwards. Future capital loss carry forward utilization in any given year may be subject to Internal Revenue Code limitations.
6. INVESTMENT TRANSACTIONS
For the six months ended March 31, 2025, the cost of investments purchased and proceeds from sales of investments, excluding short-term investments were as follows:
Purchases | Sales | ||||
$ | 18,964,822 | $ | 17,737,031 |
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 Fund's 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 Fund or its 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 Fund's Prospectus. For the six months ended March 31, 2025, the total CDSC received by affiliates in the Fund amounted to $355.
For the six months ended March 31, 2025, various broker dealers received $11,932 of sales charges from Shares Sold of the Fund. Sales charges from Shares sold of the Fund received by affiliates amounted to $1,674.
8. REPURCHASE AGREEMENTS
During the six months ended March 31, 2025, the Fund entered into a Master Repurchase Agreement (the "MRA") with UMB Bank, N.A., ("UMB Bank"), which provides that UMB Bank may from time to time, purchase certain assets from the Fund and the Fund agrees to repurchase such assets back pursuant to the MRA. Additionally, the Fund and UMB Bank have entered into a related Committed Repurchase Agreement (the "CRA" and together with the MRA, the "Agreements"), effective on December 5, 2024, and effective for one-year rolling terms. The MRA gives the Fund the right to demand that UMB Bank enter into certain repurchase transactions during the then-effective term of the CRA, pursuant to the terms of the Agreements. During the six months ended March 31, 2025, there were no transactions consummated under the Agreements.
9. PRINCIPAL RISKS
Risk is inherent in all investing. The value of your investment in the Fund, 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 Fund 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 Fund.
Active Management Risk - The Fund is an actively managed portfolio and its success depends upon the investment skills and analytical abilities of the Fund's Sub-Adviser to develop and effectively implement strategies that achieve the Fund's investment objective. Subjective decisions made by the Sub-Adviser may cause the Fund to incur losses or to
20
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements (continued) |
March 31, 2025 (unaudited) |
miss profit opportunities on which it may otherwise have capitalized, thus there is no guarantee that such decisions will produce the desired results or expected return.
Concentration Risk - The Fund intends to invest 25% or more of its total assets in securities of financial services companies. As a result, the Fund's portfolio may be subject to greater risk and volatility than if investments had been made in a broader diversification of investments in terms of industry. This policy makes the Fund more susceptible to adverse economic or regulatory occurrences affecting financial services companies.
Contingent Capital Securities Risk - Contingent capital securities (also known as contingent convertible securities and sometimes referred to as "CoCos") are a form of hybrid, income-producing debt security that are intended to either convert into equity or have their principal written down upon the occurrence of certain triggers. These triggers are generally linked to regulatory capital thresholds or other regulatory actions. CoCos may provide for mandatory conversion into common stock of the issuer under certain circumstances. Since the common stock of the issuer may not pay a dividend, investors in these instruments could experience a reduced income rate, potentially to zero; and conversion would deepen the subordination of the investor, hence worsening the Fund's standing in a bankruptcy proceeding. In addition, some such instruments have a set stock conversion rate that would cause a reduction in value of the security if the price of the stock is below the conversion price on the conversion date. CoCos may be considered to be high-yield securities (a.k.a. "junk" bonds) and, to the extent a CoCo held by the Fund undergoes a write-down, the Fund may lose some or all of its original investment in the CoCo. Performance of a CoCo issuer may, in general, be correlated with the performance of other CoCo issuers. As a result, negative information regarding one CoCo issuer may cause a corresponding decline in value of other CoCo issuers. Investments in CoCos may also lead to an increased sector concentration risk as such securities may be issued by a limited number of financial institutions (for more information, see "Concentration Risk" above). Subordinate securities such as CoCos are more likely to experience credit loss than non-subordinate securities of the same issuer - even if the CoCos do not convert to equity securities. Any losses incurred by subordinate securities, such as CoCos, are likely to be proportionately greater than non-subordinate securities, and any recovery of principal and interest of subordinate securities may take more time. As a result, any perceived decline in creditworthiness of a CoCo issuer is likely to have a greater impact on the CoCo, as a subordinate security.
Convertible Securities Risk - Convertible securities are debt securities or preferred stock that may be converted into common stock. Convertible securities typically pay current income as either interest (debt security convertibles) or dividends (preferred stock convertibles). The market value of a convertible security often performs like that of a regular debt security; that is, if market interest rates rise, the value of a convertible security usually falls. In addition, convertible securities are subject to the risk that the issuer will not be able to pay interest or dividends when due, and their market value may change based on changes in the issuer's credit rating or the market's perception of the issuer's creditworthiness. Since it derives a portion of its value from the common stock into which it may be converted, a convertible security is also subject to the same types of market and issuer risks that apply to the underlying common stock.
Credit Risk - Credit risk is the risk that an issuer of a debt security will be unable or unwilling to make dividend, interest or principal payments when due and the related risk that the value of a security may decline because of concerns about the issuer's ability or willingness to make such payments. Changes in an issuer's credit rating or the market's perception of an issuer's creditworthiness may also affect the value of the Fund's investment in that issuer. Credit risk may be heightened for the Fund because the Fund may invest in "high-yield," "high-risk," or "junk" securities; such securities, while generally offering higher yields than investment-grade securities with similar maturities, involve greater risks, including the possibility of default or bankruptcy, and are regarded as predominantly speculative with respect to the issuer's capacity to pay dividends and interest and repay principal.
Currency Risk - Since a portion of the Fund's assets may be invested in securities denominated in non-U.S. currencies, changes in currency exchange rates may adversely affect the Fund's NAV, the value of dividends and income earned, and gains and losses realized on the sale of securities. Generally, when the U.S. dollar rises in value against a non-U.S. currency, a security denominated in that currency loses value because the currency is worth fewer U.S. dollars. Conversely, when the U.S. dollar decreases in value against a non-U.S. currency, a security denominated in that currency gains value because the currency is worth more U.S. dollars. This risk, generally known as "currency risk," means that a strong U.S. dollar will reduce returns for U.S. investors holding securities denominated in non-U.S. currencies while a weak U.S. dollar will increase those returns.
Cybersecurity Risk - As the use of internet technology has become more prevalent in the course of business, the Fund has become more susceptible to potential operational risks through breaches in cyber security. A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption or lose operational capacity. Such events could cause the Fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss. The rapid development and increasingly widespread use of certain artificial intelligence technologies, including machine learning models and generative artificial intelligence, could increase the effectiveness of cyberattacks and exacerbate the risks.
21
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements (continued) |
March 31, 2025 (unaudited) |
Financial Services Companies Risk - Financial services companies are especially susceptible to the adverse effects of economic recession; currency exchange rates; government regulation; decreases in the availability of capital; volatile interest rates; portfolio concentrations in geographic markets and in commercial and residential real estate loans; and competition from new entrants in their fields of business. In addition, the financial services industry is an evolving and competitive industry that is undergoing significant change, as existing distinctions between financial segments become less clear. Such changes have resulted from various consolidations as well as the continual development of new products, structures and a changing regulatory framework. These changes are likely to have a significant impact on the financial services industry and the Fund. Insurance companies may be subject to severe price competition, claims activity, marketing competition and general economic conditions. Particular insurance lines will also be influenced by specific matters. Property and casualty insurer profits may be affected by events such as man-made and natural disasters (including weather catastrophe and terrorism). Life and health insurer profits may be affected by mortality risks and morbidity rates. Individual insurance companies may be subject to material risks including inadequate reserve funds to pay claims and the inability to collect from the insurance companies which insure insurance companies, so-called reinsurance carriers.
Foreign Custody Risk - The Fund may hold foreign securities with foreign banks, agents and securities depositories appointed by the Fund's custodian (each, a "Foreign Custodian"). Some Foreign Custodians may be recently organized or new to the foreign custody business. In some countries, Foreign Custodians may be subject to little or no regulatory oversight or independent evaluation of their operations. Further, the laws of certain countries may place limitations on the Fund's ability to recover its assets if a Foreign Custodian enters bankruptcy. Investments in emerging markets may be subject to even greater custody risks than investments in more developed markets.
General Fund Investing Risks - The Fund is not a complete investment program and you may lose money by investing in the Fund.
High-Yield Securities Risk - High-yield securities, or "junk" bonds, are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, may be highly speculative. In general, high-yield securities may have a greater risk of default than other types of securities.
Income Risk - The income earned from the Fund's portfolio may decline because of falling market interest rates. This can result when the Fund invests the proceeds from new share sales, or from matured or called preferred or debt securities, at market interest rates that are below the portfolio's current earnings rate.
Interest Rate Risk - Interest rate changes can be sudden and unpredictable and a wide variety of factors can cause interest rates to rise, such as central bank monetary policies, inflation rates, supply and demand and general economic conditions. If interest rates rise - in particular, if long-term interest rates rise - the prices of fixed-rate securities held by the Fund will fall. The magnitude of these fluctuations will generally be greater if the Fund holds securities with longer maturities or lower quality ratings.
Investment Companies Risk - As with other investments, investments in other investment companies are subject to market and selection risk. In addition, if the Fund acquires shares of investment companies, including ones affiliated with the Fund, shareholders bear both their proportionate share of expenses in the Fund (including management and advisory fees) and, indirectly, the expenses of the investment companies. To the extent the Fund is held by an affiliated fund, the ability of the Fund itself to hold other investment companies may be limited. Certain ETFs or closed-end funds traded on exchanges may be thinly traded and experience large spreads between the "ask" price quoted by a seller and the "bid" price offered by a buyer.
Liquidity Risk - This Fund, like all open-end funds, is limited to investing up to 15% of its net assets in illiquid investments. From time to time, certain securities held by the Fund may have limited marketability and may be difficult to sell at favorable times or prices. Less liquid investments that the Fund may want to invest in may be difficult or impossible to purchase. It is possible that certain securities held by the Fund will not be able to be sold in sufficient amounts or in a sufficiently timely manner to raise the cash necessary to meet any potentially large redemption requests by fund shareholders.
LIBOR Risk - Certain London Interbank Offered Rates ("LIBORs") were generally phased out by the end of 2021, and some regulated entities have ceased to enter into new LIBOR-based contracts beginning January 1, 2022. The 1-, 3- and 6-month U.S. dollar LIBOR settings continued to be published using a synthetic methodology until September 2024. Neither the effect of the LIBOR transition process nor its ultimate success can yet be known. Although the transition away from LIBOR has become increasingly well-defined, any potential effects of the transition away from LIBOR and other benchmark rates on financial markets, a fund or the financial instruments in which a fund invests can be difficult to ascertain. Not all existing LIBOR-based instruments may have alternative rate-setting provisions and there remains uncertainty regarding the willingness and ability of issuers to add alternative rate-setting provisions in certain existing instruments. Global regulators have advised market participants to cease entering into new contracts using LIBOR as
22
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements (continued) |
March 31, 2025 (unaudited) |
a reference rate, and it is possible that investments in LIBOR-based instruments could invite regulatory scrutiny. In addition, a liquid market for newly-issued instruments that use a reference rate other than LIBOR still may be developing. All of the aforementioned may adversely affect the Fund's performance or NAV.
SOFR Risk - SOFR is intended to be a broad measure of the cost of borrowing funds overnight in transactions that are collateralized by U.S. Treasury securities. SOFR is calculated based on transaction-level repo data collected from various sources. For each trading day, SOFR is calculated as a volume-weighted median rate derived from such data. SOFR is calculated and published by the Federal Reserve Bank of New York ("FRBNY"). If data from a given source required by the FRBNY to calculate SOFR is unavailable for any day, then the most recently available data for that segment will be used, with certain adjustments. If errors are discovered in the transaction data or the calculations underlying SOFR after its initial publication on a given day, SOFR may be republished at a later time that day. Rate revisions will be effected only on the day of initial publication and will be republished only if the change in the rate exceeds one basis point.
Because SOFR is a financing rate based on overnight secured funding transactions, it differs fundamentally from LIBOR. LIBOR is intended to be an unsecured rate that represents interbank funding costs for different short-term maturities or tenors. It is a forward-looking rate reflecting expectations regarding interest rates for the applicable tenor. Thus, LIBOR is intended to be sensitive, in certain respects, to bank credit risk and to term interest rate risk. In contrast, SOFR is a secured overnight rate reflecting the credit of U.S. Treasury securities as collateral. Thus, it is largely insensitive to credit-risk considerations and to short-term interest rate risks. SOFR is a transaction-based rate, and it has been more volatile than other benchmark or market rates, such as three-month LIBOR, during certain periods. For these reasons, among others, there is no assurance that SOFR, or rates derived from SOFR, will perform in the same or similar way as LIBOR would have performed at any time, and there is no assurance that SOFR-based rates will be a suitable substitute for LIBOR. SOFR has a limited history, having been first published in April 2018. The future performance of SOFR, and SOFR-based reference rates, cannot be predicted based on SOFR's history or otherwise. Levels of SOFR in the future, including following the discontinuation of LIBOR, may bear little or no relation to historical levels of SOFR, LIBOR or other rates.
Market Risk - Market risk is the risk that a particular security owned by the Fund or shares of the Fund in general may fall in value. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, the spread of infectious illness (including epidemics and pandemics) or other public health issues, military conflict, changes in interest rates and perceived trends in securities prices. These risks may be magnified if certain events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies worldwide due to increasingly interconnected global economies and financial markets. Overall securities values could decline generally or could underperform other investments.
Non-Investment-Grade Securities Risk - Non-investment-grade securities are not rated within the four highest categories by certain ratings agencies. To the extent that such securities are rated lower than investment-grade or are not rated, there would be a greater risk as to the timely repayment of the principal of, and timely payment of interest or dividends on, those securities.
Non-U.S. Investments Risk - The Fund invests its assets in income producing and preferred non-U.S. instruments. Thus, the value of Fund shares can be adversely affected by changes in currency exchange rates and political and economic developments abroad. Non-U.S. markets may be smaller, less liquid and more volatile than the major markets in the United States and, as a result, Fund share values may be more volatile. Trading in non-U.S. markets typically involves higher expense than trading in the United States. The Fund may have difficulties enforcing its legal or contractual rights in a non-U.S. country. In addition, the European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe, including countries that do not use the euro.
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.
Reverse Repurchase Agreements Risk - Reverse repurchase agreements involve the sale of securities held by the Fund subject to the Fund's agreement to repurchase the securities at an agreed-upon price, date and rate of interest. Reverse repurchase agreements may be considered borrowings under the 1940 Act and may be entered into only for temporary or emergency purposes. Reverse repurchase agreements involve the risk that the market value of the securities sold by a Fund may decline below the price of the securities the Fund is obligated to repurchase and the interest received on the cash exchanged for the securities. Reverse repurchase agreements may be classified as derivatives. The Fund is not subject to the full requirements of Rule 18f-4 under the 1940 Act as a "limited derivatives user," as defined in Rule 18f-4,
23
Destra Flaherty & Crumrine Preferred and Income Fund |
Notes to Financial Statements (continued) |
March 31, 2025 (unaudited) |
and maintains a maximum derivatives exposure of 10% of its net assets. In accordance with Rule 18f-4, when the Fund engages in reverse repurchase agreements and similar financing transactions, the Fund may either (i) maintain asset coverage of at least 300% with respect to such transactions and any other borrowings in the aggregate, or (ii) treat such transactions as "derivatives transactions" and comply with Rule 18f-4 with respect to such transactions. Short-term credits necessary for the settlement of securities transactions are subject to the Fund's fundamental policy regarding borrowings. The use of derivatives generally is also subject to the operational risks including documentation issues, settlement issues, system failures, inadequate controls, and human error, as well as legal risks including the risks of loss resulting from insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract.
10. TRUSTEES AND OFFICERS
The Destra Fund Complex (consisting of the Trust, 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. Certain officers are officers of Destra.
Employees of PINE Advisors LLC ("PINE") serve as officers of the Trust. PINE receives an annual base fee for the services provided to the Trust. PINE is reimbursed for certain out-of-pocket expenses by the Trust. Each Fund in the Destra Fund Complex pays a portion of these fees on a pro-rata basis according to each Fund's average net assets. Chief financial officer and chief compliance officer fees paid by the Trust for the six months ended March 31, 2025, are disclosed in the Statement of Operations.
11. SUBSEQUENT EVENTS
Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued. Management has concluded that there is no impact requiring adjustment or disclosure in the financial statements. On April 29, 2025, the Fund paid a distribution of $0.0616 per Class A Share, $0.0650 per Class I Share and $0.0508 per Class C Share to shareholders of record on April 28, 2025.
24
Destra Flaherty & Crumrine Preferred and Income Fund |
Approval of Investment Management Agreements |
March 31, 2025 (unaudited) |
Renewal of Preferred & Income Fund Advisory and Sub-Advisory Agreement
At a meeting held on November 13, 2024, the Board of Trustees of Destra Investment Trust (the "Trust"), including the Independent Trustees, unanimously approved the renewal of the Investment Management Agreement (the "Preferred & Income Advisory Agreement") between DFC Preferred Advisors LLC ("DFC") and the Trust with respect to the Destra Flaherty Preferred and Income Fund (the "Preferred and Income Fund") and the Sub-Advisory Agreement between the Trust, on behalf of the Preferred and Income Fund, Flaherty & Crumrine Incorporated (the "Flaherty"), and DFC (together with the Preferred & Income Advisory Agreement, the "Flaherty Advisory Agreements").
The Board reviewed and discussed the written materials that were provided in advance of the meeting and deliberated on the renewal of the Flaherty Advisory Agreements. The Board relied upon the advice of independent legal counsel and their own business judgment in determining the material factors to be considered in renewing the Flaherty Advisory Agreements and the weight to be given to each such factor. The conclusions reached by the Board were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor. Moreover, each Trustee may have afforded different weight to the various factors in reaching his conclusions with respect to renewal of the Flaherty Advisory Agreements. During the review process, the Board noted certain instances where clarification or follow-up was appropriate and others where the Board determined that further clarification or follow-up was not necessary. In those instances where clarification or follow-up was requested, the Board determined that in each case either information responsive to its requests had been provided, or where any request was outstanding in whole or in part, given the totality of the information provided with respect to the agreements, the Board had received sufficient information to renew and approve the Flaherty Advisory Agreements.
In considering such renewals, the Board reviewed and analyzed various factors that it determined were relevant, including the factors enumerated below.
Nature, Extent and Quality of Service
The Board reviewed and considered the nature and extent of the investment advisory services provided by DFC and Flaherty to the Fund under the Flaherty Advisory Agreements, including the selection of the Fund's investments. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by DFC and Flaherty including, among other things, providing office facilities, equipment, and personnel. The Board also reviewed and considered the qualifications of the key personnel of DFC and Flaherty who provide the investment advisory and/or administrative services to the Fund. The Board determined that DFC's key personnel and Flaherty's key personnel are well-qualified by education and/or training and experience to perform the services in an efficient and professional manner. The Board also took into account both DFC's and Flaherty's respective compliance policies and procedures including the procedures used to determine the value of the Fund's investments. The Board concluded that the overall quality of the advisory and administrative services provided was satisfactory.
Performance
The Board reviewed the performance of the Fund over the one-year, three-year, five-year, and ten-year periods ended September 30, 2024, as compared to a peer group of funds with similar investment strategies. The Board noted that except for the ten-year period, during which the Fund outperformed its peer group median, the Fund had underperformed over all periods but were within an acceptable range of the peer group median over such periods. The Board also considered information related to the manner in which the peer group was selected, and additional performance information from Flaherty. The Board further discussed the Fund's performance and concluded that the performance of the Fund over the time periods reviewed was satisfactory.
Fees and Expenses
The Board reviewed the advisory fee rate and total net expense ratio of the Fund. The Board compared the advisory fee and total net expense ratio for the Fund as compared to a peer group of funds with similar investment strategies. The Board noted that the Fund's advisory fee and total net expense ratio were each higher than the respective peer group medians. The Board concluded that the advisory fees paid to DFC and Flaherty were reasonable and satisfactory in light of the services provided.
Comparable Accounts
The Board noted certain information provided by DFC and Flaherty regarding fees charged to their respective other clients utilizing a similar strategy to that employed by the Fund. With respect to DFC, the Board noted that DFC does not charge a lower fee for any client with comparable investment objective to that of the Fund. With respect to Flaherty,
25
Destra Flaherty & Crumrine Preferred and Income Fund |
Approval of Investment Management Agreements (continued) |
March 31, 2025 (unaudited) |
the Board concluded that, bearing in mind the limitations of comparing different types of managed accounts and the different levels of service typically associated with such accounts, the fee structures applicable to Flaherty's other clients employing a comparable strategy to the Fund were not indicative of any unreasonableness with respect to the sub-advisory fee payable by the Adviser.
Economies of Scale
The Board reviewed the structure of the Fund's investment management under the applicable Flaherty Advisory Agreement. The Board determined that, based on the Fund's current assets and projections for future growth in such assets, neither DFC nor Flaherty is currently experiencing economies of scale with respect to the Fund at this time.
Profitability
The Board discussed the information related to DFC's retrospective profitability analysis for 2023 and projected profitability analysis for 2024, from its management of the Fund as well as Flaherty's retrospective profitability analysis for 2023 and projected profitability analysis for 2024. The Board considered assumptions regarding changes in assets under management and how those changes may impact profitability. The Board determined that the profitability of DFC and Flaherty was not unreasonable.
Other Benefits
The Board also considered other benefits potentially received by DFC and Flaherty from their management of the Fund, including, with respect to DFC, selling and servicing other open-end or closed-end funds in parallel with the Fund, cross-selling opportunities to existing clients, and efficiencies in marketing the Fund alongside DFC's other product offerings. With respect to Flaherty, the Board considered that Flaherty may benefit from marketing opportunities for Flaherty's other products. The Board concluded that the advisory and sub-advisory fees were reasonable in light of the fall-out benefits.
Conclusion
In considering renewal of the Flaherty Advisory Agreements, the Board evaluated the factors and information described above, as well as information concerning DFC, Flaherty and the Fund that is provided to the Board throughout the year in connection with other Board meetings. In its deliberations, the Board did not identify any single item that was paramount or controlling, and individual Trustees may have attributed different weights to various factors. Based on its consideration of all factors that it deemed material, and assisted by the advice of its counsel, the Board concluded it would be in the best interest of the Fund and its shareholders to approve the renewals of the Flaherty Advisory Agreements.
26
Destra Flaherty & Crumrine Preferred and Income Fund |
Additional Information |
March 31, 2025 (unaudited) |
This report is sent to shareholders of the Fund for their information. It is not a Prospectus, circular or representation intended for use in the purchase or sale of Shares of the Fund or of any securities mentioned in this report.
Corporate Dividends Received Deduction - For the period ended September 30, 2024, the Fund had 57.96% 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, 2024, the Fund had 95.86%, of dividends paid from net investment income designated as qualified dividend income.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 9. PROXY DISCLOSURES FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 10. REMUNERATION PAID TO DIRECTORS, OFFICERS, AND OTHERS OF OPEN-END MANAGEMENT INVESTMENT COMPANIES.
This information is included in the Notes to Financials in Item 7.
ITEM 11. STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT.
This information is included in approval of investment advisory agreement in Item 7.
27
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Not applicable
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
This information is included in the Additional Information in Item 7.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
This information is included in the Additional Information in Item 7.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 15. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 16. Controls and Procedures
(a) | The registrant's Principal Executive Officer and Principal Financial Officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures as of a date within 90 days of this report on Form N-CSR. |
(b) | There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) 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 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 18. Recovery of Erroneously Awarded Compensation.
(a) | Not applicable |
(b) | Not applicable |
Item 19. Exhibits.
(a)(1) | Code of Ethics. Not applicable to semi-annual reports. |
(a)(2) | Not applicable |
(a)(3) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)): Attached hereto. |
(a)(4) | Not applicable |
(a)(5) | Not applicable |
(b) | Certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)): 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 | 06/06/2025 |
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 | 06/06/2025 |
By | (Signature and Title) | |
/s/ Derek Mullins | ||
Derek Mullins, Treasurer/Principal Financial Officer |
Date | 06/06/2025 |