UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-22417
Destra Investment Trust
(Exact name of registrant as specified in charter)
444 West Lake Street, Suite 1700
Chicago, IL 60606
(Address of principal executive offices) (Zip code)
Robert A. Watson
C/O Destra Capital Advisors LLC
444 West Lake Street, Suite 1700
Chicago, IL 60606
(Name and address of agent for service)
Registrant’s telephone number, including area code: (312) 843-6161
Date of fiscal year end: September 30
Date of reporting period: March 31, 2020
ITEM 1. REPORTS TO STOCKHOLDERS.
Destra Flaherty & Crumrine Preferred and Income Fund
Destra Granahan Small Cap Advantage Fund
Semi-Annual Report
March31, 2020
(Unaudited)
Beginning on January1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Destra Flaherty & Crumrine Preferred and Income Fund’s and Destra Granahan Small Cap Advantage Fund’s (each, a “Fund” and together, the “Funds”) annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website at www.destracapital.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from each Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) through the Fund’s transfer agent by calling toll-free at 844-9DESTRA (933-7872), or if you are a direct investor, by enrolling at www.destracapital.com.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with a Fund, you can call 844-9DESTRA (933-7872) to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the Destra Fund Complex if you invest directly with the Fund.
Table of Contents
3 | ||
4 | ||
Schedules of Investments | ||
5 | ||
12 | ||
15 | ||
16 | ||
17 | ||
18 | ||
20 | ||
27 | ||
Approval of Investment Management and Sub-Advisory Agreements | 28 | |
30 |
2
This document may contain forward-looking statements representing Destra Capital Advisors LLC’s (“Destra”), the portfolio managers’ or sub-adviser’s beliefs concerning future operations, strategies, financial results or other developments. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond Destra’s, the portfolio managers’ or sub-advisers’ control or are subject to change, actual results could be materially different. There is no guarantee that such forward-looking statements will come to pass.
Certain impacts to public health conditions particular to the coronavirus (COVID-19) outbreak may have a significant negative impact on the operations and profitability of the Funds’ investments. The extent of the impact to the financial performance of the Funds will depend on future developments, including (i) the duration and spread of the outbreak,(ii) the restrictions and advisories, (iii) the effects on the financial markets, and (iv) the effects on the economy overall, all of which are highly uncertain and cannot be predicted.
Investors should consider the investment objective and policies, risk considerations, charges and ongoing expenses of an investment carefully before investing. The prospectus contains this and other information relevant to an investment in each Fund. Please read the prospectus carefully before investing. To obtain a prospectus, please contact your investment representative or Destra Capital Investments LLC at 844-9DESTRA (933-7872) or access our website at www.destracapital.com.
3
As a shareholder of the Destra Investment Trust, you incur management fees and other fund expenses. The expense examples below (the “Example”) are intended to help you understand your ongoing costs (in dollars) of investing in each Fund and to compare these costs with the ongoing costs of investing in other funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from October1, 2019 to March31, 2020.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not each Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or deferred sales charges. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Destra Flaherty & Crumrine Preferred and Income Fund | Beginning | Ending | Annualized | Expenses | ||||
Class I | ||||||||
Actual | $1,000.00 | $ 871.00 | 1.17% | $ 5.48 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,019.14 | 1.17% | 5.92 | ||||
Class A | ||||||||
Actual | 1,000.00 | 869.90 | 1.42% | 6.64 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.97 | 1.42% | 7.16 | ||||
Class C | ||||||||
Actual | 1,000.00 | 866.70 | 2.17% | 10.14 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,014.14 | 2.17% | 10.94 |
Destra Granahan Small Cap Advantage Fund | Beginning | Ending | Annualized | Expenses | ||||
Class I | ||||||||
Actual | $1,000.00 | $ 903.80 | 1.50% | $ 7.12 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,017.53 | 1.50% | 7.55 | ||||
Class A | ||||||||
Actual | 1,000.00 | 901.70 | 1.75% | 8.34 | ||||
Hypothetical (5% return before expenses) | 1,000.00 | 1,016.21 | 1.75% | 8.84 |
1 Expenses are equal to the Destra Flaherty & Crumrine Preferred and Income Fund’s annualized expense ratios for the period October 1, 2019 through March 31, 2020, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
2 Expenses are equal to the Destra Granahan Small Cap Advantage Fund’s annualized expense ratio for the period October 1, 2019 through March 31, 2020, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
4
Schedule of Investments |
As of March31, 2020 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES – 75.3% | |||||||
BANKS – 37.0% | |||||||
28,600 | BancorpSouth Bank, 5.500%, Series A(1) | Ba1 | $ | 607,464 | |||
Bank of America Corp. |
| ||||||
350,000 | 5.875% to 03/15/28 then 3-Month USD Libor + 2.931%, Series FF(1) | Baa3 |
| 354,954 | |||
500,000 | 6.100% to 03/17/25 then 3-Month USD Libor + 3.898%, Series AA(1) | Baa3 |
| 505,348 | |||
2,000,000 | 6.250% to 09/05/24 then 3-Month USD Libor + 3.705%, Series X(1) | Baa3 |
| 2,031,390 | |||
250,000 | 6.300% to 03/10/26 then 3-Month USD Libor + 4.553%, Series DD(1) | Baa3 |
| 262,709 | |||
4,525,000 | 6.500% to 10/23/24 then 3-Month USD Libor + 4.174%, Series Z(1) | Baa3 |
| 4,777,020 | |||
290,945 | Capital One Financial Corp., | Baa3 |
| 5,833,447 | |||
Citigroup, Inc. |
| ||||||
1,125,000 | 4.700% to 01/30/25 then SOFR + 3.234%, Series V(1) | Ba1 |
| 965,784 | |||
4,560,000 | 5.950% to 05/15/25 then 3-Month USD Libor + 3.905%, Series P(1) | Ba1 |
| 4,420,669 | |||
1,700,000 | 6.250% to 08/15/26 then 3-Month USD Libor + 4.517%, Series T(1) | Ba1 |
| 1,743,920 | |||
108,199 | 6.875% to 11/15/23 then 3-Month USD Libor + 4.130%, Series K(1) | Ba1 |
| 2,789,370 | |||
16,400 | 7.125% to 09/30/23 then 3-Month USD Libor + 4.040%, Series J(1) | Ba1 |
| 424,596 | |||
150,000 | Citizens Financial Group, Inc., |
| |||||
6.350% to 04/06/24 then 3-Month USD Libor + 3.642%, Series D(1) | BB+(2) |
| 3,577,500 | ||||
CoBank ACB |
| ||||||
11,790 | 6.200% to 01/01/25 then 3-Month USD Libor + 3.744%, Series H(1)(3) | BBB+(2) |
| 1,203,700 | |||
8,400 | 6.250% to 10/01/22 then 3-Month USD Libor + 4.557%, Series F(1)(3) | BBB+(2) |
| 832,692 | |||
500,000 | 6.250% to 10/01/26 then 3-Month USD Libor + 4.660%, Series I(1)(3) | BBB+(2) |
| 495,000 | |||
Fifth Third Bancorp |
| ||||||
45,761 | 6.000%, Series A(1) | Baa3 |
| 1,078,129 | |||
24,516 | 6.625% to 12/31/23 then 3-Month USD Libor + 3.710%, Series I(1) | Baa3 |
| 627,119 |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) | |||||||
BANKS (continued) | |||||||
20,800 | First Citizens BancShares, Inc., | Baa3 | $ | 470,704 | |||
8,000 | First Horizon National Corp., | Ba2 |
| 187,040 | |||
Goldman Sachs Group, Inc. |
| ||||||
925,000 | 4.400% to 02/10/25 then USD 5 Year Tsy + 2.850%, Series S(1) | Ba1 |
| 773,531 | |||
2,500,000 | 4.950% to 02/10/25 then USD 5 Year Tsy + 3.224%, Series R(1) | Ba1 |
| 2,226,737 | |||
600,000 | 5.500% to 08/10/24 then USD 5 Year Tsy + 3.623%, Series Q(1) | Ba1 |
| 577,083 | |||
103,105 | 6.375% to 05/10/24 then 3-Month USD Libor + 3.550%, Series K(1) | Ba1 |
| 2,683,823 | |||
49,593 | Huntington Bancshares, Inc., | Baa3 |
| 1,212,053 | |||
JPMorgan Chase & Co. |
| ||||||
490 | 4.750%, Series GG(1) | Baa2 |
| 11,412 | |||
1,450,000 | 5.229%, 3-Month USD Libor + 3.320%, Series V(1)(4) | Baa2 |
| 1,261,130 | |||
KeyCorp |
| ||||||
3,740,000 | 5.000% to 09/15/26 then 3-Month USD Libor + 3.606%, Series D(1) | Baa3 |
| 3,256,923 | |||
25,277 | 5.625%, Series G(1) | Baa3 |
| 610,440 | |||
30,425 | 6.125% to 12/15/26 then 3-Month USD Libor + 3.892%, Series E(1) | Baa3 |
| 760,625 | |||
850,000 | Lloyds Bank PLC, | Baa3 |
| 938,817 | |||
700,000 | M&T Bank Corp., | Baa2 |
| 664,927 | |||
15,000 | Merchants Bancorp, 6.000% to 10/01/24 then 3-Month USD Libor + 4.569%, Series B(1) | NR(5) |
| 314,850 | |||
Morgan Stanley |
| ||||||
25,000 | 4.875%, Series L(1) | Ba1 |
| 589,250 | |||
171,717 | 5.850% to 04/15/27 then 3-Month USD Libor + 3.491%, Series K(1) | Ba1 |
| 4,227,673 | |||
24,190 | 6.375% to 10/15/24 then 3-Month USD Libor + 3.708%, Series I(1) | Ba1 |
| 606,443 |
See accompanying Notes to Financial Statements
5
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments(continued) |
As of March31, 2020 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) | |||||||
BANKS (continued) | |||||||
164,500 | 6.875% to 01/15/24 then 3-Month USD Libor + 3.940%, Series F(1) | Ba1 | $ | 4,219,425 | |||
165,285 | New York Community Bancorp, Inc., | Ba2 |
| 3,616,436 | |||
106,311 | People’s United Financial, Inc., | Ba1 |
| 2,494,056 | |||
Regions Financial Corp. |
| ||||||
90,500 | 5.700% to 08/15/29 then 3-Month USD Libor + 3.148%, Series C(1) | Ba1 |
| 2,126,750 | |||
74,300 | 6.375% to 09/15/24 then 3-Month USD Libor + 3.536%, Series B(1) | Ba1 |
| 1,780,971 | |||
1,250 | Sovereign Real Estate Investment Trust, 12.000%, Series A(1)(3) | Ba1 |
| 1,322,144 | |||
20,402 | Sterling Bancorp, | Ba2 |
| 458,908 | |||
46,000 | Synchrony Financial, 5.625%, Series A(1) | BB-(2) |
| 784,760 | |||
127,922 | Synovus Financial Corp., 5.875% to 07/01/24 then USD 5 Year Tsy + 4.127%, Series E(1) | BB-(2) |
| 2,628,797 | |||
72,679 | Texas Capital Bancshares, Inc., | Ba2 |
| 1,537,161 | |||
15,000 | TriState Capital Holdings, Inc., | NR(5) |
| 285,000 | |||
Truist Financial Corp. |
| ||||||
1,098,000 | 4.800% to 09/01/24 then USD 5 Year Tsy + 3.003%, Series N(1) | Baa2 |
| 945,043 | |||
2,569,000 | 5.050% to 06/15/22 then 3-Month USD Libor + 3.102%, Series L(1) | Baa2 |
| 2,287,206 | |||
Valley National Bancorp |
| ||||||
2,022 | 5.500% to 09/30/22 then 3-Month USD Libor + 3.578%, Series B(1) | BB(2) |
| 41,876 | |||
30,345 | 6.250% to 06/30/25 then 3-Month USD Libor + 3.850%, Series A(1) | BB(2) |
| 750,432 | |||
8,440,000 | Wachovia Capital Trust III, 5.570%, 3-Month USD Libor + 0.930%, | Baa2 |
| 8,199,629 |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) | |||||||
BANKS (continued) | |||||||
Wells Fargo & Co. |
| ||||||
12,700 | 5.850% to 09/15/23 then 3-Month USD Libor + 3.090%, Series Q(1) | Baa2 | $ | 309,245 | |||
1,557,000 | 5.875% to 06/15/25 then 3-Month USD Libor + 3.990%, Series U(1) | Baa2 |
| 1,581,437 | |||
20,000 | 6.625% to 03/15/24 then 3-Month USD Libor + 3.690%, Series R(1) | Baa2 |
| 530,200 | |||
267 | 7.500%, Series L(1)(6) | Baa2 |
| 340,163 | |||
Zions Bancorp NA |
| ||||||
43,000 | 5.800% to 06/15/23 then 3-Month USD Libor + 3.800%, Series I(1) | BB+(2) |
| 41,731 | |||
2,000 | 6.300% to 03/15/23 then 3-Month USD Libor + 4.240%, Series G(1) | BB+(2) |
| 48,500 | |||
| 90,234,142 | ||||||
FINANCIAL SERVICES – 1.3% | |||||||
450,000 | AerCap Global Aviation Trust, | Ba1 |
| 376,448 | |||
1,545,000 | AerCap Holdings, | Ba2 |
| 1,074,277 | |||
590,000 | E*TRADE Financial Corp., 5.300% to 03/15/23 then 3-Month USD Libor + 3.160%, Series B(1) | Ba2 |
| 531,289 | |||
General Motors FinancialCo., Inc. |
| ||||||
560,000 | 5.750% to 09/30/27 then 3-Month USD Libor + 3.598%, Series A(1) | Ba2 |
| 353,256 | |||
600,000 | 6.500% to 09/30/28 then 3-Month USD Libor + 3.436%, Series B(1) | Ba2 |
| 415,047 | |||
21,000 | Stifel Financial Corp., 6.250%, Series B(1) | BB-(2) |
| 508,620 | |||
| 3,258,937 | ||||||
INSURANCE – 18.2% |
| ||||||
1,151,000 | ACE Capital Trust II, 9.700%, 04/01/30 | Baa1 |
| 1,520,258 | |||
95,600 | Allstate Corp., | Baa2 |
| 2,208,360 | |||
92,000 | American Equity Investment Life HoldingCo., | BB(2) |
| 1,466,480 |
See accompanying Notes to Financial Statements
6
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments(continued) |
As of March31, 2020 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) | |||||||
INSURANCE (continued) | |||||||
1,515,000 | American International Group, Inc., | Baa2 | $ | 1,778,869 | |||
Arch Capital Group, Ltd. |
| ||||||
13,000 | 5.250%, Series E(1) | Baa3 |
| 298,220 | |||
22,247 | 5.450%, Series F(1) | Baa3 |
| 494,996 | |||
Aspen Insurance Holdings,Ltd. |
| ||||||
25,000 | 5.625%(1) | Baa3 |
| 513,500 | |||
19,543 | 5.950% to 07/01/23 then 3-Month USD Libor + 4.060%(1) | Baa3 |
| 419,197 | |||
88,000 | Athene Holding, Ltd., 6.350% to 06/30/29 then 3-Month USD Libor + 4.253%, Series A(1) | BBB-(2) |
| 1,999,360 | |||
183,598 | Axis Capital Holdings, Ltd., 5.500%, Series E(1) | Baa3 |
| 4,011,616 | |||
735,000 | Axis Specialty Finance LLC, 4.900% to 01/15/30 then USD 5 Year Tsy + 3.186%, 01/15/40 | Baa2 |
| 635,127 | |||
100,435 | Delphi Financial Group, Inc., | BBB(2) |
| 2,284,896 | |||
45,400 | Enstar Group, Ltd., | BB+(2) |
| 995,168 | |||
196,000 | Everest Reinsurance Holdings, Inc., | Baa2 |
| 143,576 | |||
7,103,000 | Liberty Mutual Group, Inc., | Baa3 |
| 7,550,880 | |||
MetLife, Inc. |
| ||||||
1,605,000 | 9.250% to 04/08/38 then 3-Month USD Libor + 5.540%, 04/08/38(3) | Baa2 |
| 2,008,441 | |||
1,937,000 | 10.750% to 08/01/39 then 3-Month USD Libor + 7.548%, 08/01/39 | Baa2 |
| 2,699,744 | |||
PartnerRe, Ltd. |
| ||||||
141,098 | 5.875%, Series I(1) | Baa2 |
| 3,303,104 | |||
42,701 | 7.250%, Series H(1) | Baa2 |
| 1,062,828 | |||
4,500,000 | Provident Financing Trust I, | Baa3 |
| 4,686,142 | |||
100,476 | Reinsurance Group of America, Inc., | Baa2 |
| 2,316,977 |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) | |||||||
INSURANCE (continued) | |||||||
1,175,000 | SBL Holdings, Inc., | BB(2) | $ | 765,219 | |||
23,000 | Voya Financial, Inc., | Ba2 |
| 529,230 | |||
28,768 | W.R. Berkley Corp., 5.750%, 06/01/56 | Baa2 |
| 633,184 | |||
| 44,325,372 | ||||||
UTILITIES – 12.3% |
| ||||||
41,000 | Algonquin Power & Utilities Corp., | BB+(2) |
| 963,500 | |||
646,000 | CenterPoint Energy, Inc., | Ba1 |
| 517,249 | |||
109,000 | CMS Energy Corp., | Baa2 |
| 2,752,250 | |||
3,576,000 | ComEd Financing III, | Baa2 |
| 4,146,372 | |||
2,000,000 | Duke Energy Corp., | Baa3 |
| 1,681,390 | |||
2,806,000 | Emera, Inc., | Ba2 |
| 2,548,564 | |||
79,020 | Integrys Holding, Inc., 6.000% to 08/01/23 then 3-Month USD Libor + 3.220%, 08/01/73 | Baa2 |
| 1,797,705 | |||
2,185,000 | NextEra Energy Capital Holdings, Inc., | Baa2 |
| 2,017,745 | |||
285,000 | NiSource, Inc., | Ba1 |
| 253,790 | |||
39,250 | SCE Trust II, | Ba1 |
| 861,930 | |||
119,974 | SCE Trust V, | Ba1 |
| 2,286,704 | |||
192,087 | SCE Trust VI, | Ba1 |
| 3,939,704 |
See accompanying Notes to Financial Statements
7
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments(continued) |
As of March31, 2020 (unaudited) |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) | |||||||
UTILITIES (continued) | |||||||
1,140,000 | Southern California Edison Co., | Ba1 | $ | 1,094,753 | |||
225,000 | Southern Co., | Baa3 |
| 5,037,750 | |||
4,866 | Spire, Inc., | Ba1 |
| 121,455 | |||
| 30,020,861 | ||||||
ENERGY – 4.2% |
| ||||||
DCP Midstream LP |
| ||||||
1,300,000 | 7.375% to 12/15/22 then 3-Month USD Libor + 5.148%, Series A(1) | B1 |
| 522,268 | |||
3,900 | 7.875% to 06/15/23 then 3-Month USD Libor + 4.919%, Series B(1) | B1 |
| 35,490 | |||
1,252,000 | Enbridge, Inc., | Ba1 |
| 928,665 | |||
Energy Transfer |
| ||||||
362,000 | 7.125% to 05/15/30 then USD 5 Year Tsy + 5.306%, Series G(1) | Ba2 |
| 218,315 | |||
203,430 | 7.375% to 05/15/23 then 3-Month USD Libor + 4.530%, Series C(1) | Ba2 |
| 2,563,218 | |||
155,236 | 7.600% to 05/15/24 then 3-Month USD Libor + 5.161%, Series E(1) | Ba2 |
| 1,929,583 | |||
1,600 | 7.625% to 08/15/23 then 3-Month USD Libor + 4.738%, Series D(1) | Ba2 |
| 20,320 | |||
1,765,000 | MPLX LP, | BB+(2) |
| 1,077,515 | |||
Transcanada Trust |
| ||||||
725,000 | 5.300% to 03/15/27 then 3-Month USD Libor + 3.208%, 03/15/77, | Baa3 |
| 541,753 | |||
1,825,000 | 5.500% to 09/15/29 then 3-Month USD Libor + 4.154%, 09/15/79 | Baa3 |
| 1,399,310 | |||
1,350,000 | 5.875% to 08/15/26 then 3-Month USD Libor + 4.640%, 08/15/76, | Baa3 |
| 1,058,731 | |||
| 10,295,168 |
Shares or |
| Moody’s | Value | ||||
PREFERRED SECURITIES (continued) | |||||||
MISCELLANEOUS – 1.7% | |||||||
370,000 | Apollo Management Holdings LP, | BBB+(2) | $ | 333,702 | |||
450,000 | BHP Billiton Finance USA, Ltd., | Baa1 |
| 477,902 | |||
Land O’ Lakes, Inc. |
| ||||||
700,000 | 7.250%, Series B(1)(3) | BB(2) |
| 623,214 | |||
3,115,000 | 8.000%, Series A(1)(3) | BB(2) |
| 2,819,075 | |||
| 4,253,893 | ||||||
COMMUNICATIONS – 0.6% | |||||||
33,000 | AT&T, Inc., | Ba1 |
| 699,600 | |||
700,000 | Vodafone Group PLC, | Ba1 |
| 749,261 | |||
| 1,448,861 | ||||||
| |||||||
TOTAL PREFERRED SECURITIES |
| 183,837,234 | |||||
| |||||||
CONTINGENT CAPITAL SECURITIES – 20.3% | |||||||
BANKS –19.0% |
| ||||||
4,207,000 | Australia & New Zealand Banking Group, Ltd., 6.750% to 06/15/26 then USD 5 Year Swap + 5.168%(1)(3) | Baa2 |
| 4,136,890 | |||
Banco Bilbao Vizcaya Argentaria SA |
| ||||||
2,600,000 | 6.125% to 11/16/27 then USD 5 Year Swap + 3.870%(1) | Ba2 |
| 1,913,119 | |||
800,000 | 6.500% to 03/05/25 then USD 5 Year Tsy + 5.192%(1) | Ba2 |
| 620,556 | |||
Banco Mercantil del NorteSA |
| ||||||
360,000 | 7.500% to 06/27/29 then USD 10 Year Tsy + 5.470%(1)(3) | Ba2 |
| 274,954 | |||
640,000 | 7.625% to 01/06/28 then USD 10 Year Tsy + 5.353%(1)(3) | Ba2 |
| 491,408 | |||
Barclays PLC |
| ||||||
8,247,000 | 7.875% to 03/15/22 then USD 5 Year Swap + 6.772%(1) | Ba2 |
| 7,587,240 | |||
700,000 | 8.000% to 06/15/24 then USD 5 Year Tsy + 5.672%(1) | Ba2 |
| 649,666 |
See accompanying Notes to Financial Statements
8
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments(continued) |
As of March31, 2020 (unaudited) |
Shares or |
| Moody’s | Value | ||||
CONTINGENT CAPITAL SECURITIES (continued) | |||||||
BANKS (continued) | |||||||
600,000 | BBVA Bancomer SA Texas, 5.875% to 09/13/29 then USD 5 Year Tsy + 4.308%, 09/13/34(3) | Baa3 | $ | 497,670 | |||
BNP Paribas SA |
| ||||||
1,350,000 | 4.500% to 02/25/30 then USD 5 Year Tsy + 2.944%(1)(3) | Ba1 |
| 1,040,344 | |||
3,000,000 | 7.375% to 08/19/25 then USD 5 Year Swap + 5.150%(1)(3) | Ba1 |
| 2,867,085 | |||
1,000,000 | 7.625% to 03/30/21 then USD 5 Year Swap + 6.314%(1)(3) | Ba1 |
| 976,875 | |||
500,000 | Credit Agricole SA, | Baa3 |
| 518,136 | |||
Credit Suisse Group AG |
| ||||||
500,000 | 5.100% to 01/24/30 then USD 5 Year Tsy + 3.293%(1)(3) | Ba2 |
| 386,875 | |||
1,100,000 | 6.375% to 08/21/26 then USD 5 Year Tsy + 4.828%(1)(3) | Ba2 |
| 966,388 | |||
500,000 | 7.250% to 09/12/25 then USD 5 Year Tsy + 4.332%(1)(3) | Ba2 |
| 454,098 | |||
HSBC Holdings PLC |
| ||||||
325,000 | 6.000% to 05/22/27 then USD 5 Year Swap + 3.746%(1) | Baa3 |
| 308,209 | |||
850,000 | 6.500% to 03/23/28 then USD 5 Year Swap + 3.606%(1) | Baa3 |
| 795,443 | |||
4,918,000 | 6.875% to 06/01/21 then USD 5 Year Swap + 5.514%(1) | Baa3 |
| 4,832,599 | |||
4,885,000 | ING Groep, | Ba1 |
| 4,224,304 | |||
1,700,000 | Lloyds Banking Group PLC, | Baa3 |
| 1,529,141 | |||
1,530,000 | Macquarie Bank, Ltd., | Ba1 |
| 1,378,278 | |||
Societe Generale SA |
| ||||||
250,000 | 6.750% to 04/06/28 then USD 5 Year Swap + 3.929%(1)(3) | Ba2 |
| 208,641 |
Shares or |
| Moody’s | Value | ||||
CONTINGENT CAPITAL SECURITIES (continued) | |||||||
BANKS (continued) | |||||||
3,500,000 | 7.375% to 09/13/21 then USD 5 Year Swap + 6.238%(1)(3) | Ba2 | $ | 3,237,412 | |||
750,000 | 8.000% to 09/29/25 then USD 5 Year Swap + 5.873%(1)(3) | Ba2 |
| 686,771 | |||
Standard Chartered PLC |
| ||||||
4,200,000 | 7.500% to 04/02/22 then USD 5 Year Swap + 6.301%(1)(3) | Ba1 |
| 4,140,843 | |||
250,000 | 7.750% to 04/02/23 then USD 5 Year Swap + 5.723%(1)(3) | Ba1 |
| 245,748 | |||
1,600,000 | UBS Group Funding Switzerland AG, | Ba1 |
| 1,505,112 | |||
| 46,473,805 | ||||||
FINANCIAL SERVICES– 0.1% |
| ||||||
400,000 | Deutsche Bank AG, | B1 |
| 268,800 | |||
| |||||||
INSURANCE – 1.2% |
| ||||||
3,150,000 | QBE Insurance Group, Ltd., 7.500% to 11/24/23 then USD 5 Year Swap + 6.030%, 11/24/43(3) | Baa1 |
| 2,934,855 | |||
| |||||||
TOTAL CONTINGENT CAPITAL SECURITIES (Cost $55,753,473) |
| 49,677,460 | |||||
| |||||||
CORPORATE DEBT SECURITIES – 1.3% | |||||||
BANKS – 0.8% |
| ||||||
100,000 | CIT Group, Inc., | Ba1 |
| 94,854 | |||
84,800 | Texas Capital Bancshares, Inc., | Baa3 |
| 1,813,024 | |||
| 1,907,878 | ||||||
FINANCIAL SERVICES – 0.1% | |||||||
11,000 | B. Riley Financial, Inc., | NR(5) |
| 206,580 | |||
COMMUNICATIONS – 0.4% | |||||||
Qwest Corp. |
| ||||||
12,347 | 6.500%, 09/01/56 | Ba2 |
| 257,929 | |||
36,585 | 6.750%, 06/15/57 | Ba2 |
| 761,700 | |||
| 1,019,629 | ||||||
| |||||||
TOTAL CORPORATE DEBT SECURITIES |
| 3,134,087 |
See accompanying Notes to Financial Statements
9
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments(continued) |
As of March31, 2020 (unaudited) |
Shares or |
|
| Value | ||||
SHORT-TERM INVESTMENTS – 2.3% | |||||||
MONEY MARKET FUND – 2.3% | |||||||
5,626,404 | Fidelity Investments Money Market Treasury Portfolio – Class I, 0.260%(7) | $ | 5,626,404 | ||||
TOTAL SHORT-TERM INVESTMENTS | |||||||
(Cost $5,626,404) |
| 5,626,404 | |||||
TOTAL INVESTMENTS –99.2% |
| ||||||
(Cost $272,875,123) |
| 242,275,185 | |||||
Other Assets In Excess Of Liabilities – 0.8% |
| 1,877,757 | |||||
TOTAL NETASSETS – 100.0% | $ | 244,152,942 |
(1) Security is perpetual in nature with no stated maturity date.
(2) Standard & Poor’s Rating.
(3) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities are restricted and may be resold in transactions exempt from registration normally to qualified institutional buyers. At March 31, 2020 the total value of these securities was $46,695,615 representing 19.1% of net assets.
(4) The interest rate shown reflects the rate in effect as of March 31, 2020.
(5) Security is unrated by Mood’s, S&P and Fitch.
(6) Convertible security.
(7) The rate is the annualized seven-day yield as of March 31, 2020.
Libor – London Interbank Offered Rate
LLC – Limited Liability Company
LP – Limited Partnership
PLC – Public Limited Company
SA – Corporation
SOFR – Secured Overnight Financing Rate
Tsy – United States Government Treasury Yield
Summary by Country | Value | %of | ||||
Australia | $ | 8,927,925 | 3.7 | % | ||
Bermuda |
| 13,097,989 | 5.4 |
| ||
Canada |
| 7,440,521 | 3.0 |
| ||
France |
| 9,535,265 | 3.9 |
| ||
Germany |
| 268,800 | 0.1 |
| ||
Mexico |
| 1,264,032 | 0.5 |
| ||
Netherlands |
| 5,298,581 | 2.2 |
| ||
Spain |
| 2,533,675 | 1.0 |
| ||
Switzerland |
| 3,312,473 | 1.4 |
| ||
United Kingdom |
| 21,776,967 | 8.9 |
| ||
United States |
| 168,818,957 | 69.1 |
| ||
TotalInvestments |
| 242,275,185 | 99.2 |
| ||
Other Assets in Excess of Liabilities |
| 1,877,757 | 0.8 |
| ||
NetAssets | $ | 244,152,942 | 100.0 | % |
See accompanying Notes to Financial Statements
10
Destra Flaherty & Crumrine Preferred and Income Fund |
Schedule of Investments(continued) |
As of March31, 2020 (unaudited) |
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 March31, 2020. 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 | $ | 50,601,010 | $ | 39,633,132 | $ | — | $ | 90,234,142 | ||||
Financial Services |
| 508,620 |
| 2,750,317 |
| — |
| 3,258,937 | ||||
Insurance |
| 20,252,220 |
| 24,073,152 |
| — |
| 44,325,372 | ||||
Utilities |
| 15,963,294 |
| 14,057,567 |
| — |
| 30,020,861 | ||||
Energy |
| 4,548,612 |
| 5,746,556 |
| — |
| 10,295,168 | ||||
Miscellaneous |
| — |
| 4,253,893 |
| — |
| 4,253,893 | ||||
Communications |
| 699,600 |
| 749,261 |
| — |
| 1,448,861 | ||||
Contingent Capital Securities |
|
|
|
| ||||||||
Banks |
| — |
| 46,473,805 |
| — |
| 46,473,805 | ||||
Financial Services |
| — |
| 268,800 |
| — |
| 268,800 | ||||
Insurance |
| — |
| 2,934,855 |
| — |
| 2,934,855 | ||||
Corporate Debt Securities |
|
|
|
| ||||||||
Banks |
| 1,813,024 |
| 94,854 |
| — |
| 1,907,878 | ||||
Financial Services |
| 206,580 |
| — |
| — |
| 206,580 | ||||
Communications |
| 1,019,629 |
| — |
| — |
| 1,019,629 | ||||
Short-Term Investments |
|
|
|
| ||||||||
Money Market Fund |
| 5,626,404 |
| — |
| — |
| 5,626,404 | ||||
Total Investments in Securities | $ | 101,238,993 | $ | 141,036,192 | $ | — | $ | 242,275,185 |
See accompanying Notes to Financial Statements
11
Shares |
| Value | |||
COMMON STOCKS – 94.6% |
| ||||
COMMUNICATIONS – 6.4% |
| ||||
ADVERTISING – 1.0% |
| ||||
146 | Trade Desk, Inc., Class A(1) | $ | 28,178 | ||
| |||||
INTERNET – 5.4% |
| ||||
565 | 8x8, Inc.(1) |
| 7,831 | ||
1,444 | Etsy, Inc.(1) |
| 55,507 | ||
716 | EverQuote, Inc., Class A(1) |
| 18,795 | ||
4,548 | Limelight Networks, Inc.(1) |
| 25,924 | ||
793 | Liquidity Services, Inc.(1) |
| 3,077 | ||
445 | Mimecast, Ltd.(1) |
| 15,708 | ||
229 | Q2 Holdings, Inc.(1) |
| 13,525 | ||
3,592 | Rubicon Project, Inc.(1) |
| 19,936 | ||
918 | RumbleON, Inc., Class B(1) |
| 192 | ||
| 160,495 | ||||
TELECOMMUNICATIONS – 0.0% |
| ||||
25 | NeoPhotonics Corp.(1) |
| 181 | ||
TOTAL COMMUNICATIONS |
| 188,854 | |||
| |||||
CONSUMER, CYCLICAL – 5.9% |
| ||||
AUTO PARTS & EQUIPMENT – 2.9% | |||||
1,111 | Douglas Dynamics, Inc. |
| 39,452 | ||
768 | Gentherm, Inc.(1) |
| 24,115 | ||
1,805 | Motorcar Parts of America, Inc.(1) |
| 22,707 | ||
| 86,274 | ||||
DISTRIBUTION/WHOLESALE – 0.6% | |||||
2,227 | Titan Machinery, Inc.(1) |
| 19,352 | ||
| |||||
HOME FURNISHINGS – 0.1% |
| ||||
730 | Casper Sleep, Inc.(1) |
| 3,132 | ||
| |||||
LEISURE TIME – 0.4% |
| ||||
2,754 | OneSpaWorld Holdings, Ltd. |
| 11,181 | ||
| |||||
RETAIL – 1.9% |
| ||||
1,123 | Lovesac Co.(1) |
| 6,547 | ||
1,992 | MarineMax, Inc.(1) |
| 20,757 | ||
874 | Rush Enterprises, Inc., Class A |
| 27,898 | ||
| 55,202 | ||||
TOTAL CONSUMER, CYCLICAL |
| 175,141 | |||
CONSUMER, NON-CYCLICAL – 36.7% | |||||
BIOTECHNOLOGY – 10.4% |
| ||||
396 | Acceleron Pharma, Inc.(1) |
| 35,588 | ||
239 | Argenx SE, ADR(1) |
| 31,483 | ||
1,040 | Autolus Therapeutics PLC, ADR(1) |
| 6,230 | ||
284 | Beam Therapeutics, Inc.(1) |
| 5,112 | ||
112 | CRISPR Therapeutics AG(1) |
| 4,750 | ||
750 | CytomX Therapeutics, Inc.(1) |
| 5,752 | ||
178 | Editas Medicine, Inc.(1) |
| 3,530 | ||
834 | Esperion Therapeutics, Inc.(1) |
| 26,296 | ||
500 | Exact Sciences Corp.(1) |
| 29,000 | ||
396 | Frequency Therapeutics, Inc.(1) |
| 7,053 | ||
536 | Genfit, ADR(1) |
| 7,724 | ||
3,117 | Harvard Bioscience, Inc.(1) |
| 6,889 |
Shares |
| Value | |||
COMMON STOCKS (continued) |
| ||||
CONSUMER, NON-CYCLICAL (continued) |
| ||||
BIOTECHNOLOGY (continued) |
| ||||
1,036 | Immunomedics, Inc.(1) | $ | 13,965 | ||
1,331 | Insmed, Inc.(1) |
| 21,336 | ||
176 | Intercept Pharmaceuticals, Inc.(1) |
| 11,081 | ||
783 | Iterum Therapeutics plc(1) |
| 2,122 | ||
2,805 | Kindred Biosciences, Inc.(1) |
| 11,220 | ||
532 | MacroGenics, Inc.(1) |
| 3,096 | ||
1,783 | NeoGenomics, Inc.(1) |
| 49,229 | ||
328 | Sangamo Therapeutics, Inc.(1) |
| 2,089 | ||
615 | Veracyte, Inc.(1) |
| 14,951 | ||
248 | Xencor, Inc.(1) |
| 7,410 | ||
| 305,906 | ||||
COMMERCIAL SERVICES – 15.9% |
| ||||
813 | 2U, Inc.(1) |
| 17,252 | ||
3,577 | Alta Equipment Group, Inc.(1) |
| 15,274 | ||
178 | Bright Horizons Family |
| 18,156 | ||
3,009 | Chegg, Inc.(1) |
| 107,662 | ||
170 | CoStar Group, Inc.(1) |
| 99,826 | ||
139 | Grand Canyon Education, Inc.(1) |
| 10,604 | ||
511 | HealthEquity, Inc.(1) |
| 25,851 | ||
1,008 | Paylocity Holding Corp.(1) |
| 89,027 | ||
934 | ShotSpotter, Inc.(1) |
| 25,666 | ||
423 | Strategic Education, Inc. |
| 59,118 | ||
| 468,436 | ||||
HEALTHCARE-PRODUCTS – 5.4% |
| ||||
786 | AtriCure, Inc.(1) |
| 26,402 | ||
632 | BioLife Solutions, Inc.(1) |
| 6,004 | ||
762 | Cardiovascular Systems, Inc.(1) |
| 26,830 | ||
532 | CONMED Corp. |
| 30,467 | ||
2,108 | Oxford Immunotec Global PLC(1) |
| 19,520 | ||
528 | Repligen Corp.(1) |
| 50,973 | ||
| 160,196 | ||||
HEALTHCARE-SERVICES – 2.7% |
| ||||
951 | Ensign Group, Inc. |
| 35,767 | ||
282 | Teladoc Health, Inc.(1) |
| 43,713 | ||
| 79,480 | ||||
PHARMACEUTICALS – 2.3% |
| ||||
1,801 | Cidara Therapeutics, Inc.(1) |
| 4,466 | ||
318 | Enanta Pharmaceuticals, Inc.(1) |
| 16,355 | ||
2,017 | Flexion Therapeutics, Inc.(1) |
| 15,874 | ||
194 | Intellia Therapeutics, Inc.(1) |
| 2,373 | ||
842 | Jounce Therapeutics, Inc.(1) |
| 3,999 | ||
404 | Pacira BioSciences, Inc.(1) |
| 13,546 | ||
2,259 | Paratek Pharmaceuticals, Inc.(1) |
| 7,116 | ||
548 | Spero Therapeutics, Inc.(1) |
| 4,428 | ||
| 68,157 | ||||
TOTAL CONSUMER, |
| 1,082,175 |
See accompanying Notes to Financial Statements
12
Destra Granahan Small Cap Advantage Fund |
Schedule of Investments(continued) |
As of March31, 2020 (unaudited) |
Shares |
| Value | |||
COMMON STOCKS (continued) |
| ||||
ENERGY – 2.4% |
| ||||
ENERGY-ALTERNATE SOURCES – 1.7% | |||||
1,530 | Enphase Energy, Inc.(1) | $ | 49,404 | ||
| |||||
OIL & GAS SERVICES – 0.7% |
| ||||
935 | DMC Global, Inc. |
| 21,514 | ||
TOTAL ENERGY |
| 70,918 | |||
| |||||
FINANCIAL – 5.4% |
| ||||
INSURANCE – 3.5% |
| ||||
734 | eHealth, Inc.(1) |
| 103,362 | ||
| |||||
PRIVATE EQUITY – 0.6% |
| ||||
1,148 | Victory Capital Holdings, Inc., |
| 18,782 | ||
| |||||
REITS – 1.3% |
| ||||
482 | Innovative Industrial Properties, Inc. |
| 36,598 | ||
TOTAL FINANCIAL |
| 158,742 | |||
| |||||
INDUSTRIAL – 14.1% |
| ||||
ELECTRONICS – 1.9% |
| ||||
1,841 | Fluidigm Corp.(1) |
| 4,676 | ||
738 | OSI Systems, Inc.(1) |
| 50,863 | ||
| 55,539 | ||||
ENGINEERING & CONSTRUCTION –0.5% |
| ||||
619 | Dycom Industries, Inc.(1) |
| 15,877 | ||
| |||||
HAND/MACHINE TOOLS – 1.0% |
| ||||
2,125 | Luxfer Holdings PLC |
| 30,048 | ||
| |||||
MACHINERY-DIVERSIFIED – 1.7% |
| ||||
533 | Chart Industries, Inc.(1) |
| 15,446 | ||
1,411 | Columbus McKinnon Corp. |
| 35,275 | ||
| 50,721 | ||||
METAL FABRICATE/HARDWARE – 2.2% | |||||
923 | Lawson Products, Inc.(1) |
| 24,663 | ||
342 | RBC Bearings, Inc.(1) |
| 38,574 | ||
| 63,237 | ||||
MISCELLANEOUS MANUFACTURING – 5.8% | |||||
1,761 | Axon Enterprise, Inc.(1) |
| 124,626 | ||
382 | John Bean Technologies Corp. |
| 28,371 | ||
492 | Materion Corp. |
| 17,225 | ||
| 170,222 | ||||
TRANSPORTATION – 1.0% |
| ||||
1,703 | CryoPort, Inc.(1) |
| 29,070 | ||
TOTAL INDUSTRIAL |
| 414,714 | |||
| |||||
TECHNOLOGY – 23.7% |
| ||||
COMPUTERS – 4.7% |
| ||||
248 | Globant SA(1) |
| 21,794 | ||
1,573 | Kornit Digital, Ltd.(1) |
| 39,152 |
Shares |
| Value | |||
COMMON STOCKS (continued) |
| ||||
TECHNOLOGY (continued) |
| ||||
COMPUTERS (continued) |
| ||||
316 | Rapid7, Inc.(1) | $ | 13,692 | ||
1,670 | Virtusa Corp.(1) |
| 47,428 | ||
274 | Zscaler, Inc.(1) |
| 16,676 | ||
| 138,742 | ||||
SEMICONDUCTORS – 4.0% |
| ||||
2,272 | Brooks Automation, Inc. |
| 69,296 | ||
486 | CEVA, Inc.(1) |
| 12,116 | ||
669 | Onto Innovation, Inc.(1) |
| 19,850 | ||
191 | Power Integrations, Inc. |
| 16,871 | ||
| 118,133 | ||||
SOFTWARE – 15.0% |
| ||||
746 | 1Life Healthcare, Inc.(1) |
| 13,540 | ||
714 | Cornerstone OnDemand, Inc.(1) |
| 22,669 | ||
288 | Coupa Software, Inc.(1) |
| 40,242 | ||
368 | Dropbox, Inc., Class A(1) |
| 6,661 | ||
1,005 | Evolent Health, Inc., Class A(1) |
| 5,457 | ||
198 | HubSpot, Inc.(1) |
| 26,372 | ||
4,444 | LivePerson, Inc.(1) |
| 101,101 | ||
340 | Paycom Software, Inc.(1) |
| 68,683 | ||
2,559 | Pluralsight, Inc., Class A(1) |
| 28,098 | ||
344 | PROS Holdings, Inc.(1) |
| 10,674 | ||
1,835 | Sprout Social, Inc.(1) |
| 29,287 | ||
1,606 | SPS Commerce, Inc.(1) |
| 74,695 | ||
529 | Upland Software, Inc.(1) |
| 14,188 | ||
| 441,667 | ||||
TOTAL TECHNOLOGY |
| 698,542 | |||
| |||||
TOTAL COMMON STOCKS |
| 2,789,086 | |||
| |||||
SHORT-TERM INVESTMENTS – 4.3% |
| ||||
MONEY MARKET FUND – 4.3% |
| ||||
126,266 | Fidelity Investments Money MarketTreasury Portfolio – Class I, 0.260%(2) |
| 126,266 | ||
| |||||
TOTAL SHORT-TERM INVESTMENTS |
| 126,266 | |||
| |||||
TOTAL INVESTMENTS – 98.9% |
| 2,915,352 | |||
Other Assets in Excess ofLiabilities – 1.1% |
| 32,427 | |||
TOTAL NET ASSETS – 100.0% | $ | 2,947,779 |
(1) Non-income producing security.
(2) The rate is the annualized seven-day yield as of March 31, 2020.
ADR – American Depository Receipt
PLC – Public Limited Company
SA – Corporation
See accompanying Notes to Financial Statements
13
Destra Granahan Small Cap Advantage Fund |
Summary of Investments |
As of March31, 2020 (unaudited) |
Summary by Industry Group | Value | %of | ||||
Common Stocks |
|
| ||||
Advertising | $ | 28,178 | 1.0 | % | ||
Auto Parts & Equipment |
| 86,274 | 2.9 |
| ||
Biotechnology |
| 305,906 | 10.4 |
| ||
Commercial Services |
| 468,436 | 15.9 |
| ||
Computers |
| 138,742 | 4.7 |
| ||
Distribution/Wholesale |
| 19,352 | 0.6 |
| ||
Electronics |
| 55,539 | 1.9 |
| ||
Energy-Alternate Sources |
| 49,404 | 1.7 |
| ||
Engineering & Construction |
| 15,877 | 0.5 |
| ||
Hand/Machine Tools |
| 30,048 | 1.0 |
| ||
Healthcare-Products |
| 160,196 | 5.4 |
| ||
Healthcare-Services |
| 79,480 | 2.7 |
| ||
Home Furnishings |
| 3,132 | 0.1 |
| ||
Insurance |
| 103,362 | 3.5 |
| ||
Internet |
| 160,495 | 5.4 |
| ||
Leisure Time |
| 11,181 | 0.4 |
| ||
Machinery-Diversified |
| 50,721 | 1.7 |
|
Summary by Industry Group | Value | %of | ||||
Metal Fabricate/Hardware | $ | 63,237 | 2.2 | % | ||
Miscellaneous Manufacturing |
| 170,222 | 5.8 |
| ||
Oil & Gas Services |
| 21,514 | 0.7 |
| ||
Pharmaceuticals |
| 68,157 | 2.3 |
| ||
Private Equity |
| 18,782 | 0.6 |
| ||
REITS |
| 36,598 | 1.3 |
| ||
Retail |
| 55,202 | 1.9 |
| ||
Semiconductors |
| 118,133 | 4.0 |
| ||
Software |
| 441,667 | 15.0 |
| ||
Telecommunications |
| 181 | 0.0 |
| ||
Transportation |
| 29,070 | 1.0 |
| ||
TotalCommonStocks |
| 2,789,086 | 94.6 |
| ||
Short-Term Investments |
|
| ||||
Money Market Fund |
| 126,266 | 4.3 |
| ||
TotalShort-TermInvestments |
| 126,266 | 4.3 |
| ||
TotalInvestments |
| 2,915,352 | 98.9 |
| ||
Other Assets in Excess of Liabilities |
| 32,427 | 1.1 |
| ||
TotalNetAssets | $ | 2,947,779 | 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 March31, 2020. For information on the Fund’s policy regarding the valuation of investments, please refer to the Investment Valuation section of Note 2 in the accompanying Notes to Financial Statements.
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 2,789,086 | $ | — | $ | — | $ | 2,789,086 | ||||
Short-Term Investments |
| 126,266 |
| — |
| — |
| 126,266 | ||||
Total Investments in Securities | $ | 2,915,352 | $ | — | $ | — | $ | 2,915,352 |
See accompanying Notes to Financial Statements
14
Destra Flaherty & | Destra | |||||||
Assets: |
|
|
|
| ||||
Investments, at value (cost $272,875,123 and $3,304,618, respectively) | $ | 242,275,185 |
| $ | 2,915,352 |
| ||
Receivables: |
|
|
|
| ||||
Interest |
| 1,872,887 |
|
| 148 |
| ||
Dividends |
| 456,518 |
|
| 814 |
| ||
Capital shares sold |
| 177,381 |
|
| — |
| ||
Investment securities sold |
| — |
|
| 798 |
| ||
Service provider deferral fees due from adviser (see note 3) |
| — |
|
| 18,655 |
| ||
Deferred offering costs (see note 4) |
| — |
|
| 40,216 |
| ||
Prepaid expenses |
| 50,172 |
|
| 25,199 |
| ||
Total assets |
| 244,832,143 |
|
| 3,001,182 |
| ||
|
|
|
| |||||
Liabilities: |
|
|
|
| ||||
Payables: |
|
|
|
| ||||
Capital shares redeemed |
| 345,717 |
|
| — |
| ||
Management fees payable (see note 3) |
| 165,114 |
|
| 15,408 |
| ||
Transfer agent fees and expenses |
| 81,798 |
|
| 5,735 |
| ||
Distribution fees |
| 29,960 |
|
| 325 |
| ||
Professional fees |
| 25,096 |
|
| 10,431 |
| ||
Accounting and administrative fees |
| 16,756 |
|
| 3,149 |
| ||
Custody fees |
| 5,670 |
|
| 11,222 |
| ||
Chief compliance officer fees |
| 3,979 |
|
| 51 |
| ||
Investment securities purchased |
| — |
|
| 6,849 |
| ||
Accrued other expenses |
| 5,111 |
|
| 233 |
| ||
Total liabilities |
| 679,201 |
|
| 53,403 |
| ||
Net assets | $ | 244,152,942 |
| $ | 2,947,779 |
| ||
|
|
|
| |||||
Net assets consist of: |
|
|
|
| ||||
Paid-in capital (unlimited shares authorized at $0.001 par value common stock) | $ | 277,051,817 |
| $ | 3,960,316 |
| ||
Total accumulated deficit |
| (32,898,875 | ) |
| (1,012,537 | ) | ||
Net assets | $ | 244,152,942 |
| $ | 2,947,779 |
| ||
|
|
|
| |||||
Net assets: |
|
|
|
| ||||
Class I | $ | 190,136,121 |
| $ | 1,384,343 |
| ||
Class A |
| 28,103,911 |
|
| 1,563,436 |
| ||
Class C |
| 25,912,910 |
|
| — |
| ||
|
|
|
| |||||
Shares outstanding: |
|
|
|
| ||||
Class I |
| 12,199,656 |
|
| 165,655 |
| ||
Class A |
| 1,796,190 |
|
| 187,199 |
| ||
Class C |
| 1,648,580 |
|
| — |
| ||
|
|
|
| |||||
Net asset value per share: |
|
|
|
| ||||
Class I | $ | 15.59 |
| $ | 8.36 |
| ||
Class A |
| 15.65 |
|
| 8.35 |
| ||
Maximum offering price per share(1) |
| 16.39 |
|
| 8.74 |
| ||
Class C |
| 15.72 |
|
| — |
|
(1) Include a sales charge of 4.50%.
See accompanying Notes to Financial Statements
15
Destra Flaherty & | Destra | |||||||
Investment income: |
|
|
|
| ||||
Interest income | $ | 4,513,129 |
| $ | 1,415 |
| ||
Dividend income |
| 3,301,636 |
|
| 4,520 |
| ||
Total investment income |
| 7,814,765 |
|
| 5,935 |
| ||
|
|
|
| |||||
Expenses: |
|
|
|
| ||||
Management fees (see note 3) |
| 1,036,745 |
|
| 20,424 |
| ||
Transfer agent fees and expenses |
| 211,523 |
|
| 16,874 |
| ||
Accounting and administrative fees |
| 113,803 |
|
| 19,442 |
| ||
Professional fees |
| 63,699 |
|
| 8,925 |
| ||
Trustee fees |
| 45,403 |
|
| 225 |
| ||
Registration fees |
| 31,975 |
|
| 24,074 |
| ||
Chief financial officer fees |
| 27,629 |
|
| 339 |
| ||
Chief compliance officer fees |
| 24,233 |
|
| 318 |
| ||
Shareholder reporting fees |
| 20,761 |
|
| 646 |
| ||
Custody fees |
| 15,264 |
|
| 31,527 |
| ||
Insurance expense |
| 12,842 |
|
| — |
| ||
Offering costs (see note 4) |
| — |
|
| 56,612 |
| ||
Distribution fees Class C (see note 5) |
| 148,138 |
|
| — |
| ||
Distribution fees Class A (see note 5) |
| 42,985 |
|
| 1,283 |
| ||
Other expenses |
| 16,208 |
|
| 165 |
| ||
Total expenses: |
| 1,811,208 |
|
| 180,854 |
| ||
Service provider deferral fees (see note 3) |
| — |
|
| (18,655 | ) | ||
Contractual expenses waived and reimbursed from adviser (see note 3) |
| — |
|
| (133,065 | ) | ||
Net expenses |
| 1,811,208 |
|
| 29,134 |
| ||
Net investment income (loss) |
| 6,003,557 |
|
| (23,199 | ) | ||
|
|
|
| |||||
Net realized and unrealizedgain (loss): |
|
|
|
| ||||
Net realized loss on: |
|
|
|
| ||||
Investments |
| (1,542,335 | ) |
| (604,553 | ) | ||
Net change in unrealized depreciation on: |
|
|
|
| ||||
Investments |
| (44,094,278 | ) |
| (335,626 | ) | ||
Net realized and unrealized loss |
| (45,636,613 | ) |
| (940,179 | ) | ||
Net decrease in net assets resulting from operations | $ | (39,633,056 | ) | $ | (963,378 | ) |
See accompanying Notes to Financial Statements
16
Destra Flaherty & Crumrine | Destra Granahan | |||||||||||||||
Six Months | Year Ended | Six Months | Period Ended | |||||||||||||
Increase (decrease) in net assetsresulting from operations |
|
|
|
|
|
|
|
| ||||||||
Net investment income (loss) | $ | 6,003,557 |
| $ | 10,122,691 |
| $ | (23,199 | ) | $ | (1,339 | ) | ||||
Net realized gain (loss) on investments |
| (1,542,335 | ) |
| 110,083 |
|
| (604,553 | ) |
| (6,581 | ) | ||||
Net change in unrealized appreciation (depreciation) |
| (44,094,278 | ) |
| 11,010,989 |
|
| (335,626 | ) |
| (53,640 | ) | ||||
Net increase (decrease) in net assets resulting from operations |
| (39,633,056 | ) |
| 21,243,763 |
|
| (963,378 | ) |
| (61,560 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Distributions to shareholders: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| (5,936,581 | ) |
| (9,222,883 | ) |
| — |
|
| — |
| ||||
Class A |
| (900,275 | ) |
| (1,570,678 | ) |
| — |
|
| — |
| ||||
Class C |
| (674,307 | ) |
| (1,315,727 | ) |
| — |
|
| — |
| ||||
Total distributions to shareholders |
| (7,511,163 | ) |
| (12,109,288 | ) |
| — |
|
| — |
| ||||
|
|
|
|
|
|
|
| |||||||||
Capital transactions: |
|
|
|
|
|
|
|
| ||||||||
Proceeds from shares sold: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| 72,125,179 |
|
| 91,812,363 |
|
| 2,664,200 |
|
| 1,146,464 |
| ||||
Class A |
| 12,170,574 |
|
| 15,771,993 |
|
| 1,685,009 |
|
| 228,420 |
| ||||
Class C |
| 3,817,875 |
|
| 3,243,740 |
|
| — |
|
| — |
| ||||
|
|
|
|
|
|
|
| |||||||||
Reinvestment of distributions: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| 4,725,524 |
|
| 7,349,757 |
|
| — |
|
| — |
| ||||
Class A |
| 721,192 |
|
| 1,276,078 |
|
| — |
|
| — |
| ||||
Class C |
| 511,331 |
|
| 989,922 |
|
| — |
|
| — |
| ||||
|
|
|
|
|
|
|
| |||||||||
Cost of shares redeemed: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| (44,796,956 | ) |
| (69,711,175 | ) |
| (1,744,075 | ) |
| — |
| ||||
Class A |
| (13,037,113 | ) |
| (14,975,319 | ) |
| (7,301 | ) |
| — |
| ||||
Class C |
| (2,676,003 | ) |
| (6,110,898 | ) |
| — |
|
| — |
| ||||
Net increase in net assets from capital transactions |
| 33,561,603 |
|
| 29,646,461 |
|
| 2,597,833 |
|
| 1,374,884 |
| ||||
Total increase (decrease) in net assets |
| (13,582,616 | ) |
| 38,780,936 |
|
| 1,634,455 |
|
| 1,313,324 |
| ||||
|
|
|
|
|
|
|
| |||||||||
Net assets: |
|
|
|
|
|
|
|
| ||||||||
Beginning of period |
| 257,735,558 |
|
| 218,954,622 |
|
| 1,313,324 |
|
| — |
| ||||
End of period | $ | 244,152,942 |
| $ | 257,735,558 |
| $ | 2,947,779 |
| $ | 1,313,324 |
| ||||
|
|
|
|
|
|
|
| |||||||||
Capital share transactions: |
|
|
|
|
|
|
|
| ||||||||
Shares sold: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| 4,020,648 |
|
| 5,250,467 |
|
| 265,623 |
|
| 118,224 |
| ||||
Class A |
| 655,653 |
|
| 887,082 |
|
| 164,095 |
|
| 23,758 |
| ||||
Class C |
| 206,501 |
|
| 182,139 |
|
| — |
|
| — |
| ||||
|
|
|
|
|
|
|
| |||||||||
Shares reinvested: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| 262,863 |
|
| 423,303 |
|
| — |
|
| — |
| ||||
Class A |
| 39,776 |
|
| 73,418 |
|
| — |
|
| — |
| ||||
Class C |
| 28,204 |
|
| 57,036 |
|
| — |
|
| — |
| ||||
|
|
|
|
|
|
|
| |||||||||
Shares redeemed: |
|
|
|
|
|
|
|
| ||||||||
Class I |
| (2,654,347 | ) |
| (4,014,621 | ) |
| (218,192 | ) |
| — |
| ||||
Class A |
| (743,935 | ) |
| (859,130 | ) |
| (654 | ) |
| — |
| ||||
Class C |
| (152,031 | ) |
| (348,133 | ) |
| — |
|
| — |
| ||||
Net increase fromcapital share transactions |
| 1,663,332 |
|
| 1,651,561 |
|
| 210,872 |
|
| 141,982 |
|
(1) Reflects operations for the period from August 8, 2019 (commencement of operations) to September 30, 2019.
See accompanying Notes to Financial Statements
17
DestraFlaherty&CrumrinePreferredandIncomeFund | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios to average net assets(1) | ||||||||||||||||||||||||||||||||||||||||||||||
Period ending | Net asset | Net | Net | Total from | Distributions | Distributions | Total | Redemption | Net | Total | Gross | Net | Net | Net assets, | Portfolio | |||||||||||||||||||||||||||||||
Class I |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2020(6) | $ | 18.41 | $ | 0.41 | $ | (2.72 | ) | $ | (2.31 | ) | $ | (0.40 | ) | $ | (0.11 | ) | $ | (0.51 | ) | $ | — | $ | 15.59 | (12.90 | )% | 1.17% | 1.17% | 4.49% | $ | 190,136 | 13% | |||||||||||||||
2019 |
| 17.73 |
| 0.84 |
| 0.86 |
|
| 1.70 |
|
| (0.86 | ) |
| (0.16 | ) |
| (1.02 | ) |
| — |
| 18.41 | 10.13 |
| 1.22 | 1.22 | 4.75 |
| 194,583 | 18 | |||||||||||||||
2018 |
| 18.68 |
| 0.83 |
| (0.83 | ) |
| 0.00 |
|
| (0.85 | ) |
| (0.10 | ) |
| (0.95 | ) |
| — |
| 17.73 | 0.02 |
| 1.18 | 1.18 | 4.59 |
| 158,002 | 7 | |||||||||||||||
2017 |
| 18.14 |
| 0.82 |
| 0.53 |
|
| 1.35 |
|
| (0.81 | ) |
| — |
|
| (0.81 | ) |
| — |
| 18.68 | 7.70 |
| 1.25 | 1.25 | 4.48 |
| 194,525 | 18 | |||||||||||||||
2016 |
| 17.00 |
| 0.83 |
| 1.03 |
|
| 1.86 |
|
| (0.73 | ) |
| — |
|
| (0.73 | ) |
| 0.01 |
| 18.14 | 11.24 |
| 1.19 | 1.19 | 4.75 |
| 129,427 | 13 | |||||||||||||||
2015 |
| 16.86 |
| 0.88 |
| 0.06 |
|
| 0.94 |
|
| (0.82 | ) |
| — |
|
| (0.82 | ) |
| 0.02 |
| 17.00 | 5.77 |
| 1.47 | 1.22 | 5.10 |
| 29,417 | 29 | |||||||||||||||
Class A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2020(6) |
| 18.48 |
| 0.39 |
| (2.73 | ) |
| (2.34 | ) |
| (0.38 | ) |
| (0.11 | ) |
| (0.49 | ) |
| — |
| 15.65 | (13.01 | ) | 1.42 | 1.42 | 4.21 |
| 28,104 | 13 | |||||||||||||||
2019 |
| 17.79 |
| 0.80 |
| 0.87 |
|
| 1.67 |
|
| (0.82 | ) |
| (0.16 | ) |
| (0.98 | ) |
| — |
| 18.48 | 9.88 |
| 1.47 | 1.47 | 4.51 |
| 34,088 | 18 | |||||||||||||||
2018 |
| 18.75 |
| 0.79 |
| (0.85 | ) |
| (0.06 | ) |
| (0.80 | ) |
| (0.10 | ) |
| (0.90 | ) |
| — |
| 17.79 | (0.29 | ) | 1.43 | 1.43 | 4.29 |
| 31,021 | 7 | |||||||||||||||
2017 |
| 18.20 |
| 0.77 |
| 0.55 |
|
| 1.32 |
|
| (0.77 | ) |
| — |
|
| (0.77 | ) |
| — |
| 18.75 | 7.46 |
| 1.50 | 1.50 | 4.24 |
| 67,639 | 18 | |||||||||||||||
2016 |
| 17.07 |
| 0.78 |
| 1.03 |
|
| 1.81 |
|
| (0.68 | ) |
| — |
|
| (0.68 | ) |
| — |
| 18.20 | 10.84 |
| 1.46 | 1.46 | 4.46 |
| 78,613 | 13 | |||||||||||||||
2015 |
| 16.94 |
| 0.84 |
| 0.06 |
|
| 0.90 |
|
| (0.77 | ) |
| — |
|
| (0.77 | ) |
| — |
| 17.07 | 5.38 |
| 2.12 | 1.50 | 4.86 |
| 21,718 | 29 | |||||||||||||||
Class C |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2020(6) |
| 18.56 |
| 0.32 |
| (2.74 | ) |
| (2.42 | ) |
| (0.31 | ) |
| (0.11 | ) |
| (0.42 | ) |
| — |
| 15.72 | (13.33 | ) | 2.17 | 2.17 | 3.48 |
| 25,913 | 13 | |||||||||||||||
2019 |
| 17.87 |
| 0.67 |
| 0.87 |
|
| 1.54 |
|
| (0.69 | ) |
| (0.16 | ) |
| (0.85 | ) |
| — |
| 18.56 | 9.02 |
| 2.22 | 2.22 | 3.76 |
| 29,065 | 18 | |||||||||||||||
2018 |
| 18.83 |
| 0.66 |
| (0.85 | ) |
| (0.19 | ) |
| (0.67 | ) |
| (0.10 | ) |
| (0.77 | ) |
| — |
| 17.87 | (1.02 | ) | 2.17 | 2.17 | 3.60 |
| 29,932 | 7 | |||||||||||||||
2017 |
| 18.28 |
| 0.64 |
| 0.54 |
|
| 1.18 |
|
| (0.63 | ) |
| — |
|
| (0.63 | ) |
| — |
| 18.83 | 6.64 |
| 2.25 | 2.25 | 3.51 |
| 32,764 | 18 | |||||||||||||||
2016 |
| 17.14 |
| 0.65 |
| 1.04 |
|
| 1.69 |
|
| (0.55 | ) |
| — |
|
| (0.55 | ) |
| — |
| 18.28 | 10.03 |
| 2.20 | 2.20 | 3.69 |
| 29,023 | 13 | |||||||||||||||
2015 |
| 17.00 |
| 0.71 |
| 0.07 |
|
| 0.78 |
|
| (0.64 | ) |
| — |
|
| (0.64 | ) |
| — |
| 17.14 | 4.64 |
| 2.69 | 2.25 | 4.09 |
| 8,408 | 29 |
(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 ofperiod end. Assumes an investment at net asset value atthe beginning of the period, reinvestment of all distributions duringthe period and does not include payment of the maximumsales charge. The return would have been lower if certainexpenses had not been waived or reimbursed by the investmentadviser.
(4) Not annualized for periods less than one year.
(5) The contractual fee and expense waiver is reflected in boththe net expense and net investment income (loss) ratios (seeNote 3).
(6) For the six months ended March 31, 2020 (unaudited).
See accompanying Notes to Financial Statements
18
Financial Highlights |
for a share of common stock outstanding throughout the periods indicated (continued) |
Destra Granahan Small Cap AdvantageFund | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios to averagenet assets(1) | |||||||||||||||||||||||||||||||||||||||||||||||
Period ending | Net asset | Net | Net | Total from | Distributions | Distributions | Total | Redemption | Net | Total | Gross | Net | Net | Net assets, | Portfolio | ||||||||||||||||||||||||||||||||
Class I |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2020(6) | $ | 9.25 | $ | (0.06 | ) | $ | (0.83 | ) | $ | (0.89 | ) | $ | — | $ | — | $ | — | $ | — | $ | 8.36 | (9.62 | )% | 9.66% | 1.50 | % | (1.19 | )% | $ | 1,384 | 75 | % | |||||||||||||||
2019(7) |
| 10.00 |
| (0.01 | ) |
| (0.74 | ) |
| (0.75 | ) |
| — |
| — |
| — |
| — |
| 9.25 | (7.50 | ) | 35.78 | 1.50 |
| (0.95 | ) |
| 1,093 | 86 |
| |||||||||||||||
Class A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
2020(6) |
| 9.26 |
| (0.07 | ) |
| (0.84 | ) |
| (0.91 | ) |
| — |
| — |
| — |
| — |
| 8.35 | (9.83 | ) | 9.93 | 1.75 |
| (1.40 | ) |
| 1,563 | 75 |
| |||||||||||||||
2019(7) |
| 10.00 |
| (0.02 | ) |
| (0.72 | ) |
| (0.74 | ) |
| — |
| — |
| — |
| — |
| 9.26 | (7.40 | ) | 36.03 | 1.75 |
| (1.19 | ) |
| 220 | 86 |
|
(1) Annualized for periods less than one year.
(2) Based on average shares outstanding during the period.
(3) Based on the net assetvalue as of period end. Assumes an investment at netasset value at the beginning of the period, reinvestment ofall distributions during the period and does not include paymentof the maximum sales charge. The return would have beenlower if certain expenses had not been waived or reimbursedby the investment adviser.
(4) Not annualized for periods less than one year.
(5) The contractual fee and expense waiver isreflected in both the net expense and net investment income(loss) ratios (see Note 3).
(6) For the six months ended March 31, 2020 (unaudited).
(7) Commenced operations on August 8, 2019.
See accompanying Notes to Financial Statements
19
1. ORGANIZATION
Destra Investment Trust (the “Trust”) was organized as a Massachusetts business trust on May25, 2010 as an open-end investment company, under the Investment Company Act of 1940, as amended (the “1940 Act”). As of March31, 2020, the Trust consisted of two series of diversified portfolios (collectively, the “Funds” and each individually a “Fund”): Destra Flaherty & Crumrine Preferred and Income Fund (“Preferred and Income Fund”), which commenced operations on April12, 2011, and Destra Granahan Small Cap Advantage Fund (“Small Cap Advantage Fund”), which commenced operations on August8, 2019. The Preferred and Income Fund’s investment objective is to seek total return with an emphasis on high current income. The Small Cap Advantage Fund’s investment objective is to seek long-term capital appreciation by investing in securities of issuers with small market capitalization. The Preferred and Income Fund currently offers three classes of shares, Classes A, C, and I. The Small Cap Advantage Fund currently offers two classes of shares, Classes A and I. All share classes have equal rights and voting privileges, except in matters affecting a single class. Each Fund represents shares of beneficial interest (“Shares”) in a separate portfolio of securities and other assets, with its own investment objective, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Funds in preparation of their financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Funds are investment companies under U.S. GAAP and follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946,Financial Services — Investment Companies.
(a) Investment Valuation
Securities listed on an exchange are valued at the last reported sale price on the principal exchange or on the principal over-the-counter (“OTC”) market on which such securities are traded, as of the close of regular trading on the New York Stock Exchange (“NYSE”) on the day the securities are being valued or, if there are no sales, at the mean of the most recent bid and asked prices. Equity securities that are traded primarily on the Nasdaq Stock Market are valued at the Nasdaq Official Closing Price. Debt securities are valued at the prices supplied by the pricing agent for such securities, if available, and otherwise are valued at the available bid price for such securities or, if such prices are not available, at prices for securities of comparable maturity, quality and type. When prices are not readily available, or are determined not to reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before each Fund calculates its net asset value (“NAV”), the Funds value these securities at fair value as determined in accordance with procedures approved by the Board of Trustees (the “Board”). Short-term securities with maturities of 60 days or less at time of purchase and of sufficient credit quality are valued at amortized cost, which approximates fair value.
For those securities where quotations or prices are not available, the valuations are determined in accordance with procedures established in good faith by the Board. Valuations in accordance with these procedures are intended to reflect each security’s (or asset’s) “fair value”.
Such “fair value” is the amount that a Fund might reasonably expect to receive for the security (or asset) upon its current sale. Each such determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the initial cost of the security, (iii) the existence of any contractual restrictions on the security’s disposition, (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies, (v) quotations or evaluated prices from broker-dealers and/or pricing services, (vi) information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), (vii) an analysis of the company’s financial statements, and (viii) an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold (e.g., the existence of pending merger activity, public offerings or tender offers that might affect the value of the security).
In accordance with FASB ASC Section 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), fair value is defined as the price that each Fund would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820-10 establishes three different categories for valuations. Level 1 valuations are those based upon quoted prices in active markets that the Funds have the ability to access. Level 2 valuations are those based upon quoted prices in inactive markets or based upon significant observable inputs (e.g., yield curves; benchmark interest rates; indices). Level 3 valuations are those based upon unobservable inputs (e.g., discounted cash flow analysis; non-market based methods used to determine fair valuation).
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Notes to the Financial Statements |
March31, 2020 (continued) |
The Funds value Level 1 securities using readily available market quotations in active markets. The Funds value Level 2 fixed income securities using independent pricing providers who employ matrix pricing models utilizing market prices, broker quotes and prices of securities with comparable maturities and qualities. The Funds value Level 2 equity securities using various observable market inputs in accordance with procedures established in good faith by management. For Level 3 securities, the Funds estimate fair value based upon a variety of observable and non-observable inputs using procedures established in good faith by management. The Funds’ valuation policies and procedures are approved by the Board.
(b) Investment Transactions and Investment Income
Investment transactions are accounted for on the trade date basis. Realized gains and losses on investments are determined on the identified cost basis. Dividend income is recorded net of applicable withholding taxes on the ex-dividend date and interest income is recorded on an accrual basis. Discounts or premiums on debt securities purchased are accreted or amortized to interest income over the lives of the respective securities using the effective interest method.
(c) Allocation of Income and Expenses
In calculating the NAV per Share of each class, investment income, realized and unrealized gains and losses and expenses other than class specific expenses are allocated daily to each class of Shares based upon the proportion of net assets of each class at the beginning of each day. Each Fund is charged for those expenses that are directly attributable to each series, such as management fees and registration costs.
The Funds record distributions received in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates (if actual amounts are not available) and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Funds adjust the estimated amounts of components of distributions (and consequently its net investment income) as necessary once the issuers provide information about the actual composition of the distributions.
The Funds may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Funds will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
(d) Cash and Cash Equivalents
Cash and cash equivalents may consist of demand deposits and highly liquid investments (e.g., U.S. treasury notes) with original maturities of three months or less. Cash and cash equivalents are carried at cost, which approximates fair value. The Funds deposit cash and cash equivalents with highly-rated banking corporations and, at times, may exceed the insured limits under applicable law.
(e) Indemnification
In the normal course of business, the Funds may enter into contracts that contain a variety of representations which provide general indemnifications for certain liabilities. Each Fund’s maximum exposure under these arrangements is unknown. However, since their commencement of operations, the Funds have not had claims or losses pursuant to these contracts and expect the risk of loss to be remote.
(f) Distributions to Shareholders
The Funds intend to pay substantially all of their net investment income to shareholders. The Preferred and Income Fund expects to pay monthly distributions and the Small Cap Advantage Fund expects to pay annual distributions. In addition, the Funds intend to distribute any capital gains to shareholders as capital gain dividends at least annually. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.
(g) Use of Estimates
The preparation of the financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.
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Notes to the Financial Statements |
March31, 2020 (continued) |
3. INVESTMENT MANAGEMENT AND OTHER AGREEMENTS
Investment Management Agreement
Pursuant to an Investment Management Agreement (the “Agreement”) between each Fund and Destra Capital Advisors LLC, the Fund’s investment adviser (the “Adviser”), subject to the oversight of the Trust’s Board, the Adviser is responsible for managing the investment and reinvestment of the assets of each Fund in accordance with each Fund’s respective investment objectives and policies and limitations and providing day-to-day administrative services to the Funds either directly or through others selected by it for the Funds. The Adviser receives an annual management fee payable monthly, at an annual rate of 0.75% and 1.10% respectively, of the average daily net assets of the Preferred and Income Fund and Small Cap Advantage Fund.
The Adviser has agreed to cap expenses such that the total annual Fund operating expenses, excluding brokerage commissions and other trading expenses, taxes, interest, acquired fund fees and other extraordinary expenses (such as litigation and other expenses not incurred in the ordinary course of business), do not exceed 1.50%, 2.25%, and 1.25% of the Preferred and Income Fund’s average daily net assets attributable to Class A shares, Class C shares, and Class I shares, respectively, and 1.75%, and 1.50% of the Small Cap Fund’s average daily net assets attributable to Class A shares and Class I shares, respectively. The arrangement will continue in effect until January28, 2030, 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 arrangement 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 period ended March31, 2020, expenses totaling $0 and $130,324 were waived and/or reimbursed from the Adviser to the Preferred and Income Fund and Small Cap Advantage Fund, respectively.
The following amounts are subject to recapture by the Adviser by the following dates:
Small Cap | |||
September 30, 2022 | $ | 46,694 |
Fee Deferral Agreement
On behalf of the Small Cap Advantage Fund, the Adviser has entered into an agreement with the service provider, UMB Fund Services, Inc. (“UMBFS”), to defer certain business line related fees subject to repayment provisions if certain conditions are met (the “Deferral Agreement”). Effective February1, 2020, through July31, 2021, UMBFS has agreed to defer certain accounting and administrative fees, transfer agent fees and expenses, and custodian fees (collectively, the “Deferral Fees”) provided the Small Cap Advantage Fund is operating above its current expense limitation. If the Small Cap Advantage Fund operates above the expense limitation prior to July31, 2021, and the Adviser receives a portion of its management fee, the Adviser will pay to UMB any outstanding Deferral Fees in an amount equal to or greater than 50% of the Adviser’s net management fee. Should the Small Cap Advantage Fund operate below the expense limitation prior to July31, 2021, the Adviser will: (i) pay to UMBFS any outstanding Deferral Fees in an amount equal to or greater than 50% of the Adviser’s net management fee, and (ii) pay UMBFS any outstanding Deferral Fees prior to retaining any recoupment amount itself per the terms of the Expense Limitation Agreement. The Adviser accepts full financial responsibility for the payment of these Deferral Fees and will repay the remaining unpaid balance amount of by December31, 2021, should the provisions for repayment outlined above not be met. During the period ended March31, 2020, the total amount of outstanding Deferral Fees is $18,655. No portion of these Deferral Fees have yet met the conditions for repayment.
Sub-Advisory Agreements
The Preferred and Income Fund has retained Flaherty & Crumrine Incorporated (“Flaherty”) to serve as its investment sub-adviser. Small Cap Advantage Fund has retained Granahan Investment Management, Inc. (“Granahan”) to serve as its investment sub-adviser.
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Notes to the Financial Statements |
March31, 2020 (continued) |
The Adviser has agreed to pay from its own assets an annualized sub-advisory fee to Flaherty 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 Preferred and Income Fund.
The Adviser has agreed to pay from its own assets an annualized sub-advisory fee to Granahan an amount equal to one half of the net advisory 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 Small Cap Advantage Fund.
Other Service Providers
UMBFS serves as each Fund’s Administrator, Accounting Agent, and Transfer Agent. UMB Bank, N.A. serves as each Fund’s Custodian.
4. OFFERING COSTS
The Small Cap Advantage Fund’s total offering costs of $113,224 represent the total amount incurred in connection with the offering and initial registration and is being amortized on a straight-line basis over the first twelve months of the Small Cap Advantage Fund’s operations which began on August8, 2019, the commencement of operations date. As of March31, 2020, $40,216 of offering costs remain as an unamortized deferred asset, while $56,612 has been expensed subject to the Small Cap Advantage Fund’s Expense Limitation Agreement (see Note 3).
5. DISTRIBUTION AND SERVICE PLANS
The Funds’ Class A Shares and the Preferred and Income Fund’s Class C Shares have adopted a Distribution Plan (“Plan”) in accordance with Rule 12b-1 under the 1940 Act. The Plan is a compensation type plan that permits the payment at an annual rate of up to 0.25% and 1.00% of the average daily net assets of the Funds’ Class A Shares and the Preferred and Income Fund’s C Shares, respectively. Payments are made to Destra Capital Investments LLC, the Funds’ distributor (the “Distributor”), which may make ongoing payments to financial intermediaries based on the value of each Fund’s Shares held by such intermediaries’ customers.
6. FEDERAL INCOME TAX MATTERS
The Funds intend to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, no provision for U.S. federal income taxes is required. In addition, by distributing substantially all of its ordinary income and long-term capital gains, if any, during each calendar year, each Fund does not expect to be subject to U.S. federal excise tax.
At September30, 2019, gross unrealized appreciation/(depreciation) of investments, based on cost for federal income tax purposes were as follows:
Preferred | Small Cap | |||||||
Cost of investments | $ | 242,087,642 |
| $ | 1,350,455 |
| ||
Gross unrealized appreciation | $ | 14,660,745 |
| $ | 38,662 |
| ||
Gross unrealized depreciation | $ | (1,170,207 | ) | $ | (98,106 | ) | ||
Net unrealized appreciation (depreciation) | $ | 13,490,538 |
| $ | (59,444 | ) |
The difference between cost amounts for financial statement and federal income tax purposes 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.
The permanent differences are related to prior year conversion true-ups and non-deductible offering costs for the Flaherty & Crumrine Preferred and Income Fund and the Granahan Small Cap Advantage Fund, respectively.
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Notes to the Financial Statements |
March31, 2020 (continued) |
For the period ended September30, 2019, permanent differences in book and tax accounting have been reclassified to capital and total distributable earnings as follows:
Capital | Total | ||||||
Preferred and Income Fund | $ | (6,980 | ) | $ | 6,980 | ||
Small Cap Advantage Fund | $ | (12,401 | ) | $ | 12,401 |
As of September30, 2019, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Preferred | Small Cap | ||||||
Undistributed ordinary income | $ | 282,532 | $ | 11,062 |
| ||
Undistributed long-term capital gains |
| 41,798 |
| — |
| ||
Tax accumulated earnings |
| 324,330 |
| 11,062 |
| ||
Accumulated capital and other losses |
| — |
| (777 | ) | ||
Temporary book and tax differences |
| 430,476 |
| — |
| ||
Unrealized appreciation (depreciation) on investments |
| 13,490,538 |
| (59,444 | ) | ||
Total accumulated earnings (deficit) | $ | 14,245,344 | $ | (49,159 | ) |
The tax character of distributions paid during the fiscal years ended September30, 2019 and 2018 for the Preferred and Income fund were as follows:
2019 | 2018 | |||||
Distributions paid from: |
|
| ||||
Ordinary income | $ | 10,417,818 | $ | 11,246,382 | ||
Net long-term capital gains |
| 1,691,470 |
| 1,418,978 | ||
Total distributions paid | $ | 12,109,288 | $ | 12,665,360 |
There were no distributions paid by the Small Cap Advantage Fund during the period ended September30, 2019.
At September30, 2019, the Funds had an accumulated non-expiring capital loss carry forward as follows:
Preferred | Small Cap | |||||
Short-term | $ | — | $ | 777 | ||
Long-term |
| — |
| — | ||
Total | $ | — | $ | 777 |
To the extent that the Funds may realize future net capital gains, those gains will be offset by any of their unused non-expiring capital loss carry forward. Future capital loss carry forward utilization in any given year may be subject to Internal Revenue Code limitations.
7. INVESTMENT TRANSACTIONS
For the six months ended March31, 2020, the cost of investments purchased and proceeds from sales of investments, excluding short-term investments were as follows:
Purchases | Sales | |||||
Preferred and Income Fund | $ | 64,468,697 | $ | 34,613,136 | ||
Small Cap Advantage Fund |
| 4,995,103 |
| 2,509,215 |
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Notes to the Financial Statements |
March31, 2020 (continued) |
8. PURCHASES AND REDEMPTIONS OF SHARES
Purchases of Class A Shares are subject to an initial sales charge of up to 4.50% on purchases of less than $1,000,000. The Funds’ Shares are purchased at NAV per Share as determined at the close of the regular trading session of the NYSE after a purchase order is received in good order by the Funds or their authorized agent. Some authorized agents may charge a separate or additional fee for processing the purchase of Shares. Redemption requests will be processed at the next NAV per Share calculated after a redemption request is accepted.
A contingent deferred sales charge of 1.00% applies on Class C Shares redeemed within 12months of purchase. The contingent deferred sales charge may be waived for certain investors as described in the Preferred and Income Fund’s Prospectus.
For the six months ended March31, 2020, various broker dealers received $180,185 and $53,758 of sales charges from Shares sold of the Preferred and Income Fund and Small Cap Advantage Fund, respectively. Sales charges from Shares sold of the Funds received by affiliates amounted to $20,336 and $6,799 for the Preferred and Income Fund and Small Cap Advantage Fund, respectively.
9. PRINCIPAL RISKS
Risk is inherent in all investing. The value of your investment in the Funds, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. You may lose part or all of your investment in the Funds or your investment may not perform as well as other similar investments. The following is a summary description of certain risks of investing in the Funds.
Recent Market and Economic Developments — Certain impacts to public health conditions particular to the coronavirus (COVID-19) outbreak may have a significant negative impact on the operations and profitability of the Funds’ investments. The extent of the impact to the financial performance of the Funds will depend on future developments, including (i) the duration and spread of the outbreak, (ii) the restrictions and advisories, (iii) the effects on the financial markets, and (iv) the effects on the economy overall, all of which are highly uncertain and cannot be predicted.
Credit and Counterparty Risk— Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and principal payments when due and the related risk that the value of a security may decline because of concerns about the issuer’s ability to make such payments.
Equity Securities Risk— Stock markets are volatile. The price of equity securities fluctuates based on changes in a company’s financial condition and overall market and economic conditions.
Financial Services Companies Risk— The Preferred and Income Fund invests in financial services companies, which may include banks, thrifts, brokerage firms, broker/dealers, investment banks, finance companies and companies involved in the insurance industry. These companies are especially subject to the adverse effects of economic recession; currency exchange rates; government regulation; decreases in the availability of capital; and volatile interest rates.
Interest Rate Risk— If interest rates rise, in particular, if long-term interest rates rise, the prices of fixed-rate securities held by a Fund will fall.
Market Risk and Selection Risk— Market risk is the risk that one or more markets in which the Funds invests will go down in value, including the possibility that the markets will go down sharply and unpredictably. Selection risk is the risk that the securities selected by Funds’ management will underperform the markets, the relevant indices or the securities selected by other Funds with similar investment objectives and investment strategies. This means you may lose money.
Preferred Security Risk — Preferred and other subordinated securities rank lower than bonds and other debt instruments in a company’s capital structure and therefore will be subject to greater credit risk than those debt instruments. Distributions on some types of these securities may also be skipped or deferred by issuers without causing a default. Finally, some of these securities typically have special redemption rights that allow the issuer to redeem the security at par earlier than scheduled.
Smaller Companies Risk— The Small Cap Advantage Fund will hold securities of small- and/or mid-cap companies. Such companies may be more vulnerable to adverse general market or economic developments, and their securities may be less liquid and may experience greater price volatility than those of larger, more established companies. Smaller capitalization issuers are often not as diversified in their business activities and frequently have fewer product lines, financial resources and management experience than issuers with larger market capitalizations. Additionally, reduced trading volume of securities of smaller issuers may make such securities more difficult to sell than those of larger companies.
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Notes to the Financial Statements |
March31, 2020 (continued) |
10. TRUSTEES AND OFFICERS
The Destra Fund Complex (consisting of the Funds, the Destra Multi-Alternative Fund, the Destra International & Event-Driven Credit Fund, and the Destra Exchange-Traded Fund Trust, of which there is currently no active series), 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.
The Trust’s Chief Compliance Officer monitors and tests the policies and procedures of the Trust in conjunction with requirements under Rule 38a-1 under the 1940 Act and receives an annual base fee. Each Fund pays its portion of these fees on a pro rata basis according to each Fund’s average net assets. Fees paid by the Trust for the six months ended March31, 2020 are disclosed in the Statement of Operations.
An employee of PINE Advisor Solutions, LLC (“PINE”) serves as the Trust’s Chief Financial Officer. 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 pays its portion of these fees on a pro rata basis according to each Fund’s average net assets. Service fees paid by the Trust for the six months ended March31, 2020 are disclosed in the Statement of Operations.
12. SUBSEQUENT EVENTS
The Funds evaluated subsequent events through the date the financial statements were available for issuance and determined that there were no additional material events that would require adjustment to or disclosure in the Funds’ financial statements.
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This report is sent to shareholders of the Funds for their information. It is not a Prospectus, circular or representation intended for use in the purchase or sale of Shares of the Funds or of any securities mentioned in this report.
Corporate Dividends Received Deduction— For the period ended September30, 2019, the Preferred and Income Fund and Small Cap Advantage Fund had 66.68% and 0%, respectively, of dividends paid from net investment income qualify for the 70% dividends received deduction available to corporate shareholders.
Qualified Dividend Income— For the period ended September30, 2019, the Preferred and Income Fund and Small Cap Advantage Fund had 100% and 0%, respectively, of dividends paid from net investment income designated as qualified dividend income.
Proxy Voting— Policies and procedures that the Funds use to determine how to vote proxies as well as information regarding how the Funds voted proxies for portfolio securities is available without charge and upon request by calling 844-9DESTRA (933-7872) or visiting Destra Capital Investments LLC’s website at www.destracapital.com or by accessing the Fund’s Form N-PX on the SEC’s website at www.sec.gov.
Disclosure of Portfolio Holdings— The Funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q (or its successor Form N-PORT). The Funds’ Form N-Q (or its successor Form N-PORT) is available on the SEC website at www.sec.gov or by visiting Destra Capital Investments LLC’s website at www.destracapital.com.
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During the quarterly meeting of the Board held on November13, 2019 by a unanimous vote, the Board, including all of the Trustees who are not “interested persons” within the meaning of Section 2(a)(19) of the 1940 Act (the “Independent Trustees”), approved the investment advisory agreement between the Destra Flaherty & Crumrine Preferred and Income Fund (the “Fund”) and the Investment Adviser (the “Investment Management Agreement”) and the investment sub-advisory agreement among the Fund, the Investment Adviser and the Sub-Adviser (the “Sub-Advisory Agreement,” and together with the Investment Management Agreement, the “Advisory Agreements”).
In advance of the November13, 2019 meeting, the Independent Trustees requested and received materials from the Investment Adviser and Sub-Adviser to assist them in considering the approval of the Advisory Agreements.
Also in advance of the November13, 2019 meeting, the Independent Trustees received a memorandum from independent counsel to the Independent Trustees discussing the fiduciary duties of the Board in connection with their consideration of the Advisory Agreements.
The Independent Trustees reviewed the following factors. The Board neither considered any single factor as controlling in determining whether or not to approve the Advisory Agreements nor are the items described herein all-encompassing of the matters considered by the Board.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board reviewed and considered the nature and extent of the investment advisory services provided by Destra and Flaherty to the Fund under the Advisory Agreements, including the selection of Fund investments. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by Destra 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 Destra and Flaherty who provide the investment advisory and/or administrative services to the Fund. The Board determined that each of Destra’s 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 Destra’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. The Board considered the investment experience of Destra and Flaherty. The Board reviewed performance of the Fund over several relevant periods as well as compared against its benchmark and peer group. The Board reviewed the report of an independent third-party provider of market data, noting that the Fund performed in the 50th percentile or better of its peer group for each of the 1-, 3-and 5-year periods presented. 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 RELATIVE TO COMPARABLE FUNDS MANAGED BY OTHER INVESTMENT MANAGERS
The Board reviewed the advisory fee rates and total expense ratio of the Fund. The Board compared the advisory fee and pro-forma total expense ratio for the Fund with various comparative data, data for the Fund’s benchmark and peer group, as reflected in the independent third-party market report. The Board concluded that the advisory fees paid by the Fund to the Adviser and the sub-advisory fees paid by the Adviser to Flaherty were reasonable and satisfactory in light of the services provided.
BREAKPOINTS AND ECONOMIES OF SCALE
The Board reviewed the structure of the Fund’s investment management under the Advisory Agreements. The Board determined that, based on the Fund’s current assets and projections for future growth in such assets, Destra and Flaherty have an appropriate framework in place with respect to economies of scale.
PROFITABILITY OF INVESTMENT ADVISER AND AFFILIATES
The Board discussed the information related to Destra’s and Flaherty’s realized and projected profitability from their management of the Fund during certain periods of time. The Board considered assumptions regarding changes in assets under management and how those changes may impact profitability. The Board evaluated estimated profitability against profit margins that have been found by courts to be reasonable under applicable securities laws. The Board determined that the profitability of Destra and Flaherty was appropriate.
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Approval of Investment Management and Sub-Advisory Agreements |
March31, 2020 (unaudited) (continued) |
ANCILLARY BENEFITS AND OTHER FACTORS
The Board also considered other benefits potentially received by Destra and Flaherty from their management of the Fund, including, without limitation, reputational benefits and, the ability to market their advisory services for similar products in the future. The Board noted that Destra and Flaherty did not have affiliations with the Fund’s transfer agent, administrator, or custodian, but the Board noted that Destra and the Fund’s distributor are affiliated and Destra may derive a benefit from the distributor’s relationship with the Fund. The Board concluded that the advisory fees were reasonable in light of the fall-out benefits.
GENERAL CONCLUSION
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 Preferred and Income Fund and its shareholders to approve the Advisory Agreements for an additional one-year term.
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Board of Trustees | Officers | Investment Adviser | ||
John S. Emrich | Robert A. Watson | Destra Capital Advisors LLC | ||
Michael S. Erickson | President | Chicago, IL | ||
Jeffrey S. Murphy | ||||
Nicholas Dalmaso* | Derek Mullins | Sub-Advisers | ||
Chief Financial Officer | Flaherty & Crumrine Inc. | |||
and Treasurer | Pasadena, CA | |||
Jane Hong Shissler | Granahan Investment Management Inc. | |||
Chief Compliance Officer | Waltham, MA | |||
and Secretary | ||||
Distributor | ||||
* “Interested Person” of the Trust, as defined in the Investment Company Act of 1940, as amended. | Destra Capital Investments LLC | |||
Custodian | ||||
UMB Bank, N.A. | ||||
Kansas City, MO | ||||
Administrator, Accounting Agent, and Transfer Agent | ||||
UMB Fund Services, Inc. | ||||
Milwaukee, WI | ||||
Legal Counsel | ||||
Faegre Drinker Biddle & Reath LLP | ||||
Philadelphia, PA | ||||
Independent Registered Public Accounting Firm | ||||
Cohen & Company, Ltd. | ||||
Chicago, IL |
Privacy Principles of the Trust for Shareholders
The Funds are committed to maintaining the privacy of their shareholders and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information the Funds collect, how we protect that information and why, in certain cases, we may share information with select other parties.
Generally, the Funds do not receive any non-public personal information relating to their shareholders, although certain non-public personal information of their shareholders may become available to the Funds. The Funds do not disclose any non-public personal information about their shareholders or former shareholders to anyone, except as permitted by law or as is necessary in order to service shareholder accounts (for example, to a transfer agent or third party administrator).
The Funds restrict access to non-public personal information about the shareholders to Destra Capital Advisors LLC employees with a legitimate business need for the information. The Funds maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of their shareholders.
Questions concerning your Shares of the Trust?
• If your Shares are held in a Brokerage Account, contact your Broker.
This report is sent to shareholders of the Funds for their information. It is not a Prospectus, circular or representation intended for use in the purchase or sale of Shares of the Funds or of any securities mentioned in this report.
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ITEM 2. CODE OF ETHICS.
Not applicable to semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the close of the period are included as part of the report to shareholders filed under Item 1 of this Form N-CSR.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) | The Registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the Registrant on Form N-CSR is (i) accumulated and communicated to the Registrant’s management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. |
(b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that have materially affected or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Not applicable to semi-annual reports.
(a)(3) Not applicable.
(a)(4) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Destra Investment Trust | ||
By (Signature and Title) | /s/ Robert A. Watson | ||
Robert A. Watson, President | |||
(Principal Executive Officer) | |||
Date | 6/2/2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title) | /s/ Robert A. Watson | ||
Robert A. Watson, President | |||
(Principal Executive Officer) | |||
Date | 6/2/2020 | ||
By (Signature and Title) | /s/ Derek J. Mullins | ||
Derek J. Mullins, Chief Financial Officer | |||
(Principal Financial Officer) | |||
Date | 6/2/2020 | ||