INVESTOR_FAQ_MortgageFund

Investor FAQ

How does the Fund manage risk?

The Fund identifies appropriate mortgage investment opportunities based on an assessment of risk primarily related to property location, the borrower’s creditworthiness and the strength of the underlying property’s cash flow attributes. The Fund believes that high quality mortgage investments that are appropriate are those where: the borrower has a clear exit strategy; the mortgage is secured by real property that is reasonably liquid; and the borrower has both the required experience and equity invested in the property securing the loan. Once funded, the Fund regularly monitors the status of each loan and the ongoing credit of the borrower. This includes substantiating mortgage and realty tax payments, confirming insurance coverage, reviewing financial and operating statements and verifying the borrower’s undertakings.

Is the Fund a Mortgage Investment Corporation under the Income Tax Act?

No, First National Mortgage Investment Fund is a closed-end mutual fund trust. In computing income for a taxation year, a unitholder is required to include the amount of the Fund’s net income for the taxation year, including the taxable portion of its net realized capital gains, paid or payable to the unitholder, and including any management fee distributions, (whether in cash or in Units) in the taxation year. This information is generally provided by a unitholder’s broker in the form of a T3 slip. The non-taxable portion of the Fund’s net realized capital gains for a taxation year that is paid or payable to the unitholder in that taxation year will not be included in the unitholder’s income for the year and will not reduce the adjusted cost base of the units. Any other amount in excess of the unitholder’s share of the Fund’s net income for a taxation year paid or payable to the unitholder in the year will generally not be included in the unitholder’s income, but will reduce the adjusted cost base of the unitholder’s units. Please consult your tax advisor for specific advice.

How often does the Fund pay distributions?

Currently, The Fund pays a distribution every month.

How do I check the Fund’s unit price?

The Fund is listed on the Toronto Stock Exchange under the symbol FNM.UN. The daily price per unit can be found on various websites, including the website of the Fund’s investment manager, Stone Asset Management Limited.

Does the Fund offer redemptions?

The Fund has an annual redemption period which begins on the first business day in May and ends at 4:00 p.m. (Toronto time) on the 9th day of May, or the immediately preceding business day in the event that the 9th day is not a business day. It also has a monthly redemption feature allowing holders to surrender their units at any time to the Fund’s registrar and transfer agent at a redemption price per unit equal to the lesser of 95% of the Trading Price and the Market Price. For more information on redemption rights and procedures, please view the Fund’s prospectus.

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