Historical Qualified Dividend Income (QDI)

The Destra Flaherty & Crumrine Preferred and Income Fund, (the “Fund”) has historically invested in securities that generally offer tax-advantaged income, which may further enhance the extra yield earned for subordination (i.e. being lower in the capital structure than senior debt) of preferred issues.

Investors may be well served to evaluate investments on an after-tax basis — since qualified dividend income (QDI) may offer a tremendous benefit to U.S. individuals. In taxable accounts, QDI may result in a gross-up factor as high as 1.287(1) versus pre-tax yields.

For illustration, in calendar 2022 the portion of the Fund’s Class A, Class I and Class C distributions that were QDI-eligible (as reported on Form 1099-DIV, box 1B) was 99.53%, 99.54% and 99.51% respectively. For comparative purposes, this means a Fund distribution of 5.00% would have a taxable-equivalent yield of 6.43% (assuming 99.54% QDI) to an investor in a taxable account. Flaherty & Crumrine, the Fund’s investment sub-advisor, has noted a multi-year shift in investor awareness away from investment tax considerations, resulting in almost no yield difference between tax-advantaged and fully-taxable securities (both types are issued in the preferred market) — which, in their view, implies the QDI benefit is largely underappreciated. Although distribution rates and QDI composition do change each year, shareholders should be aware that QDI can be an important benefit of investing in the Fund and should not be ignored.

1 Assumes marginal tax bracket of 37% and 3.8% Medicare tax on investment income

Calendar Year A Share QDI Percentage C Share QDI Percentage I Share QDI Percentage
2022 99.53% 99.51% 99.54%
2021 99.49% 99.47% 99.50%
2020 92.03% 91.86% 92.08%
2019 87.44% 87.44% 87.44%
2018 95.42% 95.55% 95.39%