(TSX:DGS) (TSX:DGS.PR.A) (TSX:SBC) (TSX:SBC.PR.A) Brompton Funds
Limited (
“Brompton” or the
“Manager”), announces special meetings (the
“
Meetings” and each, a
“Meeting”)
of holders of Class A Shares and Preferred Shares (the
“
Shareholders”) of Dividend Growth Split Corp.
(“
DGS”) and Brompton Split Banc Corp
(“
SBC”). The purpose of the Meetings is to
consider and vote upon extraordinary resolutions to implement
amendments to update and modernize the investment objectives,
investment strategies and investment restrictions of DGS and SBC
(the
“Amendments”). DGS and SBC were
launched in December 2007 and November 2005, respectively.
Changes Proposed for DGS
DGS invests, on an equally weighted basis, in a
portfolio consisting of common shares of 20 high dividend growth
rate Canadian companies. DGS provides a low cost, efficient
way to gain exposure to high dividend growth rate Canadian
companies, with the added benefit of a proprietary covered call
strategy employed by Brompton which lowers portfolio volatility
along with generating cash flows for distribution to
shareholders. Since inception on December 3, 2007 to June 30,
2018, Class A Shares and Preferred Shares have generated annualized
compound returns of 7.4%, and 5.4%, respectively. The Class A
Shares have outperformed the S&P/TSX Composite Index by 2.7%
per annum since inception.(1)
The Manager believes that the dividend growth
strategy continues to offer compelling value and is well positioned
to benefit from the growing Canadian and global economies.
The Manager believes that certain changes are advisable to the
investment objectives, strategy and restrictions of DGS to expand
its investment universe for high quality dividend growth companies.
The Manager believes that the proposed changes should enhance
long-term returns and are in the best interests of
shareholders. The proposed changes to the investment
objectives, strategy and restrictions are primarily designed to
accomplish the following:
- expand the investable universe of high quality dividend growth
companies from which the portfolio manager can select by expanding
the financial metrics that may be used to analyze the portfolio
constituents, including forward-looking metrics and to allow the
Manager to adjust the portfolio more frequently other than under
exceptional circumstances;
- provide for up to 20% of the portfolio to be invested, from
time to time, in global dividend growth companies; and
- allow the Manager to rebalance and/or reconstitute the
portfolio more frequently than annually, at its discretion, for
reasons other than the suspension of dividends, mergers or
fundamental corporate actions or exceptional circumstances, so that
DGS may respond to security or market developments on a timely
basis.
The management fee will not be increased
for DGS because of the additional work associated with these
enhancements.
Changes Proposed for SBC
SBC invests, on an equally weighted basis, in a
portfolio consisting of common shares of the six largest Canadian
banks. SBC provides a low cost, efficient way to gain
exposure to the six largest Canadian banks, with the added benefit
of a proprietary covered call strategy employed by Brompton which
lowers portfolio volatility along with generating attractive cash
flows for distribution to shareholders. Since inception on
November 16, 2005 to June 30, 2018, Class A Shares and Preferred
Shares have generated annualized compound returns of 11.6%, and
5.1%, respectively. The Class A Shares have outperformed the
S&P/TSX Capped Financials Index by 3.4% per annum and the
S&P/TSX Composite Index by 5.2% per annum since
inception.(2)
The Manager believes that a portfolio consisting
primarily of the six largest Canadian banks continues to offer
compelling value and is well positioned to benefit from the growing
Canadian and global economies and rising interest rates. The
six largest Canadian banks which are currently Bank of Montreal,
Royal Bank of Canada, Canadian Imperial Bank of Commerce, The Bank
of Nova Scotia, National Bank of Canada and The Toronto-Dominion
Bank, have dominant positions in the Canadian banking sector and in
2017 Canada’s banks were ranked among the soundest in the world by
the World Economic Forum. However, given the
rapidly changing nature of global financial services and their
regulatory environments, the Manager believes that certain modest
changes are advisable to the investment objectives, strategy and
restrictions of SBC to expand its investment universe. The
Manager believes that the proposed changes should enhance long-term
returns and are in the best interests of shareholders. The
proposed changes to the investment objectives, strategy and
restrictions are primarily designed to accomplish the
following:
- allow the Manager to rebalance and/or reconstitute the
portfolio more frequently than annually, at its discretion, for
reasons other than mergers or fundamental corporate actions, so
that SBC may respond to security or market developments on a timely
basis; and
- provide for up to 10% of the portfolio to be invested, from
time to time, in global financial companies.
The management fee will not be increased
for SBC because of the additional work associated with these
enhancements.
Special meetings of Shareholders will be held on
August 29, 2018 to consider and vote on the proposed
Amendments. Shareholders of record at the close of business
on July 30, 2018 will be entitled to vote at the meetings.
The Manager expects the effective date of the Amendments to take
place shortly after the meetings. Details of the proposed
Amendments will be further outlined in the DGS and SBC notices of
meeting and management information circular that will be prepared
and delivered to Shareholders in connection with the special
meetings and will be available on www.sedar.com.
About Brompton FundsBrompton
Funds, a division of Brompton Group which was founded in 2000, is
an experienced investment fund manager with approximately $2
billion in assets under management. Brompton’s investment solutions
include TSX traded funds, mutual funds and flow-through limited
partnerships. For further information, please contact your
investment advisor, call Brompton’s investor relations line at
416-642-6000 (toll-free at 1-866-642-6001), email
info@bromptongroup.com or visit our website at
www.bromptongroup.com.
(1) See performance table below.
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
|
SinceInception |
|
Performance as at June 30, 2018* |
|
|
|
|
|
|
|
|
Dec.
3/07 |
|
Dividend Growth Split Corp. – Class A Shares |
(3.9%) |
|
8.3% |
|
12.1% |
|
10.6% |
|
7.4% |
|
Dividend Growth Split Corp. – Preferred Shares |
5.4% |
|
5.4% |
|
5.4% |
|
5.4% |
|
5.4% |
|
Dividend Growth Split Corp. – Unit |
1.9% |
|
6.5% |
|
8.2% |
|
7.7% |
|
6.0% |
|
S&P/TSX Composite Index |
10.4% |
|
6.9% |
|
9.2% |
|
4.2% |
|
4.7% |
|
(2) See performance table below.
|
1 Year |
|
3 Years |
|
5 Years |
|
10 Years |
|
SinceInception |
|
Performance as at June 30, 2018** |
|
|
|
|
|
|
|
|
Nov.
16/05 |
|
Brompton Split Banc Corp. – Class A Shares |
15.4% |
|
18.7% |
|
20.2% |
|
16.6% |
|
11.6% |
|
Brompton Split Banc Corp. – Preferred Shares |
4.9% |
|
4.7% |
|
4.7% |
|
5.0% |
|
5.1% |
|
Brompton Split Banc Corp. – Unit |
11.2% |
|
12.7% |
|
13.2% |
|
11.2% |
|
8.7% |
|
S&P/TSX Capped Financials Index |
8.9% |
|
10.9% |
|
12.7% |
|
9.6% |
|
8.2% |
|
S&P/TSX Composite Index |
10.4% |
|
6.9% |
|
9.2% |
|
4.2% |
|
6.4% |
|
|
|
|
|
|
|
|
|
|
|
|
*The table shows DGS’ compound return on a Class
A share, Preferred share and unit for each period indicated,
compared with the S&P/TSX Composite Index (‘‘Composite
Index’’). The Composite Index tracks the performance of a broad
index of large-capitalization issuers listed on the TSX. DGS
invests in a passively managed portfolio of 20 companies that is
rebalanced at least annually. It is therefore not expected DGS’
performance will mirror that of the Composite Index, which has a
more diversified portfolio. The Composite Index is calculated
without the deduction of management fees, fund expenses and trading
commissions, whereas the performance of the DGS’ performance is
calculated after deducting such fees and expenses. Further,
the performance of DGS’ Class A shares is impacted by the leverage
provided by its Preferred shares.
**The table shows SBC’s compound return on a
Class A share, Preferred share and unit for each period indicated
compared with the S&P/TSX Capped Financials Index (‘‘Financials
Index’’) and the S&P/TSX Composite Index (‘‘Composite Index’’).
The Financials Index is derived from the Composite Index based on
the financials sector of the Global Industry Classification
Standard. The Composite Index tracks the performance, on a
market weight basis, of a broad index of large-capitalization
issuers listed on the TSX. SBC passively invests on an equal
weight basis in a portfolio comprised of six Canadian banks which
are in both the Financials Index and the Composite Index.
Since the indices have more diversified portfolios, it is not
expected that SBC’s performance will mirror that of the indices.
The Financials Index and Composite Index returns are calculated
without the impact of management fees, fund expenses and trading
commissions, whereas the performance of SBC’s Class A shares and
units are calculated after deducting such fees and expenses.
Further, the performance of SBC’s Class A shares is impacted by the
leverage provided by SBC’s Preferred shares.
You will usually pay brokerage fees to your
dealer if you purchase or sell shares of an investment fund on the
Toronto Stock Exchange or other alternative Canadian trading system
(an “exchange”). If the shares are purchased or sold on an
exchange, investors may pay more than the current net asset value
when buying shares of an investment fund and may receive less than
the current net asset value when selling them.
There are ongoing fees and expenses associated
with owning shares of an investment fund. An investment fund
must prepare disclosure documents that contain key information
about DGS and SBC. You can find more detailed information
about DGS and SBC in the public filings available at
www.sedar.com. The indicated rates of return are the
historical annual compounded returns including changes in share
value and reinvestment of all distributions and do not take into
account certain fees such as redemption costs or income taxes
payable by any securityholder that would have reduced
returns. Investment funds are not guaranteed, their values
change frequently and past performance may not be repeated.
Certain statements contained in this news
release constitute forward-looking information within the meaning
of Canadian securities laws. Forward-looking information may relate
to matters disclosed in this press release and to other matters
identified in public filings relating to the Fund, to the future
outlook of DGS or SBC and anticipated events or results and may
include statements regarding the future financial performance of
DGS or SBC. In some cases, forward-looking information can be
identified by terms such as “may”, “will”, “should”, “expect”,
“plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”,
“potential”, “continue” or other similar expressions concerning
matters that are not historical facts. Actual results may
vary from such forward-looking information. Investors should not
place undue reliance on forward-looking statements. These
forward-looking statements are made as of the date hereof and we
assume no obligation to update or revise them to reflect new events
or circumstances.
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