Brompton Announces Special Meetings of Dividend Growth

TORONTO, July 16, 2018 (GLOBE NEWSWIRE) -- (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:

1. 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;  
2. provide for up to 20% of the portfolio to be invested, from time to time, in global dividend growth companies; and  
3. 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:

1. 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  
2. 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 Funds Brompton 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.

(2) See performance table below.

*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.