Brompton Proposes Conversion of European Dividend Growth Fund Into an Exchange Traded Fund

CBJ Newsmakers

TORONTO, Dec. 12, 2018 (GLOBE NEWSWIRE) — (TSX: EDGF.UN) Brompton Funds Limited (“Brompton” or the “Manager”), the manager of European Dividend Growth Fund (the “Fund”) announces that a special meeting of unitholders (“Unitholders”) of the Fund will be held on February 14, 2019 (the “Meeting”).

At the Meeting, Unitholders of the Fund will be asked to approve the conversion of the Fund (the “Conversion”) from a closed-end investment fund into an exchange-traded fund (“ETF”), along with certain other changes considered ancillary, necessary or desirable, in the opinion of the Manager to facilitate and implement the Conversion.  Upon the effective date of the Conversion, the Fund will become “Brompton European Dividend Growth ETF”.

All costs of the Conversion, including with respect to the Meeting, will be borne by the Manager.

The Manager believes that Unitholders will benefit from the Conversion for the following reasons:

Lower Management Fee and Management Expense Ratio: The management fee payable by the Fund is currently 1.25% of the net asset value (“NAV”) plus applicable taxes until July 2020 and is 0.95% of the NAV plus applicable taxes thereafter. After the Conversion, the management fee payable by Unitholders will be 0.75% of the NAV of Brompton European Dividend Growth ETF. After the Conversion, the Manager also intends to waive a portion of the management fee of Brompton European Dividend Growth ETF and/or reimburse Brompton European Dividend Growth ETF to ensure that the sum of the management fee and operating expenses, in each case inclusive of associated GST/HST, is limited to 0.95% of the NAV of Brompton European Dividend Growth ETF.

Enhance Flexibility of the Investment Strategy:  The Manager is proposing to amend certain provisions in the Fund’s investment strategy to expand the Fund’s investment universe and allow for greater flexibility in Brompton European Dividend Growth ETF’s portfolio.  The proposed amendments will be set out in the management information circular.

Better Trading Price Relative to NAV per Unit and Reduced Bid/Ask Spread:  The Manager anticipates that an improvement in the trading price of the units of the Fund (relative to the NAV per unit of the Fund) will provide a meaningful increase in value for Unitholders.  As at December 11, 2018, prior to the announcement of the Meeting, the Fund had a 5.6% discount to NAV.  Market makers for ETFs are able to price their bids and asks for ETF units tightly around their estimate of NAV.  It is expected that bid/ask spreads will be significantly reduced from the Fund’s bid/ask spread.  This is beneficial to investors because a smaller bid/ask spread is expected to result in a lower effective cost to buy or sell ETF units.

Increased Trading Liquidity: Approved dealers acting as market makers for an ETF are able to offer or bid for large volumes of that ETF on a stock exchange, as approved dealers have the ability to create or redeem ETF units daily in large blocks directly from Brompton European Dividend Growth ETF. This is expected to result in improved liquidity, allowing an investor to buy or sell large amounts of Brompton European Dividend Growth ETF units without materially affecting the market price. The Fund holds a portfolio of large capitalization, liquid equities and, therefore, it is expected that the Conversion will improve the trading liquidity of the Fund from current levels.

Potential for Lower Expenses per Unit due to Growth: As Brompton European Dividend Growth ETF will distribute units on a continuous basis, it will have the potential to increase the number of such units outstanding through the issuance of new units, thereby spreading its operating expenses across more units and reducing expenses per unit.

Unitholders of record of the Fund at the close of business on January 15, 2019 will be entitled to vote at the Meeting of the Fund.  If approved, the Conversion is expected to be implemented in April 2019, subject to obtaining the required regulatory approvals.  Details of the proposed Conversion will be further outlined in the Fund’s Notice of Special Meeting of Unitholders and management information circular that will be prepared and delivered to Unitholders in connection with the Meeting and will be available under the Fund’s profile 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 over $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.

You will usually pay brokerage fees to your dealer if you purchase or sell units of an investment fund on the Toronto Stock Exchange or other alternative Canadian trading system (an “exchange”).  If the units are purchased or sold on an exchange, investors may pay more than the current NAV when buying units of an investment fund and may receive less than the current NAV when selling them.

There are ongoing fees and expenses associated with owning units of an investment fund.  An investment fund must prepare disclosure documents that contain key information about the Fund.  You can find more detailed information about the Fund in the public filings available at www.sedar.com.  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 the Fund and anticipated events or results and may include statements regarding the future financial performance of the Fund.  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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