Brompton Administration Limited

Citadel Diversified Investment Trust

Citadel Diversified Investment Trust
Citadel S-1 Income Trust Fund

Citadel S-1 Income Trust Fund
Citadel HYTES Fund

Citadel HYTES Fund
Citadel SMaRT Fund

Citadel SMaRT Fund
Series S-1 Income Fund

Series S-1 Income Fund
Citadel Stable S-1 Income Fund

Citadel Stable S-1 Income Fund
Citadel Premium Income Fund

Citadel Premium Income Fund

July 16, 2009 17:17 ET

RETRANSMISSION: Brompton and Bloom Seek Citadel Unitholder Support for Proposal to Replace Crown Hill and Merge Citadel Funds

TORONTO, ONTARIO--(Marketwire - July 16, 2009) - Brompton Administration Limited and Bloom Investment Counsel, Inc. announced today that they are asking unitholders of seven Citadel Funds (the "Funds") to actively come forward to support their requisition of special meetings of those Funds. The Funds are:

- Citadel Diversified Investment Trust (TSX:CTD.UN)

- Citadel S-1 Income Trust Fund (TSX:SDL.UN)

- Citadel HYTES Fund (TSX:CHF.UN)

- Citadel SMaRT Fund (TSX:CRT.UN)

- Series S-1 Income Fund (TSX:SRC.UN)

- Citadel Stable S-1 Income Fund (TSX:CSR.UN), and

- Citadel Premium Income Fund (TSX:CPF.UN).

The purpose of these meetings will be to replace Crown Hill Fund (MYT.UN-T) as administrator and to merge the Funds into a single continuing fund with a new investment strategy to meet the objective of providing unitholders with a variable level of monthly cash distributions in an amount determined and announced from time to time and an opportunity to participate in gains in the value of the investment portfolio. Unitholders will also be offered an annual net asset value redemption feature and enhanced governance protection. Bloom will act as the investment manager for the continuing fund and Brompton Funds Management will provide administrative services.

Unitholders who support Brompton and Bloom in requisitioning these meetings will have the option of either remaining Unitholders in the merged continuing fund or redeeming their units, as soon as practicable after the meetings, at 100% of their net asset value less the direct costs associated with the redemption. In order to requisition the meetings for this purpose, Brompton and Bloom must provide each Fund with a written request endorsed by Unitholders holding at least 20% of its units. Unitholders and their investment representatives are urged to contact their investment advisors or the individuals named below for this purpose.

Brompton, which has long-standing expertise and experience in administering publicly listed investment funds, with 12 funds currently under administration, and Bloom, who has been the investment manager for six of the Funds since their launch (earliest in 1997), believe that they are uniquely well-positioned to provide administrative and investment services to the merged continuing fund. Under this proposal, the aggregate annual administration and investment management fees charged to the continuing fund will be reduced to 1.00% of net asset value. The Funds currently have administration and investment management fees ranging from 1.10% to 1.50% of net asset value. In addition, the continuing fund will pay an annual service fee of 0.40% of its net asset value.

Brompton and Bloom believe that today's investment landscape and market fundamentals, coupled with taxation changes affecting income trusts, call for an investment strategy expanded beyond those of the current Funds. The investment strategy of the continuing fund will be to actively manage a portfolio of publicly listed or traded securities, including income trusts, royalty trusts, real estate investment trusts, common equities, preferred securities, and debt instruments, to meet the investment objectives of the continuing fund. The continuing fund is expected to have an initial distribution rate representing a yield on current published net asset value of approximately 10%.

Brompton and Bloom will propose that the continuing fund will not have any fixed termination date. The continuing fund will also have a number of enhanced governance features and protections compared to the existing Funds. In particular:

- the continuing fund will have an ongoing annual redemption feature at 100% of net asset value less direct costs;

- the continuing fund will not include the "permitted merger" provisions where they exist in the existing Funds, with the result that any future merger will require unitholder approval,

- the continuing fund will not permit new units to be issued (under rights offerings or otherwise) on a basis which is dilutive to existing unitholders, and

- the administrative services agreement and the investment management agreement will each be terminable upon unitholder approval by way of extraordinary resolution without the payment of any "break" or "early termination fee" (which now exist for the Funds).

It is intended that the continuing fund will implement a normal course issuer bid program to purchase up to 10% of outstanding units per year. Brompton and Bloom believe that this program should replace the current mandatory repurchase programs of the existing Funds which limit purchases to 5% of the units outstanding.

Brompton and Bloom believe that this proposal will substantially benefit the merging Funds and their Unitholders.

In order to assist them to requisition meetings of each Fund to consider this proposal, Unitholders should call their Investment Advisors or contact Brompton:

Mark Caranci - 416-642-6004 Lorne Zeiler - 416-642-9058

David Roode - 416-642-6008 Chris Cullen - 416-642-9064

Toll-free: 1-866-642-6001 Email:

Contact Information

  • Mark Caranci
    David Roode
    Lorne Zeiler
    Chris Cullen
    Toll-free: 1-866-642-6001