YEARS Financial Trust
TSX : YTU.UN

YEARS Financial Trust
Dividend Growth Split Corp.
TSX : DGS
TSX : DGS.PR.A

Dividend Growth Split Corp.

September 15, 2008 17:54 ET

YEARS Financial Trust Proposes Fund Merger Into Dividend Growth Split Corp.

TORONTO, ONTARIO--(Marketwire - Sept. 15, 2008) - Brompton Funds Management Limited (the "Manager") is proposing a meeting of YEARS Financial Trust ("YTU") (TSX:YTU.UN) to consider the merger of YTU into Dividend Growth Split Corp. ("DGS") (TSX:DGS)(TSX:DGS.PR.A). The merger is being proposed to address the economic inefficiencies of operating a small investment fund like YTU and to provide investors with a high quality portfolio at a low cost. Due to its smaller size, YTU's annual general and administration costs currently represent 0.66% of its net asset value and YTU is becoming too small to operate on its own.

DGS invests on an equally weighted basis in a portfolio of 20 large capitalization Canadian equities that have among the highest dividend growth rates on the TSX and utilizes a split share structure. Over 60% of DGS's portfolio is invested in Canadian financial equities and it includes nine of the eleven equities currently held in YTU. In addition, Highstreet Asset Management, which acts as portfolio manager of YTU, invests DGS's assets, rebalances its portfolio and selectively writes covered options to generate additional income for DGS. As such, the Manager considers DGS to be a similar investment to YTU. The proposed merger is expected to provide unitholders of YEARS Financial Trust with the following benefits:

- Lower General and Administration Costs per Unit: DGS currently offers lower general and administration costs per unit than YTU and these costs are expected to decrease further if the merger is completed due to the larger combined fund size.

- Lower Management Fee: DGS offers a lower management fee of 0.60% per annum as compared to the current YTU management fee of 0.85% per annum.

- Enhanced Liquidity: Following the merger, DGS will have a significantly larger market capitalization and a greater number of securities and securityholders than YTU, which is expected to provide enhanced liquidity. In addition, DGS offers quarterly redemptions at net asset value less costs, whereas YTU only offers redemptions at net asset value less costs on an annual basis.

- Diversified Portfolio: DGS's portfolio includes 20 blue-chip Canadian equities and is invested in equities of financial, mining, energy, telecommunication and energy issuers, providing greater diversification by number of securities and by industry sectors.

In addition, since its inception in December 2007, DGS Preferred Shares and Class A Shares have traded at an average six percent premium to net asset value on a combined basis, while YTU units have typically traded at a discount to net asset value.

Details regarding the proposed merger will be contained in an information circular which is expected to be mailed to YTU unitholders in October. The circular will also be available on www.sedar.com and posted on Brompton's website. In addition to the approval of YTU unitholders, the merger is subject to applicable regulatory approvals. Under the merger proposal, unitholders of YTU will receive units of DGS (each unit consisting of one DGS Preferred Share and one DGS Class A Share) and the number of DGS units to be received will be based on the relative net asset values per unit of each fund. The proposed merger is expected to be a taxable transaction for YTU unitholders and they are encouraged to read the circular in its entirety and consult with their advisors regarding the proposed merger. The meeting date is expected to be in early December with an effective merger date of December 31, 2008.

For additional information, please visit our website at www.bromptongroup.com.

Forward-Looking Statements

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 funds, to the future outlook of the funds and anticipated events or results and may include statements regarding the future financial performance of the funds. 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 for a variety of reasons, including those set forth below.

Forward-looking statements in this press release include among other things, the proposed timing of the merger and the expected completion thereof; the expected benefits of the merger; and the funds that are proposed to be merged. These statements are based on certain factors and assumptions. In arriving at our conclusions regarding the proposed timing of the reorganization, we have assumed that unitholder approval will be obtained at the meeting or adjournment thereof, and that any regulatory approvals and third party consents and actions are given or carried out (as the case may be) in a timely manner. Our expectations regarding the merger are based on a single fund being more cost effective to operate and a larger fund having greater trading volume and liquidity. While we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. There are no assurances that the actual outcomes will match the forward-looking statements as a result of a number of risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include changes in market and competition, governmental or regulatory developments and general economic conditions. Other than as required under securities laws, we do not undertake to update this information at any particular time.

Contact Information

  • Brompton Funds Management Limited
    David E. Roode
    Senior Vice President
    (416) 642-6008
    Website: www.bromptongroup.com