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Sentry Select Capital Inc. Proposes Restructuring of Sentry Select Diversified Income Fund (Formerly Sentry Select Diversified Income Trust)
2009-05-25

TORONTO: Sentry Select Capital Inc. ("Sentry Select" or the "Manager") announces that it will seek the approval of unitholders of Sentry Select Diversified Income Fund (the "Fund") to restructure the Fund as follows:

  1. convert the Fund from a closed-end investment fund to an open-end mutual fund which will, among other things, provide for the units of the Fund (the "Units") to become redeemable on a daily basis, at the net asset value ("NAV") per Unit, subject to a declining redemption fee schedule (the "Redemption Fee"), and the implementation of all matters necessary, or ancillary to, the mutual fund conversion;
  2. amend the management agreement between the Manager and the Fund by reducing the management fee from 1.5% per annum of the NAV of the Fund to 1.25% per annum of the NAV of the Fund and eliminating the fee payable to the Manager upon termination of the management agreement, in settlement of indebtedness of $23,945,138 under the promissory notes of Sentry Select Capital Corp. held by the Fund;
  3. amend the investment objectives of the Fund; and
  4. have the Manager become the successor trustee of the Fund upon the resignation of the Computershare Trust Company of Canada, the current trustee of the Fund (collectively, the "Restructuring").

The directors of the Manager, other than John Driscoll, who is not considered independent, (the "Independent Directors") have reviewed the proposed Restructuring and have concluded that the Restructuring is fair to the unitholders on the basis that it will result in a net benefit to unitholders. CIBC World Markets Inc. has provided the Independent Directors with a fairness opinion.

The Fund's independent review committee has reviewed the proposed terms of the Restructuring and concluded that the Restructuring would achieve a fair and reasonable result for the Fund.

Among the benefits of the Restructuring to the unitholders of the Fund include an immediate increase in realizable value for unitholders; reduced management fees; increased liquidity of the Units and expanded investment objectives.

Redemption Fee Schedule: Depending on the redemption date, Units may be subject to a Redemption Fee, payable to the Manager by the redeeming unitholder out of the redemption proceeds. The Redemption Fee will be the percentage of NAV per Unit as shown in the following table:

----------------------------------------------------------
Period                                     Redemption Fee
----------------------------------------------------------
Until December 31, 2010                                 5%
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From January 1, 2011 to December 31, 2011               4%
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From January 1, 2012 to December 31, 2012               3%
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From January 1, 2013 to December 31, 2013               2%
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From January 1, 2014 to December 31, 2014               1%
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From January 1, 2015 onwards                            0%
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Mutual Fund Conversion Timing: A special meeting of unitholders will be held on June 26, 2009 (the "Special Meeting") for unitholders of record on May 22, 2009. If the Restructuring is approved, Unitholders will have an initial redemption right following the Special Meeting and prior to effecting the mutual fund conversion to redeem their Units at NAV per Unit as of July 31, 2009, subject to a 5% Redemption Fee. The Fund's Units would then be delisted from the Toronto Stock Exchange on or about August 4, 2009 and the mutual fund conversion would be completed on or about August 14, 2009.

A management information circular and other proxy materials containing further information regarding the proposed Restructuring will be provided to unitholders of record.

Sentry Select Diversified Income Fund: Sentry Select Diversified Income Fund is a closed-end investment trust that aims to maximize distributions to unitholders by investing primarily in high-income securities issued by a broad range of royalty and income trusts, real estate investment trusts, and limited partnerships and, to a lesser extent, fixed-income securities and high-yielding common stocks.

Sentry Select: Sentry Select is a Canadian wealth management company that offers a diverse range of investment products including closed-end trusts, mutual funds, principal-protected notes, flow-through limited partnerships and hedge funds, covering a variety of domestic and global mandates.

More information: Investor Services (broker/investor inquiries)
Tel: 1-888-730-4623
Fax: 416-364-1197
Email: info@sentryselect.com

Certain statements included in this news release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect", "intend", "will" and similar expressions to the extent they relate to Sentry Select. The forward-looking statements are not historical facts but reflect Sentry Select's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations including, but not limited to, the proposed timing for implementing the Restructuring and the failure to receive all required regulatory and unitholder approvals to implement the Restructuring. Although Sentry Select believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. Sentry Select undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law. For a complete disclosure record for the Fund, please visit the Fund's profiles at www.sedar.com.


Documents (including press releases) regarding the various investment funds that are managed or advised by Sentry are provided for information purposes only and cannot be relied on to be complete, exhaustive or error-free unless the complete set of documents for any given investment fund with respect to which information is being sought is reviewed and then only on SEDAR (www.sedar.com).