TORONTO: The Board of Directors of Sentry Select Capital Corp. (the “Manager”) is pleased to announce that at the special meetings held on April 4, 2007, the unitholders of Mortgage-Backed Securities Trust and MBS Adjustable Rate Income Fund (the “Terminating Funds”) approved mergers of the Terminating Funds with Sentry Select MBS Adjustable Rate Income Fund II (collectively the “Mergers”).
Completion of Mergers: The Mergers became effective today. The Terminating Funds transferred all of their assets to Sentry Select MBS Adjustable Rate Income Fund II (“ARIF II”) in exchange for units of ARIF II and the assumption by ARIF II of all the liabilities of the Terminating Funds. The Terminating Funds have distributed these units to their unitholders in connection with the winding up of such Funds.
Each unitholder of Mortgage-Backed Securities Trust receives approximately 0.7021 units of ARIF II in exchange for each unit of Mortgage-Backed Securities Trust. Each unitholder of MBS Adjustable Rate Income Fund receives approximately 0.9780 units of ARIF II in exchange for each unit of MBS Adjustable Rate Income Fund. The units of ARIF II that the former unitholders of the Terminating Funds receive have the same aggregate net asset value as their units of the Terminating Fund. Fractional units will not be issued.
The Mergers: The Manager believes that the Mergers will result in significant benefits to unitholders. The larger combined ARIF II will have the advantage of increased economies of scale and lower fund operating expenses. The Mergers will eliminate the administrative and regulatory costs of operating separate investment funds, and provide greater liquidity on the Toronto Stock Exchange and a higher profile in the marketplace, resulting from a greater net asset value and market capitalization. Unitholders of Mortgage-Backed Securities Trust will also benefit from minimized currency exchange risk and more advantageous tax treatment of distributions, as ARIF II provides currency hedging and its distributions are generally treated as capital gains or return of capital.
Fee reduction: The Manager has agreed to reduce its management fee for ARIF II by 20%, effective July 1, 2007, from 0.125% to 0.100% of the net asset value of the Trust multiplied by the Partnership Leverage Factor, as defined in the information circular. (Assuming a debt-to-equity ratio of 9:1, this percentage would be 1.00%.)
The General Partner has agreed to reduce its fee by 20% from 0.125% to 0.100% of the gross leveraged assets of the Partnership immediately. (Assuming a debt-to-equity ratio of 9:1 this percentage would be 1.00%).
Costs of the Mergers: All costs and expenses associated with the Mergers are borne by the Manager.
Sentry Select Capital Corp.: Sentry Select Capital Corp. is one of the fastest-growing wealth management companies in Canada and manages approximately $8 billion in gross assets as of March 31, 2007. The company offers a diverse range of investment products including closed-end trusts, mutual funds, principal-protected notes and flow-through limited partnerships, covering a variety of domestic and global mandates. With 37 reporting entities, Sentry Select is the leading issuer of securities listed on the Toronto Stock Exchange.
More information: Investor Services (broker/investor inquiries) or Kinga Lam (media inquiries) Tel: 1-888-246-6656 Fax: 416-364-1197 firstname.lastname@example.org www.sentryselect.com
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