Sentry Select Capital Inc. will seek unitholder approval for the mergers of Select 50 S-1 Income Trust, Sentry Select Focused Growth & Income Trust, Multi Select Income Trust, Pro-Vest Growth & Income Fund and Sentry Select 40 Split Income Trust with Sentry Select Canadian Income Fund, an open-end mutual fund, the company said Thursday.

For each merger that is approved, the terminating fund will transfer all of its assets to Canadian Income Fund in exchange for Series A units of Canadian Income Fund. Unitholders will receive Series A units of Canadian Income Fund having the same aggregate net asset value as their units of the terminating fund.

If the unitholders of Select 50 S-1 Income Trust do not approve the merger, the unitholders will be asked to approve an amended investment objective. If unitholders of Sentry Select 40 Split Income Trust do not approve the merger, the fund will be terminated. If unitholders of any other terminating fund do not approve the merger, the terminating fund’s mandate will remain unchanged.

Each merger will require approval by two-thirds of the votes cast by unitholders of each of the terminating funds at a special meeting of the unitholders, expected to be held jointly on or about May 20.

Sentry Select says the proposed mergers will be reviewed by the Independent Review Committee of each terminating fund and of the continuing fund. The mergers are subject to regulatory approval.

All costs and expenses associated with the mergers will be borne by the fund manager.

Sentry Select says the continuing fund’s larger portfolio and broader investment mandate should offer improved portfolio diversification to unitholders of the terminating funds. Unitholders would also benefit from increased economies of scale and lower proportionate fund operating expenses.

As well, changes to the tax treatment of income trusts have resulted in a reduction in the number of income trusts in which the terminating funds can invest.

Sentry Select adds that Series A units of the continuing fund will have greater liquidity than units of the terminating funds that are listed on the Toronto Stock Exchange and the mergers will eliminate the discount to net asset value for listed terminating funds.

Sentry Select Canadian Income Fund is a open-end mutual fund with approximately $360 million in assets. The fund invests in a diversified portfolio of Canadian securities including equities, fixed-income instruments, real estate investment trusts and income trusts. It currently pays a distribution of 7.75¢ which represents an annual yield of approximately 8.63% as of March 25.

IE