Brompton Equal Weight Income Fund Announces Second Quarter 2004 Results.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- We are pleased to provide the unaudited financial results of Brompton Brompton may refer to:
TSX Transfer from Stack Pointer to Index TSX True Space Extension :EWI EWI EastWest Institute EWI Elliott Wave International EWI Edison Welding Institute EWI Executive Women International EWI Electronic Wind Instrument (music) EWI Europäisches Währungsinstitut EWI Equal Width Increment .UN) for the three and six months ended June June: see month. 30, 2004. The Fund commenced operations on July July: see month. 16, 2003 when it closed its initial public offering of $420 million and accordingly there are no comparative figures. The following information provides an analysis of the operations and financial position of the Fund and it should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the unaudited financial statements and accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. notes. The Fund is managed by Brompton EWI Management Limited and provides unitholders with the opportunity to receive high levels of monthly cash distributions by investing in an equally weighted diversified diversified (di·verˑ·s portfolio of income funds using a passive index-like approach and to receive the benefit of low management fees. The portfolio includes those income trusts that have a float capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of at least $200 million at the time of investment, pay a regular distribution and are listed on the TSX. The Fund is rebalanced in August of each year. MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial Distributions The Fund's portfolio experienced net increases in distributions during the quarter, resulting in an increase in the June distribution. The following monthly distributions per unit were declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. during the quarter: April 2004, $0.081; May 2004, $0.081; June 2004, $0.084. Distributions for the year to date amount to $0.492 per unit. Investment Portfolio As of June 30, 2004, the Fund's investments included a total of 66 income funds, providing diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. both by issuer and industry concentration. The breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. of the portfolio is shown in the accompanying pie chart A graphical representation of information in which each unit of data is represented as a pie-shaped piece of a circle. See business graphics. and a detailed listing of the Fund's security holdings is provided in the financial statements. In the second quarter, the income trust market experienced weakness largely due to concerns that interest rates would rise in the near term. The TSX Capped Income Trust Index declined 4.7% during the second quarter. This compares to a rise in the index of 2.6% during the first quarter and a rise of 13.5% for the 12 months ended June 30, 2004. The index returns exclude distributions made from underlying income trusts. Given the substantial rise in the income trust market over the past two years, a correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. of the magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the shown in the second quarter was not unexpected. Notwithstanding the weakness in the income trust market, the Fund had total unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. at June 30, 2004 of $47.9 million. The table below provides a breakdown of these gains or losses by sector for the first and second quarters of 2004. Net Increase (Decrease) in First Second Year- Unrealized Gains by Sector Quarter Quarter to-Date (millions) 2004 2004 2004 --------------------------------------------------------------------- Consumer $ 3.5 $ (4.2) $ (0.7) Industrials 2.2 (1.1) 1.1 Oil and gas 2.0 (3.1) (1.1) Power 2.3 (6.9) (4.6) Real estate investment trusts 5.1 (7.7) (2.6) Resource 2.4 1.3 3.7 Utilities and infrastructure 5.4 (5.2) 0.2 --------------------------------------------------------------------- Total 22.9 $ (26.9) $ (4.0) --------------------------------------------------------------------- Unrealized gains, beginning of period 51.9 74.8 51.9 --------------------------------------------------------------------- Unrealized gains, end of period $ 74.8 $ 47.9 $ 47.9 --------------------------------------------------------------------- --------------------------------------------------------------------- Net Asset Value During the second quarter, the net asset value of the Fund decreased by $0.63 per unit. This compares with an increase of $0.54 per unit in the first quarter of the year. For the six months ended June 30, 2004, the Fund's net asset value declined by $0.09 per unit or 0.8%, broken down as follows:
First Second Year-
Quarter Quarter to-Date
2004 2004 2004
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Net investment income $ 0.24 $ 0.25 $ 0.49
Increase (decrease) in unrealized
gains on investments 0.55 (0.64) (0.09)
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Results of operations 0.79 (0.39) 0.40
Less: distributions (0.25) (0.24) (0.49)
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Increase (decrease) in net asset
value $ 0.54 $ (0.63) $ (0.09)
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Liquidity and Capital Resources As of June 30, 2004, the Fund had borrowings of $45.2 million under its credit facility, which represented 9.2% of total assets. The interest rate on $44.1 million of the credit facility has been fixed until July 2008 at 5.06% to reduce the Fund's exposure to rising interest rates. The remaining borrowings of $1.1 million are at a floating interest rate based on the prime rate. The Fund's normal course issuer bid allows it to purchase for cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. up to 4,190,000 units from September September: see month. 2, 2003 to September 1, 2004 during periods when the units trade below the net asset value per unit. In such situations, purchases under the issuer bid are accretive to the net asset value of the Fund. A total of 33,800 units were purchased in the second quarter under this bid at an average price of $10.26. To provide liquidity, units of the Fund are listed on the TSX under the symbol EWI.UN. In addition, unitholders may redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. units of the Fund on the second last business day of July of each year at the then current net asset value. In 2004, 4.65 million units were tendered for redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. . The Fund has a distribution reinvestment plan reinvestment plan See dividend reinvestment plan (DRIP). which allows participating unitholders to automatically reinvest re·in·vest tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. monthly distributions in additional units of the Fund. For the three and six months ended June 30, 2004, 20,312 and 34,891 units, respectively, were acquired in the market at an average price of $10.12 and $10.33 per unit. Management Expense Ratio The Fund has a very low management fee at 0.45% of net asset value per annum Per annum Yearly. . Combined with the 0.30% service fee and general and administrative expenses, the management expense ratio of the Fund is 0.91% based on net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. and 0.83% based on total assets. Annual Portfolio Rebalancing Rebalancing The process of realigning the weightings of one's portfolio of assets. Notes: For example, if your portfolio's proportion of stock has grown too large for your intended assets weightings and risk tolerance, you might rebalance by selling some stock and putting The significant appreciation in the market value of the Fund's portfolio and the large number of new qualifying income funds included resulted in a significant rebalancing of the portfolio in August 2004 which resulted in the realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of net capital gains. Realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. will convert all of the tax deferred "return of capital" component of the distributions to capital gains in 2004. These gains will be taxable at the favourable capital gains rate. Without any further appreciation in market value of the Fund's holdings following the rebalancing of the portfolio in August, it would be expected that the "return of capital" component of the 2005 distribution should be similar to the 54% realized in 2003. The new portfolio will be posted to the Fund's website following the completion of the rebalancing in August 2004 at www.bromptongroup.com. Outlook We continue to believe in the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. fundamentals of the income trust market in which the Fund invests and in the total return they will provide, although values of the underlying investments may fluctuate over time, and we expect that the income trust market will continue to compete favourably Adv. 1. favourably - showing approval; "he reviewed the play favorably" favorably favourably U.S. favorably adverb 1. with other asset classes on a risk-adjusted total return basis. Respectfully submitted on behalf of the Board, Raymond R. Pether Mark A. Caranci Chief Executive Officer Chief Financial Officer Brompton EWI Management Limited Brompton EWI Management Limited August 19, 2004 This quarterly report contains forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information which involves known and unknown risks, uncertainties and other factors which may cause actual results to be materially different than the results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking information. In evaluating the forward-looking information contained herein, readers should consider various factors, including those described in the Fund's prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. and other documents filed with regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . The Fund is not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to update or revise the forward-looking information contained herein to reflect new events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
Investment Highlights
Jun 30, Mar 31, Dec 31, Sept 30,
2004 2004 2003 2003
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Net asset value per unit $ 10.61 $ 11.24 $ 10.70 $ 9.57
Quarterly distributions per unit $ 0.246 $ 0.246 $ 0.253 $ 0.249
Market price per unit $ 10.33 $ 10.86 $ 10.50 $ 9.56
Total assets (millions) $ 494 $ 521 $ 498 $ 451
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Statement of Net Assets (Unaudited)
June 30, 2004 Dec 31, 2003
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Assets
Investments, at market value (cost
2004 - $441,126,987; 2003
-$441,127,002) $ 489,019,698 $ 493,064,929
Cash 387,572 678,298
Distributions receivable 4,207,684 4,403,133
Deferred financing costs (note 6) 191,907 239,078
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Total assets 493,806,861 498,385,438
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Liabilities
Accounts payable and accrued liabilities 760,463 888,980
Distributions payable to
unitholders (note 4) 3,519,046 3,523,800
Loans payable (note 6) 45,200,000 45,125,000
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Total liabilities 49,479,509 49,537,780
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Net assets representing
unitholders' equity $ 444,327,352 $ 448,847,658
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Units outstanding (note 3) 41,893,400 41,950,000
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Net asset value per unit $ 10.61 $ 10.70
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Statement of Operations (Unaudited)
Three months ended Six months ended
June 30, 2004 June 30, 2004
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Income
Distributions from income funds $ 12,251,626 $ 23,892,004
Interest income 153 293
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12,251,779 23,892,297
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Expenses
Management fee (note 5) 532,129 1,084,834
Service fee (note 5) 343,007 687,462
General and administrative 123,190 232,866
Interest and bank charges (note 6) 596,077 1,190,858
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1,594,403 3,196,020
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Net investment income 10,657,376 20,696,277
Net change in unrealized gain on
investments (26,957,999) (4,045,216)
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Results of operations $ (16,300,623) $ 16,651,061
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Results of operations per unit (1) $ (0.38) $ 0.40
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(1) Based on the weighted average number of units outstanding for
the period (note 3).
The accompanying notes are an integral part of these financial
statements.
Statement of Cash Flows (Unaudited)
Three months ended Six months ended
June 30, 2004 June 30, 2004
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Cash flows from operating activities:
Results of operations $ (16,300,623) $ 16,651,061
Adjustments to reconcile net cash
provided by operations:
Net change in unrealized gain
on investments 26,957,999 4,045,216
Amortization of deferred financing
costs 23,585 47,171
Decrease (increase) in distributions
receivable (15,736) 195,449
Decrease in accounts payable and
accrued liabilities (206,489) (128,517)
Proceeds received on reorganization
of investments held 15 15
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Cash provided by operating activities 10,458,751 20,810,395
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Cash flows from financing activities:
Proceeds from issuance of units, net 35,505 35,505
Increase (decrease) in loans payable (175,000) 75,000
Distributions paid to unitholders
(note 4) (10,184,227) (20,627,495)
Repurchase of units (note 3) (346,682) (584,131)
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Cash used in financing activities (10,670,404) (21,101,121)
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Net decrease in cash (211,653) (290,726)
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Cash, beginning of period 599,225 678,298
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Cash, end of period $ 387,572 $ 387,572
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Supplemental information:
Interest paid $ 576,940 $ 1,145,974
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Statement of Changes in Net Assets (Unaudited)
Three months ended Six months ended
June 30, 2004 June 30, 2004
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Net assets - beginning of period $ 471,246,322 $ 448,847,658
Operations:
Results of operations (16,300,623) 16,651,061
Unitholder transactions:
Proceeds from issuance of units, net 35,505 35,505
Distributions to unitholders
(note 4) (10,307,170) (20,622,741)
Repurchase of units (note 3) (346,682) (584,131)
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(10,618,347) (21,171,367)
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Net decrease in net assets (26,918,970) (4,520,306)
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Net assets - end of period $ 444,327,352 $ 444,327,352
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Distributions per unit $ 0.246 $ 0.492
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The accompanying notes are an integral part of these financial
statements.
Statement of Investments (Unaudited)
As at June 30, 2004
% of
No. of Market Port-
Units Consumer Cost Value folio
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502,710 Bell Nordiq Income Fund $ 6,483,855 $ 6,409,552
501,200 Clearwater Seafoods Income
Fund 6,486,841 5,838,980
443,126 Connor Bros. Income Fund 6,486,266 7,311,579
419,150 Davis + Henderson Income Fund 6,487,112 7,544,700
540,800 Energy Savings Income Fund 6,483,688 8,382,400
512,575 KCP Income Fund 6,488,155 4,536,289
1,675,800 Rogers Sugar Income Fund 6,487,887 6,753,474
615,700 Specialty Foods Group Income
Fund 6,486,803 4,057,463
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51,890,607 50,834,437 10.4%
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No. of
Units Industrials
499,300 Atlas Cold Storage Income
Trust 6,486,492 2,371,675
623,050 Newalta Income Fund 6,487,019 11,713,340
268,600 North West Company Fund 6,485,867 6,827,812
291,030 Superior Plus Income Fund 6,487,207 7,552,228
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25,946,585 28,465,055 5.8%
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No. of
Units Oil and Gas
574,108 Acclaim Energy Trust 6,486,338 7,434,699
406,750 Advantage Energy Income Fund 6,486,917 7,585,887
560,850 APF Energy Trust 6,487,862 6,371,256
510,908 ARC Energy Trust 6,486,569 7,842,438
393,400 Bonavista Energy Trust 6,486,877 9,063,936
184,773 Canadian Oil Sands Trust 6,485,952 8,157,728
194,312 Enerplus Resources Fund 6,488,903 7,356,652
497,800 Focus Energy Trust 6,486,877 7,715,900
488,500 Freehold Royalty Trust 6,487,904 7,327,500
679,200 NAL Oil & Gas Trust 6,487,765 7,967,016
693,100 Paramount Energy Trust 6,487,252 7,818,168
382,509 Pengrowth Energy Trust 6,485,529 7,141,443
997,926 Petrofund Energy Trust 12,975,300 14,819,201
380,300 Peyto Energy Trust 6,488,665 11,412,803
244,765 PrimeWest Energy Trust 6,490,484 5,690,786
579,900 Provident Energy Trust 6,487,252 5,967,171
377,288 Shiningbank Energy Income
Fund 6,488,581 7,225,065
468,100 Vermilion Energy Trust 6,488,096 8,402,395
957,301 Viking Energy Royalty Trust 6,487,591 5,427,897
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129,750,714 150,727,941 30.8%
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No. of
Units Power
672,333 Algonquin Power Income Fund 6,487,087 6,373,717
660,700 Boralex Power Income Fund 6,486,456 6,534,323
612,074 Calpine Power Income Fund 6,486,984 6,304,362
649,451 Clean Power Income Fund 6,488,076 5,812,586
425,514 Great Lakes Hydro Income Fund 6,486,377 6,889,072
558,530 Northland Power Income Fund 6,487,197 6,423,095
685,195 TransAlta Power, L.P. 6,487,361 6,132,495
188,550 TransCanada Power, L.P. 6,486,945 5,899,730
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51,896,483 50,369,380 10.3%
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No. of
Units Real Estate Investment Trusts
975,425 Canadian Apartment Properties
REIT 12,974,514 12,114,778
719,147 Canadian Hotel Income
Properties REIT 6,493,813 7,263,385
445,698 Canadian REIT 6,486,848 6,903,862
459,790 Cominar REIT 6,486,530 6,873,860
416,730 H&R REIT 6,486,423 6,801,034
691,876 InnVest REIT 6,479,399 7,818,199
629,400 IPC US Income Commercial REIT 6,486,127 6,501,702
585,239 Retirement Residences REIT 6,486,833 6,104,043
452,544 RioCan REIT 6,488,310 7,285,958
390,374 Summit REIT 6,484,958 6,847,160
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71,353,755 74,513,981 15.2%
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No. of
Units Resource
250,074 Fording Canadian Coal Trust 6,486,383 14,116,677
414,575 Labrador Iron Ore Royalty
Income Fund 6,487,120 7,151,419
660,650 Noranda Income Fund 6,489,499 7,465,345
821,541 SFK Pulp Fund 6,488,656 7,484,239
572,700 TimberWest Forest Corp. 6,488,844 7,685,634
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32,440,502 43,903,314 9.0%
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No. of
Units Utilities and Infrastructure
488,700 BFI Canada Income Fund 6,486,525 9,065,385
270,000 CCS Income Trust 6,485,513 8,073,000
431,000 Chemtrade Logistics Income
Fund 6,485,924 7,964,880
530,330 Consumers' Waterheater Income
Fund 6,486,741 7,233,701
704,666 Fort Chicago Energy
Partners L.P. 6,487,036 6,870,494
317,600 Gaz Metro 6,486,002 6,669,600
493,600 Heating Oil Partners Income
Fund 6,487,083 5,429,600
993,857 Inter Pipeline Fund 6,487,487 7,901,163
440,400 Livingston International
Income Fund 6,486,076 7,834,716
535,624 Pembina Pipeline Income Fund 6,488,020 6,266,801
792,700 TransForce Income Fund 6,494,591 8,553,233
1,119,868 Westshore Terminals Income
Fund 6,487,343 8,343,017
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77,848,341 90,205,590 18.5%
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Total $441,126,987 $489,019,698 100.0%
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The accompanying notes are an integral part of these financial
statements.
1. OPERATIONS Brompton Equal Weight Income Fund (the "Fund") is a closed-end investment Closed-End Investment When an investment company issues a fixed number of shares in an actively managed portfolio of securities. The shares are traded in the market just like common stock. Notes: Most mutual funds are open-end funds, not closed-end. trust created under the laws of the Province of Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. on May 26, 2003, pursuant to an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and restated declaration of trust. Computershare Founded in Australia in 1978, Computershare (ASX: CPU) has grown (largely through overseas acquisitions) to become the world's largest share registry business. The company now has a presence in:
Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and commenced operations on July 16, 2003 when it issued 40,000,000 units at $10.00 per unit through an initial public offering. An additional 2,000,000 units at $10.00 per unit were issued on July 25, 2003 through the exercise of the over-allotment option. Brompton Capital Advisors Inc. invested the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of the offering and will rebalance the portfolio on behalf of the Fund. 2. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and should be read in conjunction with the most recent audited financial statements at December December: see month. 31, 2003. The significant accounting policies used in preparing these unaudited interim financial statements are consistent with those used in preparing the audited annual financial statements. 3. UNITS OF THE FUND The Fund is authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: to issue an unlimited number of transferable, redeemable Redeemable Eligible for redemption under the terms of an indenture. units of beneficial interest, each of which represents an equal, undivided interest undivided interest n. title to real property held by two or more persons without specifying the interests of each party by percentage or description of a portion of the real estate. in the net assets of the Fund. Each unit entitles the holder to one vote and to participate equally with respect to any and all distributions made by the Fund. Units may be surrendered for redemption during July of any year commencing in 2004, but at least seven business days prior to the second last business day of July ("Redemption Date Redemption date The date on which a bond matures or is redeemed. redemption date The date on which a debt security is scheduled to be redeemed by the issuer. The redemption date is the scheduled maturity date or, if applicable, a call date. "). Redemption of surrendered units will be effected at net asset value on the Redemption Date of each year and will be settled on or before the tenth Tenth can mean: In mathematics:
The Fund received approval from the Toronto Stock Exchange to undertake a normal course issuer bid program for the period from September 2, 2003 through to September 1, 2004. Pursuant to the issuer bid, the Fund may purchase up to 4,190,000 of its units for cancellation when the net asset value per unit exceeds its trading price Trading price The price at which a security is currently selling. . During the three and six months ended June 30, 2004, 33,800 and 56,600 units were purchased for cancellation at an average price of $10.26 and $10.32 per unit respectively. The weighted average number of units outstanding for the six months ended June 30, 2004 was 41,919,554. 4. DISTRIBUTIONS PAYABLE TO UNITHOLDERS Distributions, as declared by the Manager, are made on a monthly basis to unitholders of record on the last business day of each month. The distributions are payable no later than the tenth business day of the following month. For the three and six months ended June 30, 2004, the Fund declared total distributions of $0.246 and $0.492 per unit, respectively. Pursuant to the Fund's distribution reinvestment plan, unitholders may elect to reinvest monthly distributions in additional units of the Fund. 5. MANAGEMENT AND SERVICE FEES Pursuant to a management agreement, the Manager provides management and administrative services to the Fund, for which it is paid a management fee equal to 0.45% per annum of the net asset value of the Fund plus applicable taxes. The Manager is responsible for paying fees to Brompton Capital Advisors Inc. The Fund also pays to the Manager a service fee equal to 0.30% per annum of the net asset value of the Fund. The service fee is in turn paid by the Manager to investment dealers based on the proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. number of units held by clients of such dealers at the end of each calendar quarter. 6. LOANS PAYABLE Pursuant to an agreement with a Canadian chartered bank Chartered Bank A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission , the Fund has a 364-day renewable revolving operating line of credit ("Revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to ") and a five-year non-revolving term credit facility ("Term Credit Facility"). The Revolver provides for maximum borrowings of $9.0 million at either the prime rate of interest or the bankers' acceptance A bankers' acceptance, or BA, is a time draft drawn on and accepted by a bank. Before acceptance, the draft is not an obligation of the bank; it is merely an order by the drawer to the bank to pay a specified sum of money on a specified date to a named person or to the rate plus a fixed percentage. At June 30, 2004, the Fund had $1.1 million outstanding under this facility. The Fund has borrowed the maximum amount of $44.1 million under the Term Credit Facility at a fixed rate of 5.06% until July 2008. The credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities are secured by a first priority security interest over all of the Fund's assets. Costs incurred to establish the credit facilities are deferred and amortized over the term of the facilities. For the three and six months ended June 30, 2004, the Fund has recorded amortization of these costs in the amount of $23,585 and $47,171, respectively. The credit facilities are used by the Fund for the purchase of additional investments and for general Fund purposes. |
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