Ncm Voting Communication

TML NCM Voting Communication

TML NCM Voting Communication

Subject Line: Fund Company Update
Hi ____,
Some of our client have received client documents within the last week from Franklin Templeton, NCM Investments, or from both. If you don’t hold assets with either fund company, you can disregard this communication. For those who have received the client documents, we want to explain what these documents are and what to do with them. When fund companies consolidate two of their funds into one, they are required by the regulators to have the action voted on by the fundholders. Below are the reasons why Franklin Templeton and NCM Investments are proposing mergers of their respective funds.
NCM Investments
NCM investments proposed merger is to consolidate their Entrepreneurs fund (small cap classification) with its Small Companies fund (small/mid cap classification). CEO and President of CH Financial, Jeremy Clark, held discussions with NCM Investments over the summer after raising concerns with the performance of the Entrepreneurs fund. The small cap fund was having liquidity issues in the current market conditions, leaving it difficult for the portfolio manager to sell or buy holdings of small cap classified companies. Combining the Entrepreneurs fund with Small Companies fund will allow the NCM Investment team to add more small cap companies when the market is bullish, or adding slightly larger companies when the market is bearish. The proposed merger should lower fees, significantly add to the pool of investment opportunities for the fund and reduce capacity (size of fund) issues. There will be no change in risk classification or investment style and it will retain the same portfolio manager (and team). We are advising clients to vote in favor of the merger as the added flexibility will increase liquidity for the portfolio manager and allow the NCM Investments team to reallocate resources to position the fund for different kinds of market conditions.
Franklin Templeton
Franklin Templeton is proposing to merge all their funds with a corporate class option into their regular fund version. Corporate class funds are structed as a company, whereas fund versions (most common mutual fund) are structured as a trust. In a trust, income is taxed to the individual through a T3 whereas a corporate class fund is taxed as a corporation which issues a T5. Franklin Templeton’s corporate class funds have trapped income, meaning that their expenses aren’t significant enough to shelter income. This has lead to a drag effect on Franklin Templeton’s corporate class returns. As part of the proposed merger, fundholders of the corporate class version will be provided with a one-time opportunity to move to the fund version without the tax consequences normally associated with the transaction. We are advising clients to vote in favor of Franklin Templeton merging their corporate class version into their fund version because we believe that industry-wide trends will cause trapped income to increase.
Within the package or packages you have received, there are instructions on how to vote. As fundholders (owners of the funds), we encourage you to vote. If you have any questions about either proposal or about the voting process, please contact us at CH and we’d be happy to discuss.
Kindest Regards,
Devin Gorgchuck, Wealth Advisor
& Your CH Financial Team
P: 403 237 6570 | F: 403 269 4269
450, 700 – 4 Ave SW Calgary AB T2P 3J4
www.chfinancial.ca

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