Pender Growth Fund is a later stage, diversified, venture capital corporation, focused on under-valued public companies.

Pender Growth Fund Conversion Notice

August 10, 2010

This notice is to provide an update to the conversion notice sent to shareholders of Pender Growth Fund (VCC) Inc. (“the Fund”) via FundSERV on July 26, 2010. We are pleased to announce that Stages 1 and 2 of the conversion of the Fund are substantially complete.

STAGE 1: MFDA AND IIROC ACCOUNTS

In Stage 1 of the conversion, shares of the Fund held by clients of MFDA and IIROC dealers were converted to Class B Convertible Non-Participating Common Share (“Class B Shares”) on July 30, 2010 on a 1:1 basis. The new fund codes for Class B Shares are as follows:

PGF100, PGF101 and PGF104 to PGF111 (No load)

PGF102 to PGF112 (0.50% trailer)

PGF103 to PGF113 (1.00% trailer)

STAGE 2: FOR IIROC ACCOUNTS ONLY

For clients of IIROC dealers only, Stage 2 of the conversion was effected on August 3, 2010 to convert each Class B Share to Class RSenior Participating Redeemable Convertible Preference Share (“Class R Shares”) on a 1:1 basis. The new fund codes for Class R Shares are as follows:

PGF111 to PGF121 (No load)

PGF112 to PGF122 (0.50% trailer)

PGF113 to PGF123 (1.00% trailer)

 As part of Stage 2, clients of IIROC dealers will also receive one (1) Class C Common Share (“Class C Share”) for each Class B Share. As only whole shares can be traded on the TSX-V, any partial shares will be rounded to the nearest whole share.

The Class C Shares will be listed on the TSX-V under the ticker symbol “PTF” with CUSIP: 706719101 and ISIN: CA7067191014.

Share certificates will be issued and mailed to each IIROC dealer in nominee form later this week. A detailed listing of Class C shareholders for each dealer will be enclosed the mailing to ensure proper allocation to clients. We expect these shares to commence trading on the TSX-V the following week of August 16, 2010. An additional news release will be issued by the Fund at that time.

ADDITIONAL NOTES

1. Any rounding issues resulting from the conversion will be addressed via the month-end FundSERV reconciliation file (AA/AM File).

2. All trailing commissions will be calculated based on average assets and paid on a quarterly basis via FundSERV.

3. On July 26, 2010, Stage 1 of the conversion was processed at an incorrect ratio. This error was subsequently reversed on July 28, 2010.

4. The opening NAVs for the new fund codes were published on August 6, 2010:

Class B Shares - PGF111, PGF112 and PGF113: $5.21

Class R Shares - PGF121, PGF122 and PGF123: $4.16

5. The opening NAV for the Class C Shares is $1.05. The traded price for these shares will be determined once they commence trading on the TSX-V.

6. Class B Shares are not redeemable; however, they may be switched into Class R and Class C Shares at any time by delivering a switch request to the Fund. Each Class B Share is entitled to be switched into one (1) Class R Share and one (1) Class C Share.

7. Class R Shares are redeemable at a NAV of $4.16 (or lower value as described in the Fund’s Information Circular dated April 14, 2010). Redemptions for Class R Shares will be processed on an annual basis with requests being delivered to the Fund by November 30th of each year. Only units held for a period greater than five years will be eligible for redemption.

Class R Shares may also be converted to Class C Shares on a NAV-to-NAV basis as outlined in the information circular by delivering a conversion request to the Fund.

9. It is of the opinion of the Fund’s tax counsel, Legacy Tax + Trust Lawyers, that there are no tax implications anticipated for unitholders as a result of this conversion. However, each unitholder’s situation is unique and therefore, each unitholder should seek independent tax advice.

10. Please note that there have been no changes to the investment objectives of the Fund and the manager must continue to comply with the investment regulations set by the BC Small Business Venture Capital Act. 

11. The Fund’s information circular can be found on our website at www.penderfund.com or on SEDAR at www.sedar.com. 

To find out more about the new capital structure, click here.

To download this bulletin in full, click here.