PenderFund Capital Management Ltd. Announces Conversion of Pender Value Fund II and Pender Special Situations Fund into Alternative Mutual Funds
Vancouver, B.C., August 30, 2022 – PenderFund Capital Management Ltd. (“Pender”), the Manager of the Pender Value Fund II (“PVFII”) and the Pender Special Situations Fund (“PSSF” and together with PVFII, the “Funds” and each a “Fund”) announces that effective as of September 1, 2022 (the “Effective Date”) each Fund will be converted from a conventional mutual fund to an alternative mutual fund as set out in National Instrument 81-102 – Investment Funds of the Canadian Securities Administrators (“NI 81-102”) and, in connection therewith, the fundamental investment objectives and fee structure of each Fund will be changed effective as of the Effective Date as follows:
PVFII
Current Fundamental Investment Objectives | New Fundamental Investment Objectives(effective as of the Effective Date) |
The Fund’s primary objective is to achieve capital growth over the long-term, while being sufficiently diversified to mitigate volatility. The Fund will invest primarily in Canadian and US Securities but may also invest in foreign securities. The Fund will focus on businesses that have the potential for growth over the long-term and have securities that trade at favourable prices.
| The objective of the Fund is to preserve capital and to generate returns through current income and capital appreciation, while being sufficiently diversified to mitigate volatility. The Fund will invest primarily in North American securities and may also invest in foreign securities.
The Fund falls within the definition of an “alternative mutual fund” as set out in NI 81-102, as it is permitted, as modified by exemptive relief received by the Fund, to use strategies generally prohibited by other types of mutual funds, such as the ability to invest more than 10% of its NAV in securities of a single issuer (up to 20%), either directly or through the use of specified derivatives, the ability to borrow cash, when aggregated with the value of all outstanding borrowing, up to 100% of its NAV, to use for investment purposes, the ability to sell securities short (provided that the aggregate market value of the securities of the issuer of the securities sold short, other than government securities, does not exceed 10% of its NAV and the aggregate market value of the securities sold short does not exceed 100% of its NAV), and the ability to use leverage through the use of cash borrowing, short selling and specified derivatives. The maximum aggregate exposure to these sources of leverage, as calculated in accordance with section 2.9.1 of NI 81-102, shall not exceed 300% of the Fund’s NAV. |
New Performance Based Fee (effective as of the Effective Date):The performance fees will apply to all classes of units. For Class O units, this fee is or will be charged directly to Unitholders, as applicable. Performance fees equal 15% of the amount by which the total return of the class of units exceeds a 3% hurdle rate, for the period since the performance fee was last paid, subject to accumulation in years where no performance fee is paid, provided that the total return of the relevant class of units for such period exceeds the previous high-water mark. | |
PSSF
Current Fundamental Investment Objectives | New Fundamental Investment Objectives(effective as of the Effective Date) |
The Fund’s objective is to achieve long-term capital appreciation by investing primarily in Canadian and US equity with the ability to also invest in debt and other securities. The Fund seeks to identify investment opportunities that are believed to represent special situations.
| The Fund’s objective is to achieve long-term capital appreciation by investing primarily in Canadian and US equities with the ability to also invest in debt and other securities. The Fund seeks to identify investment opportunities that are believed to represent special situations.
The Fund falls within the definition of an “alternative mutual fund” as set out in NI 81-102, as it is permitted, as modified by exemptive relief received by the Fund, to use strategies generally prohibited by other types of mutual funds, such as the ability to invest more than 10% of its NAV in securities of a single issuer (up to 20%), either directly or through the use of specified derivatives, the ability to borrow cash, when aggregated with the value of all outstanding borrowing, up to 100% of its NAV, to use for investment purposes, the ability to sell securities short (provided that the aggregate market value of the securities of the issuer of the securities sold short, other than government securities, does not exceed 10% of its NAV and the aggregate market value of the securities sold short does not exceed 100% of its NAV), and the ability to use leverage through the use of cash borrowing, short selling and specified derivatives. The maximum aggregate exposure to these sources of leverage, as calculated in accordance with section 2.9.1 of NI 81-102, shall not exceed 300% of the Fund’s NAV. |
New Performance Based Fee (effective as of the Effective Date):Performance fees will apply to all classes of units. For Class O units, this fee is or will be charged directly to Unitholders, as applicable. Performance fees will equal 15% of the amount by which the total return of the class of units exceeds a 6% hurdle rate, for the period since the performance fee was last paid, subject to accumulation in years where no performance fee is paid, provided that the total return of the relevant class of units for such period exceeds the previous high-water mark. | |
Furthermore, the following additional changes are expected to be made to the Funds effective as of the Effective Date:
- Name Change: The name of “Pender Value Fund II” will be changed to “Pender Alternative Multi-Strategy Income Fund”. The name of “Pender Special Situations Fund” will be changed to “Pender Alternative Special Situations Fund”.
- Change in Investment Strategies: Certain associated amendments will be made to each Fund’s investment strategies in order to implement the new investment objectives of such Fund.
- Risk Rating Change:
Fund | New Risk Rating | Prior Risk Rating |
PVFII | Low | High |
PSSF | Medium | Medium |
Additional information regarding the changes described above for the Funds, including changes in investment objectives and performance based fees, is provided in the applicable Fund’s management information circular dated June 23, 2022 and the simplified prospectus dated August 29, 2022, all of which are available on the SEDAR profile of such Fund at www.sedar.com.
The risk rating for each Fund is reviewed at a minimum on an annual basis, as well as when a Fund undergoes a material change. A summary of the methodology used by Pender to identify the risk rating of each Fund can be found in the Funds’ simplified prospectus available on SEDAR at www.sedar.com. This methodology is also available by calling toll-free 1-866-377-4743 or sending an email to info@penderfund.com.
About PenderFund Capital Management Ltd.
Pender was founded in 2003 and is an independent, employee-owned investment firm located in Vancouver, British Columbia. Our goal is to protect and grow wealth for our investors over time. We have a talented investment team of expert analysts, security selectors and independent thinkers who actively manage a suite of differentiated investment funds, exploiting inefficient parts of the investing universe to achieve our goal.
For more information on Pender and for standard performance information on our funds, please visit www.penderfund.com and www.fondspender.com.
Please read important disclosures at www.penderfund.com/disclaimer.
For further information, please contact:
Melanie Moore
Vice President of Marketing, PenderFund Capital Management Ltd.
mmoore@penderfund.com
(604) 688-1511
Toll Free: (866) 377-4743
Forward-Looking Information
This news release may contain forward-looking information (within the meaning of applicable securities laws) relating to the business and operations of Pender and the Funds (“forward-looking statements”). Forward-looking statements may be identified by words such as “believe”, “anticipate”, “project”, “expect”, “intend”, “plan”, “will”, “may”, “estimate” and other similar expressions. These statements are based on Pender’s expectations, estimates, forecasts and projections and include, without limitation, statements regarding the timing and implementation of the conversion of the Funds from conventional mutual funds to alternative mutual funds, including the timing and implementation of the new investment objectives of each Fund and the corresponding name changes, changes in investment strategies, changes in the fee structures and expected risk ratings of the Funds. The forward-looking statements in this news release are based on certain assumptions; they are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the heading “Risk Factors” in the simplified prospectus available on the SEDAR profile of each Fund at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate as actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, Pender assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
