$200,000,000 (maximum) (maximum 20,000,000 Equity Shares) $10.00 per Equity Share

Transcription

1 No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and only by persons permitted to sell these securities. The securities offered by this prospectus have not been, and will not be, registered under the United States Securities Act of 1933, as amended, and, subject to certain exceptions, may not be offered or sold within the United States of America. See Plan of Distribution. PROSPECTUS INITIAL PUBLIC OFFERING February 25, 2015 $200,000,000 (maximum) (maximum 20,000,000 Equity Shares) $10.00 per Equity Share U.S. Dividend Growers Income Corp. (the Fund ), a corporation which is incorporated under the laws of the Province of Ontario and is a non-redeemable investment fund for purposes of Canadian securities legislation, hereby offers its equity shares (the Equity Shares ) at a price of $10.00 per Equity Share (the Offering ). The Fund s investment objectives are to provide holders of Equity Shares ( Shareholders ) with: (i) stable monthly cash distributions and to grow distributions over time, and (ii) enhanced long-term total return through capital appreciation of the Fund s investment portfolio, through an investment strategy which focuses on investing in securities of issuers that have exhibited strong dividend growth and that are organized in the United States or that derive a significant portion of their revenue or earnings from the United States. See Investment Objectives. The Manager (as defined below) intends that on or about April 17, 2017, the Fund will, subject to applicable law, which may require Shareholder and/or regulatory approval, be merged on a tax-deferred basis with Middlefield U.S. Dividend Growth Class (the Open-End Fund ), an open-end mutual fund managed by the Manager. See Conversion of the Fund and Canadian Federal Income Tax Considerations. The Open-End Fund, as a mutual fund, is not permitted to use leverage, sell securities short and/or purchase derivatives (other than in limited circumstances) to pursue its investment objectives, but otherwise its investment objectives are substantially similar to those of the Fund and its investment strategy is similar to that of the Fund. The expenses associated with any such merger will be paid by the Manager and not the Fund. The Fund will be managed by Middlefield Limited (in such capacity, the Manager ). Middlefield Capital Corporation (the Advisor ) will provide investment management advice to the Fund. Sector & Sovereign Research, LLC, an investment research boutique based in Stamford, Connecticut, will act as an industry advisor to the Advisor and in such capacity will provide the Advisor with ongoing analysis regarding the healthcare and technology sectors. See Organization and Management Details of the Fund Manager of the Fund, Organization and Management Details of the Fund Advisor of the Fund and Organization and Management Details of the Fund Industry Advisor of the Fund. Prospective purchasers may purchase Equity Shares either by: (i) cash payment; or (ii) an exchange (the Exchange Option ) of freely tradeable securities of one or more of those issuers set forth in this prospectus under the heading Purchase of Securities Exchange Eligible Issuers (collectively, the Exchange Eligible Issuers ). The Exchange

2 Option does not constitute, and is not to be construed as, a take-over bid for any Exchange Eligible Issuer. See Purchase of Securities. Price: $10.00 per Equity Share Minimum Purchase: 100 Equity Shares Price to the Public (1) Agents Fees Net Proceeds to the Fund (2) Per Equity Share... $10.00 $0.525 $9.475 Total Maximum Offering (3)(4)... $200,000,000 $10,500,000 $189,500,000 Total Minimum Offering (3)(5)... $50,000,000 $2,625,000 $47,375,000 (1) The Offering price was established by negotiation between the Manager and the Agents (as defined below). The price per Equity Share is payable in cash or in securities of Exchange Eligible Issuers deposited pursuant to the Exchange Option. (2) Before deducting the expenses of the Offering, estimated to be $600,000 (and subject to a maximum of 1.5% of the gross proceeds of the Offering), which, together with the Agents fees, will be paid by the Fund from the proceeds of the Offering. (3) The Fund has granted to the Agents an option (the Over-Allotment Option ), exercisable for a period of 30 days from the closing of the Offering, to offer additional Equity Shares in an amount up to 15% of the aggregate number of Equity Shares sold on the closing of the Offering on the same terms as set forth above. This prospectus also qualifies the grant of the Over-Allotment Option and the distribution of the Equity Shares issuable on the exercise of the Over-Allotment Option. Any investors who acquire Equity Shares forming part of the Agents over-allocation position will acquire those Equity Shares under this prospectus, regardless of whether the over-allocation is ultimately filled through the exercise of the Over-Allotment Option or through secondary market purchases. See Plan of Distribution. (4) If the Over-Allotment Option is exercised in full, under the maximum Offering, the price to the public, the Agents fees and the net proceeds to the Fund will be $230,000,000, $12,075,000 and $217,925,000, respectively. (5) There will be no closing unless a minimum of 5,000,000 Equity Shares are sold. If subscriptions for a minimum of 5,000,000 Equity Shares have not been received within 90 days following the date of issuance of a final receipt for this prospectus, the Offering may not continue unless an amendment to this prospectus has been filed and a receipt therefor has been issued. There currently is no market through which the Equity Shares may be sold and purchasers may not be able to resell Equity Shares purchased under this prospectus. The Toronto Stock Exchange has conditionally approved the listing of the Equity Shares. Listing is subject to the Fund fulfilling all of the requirements of the Toronto Stock Exchange on or before May 26, There is no assurance that the Fund will be able to achieve its objectives or pay distributions equal to the Target Distribution Amount (as defined under Distribution Policy ) or at all. The Equity Shares may trade at a significant discount to the Fund s net asset value per Equity Share. See Distribution Policy and Risk Factors for a discussion of various risk factors that should be considered by prospective Shareholders, including with respect to the use of leverage. CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., TD Securities Inc., GMP Securities L.P., National Bank Financial Inc., Canaccord Genuity Corp., Raymond James Ltd., Dundee Securities Ltd., Mackie Research Capital Corporation, Manulife Securities Incorporated and Middlefield Capital Corporation (collectively, the Agents ) conditionally offer the Equity Shares, subject to prior sale, on a best efforts basis, if, as and when issued by the Fund and accepted by the Agents in accordance with the conditions contained in the Agency Agreement referred to under Plan of Distribution, and subject to the approval of certain legal matters by Fasken Martineau DuMoulin LLP on behalf of the Fund and McCarthy Tétrault LLP on behalf of the Agents. In connection with this Offering and in accordance with and subject to applicable laws, the Agents are permitted to engage in transactions that stabilize or maintain the market price of the Equity Shares at levels other than those which might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time. Closing of the Offering is expected to occur on or about March 20, 2015 and in any event no later than 90 days after the issuance of a receipt for the final prospectus. See Plan of Distribution. Middlefield Capital Corporation, which is one of the Agents and the Advisor, is an affiliate of Middlefield Limited, the Manager and promoter of the Fund. Consequently, the Fund may be considered a related issuer and/or a connected issuer of Middlefield Capital Corporation under applicable securities legislation. Middlefield Capital Corporation will receive no benefit in connection with this Offering other than receiving from the Manager the advisory fee payable to the Advisor and a portion of the Agents fees described under Fees and Expenses and brokerage commissions or other fees in connection with Portfolio transactions as described under Organization and Management Details of the Fund - Conflicts of Interest. In addition, affiliates of one of the Agents (other than Middlefield Capital Corporation) have been requested to provide the Fund with a loan facility or prime brokerage facility, the proceeds of which would be used by ii

3 the Fund for various purposes, including purchasing additional securities for the Portfolio, effecting market purchases of Equity Shares and maintaining liquidity. Accordingly, if any such affiliate provides such financing, the Fund may be considered to be a connected issuer of such Agent. See Relationship Between Investment Fund and Agents and Plan of Distribution. iii

4 TABLE OF CONTENTS PROSPECTUS SUMMARY... 1 The Offering... 1 Other Features of the Fund... 2 Risk Factors... 6 Organization and Management of the Fund... 7 Summary of Fees and Expenses... 8 Fees and Expenses Payable by the Fund... 8 Fees and Expenses Payable by Shareholders... 8 Caution Regarding Forward-Looking Information OVERVIEW OF THE STRUCTURE OF THE FUND INVESTMENT OBJECTIVES INVESTMENT STRATEGY Initial Portfolio Composition Leverage Short Selling Currency Hedging Use of Derivative Instruments Securities Lending OVERVIEW OF THE SECTOR IN WHICH THE FUND INVESTS INVESTMENT RESTRICTIONS FEES AND EXPENSES Fees and Expenses Payable by the Fund Fees and Expenses Payable by Shareholders RISK FACTORS Risks Related to Investment Objectives and Strategy 23 Risks Related to Portfolio Securities Risks Related to the Structure of the Fund DISTRIBUTION POLICY Distribution Reinvestment Plan CONVERSION OF THE FUND Middlefield U.S. Dividend Growth Class Redemption of Securities following the Conversion.. 37 PURCHASE OF SECURITIES Method to Purchase Equity Shares Procedure Determination of Exchange Ratio Delivery of Final Prospectus Withdrawal of Exchange Option Elections Maximum Offering Exchange Eligible Issuers REDEMPTIONS OF SECURITIES Suspension of Redemptions Redemption at the Option of the Fund CANADIAN FEDERAL INCOME TAX CONSIDERATIONS Status of the Fund Taxation of the Fund Tax Treatment of Shareholders Taxation of Registered Plans Tax Implications of the Fund s Distribution Policy ORGANIZATION AND MANAGEMENT DETAILS OF THE FUND Officers and Directors of the Fund Manager of the Fund Duties and Services to be Provided by the Manager.. 51 Details of the Management Agreement Officers and Directors of the Manager of the Fund Advisor of the Fund Industry Advisor of the Fund Details of the Advisory Agreement Details of the Industry Advisor Agreement Conflicts of Interest Independent Review Committee Custodian Auditor Registrar and Transfer Agent; Exchange Agent Valuation Agent Promoter CALCULATION OF NET ASSET VALUE Valuation Policies and Procedures Reporting of Net Asset Value ATTRIBUTES OF SECURITIES Description of the Securities Distributed Market Purchases Book-Entry Only System SECURITYHOLDER MATTERS Meetings of Securityholders Matters Requiring Securityholder Approval Potential Fund Mergers Information and Reports to Shareholders TERMINATION OF THE FUND USE OF PROCEEDS PLAN OF DISTRIBUTION RELATIONSHIP BETWEEN INVESTMENT FUND AND AGENTS PRINCIPAL SHAREHOLDER INTEREST OF MANAGER AND OTHERS IN MATERIAL TRANSACTIONS PROXY VOTING POLICY MATERIAL CONTRACTS EXPERTS PURCHASERS STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION INDEPENDENT AUDITOR S REPORT... F-1 Management s Responsibility for the Financial Statement... F-1 Auditor s Responsibility... F-1 Opinion... F-1 STATEMENT OF FINANCIAL POSITION... F-2 NOTES TO STATEMENT OF FINANCIAL POSITION FEBRUARY 25, F-3 CERTIFICATE OF THE FUND, THE MANAGER AND THE PROMOTER... C-1 CERTIFICATE OF THE AGENTS... C-2

5 PROSPECTUS SUMMARY The following is a summary of the principal features of this distribution and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. All references in this prospectus to dollars or $ are to Canadian dollars unless otherwise indicated. The Offering Issuer: Offering: Amounts: Price: U.S. Dividend Growers Income Corp. (the Fund ) is a corporation incorporated under the laws of the Province of Ontario and is a non-redeemable investment fund. This offering (the Offering ) consists of equity shares of the Fund ( Equity Shares ). Maximum $200,000,000 (20,000,000 Equity Shares) Minimum $50,000,000 (5,000,000 Equity Shares) $10.00 per Equity Share Minimum Subscription: 100 Equity Shares ($1,000) Exchange Option: Investment Objectives: Conversion of the Fund: At the election of a prospective purchaser of Equity Shares, the price for each Equity Share purchased may be paid either by (a) cash or (b) an exchange (the Exchange Option ) of freely tradeable securities of one or more of those issuers set forth in this prospectus under the heading Purchase of Securities Exchange Eligible Issuers (collectively, the Exchange Eligible Issuers ). A prospective purchaser of Equity Shares who elects to pay for Equity Shares by using the Exchange Option must have done so by depositing (in the form of a book-entry deposit) securities of one or more Exchange Eligible Issuers with MFL Management Limited, the Fund s agent for the Exchange Option, through CDS Clearing and Depository Services Inc. ( CDS ) prior to 5:00 p.m. (Toronto time) on February 19, Such book-entry deposits must have been made by a participant in CDS, which may have an earlier deadline for receiving instructions from their clients to deposit securities of Exchange Eligible Issuers under the Exchange Option. See Purchase of Securities. The purchase of Equity Shares by the exchange of securities of an Exchange Eligible Issuer pursuant to the Exchange Option will be a taxable event for the purchaser. See Canadian Federal Income Tax Considerations. The Fund s investment objectives are to provide holders of Equity Shares ( Shareholders ) with: (i) stable monthly cash distributions and to grow distributions over time, and (ii) enhanced long-term total return through capital appreciation of the Fund s investment portfolio (the Portfolio ), through an investment strategy which focuses on investing in securities of issuers that have exhibited strong dividend growth and that are organized in the United States or that derive a significant portion of their revenue or earnings from the United States (collectively, U.S. Dividend Growers ). See Investment Objectives. On or about April 17, 2017, the Fund will, subject to applicable law, which may require Shareholder and/or regulatory approval, either (i) be merged on a tax-deferred basis into Middlefield U.S. Dividend Growth Class, an open-end mutual fund managed by Middlefield Limited (the Manager ), or another open-end mutual fund managed by the Manager or an affiliate which the Manager determines has substantially similar - 1 -

6 Investment Strategy: investment objectives and a similar investment strategy to the Fund (any such open-end mutual fund being the Open-End Fund ), or (ii) convert to an open-end mutual fund (the Converted Fund ) to be managed by the Manager or an affiliate of the Manager (any such transaction being the Conversion ). It is the Manager s current intention to effect a tax-deferred Conversion by way of merger into Middlefield U.S. Dividend Growth Class. The Open-End Fund or the Converted Fund, as applicable, unlike the Fund, will not be permitted to use leverage, sell securities short and/or purchase derivatives (other than in limited circumstances) to pursue its investment objectives (which could impact distributions paid to shareholders following the Conversion, as described under Risk Factors - Risks Related to the Structure of the Fund - Use of Leverage by the Fund ), but otherwise its investment objectives and investment strategy will be similar to those of the Fund. The expenses associated with the Conversion will be paid by the Manager and not the Fund. See Conversion of the Fund and Canadian Federal Income Tax Considerations. The Fund has been designed to provide investors with a diversified investment focusing on U.S. Dividend Growers, including investments in issuers operating in sectors the Advisor (as defined below) believes are undervalued and generally underrepresented in the S&P/TSX Composite Index. The Fund initially intends to focus on attractive issuers operating in the healthcare and technology sectors. The Advisor believes there are several positive fundamentals underpinning the current accelerating growth in the U.S. economy (as described under the heading Overview of the Sector in which the Fund Invests ), which will benefit issuers in each of the aforementioned sectors. The Portfolio will be comprised of securities which, in the view of the Advisor, are of high quality, have a history of dividend growth and generate sufficient dividends, or are undervalued and/or may be taken over at a premium to their respective market prices. Sector & Sovereign Research, LLC, an investment research boutique based in Stamford, Connecticut, will act as an industry advisor (the Industry Advisor ) to the Advisor and in such capacity will provide the Advisor with ongoing analysis regarding the healthcare and technology sectors. Dr. Richard Evans, a co-founder of the Industry Advisor, will be the individual primarily responsible for providing analysis on behalf of the Industry Advisor with respect to the healthcare sector. Dr. Evans has over 20 years of industry experience and leads the healthcare division of the Industry Advisor. Paul Sagawa will be the individual primarily responsible for providing analysis on behalf of the Industry Advisor with respect to the technology sector. Mr. Sagawa has over 20 years of technology industry experience. See Investment Strategy and Risk Factors. Other Features of the Fund Leverage: Prior to the Conversion, the Fund may borrow an amount from 0% up to 25% of the value of the total assets of the Fund, including leverage obtained through short selling and net notional exposure under derivatives, which borrowing may be used for various purposes including purchasing additional securities for the Portfolio, effecting market purchases of Equity Shares and maintaining liquidity. The Fund initially intends to borrow approximately 23.5% of the value of the total assets of the Fund for the purpose of purchasing additional securities for the Portfolio. The Fund will monitor its use of leverage and, based on factors such as changes in interest rates, the Advisor s economic outlook and the composition of the Portfolio, the Fund may from time to time alter the amount of leverage it employs. The maximum amount of leverage that the Fund could employ through a loan facility, prime brokerage facility or short sales is 1.33 to 1 (maximum total assets divided by the net asset value of the Fund ( NAV, as calculated in the manner described under the heading Calculation of Net Asset Value )). For greater certainty, short selling and derivatives used by the Fund solely for hedging purposes will not be included in leverage. Following the Conversion, the Open-End Fund or the Converted Fund, as applicable, will not be permitted to use leverage to pursue its - 2 -

7 Currency Hedging: Distribution Policy: investment objectives. See Investment Strategy Leverage and Risk Factors - Risks Related to the Structure of the Fund - Use of Leverage by the Fund. The Portfolio will include securities which are denominated in currencies other than the Canadian dollar (any such currencies being foreign currencies ) and, accordingly, the Fund will be exposed to foreign currency risk. The Fund will generally seek, and initially intends, to hedge the majority of its exposure to foreign currencies back to the Canadian dollar. The decisions as to whether the Fund s exposure to foreign currencies will be hedged back to the Canadian dollar, and the amount of such exposure to be hedged, will depend on such factors as exchange rates, the Advisor s outlook for the economy both in the U.S. and globally and a comparison of the costs associated with such hedging transactions against the benefits expected to be obtained therefrom. The Fund intends to provide Shareholders with monthly cash distributions. Such distributions will be payable to Shareholders of record on the last day of each month or such other date as the Fund may set from time to time and will be paid on or before the last business day of the first month following each such month. The Fund will not have a fixed monthly distribution amount, but will at least annually determine and announce (commencing in March 2016) a target monthly distribution amount (the Target Distribution Amount ) based upon prevailing market conditions and the estimate by the Manager of distributable cash flow for the period to which such Target Distribution Amount pertains. The initial Target Distribution Amount for the period ending March 31, 2016 is $ per Equity Share (corresponding to an annualized distribution of $0.50 per Equity Share per annum and representing an annualized yield of 5.0% per annum based on the original subscription price). The initial distribution is expected to be declared payable to Shareholders of record on April 30, 2015 and to be paid on or before the last business day of the following month. Assuming (i) the gross proceeds of the Offering are $100 million, (ii) the fees and expenses of the Offering are as described herein, (iii) leverage of 23.5% of the total assets of the Fund is employed, which is the Fund s initial intention, and (iv) no change in exchange rates between the Canadian dollar and foreign currencies, the Portfolio is expected to generate dividend and distribution income (net of applicable withholding tax) of approximately 4.35% per annum. The Portfolio would be required to generate an additional return of approximately 1.27% per annum (net of applicable withholding tax), including from dividend growth and realized capital appreciation, in order for the Fund to maintain its initially targeted distribution level and a stable NAV per Equity Share. If the return on the Portfolio (including net realized capital gains from the sale of Portfolio securities) is less than the amount necessary to fund the monthly distributions at the Target Distribution Amount and all expenses of the Fund, and if the Fund pays the monthly distributions at such amount, this will result in a portion of the capital of the Fund being returned to Shareholders and, accordingly, the NAV per Equity Share would be reduced. See Distribution Policy and Risk Factors. Following the Conversion, Shareholders will receive distributions in accordance with the distribution policy of the Open-End Fund or the Converted Fund, as applicable. Following the Conversion, the Fund will no longer be permitted to use leverage to pursue its investment objectives and, accordingly, the distributions payable after the Conversion will be based on the yield of the Portfolio or the portfolio of the Open-End Fund or the Converted Fund, as applicable, at that time and, to a lesser extent, may also consist of net realized capital gains from the sale of assets of the Portfolio or the portfolio of the Open- End Fund or the Converted Fund, as applicable, and/or a return of capital. This may affect the amount of monthly distributions following the Conversion. See Distribution Policy and Risk Factors

8 Distribution Reinvestment: Redemptions: Termination: Agents: Over-Allotment Option: The Fund intends to provide Shareholders with the opportunity to elect to reinvest monthly cash distributions made by the Fund in additional Equity Shares and to purchase additional Equity Shares for cash through participation in the distribution reinvestment plan of the Fund described under Distribution Policy Distribution Reinvestment Plan. Subject to the Fund s right to suspend redemptions, an Equity Share may be surrendered for redemption at least 20 business days prior to the second last business day of any month in order to be redeemed on such date (a Valuation Date ) by giving notice thereof to MFL Management Limited (the registrar and transfer agent) through the Shareholder s participant in CDS. Each Equity Share properly surrendered for redemption on the June Valuation Date in 2016 (the NAV Valuation Date ) will be redeemed at an amount, if any, equal to the Redemption Price per Equity Share (as defined under Redemptions of Securities ) as of the NAV Valuation Date. Each Equity Share properly surrendered for redemption on any Valuation Date other than the NAV Valuation Date will be redeemed at an amount, if any, equal to the Monthly Redemption Price per Equity Share (as defined under Redemptions of Securities ) as of the relevant Valuation Date. A Shareholder who properly surrenders an Equity Share for redemption will receive payment on or before the 15 th business day following the applicable Valuation Date. Following the Conversion, securities of the Open-End Fund or the Converted Fund, as applicable, will be redeemable each business day at an amount per security equal to the net asset value per security of such fund. See Redemptions of Securities. The Fund does not have a fixed termination date. The Manager may, in its discretion and subject to applicable laws, cause the Fund to be terminated prior to the Conversion without the approval of Shareholders if, in its opinion, it is no longer economically practical to continue the Fund or it would be in the best interests of Shareholders to terminate the Fund. The Fund also may be terminated pursuant to a merger, combination or other consolidation as described under Securityholder Matters Potential Fund Mergers, in addition to the termination of the Fund pursuant to a merger into the Open- End Fund. Any such merger, combination or other consolidation pursuant to which the Fund is terminated will be with an entity that is a reporting issuer and, if such entity is a mutual fund, it will be a mutual fund subject to National Instrument Investment Funds. Upon termination, the Fund will distribute to Shareholders their pro rata portions of the remaining assets of the Fund after all liabilities of the Fund have been satisfied or appropriately provided for. In the case of termination pursuant to a merger, combination or other consolidation, including a merger into the Open-End Fund, such distribution may be made in the securities of the resulting or continuing investment fund. See Termination of the Fund. CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., TD Securities Inc., GMP Securities L.P., National Bank Financial Inc., Canaccord Genuity Corp., Raymond James Ltd., Dundee Securities Ltd., Mackie Research Capital Corporation, Manulife Securities Incorporated and Middlefield Capital Corporation (collectively, the Agents ). See Plan of Distribution. The Fund has granted to the Agents an option (the Over-Allotment Option ), exercisable for a period of 30 days from the closing of the Offering, to offer additional Equity Shares in an amount up to 15% of the aggregate number of Equity Shares sold on the closing of the Offering on the following terms: - 4 -

9 Agents Position Over-Allotment Option (representing all securities under option to the Agents) See Plan of Distribution. Maximum Number of Equity Shares Available Exercise Period Exercise Price Up to 15% of the number of Equity Shares sold under the Offering Up to 30 days after the closing of the Offering $10.00 per Equity Share Use of Proceeds: Taxation of the Fund: Taxation of Shareholders: The net proceeds from the sale of Equity Shares (prior to the exercise of the Over- Allotment Option) will be as follows: Maximum Offering Minimum Offering Gross proceeds to the Fund... $200,000,000 $50,000,000 Agents fees... $10,500,000 $2,625,000 Estimated expenses of issue (1)... $600,000 $600,000 Net proceeds to the Fund... $188,900,000 $46,775,000 Note: (1) Subject to a maximum of 1.5% of the gross proceeds of the Offering. The Fund will use the net cash proceeds of this Offering (including any net cash proceeds from the exercise of the Over-Allotment Option) to: (i) invest primarily in securities of U.S. Dividend Growers in accordance with the Fund s investment objectives, strategy and restrictions as described herein as soon as practicable after the closing of this Offering; and (ii) fund the ongoing fees and expenses of the Fund as described under Fees and Expenses. To the extent that securities of Exchange Eligible Issuers are acquired pursuant to the Exchange Option, the Fund will consider such securities in light of the Fund s investment objectives, strategy and restrictions and also in light of the Advisor s outlook for the issuers of such securities and the sectors in which such issuers operate. In the event the Fund determines to sell any such securities based on the foregoing considerations, the timing and manner of any such sales will be made having regard to maximizing value for the Fund. The Fund will ensure that the holdings of such securities comply with the investment restrictions of the Fund set out under Investment Restrictions. See Use of Proceeds. The Fund intends to qualify as a mutual fund corporation under the Income Tax Act (Canada) (the Tax Act ). As a mutual fund corporation, the Fund will be entitled to capital gains refunds in respect of: (i) capital gains dividends paid by it; and (ii) redemptions of its Equity Shares. As a result thereof and of the deduction of expenses and the receipt by the Fund of taxable dividends on shares of taxable Canadian corporations, the Fund does not expect to be subject to any significant net income tax liability under the Tax Act. Distributions: Dividends other than capital gains dividends ( Ordinary Dividends ) received by individuals on the Equity Shares will be subject to the gross-up and dividend tax credit rules for dividends received from taxable Canadian corporations. An enhanced dividend tax credit is available for Ordinary Dividends received from the Fund which are designated by the Fund as eligible dividends under the Tax Act. Ordinary Dividends received by corporations (other than specified financial institutions) on the Equity Shares will generally be deductible in computing taxable income. Ordinary Dividends received by private corporations (and certain other corporations) on the Equity Shares will be subject to a refundable tax under Part IV of the Tax Act. The amount of any capital gains dividend received by a Shareholder from the Fund will be - 5 -

10 Eligibility for Investment: considered to be a capital gain of the Shareholder from the disposition of capital property in the taxation year of the Shareholder in which the capital gains dividend is received. Dispositions: A disposition, whether by way of redemption or otherwise, of an Equity Share held as capital property will result in a capital gain (or capital loss) to the holder thereof in the taxation year of the Shareholder in which the disposition occurs to the extent that the proceeds of disposition of the Equity Share net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such Equity Share to the Shareholder. Exchange Option: A purchaser who holds securities of Exchange Eligible Issuers as capital property and acquires Equity Shares pursuant to the Exchange Option generally will realize a capital gain (or a capital loss) in the taxation year of the Shareholder in which the disposition of the securities of the Exchange Eligible Issuer occurs to the extent that the proceeds of disposition of the securities of Exchange Eligible Issuers, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such securities to the Shareholder. For this purpose, the proceeds of disposition of the securities will be equal to the sum of the aggregate of the fair market value of the Equity Shares received, the amount of any cash received in lieu of fractional Shares on the exchange and the pro rata portion, represented by the number of Equity Shares purchased, of a cash pool of funds which has been set aside by the Fund totaling $1,000. Each investor should satisfy himself or herself as to the federal, provincial and territorial tax consequences of an investment in Equity Shares by obtaining advice from his or her tax advisor. For a detailed explanation of certain Canadian federal income tax considerations, see Canadian Federal Income Tax Considerations. Provided that the Fund qualifies as a public corporation within the meaning of the Tax Act or the Equity Shares are listed on a designated stock exchange for purposes of the Tax Act, the Equity Shares will be qualified investments under the Tax Act for trusts governed by registered retirement savings plans, tax-free savings accounts, deferred profit sharing plans, registered disability savings plans, registered retirement income funds and registered education savings plans. See Canadian Federal Income Tax Considerations Status of the Fund and Canadian Federal Income Tax Considerations Taxation of Registered Plans. Risk Factors An investment in Equity Shares is subject to various risk factors, including but not limited to: (i) (ii) (iii) (iv) (v) there being no assurance that the Fund will be able to achieve its objectives, including being able to pay distributions to Shareholders in an amount equal to the Target Distribution Amount or at all, or to provide long-term total return; there being no assurance that the Fund s performance will be similar to the historical or future performance of Middlefield U.S. Dividend Growth Class; concentration risk as a result of the Fund investing primarily in the securities of U.S. Dividend Growers; the general risks of investing in equity securities, such as general economic conditions and industry specific conditions; the NAV and the market price of Equity Shares will vary depending on a number of factors which are not within the control of the Fund, including performance of the Portfolio, which performance will be affected by various factors impacting the performance of the securities in which the Fund invests including performance of equity markets generally, and the U.S. in particular, and interest rate fluctuations; - 6 -

11 (vi) (vii) there are no assurances that the Conversion will be implemented as described in this prospectus or at all and, in such circumstances, an alternative transaction (including the termination of the Fund) may not be available on a tax-deferred basis; and risks relating to foreign currency exposure. The foregoing provides only a summary of certain of the risks that may be involved in an investment in Equity Shares. For further information regarding these risks and other risks that may be involved in an investment in Equity Shares, see Risk Factors. You should carefully consider the risk factors set out above and under Risk Factors and whether your financial condition and/or retirement savings objectives permit you to invest in the Fund. An investment in Equity Shares is only appropriate for investors who have the capacity to absorb investment losses. Organization and Management of the Fund Management of the Fund Services Provided to the Fund Municipality of Residence Manager: Advisor: Industry Advisor Promoter: Custodian: Registrar and Transfer Agent; Exchange Agent: Auditor: Valuation Agent: Middlefield Limited is the manager of the Fund. See Organization and Management Details of the Fund Manager of the Fund. The advisor to the Fund is Middlefield Capital Corporation. See Organization and Management Details of the Fund Advisor of the Fund Sector & Sovereign Research, LLC is an industry advisor to the Advisor. See Organization and Management Details of the Fund - Industry Advisor of the Fund. Middlefield Limited is the promoter of the Fund. See Organization and Management Details of the Fund Promoter. RBC Investor Services Trust is the custodian of the assets of the Fund. See Organization and Management Details of the Fund Custodian. MFL Management Limited is the registrar and transfer agent for the Equity Shares and the exchange agent for the Exchange Option. See Organization and Management Details of the Fund Registrar and Transfer Agent; Exchange Agent. Deloitte LLP is the auditor of the Fund. See Organization and Management Details of the Fund Auditor. RBC Investor Services Trust is the Fund s valuation agent and will calculate the net asset value of the Fund. See Calculation of Net Asset Value. Middlefield Limited is located at 812 Memorial Drive N.W., Calgary, Alberta, T2N 3C8 Calgary, Alberta Stamford, Connecticut Calgary, Alberta Calgary, Alberta Toronto, Ontario Toronto, Ontario Calgary, Alberta - 7 -

12 Summary of Fees and Expenses The following table contains a summary of the fees and expenses payable by the Fund and Shareholders. Shareholders may have to pay some of these fees and expenses directly, as set out below under Fees and Expenses Payable by Shareholders. The fees and expenses payable by the Fund will reduce the value of your investment in the Fund. For further particulars see Fees and Expenses. Fees and Expenses Payable by the Fund Type of Fee Description Fees payable to the Agents: $0.525 per Equity Share (5.25%). Expenses of Offering: Management Fee: Industry Advisor Fee Operating expenses of the Fund: In addition to the Agents fees, the Fund will pay the expenses incurred in connection with the Offering, estimated to be $600,000 (and subject to a maximum of 1.5% of the gross proceeds of the Offering). Annual management fee of 1.25% of the Fund s NAV calculated and payable monthly, based on the average NAV for that month, plus applicable taxes, provided that the management fee payable to the Manager shall not be paid in respect of the NAV attributable to any assets invested in the securities of any investment funds (including mutual funds) managed by the Manager or an affiliate of the Manager. The management fee will be paid in cash. The Manager, and not the Fund, will pay an advisory fee to the Advisor pursuant to the advisory agreement among the Fund, the Manager and the Advisor to be entered into at or prior to completion of the Offering. In the event the Conversion is effected pursuant to a merger of the Fund into Middlefield U.S. Dividend Growth Class, the management fee payable following the Conversion will be that of Middlefield U.S. Dividend Growth Class in respect of its Series A Shares, which is currently 2.0% per annum of the net asset value of its Series A Shares. The governing documents of Middlefield U.S. Dividend Growth Class provide that investors who participate in fee-based programs through their broker or dealer may switch Series A Shares into Series F Shares, in respect of which a lower management fee of 1.0% per annum of the net asset value of the Series F Shares is payable. See Fees and Expenses Fees and Expenses Payable by the Fund Management Fee. The Fund will pay to the Industry Advisor a research fee of US$50,000 per annum, as well as a per diem fee of up to US$3,000 for in-person consultations. The Fund will pay all expenses incurred in connection with its operation and administration, estimated to be $200,000 per annum. The Fund also will be responsible for commissions and other costs of Portfolio transactions, debt service and costs relating to any loan facility or prime brokerage facility entered into by the Fund and all liabilities and any extraordinary expenses which it may incur from time to time. See Fees and Expenses Fees Payable by the Fund Operating Expenses of the Fund. Fees and Expenses Payable by Shareholders Redemption Expenses: In connection with the redemption of Equity Shares, any costs associated with the redemption, or, if the Manager determines that it is not practicable or necessary for the Fund to sell Portfolio securities to fund such redemption then the aggregate of all brokerage fees, commissions and other transaction costs that the Manager estimates would have resulted from such a sale, will be - 8 -

13 deducted from the applicable redemption price payable to the Shareholder exercising the redemption privilege. The amount of any such redemption costs will depend on the circumstances at the time of the redemption, including the NAV, the number of Equity Shares surrendered for redemption, the available cash of the Fund, the interest rate under any loan facility or prime brokerage facility entered into by the Fund, the current market price of the securities of each issuer included in the Portfolio at the time of the redemption and the actual or estimated brokerage fees, commissions and other transaction costs as set out above. As a result of the foregoing variables, the amount of redemption costs payable by a Shareholder upon the redemption of Equity Shares may vary from time to time. See Fees and Expenses Fees and Expenses Payable by Shareholders, Risk Factors Risks Related to the Structure of the Fund Risks Related to Redemption and Redemptions of Securities

14 Caution Regarding Forward-Looking Information Certain statements and information set forth in this prospectus including under the heading Overview of the Sector in which the Fund Invests, and statements with respect to benefits of the Fund s investment strategy and the expected initial Portfolio composition, constitute forward-looking information, which involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. When used in this prospectus, the words expects, anticipates, intends, plans, may, believes, seeks, estimates, appears and similar expressions (including negative and grammatical variations) generally identify forward-looking information. In developing the forward-looking information contained herein related to the Fund, the Fund has made assumptions with respect to, among other things, the outlook for the U.S. and global economies, including the payment of dividends by U.S. Dividend Growers and any increases to the rate of such payments. These assumptions are based on the Fund s perception of historical trends, current conditions and expected future developments, as well as other factors believed to be relevant. Although the Fund believes that the assumptions made and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information contained herein will prove to be accurate. Factors which could cause actual results, events, circumstances, expectations or performance to differ materially from those expressed or implied in forward looking information include, but are not limited to: general economic, political, tax, market and business factors and conditions; interest rate and foreign exchange rate fluctuations; global equity and capital markets; statutory and regulatory developments; unexpected judicial or regulatory proceedings; catastrophic events; and other factors set out under the heading Risk Factors. Readers are cautioned that the foregoing list of factors is not exhaustive and readers should not place undue reliance on forward-looking information due to the inherent uncertainty of such information. All forward-looking information in this prospectus is qualified by the foregoing caution. The Fund undertakes no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law

15 OVERVIEW OF THE STRUCTURE OF THE FUND U.S. Dividend Growers Income Corp. ( the Fund ) is a corporation incorporated under the laws of the Province of Ontario and is a non-redeemable investment fund. The Fund hereby offers its equity shares (the Equity Shares ) at a price of $10.00 per Equity Share (the Offering ). The manager of the Fund is Middlefield Limited (in such capacity, the Manager ). The investment advisor to the Fund is Middlefield Capital Corporation (the Advisor ). Sector & Sovereign Research, LLC, an investment research boutique based in Stamford, Connecticut, will act as an industry advisor (the Industry Advisor ) to the Advisor and in such capacity will provide the Advisor with ongoing analysis regarding the healthcare and technology sectors. The Manager (or any replacement thereof) will at all times be a resident of Canada for the purposes of the Income Tax Act (Canada) (the Tax Act ) and will manage the affairs of the Fund from a place or places within Canada. The registered address of the Fund is 1 First Canadian Place, 100 King St. West, 58 th Floor, Toronto, Ontario M5X 1A6. Prior to the Conversion (as defined under Conversion of the Fund ), the Fund will be considered to be a non-redeemable investment fund under the securities legislation of the provinces and territories of Canada and consequently will be subject to the various policies and regulations that apply to non-redeemable investment funds pursuant to National Instrument Investment Funds, as it may be amended from time to time ( NI ). NI also governs mutual funds, albeit in some respects different from non-redeemable investment funds. Prior to the Conversion, the Fund will differ from a mutual fund in a number of respects, most notably as follows: (i) the Equity Shares will be redeemable only on the second last business day of every month at an amount that is calculated with reference to either the net asset value ( NAV, as calculated in the manner described under the heading Calculation of Net Asset Value ) of the Equity Shares in the case of a redemption on the second last business day of June 2016 or to the market price of the Equity Shares in the case of a redemption on the second last business day of any other month (see Redemptions of Securities ), whereas the securities of most mutual funds are redeemable daily at the net asset value of the securities; (ii) the Equity Shares are to have a stock exchange listing whereas the securities of most mutual funds do not; (iii) unlike most mutual funds, the Equity Shares will not be offered on a continuous basis; and (iv) the Fund intends to use leverage and may sell securities short and/or purchase derivatives, which practices are not permitted for mutual funds under section 2.6(a), 2.6(c), 2.7 and 2.8, respectively, of NI , other than in limited circumstances. Following the Conversion, the Open-End Fund (as defined below) or the Converted Fund (as defined below), as the case may be, will be subject to NI as a mutual fund. INVESTMENT OBJECTIVES The Fund s investment objectives are to provide holders of Equity Shares ( Shareholders ) with: (i) stable monthly cash distributions and to grow distributions over time, and (ii) enhanced long-term total return through capital appreciation of the Fund s investment portfolio (the Portfolio ), through an investment strategy which focuses on investing in securities of issuers that have exhibited strong dividend growth and that are organized in the United States or that derive a significant portion of their revenue or earnings from the United States (collectively, U.S. Dividend Growers ). See Investment Objectives. INVESTMENT STRATEGY The Fund has been designed to provide investors with a diversified investment focusing on U.S. Dividend Growers, including investments in issuers operating in sectors the Advisor believes are undervalued and generally underrepresented in the S&P/TSX Composite Index. The Fund initially intends to focus on attractive issuers operating in the healthcare and technology sectors. The Advisor believes there are several positive fundamentals underpinning the current accelerating growth in the U.S. economy (as described under the heading Overview of the Sector in which the Fund Invests ), which will benefit issuers in each of the aforementioned sectors

16 The Portfolio will be comprised of securities which, in the view of the Advisor, are of high quality, have a history of dividend growth and generate sufficient dividends, or are undervalued and/or may be taken over at a premium to their respective market prices. Initial Portfolio Composition In keeping with the Fund s active management strategy, the Portfolio composition will vary over time depending on the Advisor s assessment of overall market conditions and outlook. The following charts set forth the geographic areas and sectors in which the Fund will invest and the expected initial Portfolio allocation of each geographic area and sector if the Fund had existed as of January 14, Note: (1) The Fund expects that from 5% to 15% of the initial Portfolio will be comprised of the securities of issuers operating in sectors other than those described in the foregoing chart, which sectors may include the materials, industrials, utilities, energy and telecommunication sectors, as well as securities of investment funds including exchange-traded funds. As of January 14, 2015, the top 10 issuers, listed alphabetically, which the Advisor expects would initially form part of the Portfolio are as follows: Name Ticker Symbol Market Capitalization (US$) Sector AbbVie Inc. ABBV 101,502,886,300 Healthcare Bristol-Myers Squibb Co. BMY 104,419,980,000 Healthcare Capital One Financial Corp. COF 42,670,742,100 Financials Discover Financial Services DFS 27,716,683,300 Financials GlaxoSmithKline PLC GSK 103,311,115,800 Healthcare Host Hotels & Resorts Inc. HST 17,963,598,700 Real Estate Pfizer Inc. PFE 204,645,346,700 Healthcare Prudential Financial Inc. PRU 37,180,440,000 Financials Reynolds American Inc. RAI 35,367,543,100 Consumer Starbucks Corp. SBUX 60,178,285,000 Consumer The foregoing list of issuers and sector allocations is provided for informational purposes only. Although the Portfolio may from time to time include the securities of any of the issuers referred to in the above table, it is possible that the Portfolio may not include the securities of any of the foregoing issuers at any time. The actual securities included in the Portfolio will be determined by the Advisor based on its assessment of market and other conditions and subject to the Fund s investment restrictions

17 Leverage Following the closing of this Offering, the Fund will enter into a loan facility (the Loan Facility ) or a prime brokerage facility (the Prime Brokerage Facility ) with one or more Canadian chartered banks or affiliates thereof (the Lender ). The Lender will be at arm s length to the Fund and the Manager and their respective affiliates and associates but may be affiliated with one of the Agents (as defined under Plan of Distribution ) other than Middlefield Capital Corporation. Prior to the Conversion, the Loan Facility or Prime Brokerage Facility, as applicable, will permit the Fund to borrow an amount from 0% up to 25% of the value of the total assets of the Fund, including leverage obtained through short selling and net notional exposure under derivatives, which borrowing may be used for various purposes, including purchasing additional securities for the Portfolio, effecting market purchases of Equity Shares and maintaining liquidity. The interest rates, fees and expenses under the Loan Facility or Prime Brokerage Facility, as applicable, will be typical of credit facilities of this nature and the Fund expects that the Lender will require the Fund to provide a security interest in favour of the Lender over the assets of the Fund to secure such borrowings. In order to ensure that the total amount borrowed by the Fund under the Loan Facility or Prime Brokerage Facility, as applicable, does not exceed at any time 25% of the value of the total assets of the Fund, the Manager will take appropriate steps with the Portfolio which may include liquidating certain of the Portfolio assets and using the proceeds thereof to reduce the amount outstanding under the Loan Facility or Prime Brokerage Facility, as applicable. The Fund initially intends to borrow approximately 23.5% of the value of the total assets of the Fund for the purpose of purchasing additional securities for the Portfolio. The Fund will monitor its use of leverage and, based on factors such as changes in interest rates, the Advisor s economic outlook and the composition of the Portfolio, the Fund may from time to time alter the amount of leverage it employs. The maximum amount of leverage that the Fund could employ through a loan facility, prime brokerage facility or short sales is 1.33 to 1 (maximum total assets divided by the NAV). For greater certainty, short selling and derivatives used by the Fund solely for hedging purposes will not be included in leverage. Following the Conversion, the Open-End Fund or the Converted Fund, as applicable, will not be permitted to use leverage to pursue its investment objectives. See Risk Factors - Risks Related to the Structure of the Fund - Use of Leverage by the Fund. Other than borrowing by the Fund under the Loan Facility or Prime Brokerage Facility, as applicable, the Fund does not contemplate engaging in other borrowings. A prime brokerage facility differs from a committed loan facility. Among other things, differences include: (i) under a committed loan facility the lender commits to making the loan available so long as the borrower adheres to certain covenants, in exchange for a commitment fee and a standby fee, in addition to interest on the loan, whereas under a prime brokerage facility, the ongoing availability of credit and the terms of such credit, including interest cost and margin requirements, are subject to change at the lender s sole discretion at any time; and (ii) the interest rate charged for a prime brokerage facility is typically less than a committed loan facility due to the lack of a term commitment from the lender. See Risk Factors Risks Related to the Structure of the Fund - Availability of Leverage. Following the Conversion, the Fund will no longer be permitted by applicable securities laws to incur indebtedness. Accordingly, the Fund will terminate the Loan Facility or Prime Brokerage Facility, as applicable, on the earlier of (i) the date on which the Manager has determined that it is no longer in the best interest of the Fund to use leverage, and (ii) the last business day prior to the Conversion. Short Selling Prior to the Conversion, the Fund may engage in short selling as permitted by securities laws up to a maximum of 10% of the NAV. This 10% limit, however, does not apply to short sales of securities or short positions maintained by the Fund for the purposes of hedging (as defined in NI ) the exposure of the Portfolio to equity securities that are to be received by the Fund in connection with (i) the exercise by the Fund of a right to acquire such securities pursuant to a conversion or (ii) the exercise by the issuer of a right to issue such securities at maturity. The Fund may engage in short selling and may do so as a complement to the Fund s investment strategy in circumstances where the Advisor expects that the securities of an issuer will decrease in market value

18 Currency Hedging The Portfolio will include securities which are denominated in currencies other than the Canadian dollar (any such currencies being foreign currencies ) and, accordingly, the Fund will be exposed to foreign currency risk. The Fund will generally seek, and initially intends, to hedge the majority of its exposure to foreign currencies back to the Canadian dollar. The decisions as to whether the Fund s exposure to foreign currencies will be hedged back to the Canadian dollar, and the amount of such exposure to be hedged, will depend on such factors as exchange rates, the Advisor s outlook for the economy both in the U.S. and globally and a comparison of the costs associated with such hedging transactions against the benefits expected to be obtained therefrom. Use of Derivative Instruments Prior to the Conversion and subject to the Fund s investment restrictions, the Fund may invest in or use derivative instruments for hedging purposes consistent with its investment objectives. The Fund s use of derivatives for hedging purposes is not otherwise subject to any limitations. For example, the Fund may use derivatives for hedging purposes with the intention of offsetting or reducing risks, such as currency value fluctuations, stock market risks and interest rate changes, associated with an investment or group of investments. Prior to the Conversion and subject to the Fund s investment restrictions, the Fund also may invest in or use derivative instruments for non-hedging purposes consistent with its investment objectives to a maximum of 10% of the NAV. While the Fund does not currently intend to invest in or use derivative instruments for non-hedging purposes, in the event the Fund elects to do so it may, for example, write covered call options on some or all of the securities comprising the Portfolio or write cash covered put options. The holder of a covered call option purchased from the Fund will have the option, exercisable during a specific time period or at expiry, to purchase the securities underlying the option from the Fund at the exercise price per security determined at the time of writing the call option. In addition, the Fund may from time to time engage in writing cash covered put options based on a portion of the Fund s assets held in cash, cash equivalents and cash cover. The Fund may utilize such cash, cash equivalents and cash cover to provide cover in respect of the writing of cash covered put options, which are intended to generate additional returns and to reduce the net cost of acquiring the securities subject to the cash covered put options. The holder of a put option purchased from the Fund will have the option, exercisable during a specific time period or at expiry, to sell the securities underlying the option to the Fund at the exercise price per security. By selling covered call options and/or cash covered put options, the Fund will receive option premiums. Securities Lending In order to generate additional returns, the Fund may lend securities included in the Portfolio to securities borrowers acceptable to the Fund pursuant to the terms of a securities lending agreement between the Fund and such borrower (each a Securities Lending Agreement ). Under a Securities Lending Agreement (i) the borrower will pay to the Fund a negotiated securities lending fee and will make compensation payments to the Fund equal to any distributions received by the borrower on the securities borrowed, (ii) the securities loans must qualify as securities lending arrangements for the purposes of the Tax Act, and (iii) the Fund will receive collateral security. The terms of each Securities Lending Agreement will comply with the conditions for securities lending transactions set out in section 2.12 of NI OVERVIEW OF THE SECTOR IN WHICH THE FUND INVESTS The Fund has been designed to provide investors with a diversified investment focusing on U.S. Dividend Growers, including investments in issuers operating in sectors the Advisor believes are undervalued and generally underrepresented in the S&P/TSX Composite Index. The Fund initially intends to focus on issuers operating in the healthcare and technology sectors. The Advisor believes there are several positive fundamentals underpinning the current accelerating growth in the U.S. economy which will benefit issuers in both of the aforementioned sectors. The contents of any website referenced herein are for informational purposes only and are not incorporated by reference herein. The Fund assumes no responsibility or liability for the information set forth on such websites or the accuracy thereof

19 U.S. Dividend Growers Offer Sector Diversification, Stability, and Potential for Strong Total Returns As described in the remainder of this section, the Advisor believes U.S. Dividend Growers will benefit from the following factors: Exposure to Sectors Underrepresented in Canada The Advisor believes that one of the key advantages of investing in U.S. equities is increased sector diversification o The technology and healthcare sectors, which the Advisor believes are currently underrepresented in Canada, offer investors compelling profitability and long-term growth prospects based on their respective returns on equity and price/earnings to growth ratios, as demonstrated in the following table: Source: Bloomberg, index weightings as at January 2015 Notes: (1) Represented by the S&P 500 Information Technology Index (2) Represented by the S&P 500 Healthcare Index (3) Consensus 12-month forward return on equity ( ROE ), which provides an estimate of the ability of an issuer to generate profits from its shareholder capital. An ROE in excess of 10-15% is generally considered by the Advisor to be strong. (4) Consensus 12-month forward price/earnings to growth ratio ( PEG ), which is used to estimate the value of an issuer s shares relative to its earnings growth rate. Issuers with a PEG ratio less than 1.0x are generally considered by the Advisor to be attractively valued. The healthcare and technology sectors are the two largest sectors in the S&P 500 Index, accounting for approximately 35% of its market capitalization versus approximately 6% of the S&P/TSX Composite Index. The Advisor believes that the U.S. healthcare and technology sectors will provide Canadian investors with diversification and exposure to strong secular trends that will support dividend and earnings growth

20 Proven Track Record of Middlefield Middlefield has extensive investment experience in the equity income sector, including its successful Global Dividend Growers Income Fund (GDG.UN) The Fund shares many similarities with Middlefield s Global Dividend Growers Income Fund ( GDG ), a TSX-listed fund, which has consistently generated returns that have exceeded those of broader indices since its inception: o o o o o Investment Strategies. While the investment strategy of GDG involves investing in global issuers that have exhibited strong dividend growth, since its inception in March 2013 approximately 60% to 70% of its investment portfolio has been comprised of U.S.-based issuers or issuers that derive a significant portion of their revenue or earnings from the United States. This is similar to the Fund as its investment restrictions require that at least 75% of the value of the total assets of the Fund (excluding cash and cash equivalents) must be comprised of securities of U.S. Dividend Growers. Portfolio Composition. All of the U.S.-based issuers whose securities are currently included in the portfolio of GDG are also expected to be included in the initial Portfolio. Management Style. While the investment strategy of GDG involves both active and passive portfolio management, as compared to the Fund s active management style, approximately 70% of GDG s portfolio has been actively managed since its inception. Investment Principles. The Advisor will use substantially equivalent equity investment principles and investment analysis for the Fund that have been employed in determining the U.S.-based securities to be acquired by GDG. Investment Team. The same officers of the Advisor are principally responsible for making investment decisions on behalf of both the Fund and GDG. Source: Bloomberg, Middlefield ( Annualized total returns from March 22, 2013 to December 31, 2014 in respect of Global Dividend Growers Income Fund, the MSCI World Index and the S&P/TSX Composite Index The total returns of Global Dividend Growers Income Fund, the MSCI World Index and the S&P/TSX Composite Index for the one year period ended December 31, 2014 are 11.3%, 5.1% and 10.6%, respectively. The information is provided for illustrative purposes only, does not reflect future performance of this Fund and should not be construed as a forecast or projection. There can be no assurance that the performance of the Fund will equal or exceed the performance of Global Dividend Growers Income Fund. While the Advisor will employ similar equity investment principles with respect to the Fund as it employs in managing Global Dividend Growers Income Fund, the investments in the Fund and Global

21 Dividend Growers Income Fund will not be identical and may differ significantly. Past performance does not guarantee future results. U.S. Dividend Growers have historically demonstrated above-average returns, while exhibiting relatively low volatility The Advisor believes that companies that have sustained and/or grown their dividends have typically made more prudent capital allocation decisions, resulting in increased cash flow and earnings growth According to Ned Davis Research, Inc. ( between January 1972 and December 2014, dividend growers in the S&P 500 Index have achieved a higher annualized total return of 10.1%, approximately four times the annual total returns of 2.6% of non-dividend payers ( dividend growers are defined by Ned Davis Research, Inc. as stocks that have increased their dividend anytime in the past twelve months. Once an increase in dividends has occurred, the issuer remains classified as a dividend grower for twelve months or until there is a change in dividend policy). Source: Ned Davis Research, Inc. January 31, 1972 to December 31, 2014 Notes: Returns based on monthly equal-weighted geometric average of total returns of S&P 500 Index component stocks, with components reconstituted monthly Private Sector Deleveraging has Positioned the U.S. as the Most Attractive Global Economy The Advisor believes the current U.S. economic expansion will continue to accelerate due to the following factors: o The last three business cycles averaged eight years in duration, suggesting that, if that trend continues, the current business cycle could extend for several more years. The U.S. economy, currently in the middle of a business cycle, has been strengthening since the cycle commenced in Expansion Start Recession Start Years of Expansion Unemployment Rate Low (U.S.) CPI Y/Y Peak Fed Funds Peak S&P Cumulative Return Trough to Peak % 5.3% 11.8% +263% % 5.0% 6.5% +412% % 4.7% 5.3% +121% Average % 5.0% 7.8% +265% 2009 TBD (1) % 0.8% (2) 0.0% (2) +167% Source: Bloomberg, National Bureau for Economic Research (

22 Notes: (1) Indicates the commencement of the U.S. economy s next recession, which will mark the end of the current business cycle and is as yet not known. (2) Figures for current business cycle as at December 31, 2014 Central Bank policy divergence (e.g. the quantitative easing monetary policies of non-u.s. central banks globally) will increase the demand for U.S. dollar denominated assets. After several years of reducing and refinancing private sector debt, the Advisor expects significant growth in the U.S. economy. This view is supported by strong household and corporate balance sheets and an improving labour market, which are expected to stimulate increased growth in consumer and corporate spending. Moreover: o o Approximately 70% of U.S. consumer debt is comprised primarily of long-term fixed rate residential mortgages, which have been locked in at record-low interest rates; and Maturities of corporate loans generally extend beyond 2018 while interest coverage ratios remain in excess of eight times earnings Source: OECD, November 2014 ( U.S. industrial capacity utilization is improving, a result of which the Advisor believes companies should reinvest heavily in their businesses to replenish aging capital stock as demand improves. Furthermore: o o o U.S. net business investment as a percentage of GDP has improved, but remains below the long-term trend The average age of U.S. capital stock is approximately 22 years, the highest it has been in over 50 years Positive trends in key industrial economic indicators, earnings growth, strong balance sheets and rising revenues are expected, by the Advisor, to stimulate spending on new software and equipment Source: Bureau of Economic Analysis, 2013 (

23 Favorable U.S. Demographic Trends will Lead to Strong GDP and Earnings Growth The Advisor believes that the following demographic trends will accelerate corporate earnings potential: o o o The U.S. population is projected to grow faster and age more slowly than other countries within Europe and Asia The year old demographic ( Gen Y ) is the largest population cohort in U.S. history and will comprise an estimated two-thirds of the total labour market within the next ten years broadly supporting what the Advisor believes will be an increase in consumer spending, household formation and above average long-term economic growth The Gen Y population is 7% larger than the Baby Boom generation, which peaked in the 1990s and fuelled annualized GDP growth of approximately 3.4% per annum during the entire decade Source: 2010 U.S. Census Strong Corporate Balance Sheets will lead to Strong Dividend Growth for U.S. Companies The Advisor believes, based on research by Ned Davis Research, Inc., that U.S. corporate balance sheets are exceptionally strong and well positioned to support higher dividend growth rates than those in other global markets due to the following: o o The current S&P 500 dividend payout ratio is 36.0% and the Advisor expects this to increase and converge to the long-term average of 57.4%; and S&P 500 companies have increased year over year dividends by 11.5%, almost double that of the MSCI World Index of which the U.S. is a constituent. The Advisor believes that based on the research above, provided by Ned Davis Research, Inc., U.S. issuers offer attractive dividend yields versus other asset classes and fixed income alternatives and additionally offer the potential of excellent earnings and dividend growth. Healthcare & Technology Spending is Expected to Rise Due to Secular and Cyclical Demand The Advisor believes that healthcare equities will benefit from secular demographic trends, driving increased demand for health-related products and services, in particular: o o The global population over the age of 65 spend three times as much on healthcare services than younger cohorts, and, as a group, are projected to more than double from 2015 to 2040; and Economic growth, favourable regulatory reform and increased insurance coverage, will likely support higher healthcare spending in the U.S

24 Source: UN Data Statistics, as at April 30, 2014 ( Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, based on 2010 data The Advisor believes companies are allocating a greater portion of their capital expenditures toward initiatives which improve productivity and margins, including: software, technology infrastructure, and automation o International Data Corporation estimates that big data, mobile and cloud technologies will account for 98% of IT spending growth from ; and o Global mobile data traffic volumes are projected to increase tenfold by 2019 as smartphone penetration increases Source: Ericsson, as at June 2014 ( Source: TeleResearch Labs, as at May, 2014 ( INVESTMENT RESTRICTIONS The Fund cannot engage in any undertaking other than the investment of its assets in accordance with its investment objectives and strategy and in compliance with the investment restrictions set out in NI that are applicable to non-redeemable investment funds from time to time. In addition, prior to the Conversion the Fund shall be subject to the following investment restrictions pursuant to which the Fund will not: (a) for a period of more than 30 consecutive days have: (i) (ii) less than 75% of the value of the total assets of the Fund (excluding cash and cash equivalents) comprised of securities of U.S. Dividend Growers; or more than 10% of the value of the total assets of the Fund comprised of securities of any single issuer other than securities issued or guaranteed by the Government of Canada or a province or territory thereof or securities issued or guaranteed by the U.S. Government or its agencies and instrumentalities; (b) have more than 10% of the value of the Portfolio assets comprised of securities of private issuers ( Private Securities );