Global Dividend Growth Split : Annual Report – 2022 – French

TSX: GDV, GDV.PR.A

Global Dividend

Growth Split Corp.

Annual Report 2022

Diversified portfolio of equity securities of large-capitalization global dividend growth companies.

VALUE

INTEGRITY

PERFORMANCE

THE FOUNDATION FOR EXCELLENCE

Global Dividend Growth Split Corp. - Annual Report 2022

MANAGEMENT REPORT OF FUND PERFORMANCE

March 17, 2023

This annual management report of Fund performance for Global Dividend Growth Split Corp. (the ''Fund'') contains financial highlights but does not contain the audited annual financial statements of the Fund. The audited annual financial statements follow this report. You may obtain a copy of the audited annual or unaudited interim financial statements, at no cost, by calling 1-866-642-6001 or by sending a request to Investor Relations, Brompton Funds, Bay Wellington Tower, Brookfield Place, 181 Bay Street, Suite 2930, Box 793, Toronto, Ontario, M5J 2T3, or by visiting our website at www.bromptongroup.com or SEDAR at www.sedar.com. Shareholders may also contact us by using one of these methods to request a copy of the Fund's proxy voting policies and procedures, proxy voting disclosure record, Independent Review Committee's report, or quarterly portfolio disclosure.

THE FUND

Global Dividend Growth Split Corp. is a mutual fund corporation managed by Brompton Funds Limited (the "Manager"). The Fund has Class A and Preferred shares outstanding which trade on the Toronto Stock Exchange ("TSX") under the symbols GDV and GDV.PR.A, respectively. The Class A and Preferred shares are RRSP, DPSP, RRIF, RESP and TFSA eligible. The Preferred shares are rated Pfd-3 (high) by Dominion Bond Rating Service Limited ("DBRS").

Preferred shares of the Fund receive fixed, cumulative quarterly payments. Payments may consist of ordinary dividends, capital gains dividends or returns of capital. Preferred shares have a priority claim ahead of the Class A shares on the Fund's assets in the event of liquidation. However, the Net Asset Value of Preferred shares generally does not benefit from growth in value of the underlying stocks. Class A shares capture the movement of the underlying stocks but in a more magnified way than if an investor owned the underlying portfolio of securities directly. This magnification of return is commonly known as "leverage", which is provided by the Preferred shares.

INVESTMENT OBJECTIVES AND STRATEGIES

The Fund's investment objectives are:

1. to provide holders of Preferred shares with fixed, cumulative, preferential quarterly cash distributions and to return the original issue price of $10.00 per Preferred share to Preferred shareholders at maturity; and
2. to provide holders of Class A shares with regular monthly non-cumulative cash distributions, targeted to be $0.10 per share, and the opportunity for growth in Net Asset Value per share through exposure to the Portfolio.

To achieve these objectives, the Fund invests in a diversified portfolio of equity securities of large-capitalization global dividend growth companies selected by the Manager. The Manager expects that the Fund will be invested directly, or indirectly through exchange-traded funds, in at least 20 global dividend growth companies. Equity securities directly selected will generally be equal weighted at the time of investment and after rebalancing the portfolio, but the Fund may, at the Manager's discretion, hold non-equal weight positions. In order to qualify for inclusion in the portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing, each global dividend growth company included in the portfolio must (i) have a market capitalization of at least $10 billion; and (ii) have a history of dividend growth or, in the Manager's view, have high potential for future dividend growth. After applying these criteria, the Manager will select equity securities of global dividend growth companies to construct the portfolio after considering, among other factors, each global dividend growth company's: dividend growth potential (as indicated by historical dividend growth, expected future earnings, revenue and/or dividend growth, dividend payout ratio, and/or dividend policy); valuation (as indicated by price to earnings, price to book value and/or enterprise value to EBITDA ratios, and/or free cash flow yield); profitability (as indicated by relatively high returns on equity and/or profit margins); current dividend yield; balance sheet strength (as indicated by interest coverage, debt/cash flow, debt/equity and/or debt covenants); and/or liquidity of the equity securities and options.

The portfolio will be rebalanced and may be reconstituted by the Manager at least annually but may be rebalanced and/or reconstituted more frequently at the Manager's discretion. Covered call options and cash-covered put options may be written in respect of the portfolio to generate additional distributable income for the Fund and/or to reduce the volatility of the Fund. In addition, the Fund may sell investments for working capital purposes or replace investments with proceeds from the exercise of covered call options previously written.

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Global Dividend Growth Split Corp. - Annual Report 2022

RECENT DEVELOPMENTS

Treasury Offering

On February 15, 2023 the Fund completed a treasury offering of Class A and Preferred shares for an aggregate gross proceeds of approximately $42.9 million. Class A shares were offered at $10.65 and Preferred shares were offered at $9.75 per share.

Market Conditions

Fiscal and monetary policy responses to increased levels of inflation have led to higher interest rates and to fluctuations in securities prices. In addition, global political tension and military events in Ukraine and Russia have also caused increased volatility and disruptions in global financial markets.

The collapse of Silicon Valley Bank and Signature Bank, followed by unfavourable news for Credit Suisse in early March 2023 led to overall financial market decline especially in the banking sector as of the date of the annual report. The Fund does not have any direct exposure to the three banks but its portfolio value has been impacted by overall market selloff.

The Fund's Net Asset Value reflecting the value of the Fund's portfolio based on the most recent valuation date can be found on the Fund's webpage at www.bromptongroup.com.

RISKS

Risks associated with an investment in the shares of the Fund are discussed in the Fund's 2022 Annual Information Form, which is available at www.bromptongroup.com or on SEDAR at www.sedar.com. There were no changes to the risks during the year ended December 31, 2022 that could materially affect an investment in the shares of the Fund as they were discussed.

RESULTS OF OPERATIONS

Distributions

The Fund distributed $1.20 per Class A share during the year ended December 31, 2022, reflecting monthly distributions of $0.10 per Class A share, unchanged from 2021. Preferred share distributions were $0.50 per share during the year ended December 31, 2022, reflecting quarterly distributions of $0.125 per Preferred share, unchanged from 2021. Since inception, the Fund has distributed $5.45 per Class A share and $2.27 per Preferred share.

The Fund has a distribution reinvestment plan which allows participating Class A shareholders to automatically reinvest monthly distributions, commission free, in additional Class A shares of the Fund. Pursuant to this plan, during the year ended December 31, 2022, 48,359 Class A shares were acquired in the market at an average price of $10.93 per Class A share.

Income and Expenses

The Fund's investment portfolio generated total income of $0.56 per Class A share in 2022, compared to $0.41 per Class A share in 2021. Income earned for the current year increased by $0.15 per unit or approximately by 36.6%. The increase was contributed by the Fund adding higher yielding securities in the portfolio in 2022. Total expenses were $0.41 per Class A share in 2022, compared to $0.60 in 2021. The Class A per share expense decrease of $0.19 per share was primarily contributed by lower issuance costs and agents' fees on per share basis in comparison to 2021. During the year, these costs reflected $0.12 per share in comparison to $0.28 per share in 2021. These costs were borne by new subscribing shareholders through the premium issue price paid by the Class A shareholders over the then current Net Asset Value paid by the new Class A shareholders.

Net Asset Value

The Net Asset Value per Class A share was $7.64 per Class A share at December 31, 2022 compared to $12.72 at December 31, 2021. This reflects 39.9% or $5.08 decrease per Class A share. For the purpose of calculating the Net Asset Value of the Fund as a whole, the Preferred shares are not considered a liability of the Fund. The aggregate Net Asset Value of the Fund was $233.0 million at December 31, 2022 compared to $202.5 million at December 31, 2021, reflecting an increase of 15.1% or $30.5 million. During the year the Fund had gross proceeds of $94.4 million from two follow-on treasury offerings.

Investment Portfolio

At December 31, 2022, the Fund's investment portfolio included 45 securities across 10 sectors compared to 45 securities across 11 sectors at December 31, 2021. During the year, the Fund purchased 25 new securities and sold 25 securities. The portfolio's investment weighting (excluding cash and short-term investments) and a detailed listing of the Fund's holdings is provided in the financial statements.

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Global Dividend Growth Split Corp. - Annual Report 2022

For the year ended December 31, 2022, the Fund's portfolio recorded net realized losses of $27.8 million and change in unrealized losses of $14.3 million. The Fund's investments in the Energy sector contributed approximately $2.3 million in net realized and change in unrealized gains, which was offset by losses from the Fund's other sectors. The losses were most prevalent in the Financials, Industrials and Materials, as together they accounted for $21.9 million in net realized and change in unrealized losses. During the later stages of the year, the fund added positions in cyclical sectors and trimmed the positions in the lagging defensive sectors.

In response to market conditions during 2022, the Fund selectively wrote covered call options on the companies in the portfolio and generated premiums of $3.5 million. The Fund had a net realized and change in unrealized gain on options of $1.9 million, which represented premium income, less amounts paid to close out the options at expiry. During 2022, the Fund wrote call options on an average notional value of 13.1% of the Fund's portfolio. There were 2,002 option contracts outstanding at December 31, 2022 with a notional value representing 14.7% of the portfolio.

The Fund's portfolio is comprised of US dollar, Euro and to a lesser extent Swiss franc, Japanese yen and British pound denominated securities. At December 31, 2022, the Fund's exposure to foreign currencies was substantially hedged through its foreign currency forward contracts. The Fund had a net realized and change in unrealized loss of $9.5 million from foreign currency forward contracts during the year ended December 31, 2022.

Portfolio Sectors

	% of Portfolio	Realized	Change in	Total
Net Gains (Losses) by Sector (millions)	Unrealized
as of 31-Dec-22	$	$	$
Communication services	2.1	-	(0.7)	(0.7)
Consumer discretionary	11.6	(2.6)	(0.8)	(3.4)
Consumer staples	9.0	0.9	(0.4)	0.5
Energy	11.3	0.3	2.0	2.3
Financials	11.5	(2.7)	(5.7)	(8.4)
Healthcare	17.8	(2.6)	2.7	0.1
Industrials	11.2	(2.7)	(4.1)	(6.8)
Information technology	18.2	(1.2)	(5.1)	(6.3)
Materials	3.5	(6.0)	(0.7)	(6.7)
Real estate	-	0.2	(2.7)	(2.5)
Utilities	3.8	(2.7)	0.1	(2.6)
Options	-	1.7	0.2	1.9
Foreign currency forward contracts	-	(10.4)	0.9	(9.5)
Total	100.0	(27.8)	(14.3)	(42.1)

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Global Dividend Growth Split Corp. - Annual Report 2022

Geographic Split	% of Portfolio
as of 31-Dec-22
United States	54.5
Canada	22.7
France	7.3
Switzerland	4.2
Netherlands	2.5
Norway	2.4
Japan	2.2
Great Britain	2.2
Ireland	2.0
Total	100.0

Liquidity

To provide liquidity for shareholders, the Class A shares and Preferred shares of the Fund are listed on the TSX. Investors also have the right to retract their shares in accordance with the Fund's retraction provisions for each class of share.

RELATED PARTY TRANSACTIONS

Related party transactions consist of services provided by the Manager pursuant to a management agreement. See the Management Fees section below.

MANAGEMENT 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 0.85% per annum of the Net Asset Value of the Fund, calculated and payable monthly in arrears. The management fee is used by the Manager to cover its costs to obtain the Fund's assets, the cost to administer the Fund, the cost of investment management services and for profit. For the years ended December 31, 2022, management fees amounted to $2.2 million.

FINANCIAL HIGHLIGHTS

The following tables show selected key financial information about the Fund and are intended to help readers understand the Fund's financial performance for the fiscal periods indicated. This information is derived from the Fund's audited annual financial statements. The information in the following tables is presented in accordance with National Instrument ("NI") 81-106 and, as a result, does not act as a continuity of opening and closing Net Assets per Class A share. The increase (decrease) in Net Assets from operations is based on average shares outstanding during the period, and all other numbers are based on actual shares outstanding at the relevant point in time.

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