TORONTO, Tuesday, April 30, 2013 – Further to its announcements on March 26, 2013 and April 8, 2013, First Asset Investment Management Inc. (“First Asset”) expects to proceed with the previously announced changes to First Asset Morningstar Emerging Markets Composite Bond Index ETF (TSX: EXM and EXM.A) (the “Fund”) on or about May 20, 2013, subject to receipt of any required approvals.
As previously announced, in response to proposed new tax measures introduced in conjunction with the Federal budget on March 21, 2013 (known as the “character conversion measures”), the Fund has temporarily stopped issuing new units because the character conversion measures effectively prevent it from investing any new subscription proceeds through its existing forward agreement.
To enable the Fund to resume issuing new units, the Fund’s Declaration of Trust will be amended in accordance with its terms in order to permit the Fund to maintain its exposure to the Morningstar® Emerging Markets Composite Bond IndexSM (the “Index”) indirectly through its existing forward agreement while permitting the Fund to invest proceeds from the sale of new units directly in securities that replicate the performance of the Index.
Unitholders will continue to benefit from the tax advantaged character of that portion of the Fund’s distributions that are funded through the partial settlement of the forward agreement until the forward agreement terminates in September, 2015. Once the Fund starts investing the proceeds from new subscriptions directly as described above, First Asset expects that these tax benefits will be diminished as the tax benefit is spread over the larger asset base. The portion of future distributions derived from the Fund’s direct investments is expected to be fully taxable as ordinary income (net of allowable expenses). The Fund anticipates that this reduced tax benefit will be partially offset going forward by cost savings attributable to pursuing its investment objectives directly, rather than through the forward agreement, which the Fund expects will increase distributable cash yield.
First Asset expects that the proposed amendments to the Fund’s Declaration of Trust will become effective on or about May 20, 2013, or such other later date as First Asset may advise by further press release (the “Effective Date”). First Asset reserves the right not to implement the proposed amendment should it decide that it is in the best interests of the Fund to elect not to do so. Unitholders will be advised of any such decision prior to the Effective Date.
For further information, please call Rob MacNiven, Investor Relations, First Asset Investment Management Inc. at 416-642-1289 or 1-877-642-1289 or visit www.firstasset.com.
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Certain statements contained in this news release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to matters disclosed in this news release and to other matters identified in public filings relating to the Fund, to the future outlook of the Fund and anticipated events or results and may include statements regarding the future financial performance of the Fund. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to vary from those expressed or implied by such forward-looking statements. The opinions contained in this news release are solely those of the Manager and are subject to change without notice. The reference information was obtained from publicly available sources, and although the Manager believes that these independent sources are generally reliable, the accuracy and completeness of such information is not guaranteed and has not been independently verified. The Manager assumes no responsibility for any losses or damages, whether direct or indirect which arise from the use of this information and expressly disclaims liability for any errors or omissions of this information. The Manager does not assume any obligation, to update or revise these forward-looking statements to reflect new events or circumstances.