Press Releases

First Asset Convertible Debenture Fund Announces Follow-On Offering

TORONTO, ONTARIO--(CCNMatthews - Feb. 26, 2007) - First Asset Diversified Convertible Debenture Fund (the "Fund") (TSX:DCD.UN) announces that it has filed a preliminary prospectus with the securities regulatory authorities of all the Canadian provinces in connection with a follow-on offering of up to $75 million of units of the Fund at a price of $20 per unit. The Units will be offered on a best efforts basis by a syndicate of investment dealers co-led by CIBC World Markets Inc., National Bank Financial Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., TD Securities Inc., and including, HSBC Securities (Canada) Inc., Dundee Securities Corporation, Canaccord Capital Corporation, Raymond James Ltd., Wellington West Capital Inc., Blackmont Capital Inc., Berkshire Securities Inc., Desjardins Securities Inc. and Research Capital Corporation.

The Fund's investment objectives are to provide Unitholders with (i) quarterly cash distributions, and (ii) the opportunity for capital appreciation, by investing, on an actively managed basis, in a diversified portfolio comprised primarily of convertible debentures of Canadian and US issuers.

The Fund will utilize existing losses to provide tax-efficient distributions, initially anticipated to be approximately $0.30 per Unit per quarter, commencing with the quarter-ended June 30, 2007, representing a yield of approximately 6.0% per annum based on the offering price. As at December 31, 2006, the Fund had approximately $29.8 million of capital loss carry forwards and $10.9 million of non-capital loss carry forwards. The Fund anticipates that all distributions will be returns of capital, which are generally not subject to tax (but which reduce the adjusted cost base of a Unitholder's Units), until all the non-capital loss carry forwards and other available expenses of the Fund are fully utilized or expire. In addition, to the extent of the Fund's capital loss carry forwards, realized capital gains of the Fund will be offset to facilitate tax free growth.

The Fund's assets are currently principally in cash and cash equivalents and investment in convertible debentures will commence shortly. The investment advisor, First Asset Investment Management Inc., believes that Convertible Debentures offer an attractive investment opportunity, as these securities generally provide (i) security of principal through the obligation of the issuer to repay the principal amount in full at maturity, (ii) income from fixed coupons, and (iii) the potential for capital appreciation through the holder's right to convert its securities at a specified price into the underlying equity securities of the issuer.

Prospective purchasers may purchase trust units either by cash payment or by an exchange of freely tradeable convertible debentures of any of the Exchange Eligible Issuers listed in the following table:

Exchange Eligible Issuer Convertible Debenture TSX Symbol CUSIP Number
Advantage Energy Income Fund 9.00% due August 1, 2008 AVN.DB.A 00762LAB7
  7.50% due October 1, 2009 AVN.DB.C 00762LAD3
  7.75% due December 1, 2011 AVN.DB.D 00762LAE1
  6.50% due June 30, 2010 AVN.DB.E 00762LAF8
Algonquin Power Income Fund 6.65% due July 31, 2011 APF.DB 015910AA0
  6.20% due November 30, 2016 APF.DB.A 015910AB8
Arctic Glacier Income Fund 6.50% due July 31, 2011 AG.DB 039675AA1
Artis Reit 6.25% due May 31, 2013 AX.DB.C 960196AC7
Atlantic Power Corp 6.25% due October 31, 2011 ATP.DB 04878QAH6
Canetic Resources Trust 6.50% due September 30, 2011 CNE.DB.E 137513AH0
Cineplex Galaxy Income Fund 6.00% due December 31, 2012 CGX.DB 172453AA0
Clarke Inc 6.00% due December 31, 2013 CKI.DB.A 181901AB5
Clean Power Income Fund 6.75% due December 31, 2010 CLE.DB 18450KAA0
Clearwater Seafoods Income Fund 7.00% due December 31, 2010 CLR.DB 185384AA2
Colabor Income Fund 7.00% due December 31, 2011 CLB.DB 192668AA9
Countryside Canada Power Inc 6.25% due October 31, 2012 CSD.DB.U 22237QAB7
Creststreet Power & Income Fund LP 7.00% due March 15, 2010 CRS.DB 226294AA4
  8.00% due September 15, 2011 CRS.DB.A 226294AB2
Data Group Income Fund (The) 6.75% due December 31, 2011 DGI.DB 23768UAA5
Enterra Energy Trust 8.00% due December 31, 2011 ENT.DB 29381PAA0
Eveready Income Fund 7.00% due June 30, 2011 EIS.DB 29976XAA4
Fairborne Energy Trust 6.50% due December 31, 2011 FEL.DB 303628AA9
Firm Cap Mortgage Investment Trust 6.00% due June 30, 2013 FC.DB 318324AA8
First Capital Realty Inc 5.50% due September 30, 2017 FCR.DB.A 31943BAH3
Fort Chicago Energy Partners L.P. 6.75% due December 31, 2010 FCE.DB.B 346921AB5
Gateway Casinos Income Fund 5.35% due June 30, 2011 GCI.DB 36759MAA6
Harvest Energy Trust 6.50% due December 31, 2010 HTE.DB.B 41752XAD3
  10.50% due January 31, 2008 HTE.DB.C 41752XAG6
  6.40% due October 31, 2012 HTE.DB.D 41752XAF8
  7.25% due September 30, 2013 HTE.DB.E 41752XAH4
  7.25% due February 28, 2014 HTE.DB.F 41752XAJ0
Innvest Real Estate Investment Trust 6.00% due May 31, 2013 INN.DB.B 45771TAD0
International Minerals Corp 5.50% due May 19, 2012 IMZ.DB 459875 AA 8
KIK Acquisition Co 6.50% due November 30, 2010 KCC.DB.U 48247WAA9
Killam Properties Inc 6.50% due May 5, 2012 KMP.DB 494104AB8
Lanesborough Real Estate Investment Trust 7.50% due December 31, 2011 LRT.DB.G 515555AF7
Magellan Aerospace Corp 8.50% due January 31, 2008 MAL.DB 558912AA9
MDC Partners Inc 8.00% due June 30, 2010 MDZ.DB 552697AB0
Newport Partners Income Fund 7.50% due December 31, 2010 NPF.DB 65230PAA7
Paramount Energy Trust 6.25% due June 30, 2010 PMT.DB.A 699219AC5
  6.25% due April 30, 2011 PMT.DB.B 699219AE1
PDM Royalties Income Fund 7.75% due December 31, 2011 PDM.DB 69329MAA8
Pengrowth Energy Trust 6.50% due December 31, 2010 PGF.DB 706902AA1
Primewest Energy Trust 7.50% due September 30, 2009 PWI.DB.A 741930AA9
  6.50% due January 31, 2012 PWI.DB.C 741930AE1
Progress Energy Trust 6.75% due June 30, 2010 PGX.DB 74326TAA6
  6.25% due September 30, 2011 PGX.DB.A 74326TAB4
Provident Energy Trust 6.50% due August 31, 2012 PVE.DB.C 74386KAD6
  6.50% due April 30, 2011 PVE.DB.D 74386KAE4
Rogers Sugar Income Fund 6.00% due June 29, 2012 RSI.DB.A 774910AC7
  5.90% due June 29, 2013 RSI.DB.B 774910AE3
Royal Host Real Estate Investment Trust 6.00% due October 31, 2015 RYL.DB.B 78029AAD2
  6.25% due September 30, 2013 RYL.DB.C 78029AAE0
Sound Energy Trust 8.75% due June 30, 2009 SND.DB 83607XAA8
  8.00% due December 31, 2011 SND.DB.A 83607XAB6
Superior Plus Income Fund 8.00% due November 1, 2008 SPF.DB.A 867946AB1
  5.75% due December 31, 2012 SPF.DB.B 867946AD7
  5.85% due October 31, 2015 SPF.DB.C 867946AE5
Taylor NGL Ltd 5.85% due September 10, 2010 TAY.DB 877256AA5
Thunder Energy Trust 7.25% due April 30, 2011 THY.DB 88604TAA9
True Energy Trust 7.50% due June 30, 2011 TUI.DB 897839AA4
Vault Energy Trust 8.00% due June 30, 2010 VNG.DB 92241AAA1
  7.20% due May 31, 2011 VNG.DB.A 92241AAB9
Versacold Income Fund 6.25% due January 31, 2010 ICE.DB.A 92511PAC7
  6.75% due November 30, 2011 ICE.DB.C 92511PAG8
Western Canadian Coal Corp 7.50% due March 24, 2011 WTN.DB 957860AA7
YPG Holdings Inc 5.50% due August 1, 2011 YPG.DB 984246AC2

For further information, please call Rob MacNiven, Investor Relations, First Asset at 416-642-1289 or 1-877-642-1289 or visit www.firstassetfunds.com.