LOGiQ Asset Management Inc.
TSX : LGQ

LOGiQ Asset Management Inc.

April 28, 2017 17:48 ET

Canadian 50 Advantaged Preferred Share Fund - Termination of Forward Agreement and Change of Fundamental Investment Objectives

TORONTO, ONTARIO--(Marketwired - April 28, 2017) -

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LOGiQ Asset Management Ltd. (TSX:LGQ) (the "Manager") and Canadian 50 Advantaged Preferred Share Fund (the "Fund") announced today that the Fund's forward agreement (the "Forward Agreement") will expire on May 18, 2017 (the "Expiry Date"). The Fund currently obtains exposure to the total return approximating that of the BMO Capital Markets 50 Preferred Share Index (the "Portfolio") through the Forward Agreement.

Upon the expiry of the Forward Agreement on the Expiry Date, the Manager has determined that the Fund will own its portfolio of investments directly rather than gaining exposure to the Portfolio through the Forward Agreement. In order to do so, the Fund's investment objectives will be amended on or about the Expiry Date to delete references to "tax-advantaged" and to clarify that the Fund will invest directly in securities similar to those in the Portfolio.

The investment objectives of the Fund after any such amendments would be to provide holders of units with: (i) quarterly cash distributions, and (ii) exposure to the total return approximating that of the BMO Capital Markets 50 Preferred Share Index.

The Income Tax Act (Canada) was amended in December 2013 to implement proposals that were first announced in the March 21, 2013 federal budget regarding the income tax treatment of character conversion transactions (the "Tax Changes"). Under the Tax Changes, the favourable tax treatment of character conversion transactions will be eliminated. In particular, if the Fund were to extend the term of the Forward Agreement past the Expiry Date or enter into a new forward agreement to obtain exposure to the Portfolio, gains (and losses) realized by the Fund under such an agreement would be treated as ordinary income (or loss) rather than a capital gain (or capital loss).

Following the termination of the Forward Agreement, a greater portion of distributions paid by the Fund will be characterized primarily as income for tax purposes to the extent they exceed available non-capital losses of the Fund. The termination of the Forward Agreement will not affect the status of the Fund as a "mutual fund trust" under the Tax Act.

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