Capital Gains Income Streams

Capital Gains Income Streams

August 18, 2005 09:00 ET

Capital Gains Income STREAMS: Monthly Distribution Declared For Equity Dividend Share

TORONTO, ONTARIO--(CCNMatthews - Aug. 18, 2005) - The Board of Directors of Capital Gains Income STREAMS ("CG STREAMS") (TSX:CGQ)(TSX:CGQ.E) declares its regular monthly distribution of $0.0875 per Equity Dividend Share (TSX:CGQ.E). In accordance with the distribution program described below, there will be no distribution to the Capital Yield Shareholders for the month of August 2005. The Equity Dividend Share distribution will be payable September 9, 2005 to shareholders of record as of August 31, 2005.

Holders of Equity Dividend shares continue to receive their regular cumulative monthly fixed distribution of $0.0875 per share. To date Equity Dividend shareholders have received 54 monthly distributions for a total of $4.71 per share inclusive of this distribution.

The Board of Directors implemented a variable distribution program in July 2002 based on equity market conditions at that time in order to preserve its asset base over the long term. As market conditions have improved and stabilized, the Board expects, effective July 2003, to declare distributions going forward based on the size of the mid-month managed portfolio of the corporation as follows:

Managed Portfolio per unit Capital Yield Share Capital Yield
Mid month (net of Distribution Payment Share
distributions) Annual Rate Monthly Payment

Over $20.00 $ 2.50 $ 0.2083

$19.50 to $20.00 $ 2.00 $ 0.1667

$19.00 to $19.49 $ 1.50 $ 0.1250

$18.50 to $18.99 $ 1.25 $ 0.1042

$18.00 to $18.49 $ 1.00 $ 0.0833

Under $18 Nil Nil

The managed portfolio as of August 15, 2005 was $16.10 therefore the August 31, 2005 distribution for the Capital Yield Share will be set at nil per share. Elimination of the Capital Yield Share distribution when the Managed Portfolio per unit declines below $18.00 (net of Capital Yield Share distribution) is compliant with the requirements of the initial, prospectus dated February 23, 2001. The Board believes this is a prudent decision and in the best interest of both classes of shareholders over the long term. Based on the current market conditions, the Board expects the above distribution policy to continue. To date, Capital Yield shares have received a total of 23 monthly distributions for a total of $4.17 per share.

The capital repayment forward agreement remains in force with Merrill Lynch and TD Global Finance, a guaranteed subsidiary of TD Bank. This will provide Capital Yield shareholders with a payment of $25.00 on December 1, 2013. In addition, Capital Yield shareholders are entitled to an additional payment equal to the value of the Managed Portfolio at wind-up, if any, after payment to satisfy Equity Dividend Share obligations of $15.00 per share.

The managed portfolio (the managed portion of the assets of CG STREAMS not subject to the Capital Yield share repayment forward contract) is invested primarily in a diversified portfolio of companies included in the S&P 500 and the S&P/TSX 60. To provide additional returns above the dividend and interest income earned on the managed portfolio, a covered call writing program generates option premium income on stocks held in the portfolio.

CG STREAMS top holdings include Royal Bank of Canada, CIBC, BCE, Toronto-Dominion Bank, Bank of Montreal, Citigroup, American Express, J.P. Morgan, FedEx and Manulife Financial as of August 15, 2005. The economic exposure will vary according to the level of option premiums written against the underlying holdings. The list of holdings is subject to change as the portfolio is actively managed.

Quadravest Capital Management Inc., the investment manager of CG STREAMS, is focused on the creation and management of enhanced yield products for retail investors.

Distribution Details:

Distribution per Capital Yield Share (CGQ): $ Nil

Distribution per Equity Dividend Share (CGQ.E) $ 0.0875

Ex-Dividend Date: August 29, 2005

Record Date: August 31, 2005

Payable Date: September 9, 2005

Contact Information