Friedberg Mercantile Group, Ltd (FMGL)

March 11, 2008 15:59 ET

Friedberg Mercantile Group Ltd.: Press Release

TORONTO, ONTARIO--(Marketwire - March 11, 2008) - Friedberg Mercantile Group Ltd. ("FMGL") announced today that while it will continue its policy of limiting new subscriptions for the Friedberg Global Macro Hedge Fund (the "Fund") that it is prepared to accept to aggregate amounts that do not exceed the amount of cash outflows of the Fund, primarily due to fees or redemptions, it has determined to afford priority, effective immediately, to subscriptions from deferred income plans, such as registered retirement savings plans ("RRSPs"), in the interest of both existing and prospective investors in the Fund.

FMGL announced on August 2, 2007 that, while it was not suspending redemptions, it was suspending acceptance of subscriptions to the Fund, because of the likelihood that any substantial inflow of net new subscriptions would dilute existing investors due to the high degree of volatility in credit derivatives and the extreme difficulty to faithfully replicate the position of over-the-counter traded credit default swaps that the Fund maintained. As a result, FMGL determined that it would be in the best interests of the Fund's unitholders to temporarily close the Fund to new subscriptions. On September 18, 2007, FMGL announced that it was prepared to accept subscriptions to match, as closely as possible, the amounts of cash outflows.

In the intervening period a good portion of the credit derivatives mentioned earlier which caused us to suspend new subscriptions have been liquidated. Nevertheless, the assets of the fund have grown significantly due to gains in its investment portfolio. As a result of this increase, FMGL believes that the amount of assets under administration restrict the ability to trade the Fund's assets without affecting the markets - what is commonly called slippage costs. Therefore, the previously mentioned suspension remains in place. Furthermore, FMGL now believes that because of stepped up volatility, the Fund is best suited for RRSPs and other deferred income plans, which tend to have longer holding strategies and are not affected by tax considerations.

Accordingly, in the interests of both existing unitholders of the Fund and prospective investors, subscription priority will be afforded subscriptions from RRSPs and other deferred income plan accounts. At this time, FMGL is continuing its decision to accept subscriptions only in aggregate amounts approximating aggregate cash outflows.

FMGL will review this decision on an ongoing basis with a view to fully re-opening the Fund to new investors as soon as appropriate.

Contact Information

  • Friedberg Mercantile Group Ltd.
    Henry Fenig
    Vice President
    (416) 350-2890
    (416) 364-0572 (FAX)