Income Streams III

Income Streams III

June 20, 2005 09:01 ET

Income STREAMS III: Monthly Distribution Declared For Equity Dividend Shares

TORONTO, ONTARIO--(CCNMatthews - June 20, 2005) - The Board of Directors of Income STREAMS III ("IS STREAMS") (TSX:STQ)(TSX:STQ.E) declares its regular monthly distribution of $0.0875 per Equity Dividend Share (TSX:STQ.E). In accordance with the distribution program described below, there will be no distribution to the Capital Yield Shareholders for the month of June 2005. The Equity Dividend Share distribution will be payable July 8, 2005 to shareholders of record as of June 30, 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 48 monthly distributions for a total of $4.17 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, effective July 2003, expects to declare distributions going forward based on the size of the mid-month managed portfolio of the Corporation as follows:

Portfolio per unit Capital Yield Capital Yield
Mid month Share Distribution Share
(net of distributions) Payment 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 June 15, 2005 was $16.98 therefore the June 30, 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 June 27, 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 25 monthly distributions for a total of $3.97 per share.

The Corporation's 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 on December 1, 2013. Capital Yield shareholders are also 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 IS 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.

IS STREAMS top holdings include Citigroup, CIBC, Bank of Montreal, Royal Bank of Canada, Toronto-Dominion Bank, BCE, Bank of America, General Electric, Merrill Lynch and J.P. Morgan as of June 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 IS STREAMS, is focused on the creation and management of enhanced yield products for retail investors.

Distribution Details:

Distribution per Capital Yield Share (STQ): $ Nil
Distribution per Equity Dividend Share (STQ.E) $ 0.0875
Ex-Dividend Date: June 28, 2005
Record Date: June 30, 2005
Payable Date: July 8, 2005

Contact Information