O'Leary Funds Management LP announces that O'Leary U.S. Strategic Yield Advantaged Fund is no longer converting to a mutual fund

MONTREAL, May 1, 2013 /CNW Telbec/ - On March 20, 2013, O'Leary Funds Management LP, the manager and trustee (the "Manager") of O'Leary U.S. Strategic Yield Advantaged Fund (the "Fund") announced details of the conversion of the Fund to an open-end fund, scheduled to occur on or about May 24, 2013.

On the following day, the federal budget proposed amendments to the Income Tax Act (Canada) (the "Income Tax Act").  These proposed amendments are expected to eliminate the tax advantages of character conversion transactions employed by tax forward structures at the end of their respective terms. The Fund's forward agreement is set to expire on May 19, 2016.

In response to tax law changes, after consultation with the securities regulatory authorities, and based on a positive recommendation from the Fund's Independent Review Committee, the Manager today announces that the Fund will remain a TSX listed closed-end fund, rather than convert to a mutual fund.

The Manager believes that maintaining the Fund as a closed-end fund will best prolong the tax advantaged nature of the Fund, which based on the Manager's current understanding of the Income Tax Act amendments should continue until expiration of the forward agreement (May 2016), as well as permit maintaining the Fund's objectives and strategy, and avoid certain risks of fund expense increases.

In connection with this change, investors will be provided additional redemption rights, as further summarized below. The Manager will monitor tax laws and other factors to determine if any further adjustments, in the future, would be in the best interest of investors.

Consequently:

  •  the Fund will not proceed with the conversion of the Fund;
  • unitholders who redeemed units at NAV (net asset value) per unit prior to 5:00 p.m. (Toronto time) on April 30, 2013 were redeemed as of April 30, 2013 and will receive payment on or before the 15th day following that date;
  • Additional redemption rights at the NAV per unit will be granted, at no cost, to the Fund's unitholders:
    • Unitholders may redeem units at NAV between May 5th, 2013 through July 5th, 2013, prior to 5:00 p.m. (Toronto time) on July 5th, 2013. Units surrendered for redemption during this period will be redeemed at NAV on July 5th, 2013 and each redeeming unitholder will receive payment on or before the 15th day following that date;
    • on an annual basis, thereafter, unitholders will be able to redeem units at NAV during the month of April of each year.
  • the monthly redemption option set out in the Declaration of Trust governing the Fund ("DOT") will be extended so that unitholders of the Fund will continue to benefit from the additional option of redeeming units at 95% of value based on market price as set out in the DOT;
  • the Class A units and the Class U units of the Fund will remain listed and tradable on the Toronto Stock Exchange; and
  • in accordance with the Fund's investment objectives, Class A and Class U unitholders will continue to receive monthly tax-advantaged distributions currently set at CA$0.06 and US$0.06 per unit respectively. Since inception of the Fund through March 31, 2013, Class A and Class U unitholders have received CA$1.32 and US$1.32 per unit in cash distributions, respectively.

We will continue to monitor the situation as we operate the Fund as a closed-end fund.  At the appropriate time and in the best interest of the Fund and its unitholders, we will take the necessary measures, including holding a unitholder meeting, if required. Possible options in the future include: (1) continuing as a closed-end fund with the changes described above; (2) converting to a mutual fund, in the event the Income Tax Act is further amended in such a way as to make it favorable; (3) merging with another closed or open end fund; and (4) terminating the Fund in accordance with the notice provisions contained in the DOT. At the present time the Manager does not intend on changing the investment objectives or the name of the Fund.

Unitholder accounts which are deemed to be non-resident of a Canadian province will continue to be allowed to hold units of the Fund for as long as it remains a closed end fund.

O'Leary Funds Management LP is a Canadian investment fund manager of mutual funds and closed-end funds striving to provide Canadian investors with reliable and unique income solutions. Focused on our value-yield investment philosophy, Canadian and global investment opportunities are identified through a disciplined investment process. Our core principles, Income, Capital Appreciation and Capital Preservation, are driven by each portfolios investment objectives. Our portfolios are diversified by sector, region and asset class. For more details about O'Leary Funds, visit www.olearyfunds.com.

SOURCE: O'Leary Funds Management LP

For further information:

for media inquiries or additional information, please contact Louise Anne Poirier, Investor Relations at info@olearyfunds.com or at 877-849-2004.

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O'Leary Funds Management LP

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O'LEARY U.S. STRATEGIC YIELD ADVANTAGED FUND

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