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TORONTO, July 25, 2016 /CNW/ - Scotia Managed Companies Administration Inc. (the "Manager"), the manager of Moneda Latam Corporate Bond Fund (the "Fund") (TSX: MLD.UN), announces that as a result of changes to the Income Tax Act (Canada) the Fund's forward agreement (the "Forward Agreement") will be settled on November 3, 2016 (the "Forward Date"), the scheduled maturity date of the Forward Agreement. Following this, it is proposed that the Fund will invest directly in the securities of Moneda Deuda Latinoamericana Fondo de Inversion (the "Moneda Fund"), a US$1.1 billion (as at June 30, 2016) Chilean listed investment fund, which is the notional portfolio that the Forward Agreement references. After the Forward Date, distributions made by the Fund will no longer have the same tax-advantaged nature.
For distributions declared after the Forward Date, the Fund is proposing to initially set its targeted distributions at $0.60 per Class A unit and US$0.60 per Class U unit, per annum, representing an approximate annual yield of 6.38% and 6.34% on the Class A units and Class U units, respectively, based on the net asset value per unit as at July 18, 2016. Following the Forward Date, distributions paid by the Fund are no longer expected to be characterized primarily as capital gains or returns of capital and instead all or a portion of the distributions will be characterized as ordinary income, although the Fund may still distribute capital gains or returns of capital in the future. The maturity of the Forward Agreement will not affect the status of the Fund as a "mutual fund trust" under the Tax Act.
Subject to regulatory approval, the Manager proposes to amend the declaration of trust of the Fund to remove the words "tax-advantaged" and references to the Forward Agreement from its investment objectives. The investment objectives of the Fund after the proposed amendments will be to: (i) preserve and enhance the net asset value of the Fund; and (ii) provide unitholders with quarterly distributions through investment in the Moneda Fund.
On or about the Forward Date, the Manager expects that the Fund will amend its declaration of trust and other ancillary documents as required to reflect the maturity of the Forward Agreement, changes to the investment objectives of the Fund as described above and delete the references to the exposure to the Moneda Fund through the Forward Agreement. There will be no change to the aggregate management fees received by the Manager after the Forward Date.
Certain statements included in this news release constitute forward-looking statements. The forward-looking statements are not historical facts but reflect current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. The Manager undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law. Investment funds are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There is no assurance that the Fund will be able to achieve its distribution and capital preservation objectives or that the full amount of a unitholders investment in the Fund will be returned.
SOURCE Moneda LatAm Corporate Bond Fund
For further information: Investor Relations, Moneda LatAm Corporate Bond Fund, Web site: www.scotiamanagedcompanies.com, Email: [email protected], 26th Floor, 40 King Street West, Toronto, Ontario M5W 2X6, Tel: (416) 945-4262 Fax: (416) 863-7425