MONTREAL, May 10, 2013 /CNW Telbec/ - O'Leary Funds Management LP, the manager (the "Manager") of O'Leary Strategic Yield Advantaged Class (a corporate class of O'Leary Funds Inc., the "Terminating Fund") and O'Leary Strategic Yield Plus Fund (the "Continuing Fund" and together with the Terminating Fund, the "Funds") announces that it will seek approval of the Terminating Fund's shareholders to merge the Terminating Fund into the Continuing Fund (the "Merger"). Alternatively, in the event the Merger is not approved, the Manager will seek shareholder approval for the termination of the Terminating Fund.
On March 21, 2013 the federal budget of the Government of Canada proposed amendments to the Income Tax Act which are expected to eliminate the tax advantages of character conversion transactions employed by tax forward structures at the end of the term of the relevant forward contract. The Terminating Fund's forward contract is set to expire on December 29, 2014.
The Government of Canada has given some guidance with respect to the interpretation of the budget proposals and the Manager's current understanding is that the Terminating Fund may continue to use the Forward Contract until the expiration of its term but that no new subscriptions in the Fund may be used to extend the size of the forward contract. Given the fact that the Terminating Fund is relatively small in size, with approximately $10 million of assets under management, and given that the Terminating Fund cannot grow significantly in size through the use of its alternate strategy to "invest directly in fixed income and/or dividend paying equity securities" as set out in its objectives, without eroding the tax benefits of the forward contract for the Terminating Fund and the unitholders as a whole, the Manager has determined that it is in the best interests of the Terminating Fund's investors to merge the Terminating Fund into the Continuing Fund, which has investment objectives which are substantially similar to the reference fund of the Terminating Fund.
The Manager has obtained approval from the Investment Review Committee of the Terminating Fund for the Merger, which has determined that the Merger achieves a fair and reasonable result for each of the Funds. The Merger has also been approved by the Boards of Directors of O'Leary Funds Inc. and of the Manager, which is the manager of both Funds. A meeting of the shareholders of the Terminating Fund will be held on June 28, 2013, in order to obtain approval of the Merger and subsequent winding up and dissolution of the Terminating Fund and O'Leary Funds Inc. For the purpose of the Meeting, the record date will be May 28, 2013. The Merger will be implemented on or about June 28, 2013, upon receipt of all necessary approvals from the shareholders and, if required, from the securities regulatory authorities under applicable regulation. Pursuant to the Merger, the assets of the Terminating Fund will be transferred to the Continuing Fund and existing shareholders of the Terminating Fund will receives units of corresponding series of the Continuing Fund in exchange for their shares of the Terminating Fund. Upon completion of the Merger, the Terminating Fund and O'Leary Funds Inc. will be dissolved. Should the shareholders of the Terminating Fund vote not to proceed with the Merger, the shareholders will be asked to approve the winding up and dissolution of the Terminating Fund and O'Leary Funds Inc.
The Merger should eliminate the administrative and regulatory costs of operating the Terminating Fund as a separate mutual fund, which is a greater burden on smaller funds.
Shareholders of the Terminating Fund may redeem their shares prior to the Merger in compliance with the redemption provisions of the Terminating Fund, and will continue to have the right to redeem their shares up to the close of business on the last business day before the date of the Merger.
Post-Merger, shareholders of the Terminating Fund will benefit from the same management fees as they currently pay pre-Merger.
Once all operational steps required to implement the Merger are completed, former shareholders of the Terminating Fund will be able to redeem the new series of units of the Continuing Fund on a daily basis at their net asset value via FundSERV and will benefit from the same rights with respect to switches, reclassifications and conversions into other mutual funds managed by the Manager.
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 strategic income solutions. Based 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 portfolio's 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 email@example.com or at 877-849-2004 or 514-849-1056.