First Asset Funds Inc. announced its intention to merge the First Asset equal weight small-cap income fund into its equal weight REIT income fund. Upon completion of the planned merger, former unitholders of the small-cap fund will become unitholders of the REIT fund.

The transaction would be completed in accordance with the permitted merger guidelines approved by unitholders of both funds earlier this year. In particular, (a) the small-cap Fund and the REIT fund have similar investment objectives — namely, to provide unitholders with monthly cash distributions and the opportunity for capital appreciation; (b) both of the funds are managed by First Asset; (c) the manager has determined that there will be no increase in the management expense ratio borne by the unitholders; Unitholders are, in fact, expected to benefit from the cost savings and increased efficiencies realized by the transaction; (d) the exchange ratio will be determined with reference to the net asset value of the funds, and (e) the merger will be accomplished on a tax-deferred “roll-over” basis for unitholders of the small-cap fund.

Prior to the effective date of the merger, the manager of the small-cap fund will liquidate the portfolio securities held by that fund in an orderly manner such that at the time of the merger, assets of the small-cap Fund will be comprised entirely of cash.

Unitholders of the small-cap fund who do not wish to become unitholders of the REIT Fund may sell their units prior to the merger or avail themselves of their right to redeem their units in August. The valuation date for the redemption is Aug. 30 and the cut-off date for receipt of redemption requests by the fund is Aug. 16. Unitholders of the small-cap fund who redeem will receive net asset value per unit, less any expenses associated with the redemption. The merger will not be effected prior to Aug. 31.

The proposed merger is subject to obtaining all required regulatory and third-party approvals, and the manager has the authority to delay or terminate the proposed merger if it determines that it would be necessary or desirable to do so. Once all necessary approvals have been obtained, a release will be issued confirming the effective date of the merger.