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About Aberdeen G7 Trust (TSX : GSV.UN)

Investment Objectives

The Trust's investment objectives are:

  • Provide Unitholders with a stable stream of monthly distributions targeted at $0.125 per Unit ($1.50 per annum or 10.0% on the original issue price).
  • Preserve and potentially enhance the value of the Trust's Portfolio in order to return at least the original issue price of the Units ($15.00 per Unit) to Unitholders upon the termination of the Trust on December 31, 2008.

Following the recent decline in equity markets G7 has determined that at the present time it is prudent and in the best interest of unitholders to reduce its monthly distributions to protect the Trust's portfolio until market conditions improve. Aberdeen Asset Managers (C.I.) Limited, the investment manager of the Trust (the "Investment Manager"), has also decided to voluntarily reduce its management fee in direct proportion to the decline in the distribution rate, as further detailed below.

Since the Trust's inception on January 24, 2002 to March 31, 2004, the MSCI World Index has fallen by almost 12%. The decline in the value of the portfolio investments has adversely affected the Trust by reducing the market value of the assets with which the Trust has available to generate the ongoing distributions. In addition, the volatility levels of the equity markets have also declined which has had the effect of reducing the amount of cash generated from option writing. The combination of these two factors has resulted in a significant erosion in both the value of the portfolio and its operating flexibility.

As a consequence, on April 5, 2004 the Trust announced that in order to preserve the value of the portfolio and thereby increase the long-term viability of sustainable distributions the following measures have been undertaken by the Trust:

  1. The Trust will reduce the distribution on its units from 10.00% to 7.5% per annum, stated as a percentage of the original unit price of $15.00. This will decrease the annual distribution from $1.50 to $1.125 or on a monthly equivalent basis from $0.125 to $0.09375 per unit.
  2. The Investment Manager's management fee will be reduced from 1.10% of NAV to 0.825% of NAV, which represents a decrease in direct proportion to the decline in the distribution rate.

Investment Strategy

To achieve the Trust's investment objectives, the Trust will manage a diversified portfolio (the "Portfolio") consisting primarily of equity securities of companies selected from the Morgan Stanley Capital International World Index having a market capitalization in excess of US$5 billion and listed for trading on a major North American stock exchange, a major international stock exchange or on the Nasdaq National Market ® (the "Portfolio Universe"). To generate additional returns above dividend income and capital gains generated by the Portfolio, the Trust will write covered call options on all or part of the equity securities in the Portfolio. In addition, the Trust may write cash covered put options in respect of securities in which the Trust is permitted to invest.

Investment Highlights

  • Diversified blue chip portfolio selected from the MSCI World Index each with a market capitalization in excess of US$5 billion.
  • 100% of Net Assets available for investment in global equity markets.
  • Increase the portfolio's total return through covered call option writing during flat or declining markets.
  • Potential for additional returns from dividend growth and capital appreciation of the Portfolio.
  • Additional liquidity via monthly redemption feature.
  • Eligible for RRSPs, DPSPs, and RRIFs as foreign content.
  • Toronto Stock Exchange listing.