# Middlefield Capital Corp



## Square Root (Jan 30, 2010)

I have noticed ads in the G&M for something called "IndexPlus Dividend Fund" offered by Middlefield Capital Corp. These ads seem to imply that you can role certain of your current equity investments into their fund. This is probably to defer any cap gains that may be associated with these equities? The fund is income related and has a current target of 6.5% paid monthly. MER is a high 1.7% The tax deferal coupled with the diversification of a fund like this might appeal to me as I have a very large position in the stock of my previous employer with a low ACB. Anyone have insight into these type of funds(contribution in kind allowing tax deferral)?


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## CanadianCapitalist (Mar 31, 2009)

Square Root said:


> I have noticed ads in the G&M for something called "IndexPlus Dividend Fund" offered by Middlefield Capital Corp. These ads seem to imply that you can role certain of your current equity investments into their fund. This is probably to defer any cap gains that may be associated with these equities? The fund is income related and has a current target of 6.5% paid monthly. MER is a high 1.7% The tax deferal coupled with the diversification of a fund like this might appeal to me as I have a very large position in the stock of my previous employer with a low ACB. Anyone have insight into these type of funds(contribution in kind allowing tax deferral)?


I saw the Middlefield ads as well but I was unable to find the preliminary prospectus on SEDAR. Does anyone here have a link?


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## OptsyEagle (Nov 29, 2009)

I do not know anything about that particular fund, but many new offerings these days are designed to appeal to dividend stock investors. They come up with these investment funds in hopes of attracting your money. Great business, but then some really smart guy figured out, instead of you selling the Royal Bank to buy their fund, and then they take your money and buy the Royal Bank (one of many investments within the fund), why not let you buy their fund with your shares of the Royal Bank. They still get their management fees on your money and you get their fund. Not really much difference and it opens up a larger market for distribution.

That is pretty much it. I doubt there will be any tax deferral since they are pretty much a different investment, but who knows how they work it.


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## Square Root (Jan 30, 2010)

Thanks Eagle. I am thinking the big advantage to using the Royal shares in your example would be the deferral of any taxable capital gains on the Royal shares. Otherwise no obvious advantage? There are provisions in the tax act ( I think 85(1)?) that allows for a ACB roleover when you exchange one property for another? Been a while since I was involved in this stuff though?


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## OptsyEagle (Nov 29, 2009)

They might be able to do that, but I suspect the fund that they are offering is probably a diversified portfolio of dividend paying investments. I doubt CRA would allow you to change the Royal Bank, for example, to a diversified portfolio, and call this the same investment and then allow tax deferral.

Just my opinion. Maybe their smart tax guys have a way around it, but again, I doubt it.


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