TSX Symbol: CIX
TORONTO, April 12, 2013 /CNW/ - CI Investments Inc. ("CI") today
announced that, in response to proposed changes to Canadian tax laws
contained in the recent federal budget, it will be closing certain
funds to new investments.
In the budget announced March 21, 2013, the federal government proposed
to eliminate the tax advantages associated with the use of forward
agreements to achieve capital gains treatment on income that would
otherwise be treated as ordinary income. The government refers to these
as "character conversion transactions."
The legislation implementing this change has not been finalized and
there is still some uncertainty regarding the full impact; however, CI
believes that it is likely that further increases to the size of
character conversion transactions will not be permitted. For that
reason, CI has decided that certain funds using forward agreements will
be closed to new investments as of the close of business on Monday,
April 15, 2013. CI is closing the funds to safeguard the interests of
their current investors. CI also believes that the budget proposals, as
currently interpreted, will permit the funds listed below to continue
to benefit from the tax efficiency offered by the forward agreements
until the expiry of those agreements. CI and its legal and tax advisors
are continuing to consider the implications of the budget measure and
to seek clarification from the Finance Department on its
The funds that will be closed to new investments are:
Cambridge Income Corporate Class
Cambridge Income Fund
CI Global High Dividend Advantage Corporate Class
CI Global High Dividend Advantage Fund
CI Short-Term Advantage Corporate Class
Signature Diversified Yield Corporate Class
Signature Diversified Yield Fund
Signature High Yield Bond Corporate Class
Signature High Yield Bond Fund
CI suggests that investors considering new investments discuss
alternatives for the closed funds with their financial advisors. CI has
over 200 mutual funds, some of which have similar mandates to the funds
that are being closed.
"CI has a wide selection of high-quality funds with a number of choices
to meet the needs of these clients," said Derek J. Green, CI President. "These include funds within our corporate class structure, which
provides tax-efficient benefits that are not affected by the recent
CI also announced the following other changes:
Trident Global Opportunities Fund, a hedge fund, also uses a forward
agreement and will be closed to new investments as of the close of
business on April 30, 2013. CI is considering launching a new version
of this fund.
Signature Enhanced Yield Fund is being renamed Signature Diversified
Yield II Fund to reflect the similar investment mandates of the two
funds. Both funds provide exposure to a diversified portfolio of global
high-yield securities, including corporate bonds, real estate
investment trusts and dividend-paying shares.
Select Income Advantage Managed Corporate Class is being renamed Select
Income Managed Corporate Class.
CI Income Advantage Fund is being renamed CI Income Fund and the fund
will continue to operate in accordance with its investment objectives
and prospectus. The strategies of the fund will be modified to describe
its direct investments in greater detail.
CI Short-Term Corporate Class will be reopened to new investments.
Corporate Class maintains its tax efficiency
CI also notes that there continues to be confusion in the marketplace
regarding the budget's impact on mutual fund corporations or corporate
class funds. CI emphasizes that the budget measure does not directly affect the
corporate class structure, which offers tax advantages that include
switching or rebalancing between funds within the corporate structure
without triggering capital gains, thereby deferring taxes, and
minimizing taxable dividends through the sharing of expenses and gains
and losses within the corporation. CI was the first company to introduce a multi-fund corporate class
structure 25 years ago and today has the industry's largest corporate
class with over 55 equity, balanced and income funds.
About CI Investments - Canada's Investment Company
CI Investments is one of Canada's largest investment management
companies. It offers a broad range of investment products and services,
including an industry-leading selection of investment funds, and is on
the Web at www.ci.com. CI is a subsidiary of CI Financial Corp. (TSX:
CIX), an independent, Canadian-owned wealth management firm with
approximately $104.7 billion in assets as of March 31, 2013.
SOURCE: CI Investments Inc.
For further information:
Derek J. Green