CI Investments announces changes to its fund lineup

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 implementation.

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 budget."

Other changes

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 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
CI Investments
(416) 364-1145

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