TSX Symbol: CIX
TORONTO, April 5, 2013 /CNW/ - CI Investments Inc. ("CI") today announced a response to the recent federal budget.
In the budget announced March 21, 2013, the government proposed to eliminate the tax benefits associated with forward agreements used by some mutual funds 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 following CI funds currently use forward agreements:
- Cambridge Income Corporate Class
- Cambridge Income Fund
- CI Income Advantage Fund
- CI Global High Dividend Advantage Corporate Class
- CI Global High Dividend Advantage Fund
- CI Short-Term Advantage Corporate Class
- Select Income Advantage Managed Corporate Class
- Signature Diversified Yield Corporate Class
- Signature Diversified Yield Fund
- Signature High Yield Bond Corporate Class
- Signature High Yield Bond Fund
- Trident Global Opportunities Fund.
CI and its legal and tax advisors continue to consider the implications of the budget and to seek clarification on how this measure will be implemented. Until such clarification is available, CI is advising clients that the funds listed above may not be able to achieve future tax efficiency related to the forward agreements similar to that achieved prior to the federal budget announcement.
CI believes it is also important to note that the budget measures do not directly affect the structure of mutual fund corporations, which are also known as corporate class funds. Although some corporate class funds at CI use forward contracts, investors continue to benefit from the tax advantages of the CI Corporate Class structure, which include:
- Switching or rebalancing between funds within the corporate structure without triggering capital gains, thereby deferring taxes.
- Minimizing taxable dividends through the sharing of expenses and gains and losses within the corporation.
- Receiving tax-efficient capital gains or Canadian dividends.
- The ability to produce a tax-efficient cash flow through T-Class units or a systematic withdrawal plan.
CI Corporate Class has more than 60 funds, including a wide range of 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