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TheStreet Open House

Invesco Canada Examines Federal Budget Tax Proposal

Stocks in this article: IVZ

TORONTO, March 28, 2013 /CNW/ - Invesco Canada Ltd. is currently reviewing a proposal in the 2013 federal budget that eliminates Character Conversion Transactions - investment strategies that deliver returns in the form of tax-preferred capital gains rather than fully taxable interest income through the use of forward contracts.

The proposal affects PowerShares Tactical Bond Capital Yield Class and Invesco Intactive Strategic Capital Yield Portfolio Class (the "Capital Yield Classes").

The budget proposal applies to any forward contracts with terms exceeding 180 days that are entered into on or after March 21, 2013, or any extension of existing forward contracts on or after March 21, 2013.

The existing forward contracts for PowerShares Tactical Bond Capital Yield Class and Invesco Intactive Strategic Capital Yield Portfolio Class expire in September 2015 and May 2017, respectively.

Under the present terms of the proposal, Invesco Canada believes current Capital Yield Class investors will continue to benefit from the capital gains treatment of returns until the expiry of the forward contracts, provided the forward contracts are not extended.

Invesco Canada is seeking greater certainty from the federal government on how the proposal will be implemented. As more information becomes available, we will determine the appropriate plan of action that puts clients in the best possible position.

Invesco Canada reserves the right to close the Capital Yield Classes to new purchases at any time and without notice, based on its assessment of how new purchases would affect the Capital Yield Classes.

Absent new purchases, changes to the budget proposals or guidance, Invesco Canada is confident investors in the Capital Yield Classes will receive the tax treatment as set forth in the prospectus for the period until expiry of the forward contracts.

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