TORONTO, April 3, 2013 /CNW/ - The March 21, 2013 federal budget included measures that would eliminate certain tax benefits in investment funds that use forward contracts to convert income to capital gains for tax purposes. The budget describes this structure as "character conversion transactions."
Because the following funds employ these transactions, TD Asset Management Inc. (TDAM) has made the decision to protect existing unitholders and no longer accept additional investments to these funds as of the close of business Friday, April 5, 2013:
- TD Corporate Bond Capital Yield Fund
- TD Fixed Income Capital Yield Pool Class
- TD Global High Yield Capital Class
Although TDAM is seeking further clarification from the federal government regarding the budget measures, it appears that increasing the size of existing character conversion transactions is not permitted. For existing unitholders we believe there will be no change in tax treatment for a minimum of 180 days from March 21, 2013 and as a result of this change there is no reason to redeem their units.
It is important to note that the budget measures do not directly impact the corporate class structure. The key benefits offered by TD Mutual Funds' Corporate Class remain, including the ability to defer capital gains taxes when switching between classes and the ability to potentially minimize taxable distributions.Existing unitholders of these funds are encouraged to speak with their financial advisor about their investment options. About TD Asset Management Inc. Under the TD Mutual Funds name, TD Asset Management (TDAM) provides a diverse range of 70 mutual funds, 26 professionally managed portfolios and 20 corporate class funds. TDAM manages retail mutual fund assets on behalf of more than 1.7 million investors and TD Mutual Funds is one of the most broadly diversified fund families in Canada. Funds are available at TD Canada Trust branches (through TD Investment Services Inc. representatives), TD Direct Investing, TD Wealth Financial Planning and TD Wealth Private Investment Advice, as well as leading investment dealers, independent brokers, advisors and financial planners. As of February 28, 2013, TDAM was the fourth largest mutual fund company in Canada, with $73.1 billion invested in TD Mutual Funds. SOURCE TD Asset Management Inc.
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