April 9, 2013
CIBC (CM: TSX) (CM: NYSE)
The 2013 federal budget included proposed changes to eliminate character conversion transactions using forward contracts. Certain mutual funds use these forwards to convert ordinary income to capital gains for tax purposes. The budget provided a transition period of at least 180 days.
The proposed changes will impact capital yield funds across the financial services industry, including the Renaissance Corporate Bond Capital Yield Fund (the Fund). Existing assets in the Fund will continue to benefit from the forward contracts during the transition period. CIBC Asset Management continues to work with legal counsel to determine the transitional approach for the Fund.
It is our expectation that once the government's proposed changes are implemented, the Fund's 2013 taxation year distributions will be comprised primarily of capital gains, with a smaller portion as ordinary income.
After the transition period, it is our intention to continue to offer the Fund with the same underlying investment focus. The Renaissance Corporate Bond Capital Yield Fund has been one of the strongest fixed income funds in
, independent of the tax structure.
CIBC Asset Management will continue to examine the potential implications of the government's budget proposals and act in the best interest of unitholders.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Renaissance Investments family of funds simplified prospectus before investing. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated.
CIBC Asset Management Inc., the asset management division of CIBC, is responsible for the CIBC and Renaissance Investments families of mutual funds, Imperial Pools, Frontiers Pools and the CIBC family of managed portfolio solutions - Axiom Portfolios, CIBC Managed Portfolio Services and CIBC Personal Portfolio Services. CIBC Asset Management manages more than $60 billion in assets.