Advisor GuideIncome tax at 46.41% MTR – capital gains at 50% $37 Net income $3,963 Difference...

Advisor Guide

Tax-Efficient Investing at its Best

According to Section 51(1) of the Income Tax Act:

■ The investor may switch between the various classes of capital stock of a

corporation without tax consequences.

■ Income tax becomes payable only when capital stock holdings in the

corporation are sold.

Tax-efficient investing at its best

A Mutual Fund Corporation

■ Tax-deferral advantages of

an RSP

■ Ability to lock in investment gains

without triggering a taxable event

■ Tax-efficient source of stable

monthly income

■ Control when you pay tax on your

investment.No capital gains are triggered

when switching to different funds

Switchbetween

funds

Canadian Income

SpecialtyGlobal

$$

$

$


CI Corporate Class

Tax is paid every year on income

Inclusion rate is 100% for interest income or 50% for dividends

100%Government bonds

100%Investment-gradecorporate bonds

100%High-yield corporate bonds

100%Income trusts

50%Preferred shares

50%Dividend-paying common shares

VOLATILITY

RETU

RN


Across the Capital Structure

VOLATILITY

RETU

RN

50%Government bonds

50%Investment-grade corporate bonds

50%High-yield corporate bonds

50%Income trusts

50%Preferred shares

50%Dividend-paying common shares

Tax is paid at time of redemption*

Inclusion rate is always capital gain at 50%

*Dividends are minimized and can only be tax-advantaged dividends or capital gains, not interest income.


With Corporate Class

Real After-Tax GIC Returns

Source: Bank of Canada, Statistics Canada. Based on the average one-year GIC rate, a top marginal tax rate of 46.4% for Ontario in 2008 and the annual rateof inflation.

After tax After inflation1-year GIC avg.

5%

4%

3%

2%

1%

0%

-1%

-2%

2000 2001 2002 2003 2004 2005 2006 2007 2008


Negative After-Tax Returns

Trust Corporate Class

BondFund

CanadianEquityFund

GlobalEquityFund Bond Fund

Canadian Equity FundGlobal Equity Fund


A Level Playing Field

The difference in the after-tax value of $10,000 in income from interest, dividends, capital gains andreturn of capital1

$5,3

60

$4,6

40

$7,6

94

$2,3

06

$7,6

80

$2,3

20

$10,

000

$0

$2,000

$4,000

$6,000

$8,000

$10,000

InterestIncome

DividendIncome

Net

CapitalGains

Returnof Capital

Taxes Paid

1 Assumes a top marginal tax rate of 46.41% for Ontario, 2009.


Why is Tax Efficiency Important?

Gross Tax* After Tax

Interest Income 4% – 2% = 2%Capital Gains 4% – 1% = 3%

Difference +50%*Marginal tax rate of 46.41%. (Capital gains inclusion rate of 50%.) Results have been rounded to the nearest whole number.

After-tax returns


Turning Income into Capital Gains

Provides the ability to:

SWITCHbetween funds without

tax consequences

DEFER income tax on fund earnings

CONVERTdividend and interest income

into capital gains

At no additional cost over the equivalent trust fund


Why CI Corporate Class?

Scenario assumes taxes are paid from the gains of the investment before reinvesting in another investment. Taxes are calculated as follows:closing value less initial investment x 40% estimated MTR = taxable capital gains x 50% estimated MTR = tax paid at switch.

Initial investment

Value

Switch investment – taxes paid

Reinvested amount

Value

Switch investment – taxes paid

Reinvested amount

Value at redemption

Taxes owed

Total after-tax

Year 1

Year 6

Year 12

Year 18

Corporate Class

$10,000

$20,000

$0

$20,000

$40,000

$0

$40,000

$80,000

$14,400

$66,000

Trust

$10,000

$20,000

$2,000

$18,000

$36,000

$3,600

$32,400

$64,480

$6,480

$58,320Difference $7,680


Switch

* 2004 distribution $0.24 per unit, 2005 distribution $0.21 per unit, 2006 distribution $0.19 per unit, 2007 distribution $0.18 per unit, 2008distribution $0.19 per unit.

** Assumes top marginal rate of 46.41% for Ontario, 2008. Actual distribution is taxed by type of income.*** Assumes tax is paid outside the account and lowers the value of the investment.

Signature Canadian Bond Corporate Class & Signature Canadian Bond Fund

A $100,000 investment from December 2003 to December 2008

Amount invested on December 31, 2003

Unrealized capital gains

Distributions (realized gains before tax)*

Income tax paid on distributions**

Actual after-tax value of investment at December 31, 2008***

Corporate Class

$100,000

$18,916

n.a.

n.a.

$118,916

Trust

$100,000

$0

$18,159

$8,428

$109,594Difference $9,322


Defer

* Assumes 96% return of capital, which does not attract tax, and 4% capital gains, redeemed at year end. Assumes top marginal rate of 46.41%for Ontario, 2009.

Cl Canadian Bond Corporate Class

Investment $100,000

SWP at 4% annually* $4,000

Income tax at 46.41% MTR – capital gains at 50% $37

Net income $3,963

Difference $1,819 annually, or 85% more income

Cl Canadian Bond Fund

Investment $100,000

Annual interest distribution 4% $4,000

Income tax at 46.41% MTR– interest income at MTR $1,856

Net income $2,144


Convert

Wide investment choice with more than 55 funds covering Canadian and global income, balancedand equities, as well as Portfolio Select Series managed portfolios.


Investment Options

T-Class provides an income solution that creates a predictable tax-efficient cash flow using CI Corporate Class funds.

By tapping into the unrealized gains in their Corporate Class funds, your clients can create apredictable, monthly income stream and still allow their investments to continue growing at rates thatcan potentially match, or outstrip the rate of withdrawal. They receive a tax-efficient income withoutsacrificing the potential for growth.

With T-Class they are able to have steady income from non-conventional sources, such as equities andbalanced portfolios.

■ tax-efficient income

■ guaranteed monthly distributions of 100% return of capital (ROC)

■ available for more than 30 CI Corporate Class funds

■ provides a high level of sustainable, tax-efficient cash flow with choice of two annual targetdistribution levels – 5% or 8%


T-Class

This chart represents how T-Class works over time.

1 The original investment – which equals the adjusted cost base (ACB)

2 Represents the increase in the market value of the portfolio as it grows over time

3 As the client withdraws monthly income – which is ROC – each withdrawal lowers theadjusted cost base, until such time that,

4 The ACB reaches zero – and from there on any future withdrawals will be tax-advantagedcapital gains


How does T-Class work?

1

2

3 4

Valu

e

Time

Market Value

Original ACB

Declining ACB

CI Private Managed Assets is a flexible program providing institutional and high net worth investorswith superior service and access to CI portfolio managers through a variety of platforms.

■ World-class money management

■ Asset allocation pools and U.S. dollar mandates also available

■ Daily liquidity and account values

■ Transparent institutional fees


CI Private Managed Assets

Portfolio Select Series is a comprehensive investment program, delivering institutional qualityinvestment solutions:

■ Core Portfolios – multi-asset, multi-style, multi-manager optimized portfolios.

■ Flexibility to choose Managed Portfolios or Custom Portfolios.

■ Truly tax-efficient, based on CI Corporate Class platform.

■ Software guides you through the entire process, including customization.

■ Additional services – portfolio rebalancing, monitoring, personalized investment policy statementsand quarterly reporting.

■ Support and monitoring on your behalf make the choices simpler.

■ All unit types available – A (front end, DSC, low load), F, W, I.

■ Cost-effective program with competitive management fees.

■ Minimum initial investment of $50,000 per Managed Portfolio or $50,000 per account for CustomPortfolios.


Portfolio Select Series

HARBOURADVISORS

All charts and illustrations in this guide are for illustrative purposes only. They are not intended to predict or project investment results.

®CI Investments, the CI Investments design and Harbour Advisors are registered trademarks of CI Investments Inc. Commissions, trailing commissions, management fees andexpenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods less thanone year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data assume reinvestment of alldistributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reducedreturns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. TMSignature Funds, Signature Global Advisors, Cambridge Fundsand Cambridge Advisors are trademarks of CI Investments Inc.

For more information on CI Corporate Class, please contact your CI sales team or visit www.ci.com

CORP

_CLS

_BRO

12-

09-E

2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I www.ci.comHead Office / Toronto416-364-1145 1-800-268-9374

Calgary 403-205-43961-800-776-9027

Montreal 514-875-00901-800-268-1602

Vancouver 604-681-33461-800-665-6994

Client Services English: 1-800-563-5181French: 1-800-668-3528

Advisor GuideIncome tax at 46.41% MTR – capital gains at 50% $37 Net income $3,963 Difference...

Documents

Transcript of Advisor GuideIncome tax at 46.41% MTR – capital gains at 50% $37 Net income $3,963 Difference...