in the section titled "Management Fee Distribution Discounts."
update Following industry practice, quoted MERs now include GST, so an MER that used to be 90 bp is now 96 bp and a 60 bp rebate is now 64 bp, etc.
update Starting with the period from 01Mar01 to 30Jun01, CIBC have started to pay quarterly MER rebates to investors who hold a total of at least $150k in CIBC index funds in multiple accounts even though individual accounts may have less than $150k, e.g. $100k in one account and $75k in another.
Moreover, the accounts can be a combination of taxable, RRSP, individual, joint, etc. since it seems that they match using Social Insurance Number (SIN.) The accounts can even be held at different institutions.
Kudos CIBC!
Dear CIBC Investor:
CIBC has introduced management fee rebates to index fund investors with balances over $150,000. The rebates will be calculated daily and paid quarterly to investor's accounts beginning January 4, 1999.
The rebate calculation is based on the closing market value of the eligible index funds within an account multiplied by the daily rebate factor for the account dollar range as listed below:
|
Total market value of index funds within the account |
Management fee rebate (daily factor) |
Management fee rebate (yearly percentage) |
|
$150,000.01 to $500,000 |
.0000164384 |
.60% |
|
$500,000.01 and greater |
.0000178082 |
.65% |
Note: Rebates include applicable sales tax
At the end of each quarterly period, the sum of the daily rebate amounts within the period, will be paid to the investor's account through a special income distribution of additional units to the fund(s) earning the rebate.
It is important to note that rebates will be considered income to non-registered account holders and will be reported on their Statement of Trust Income and T3 tax slip1.
CIBC Securities Inc. reserves the right to discontinue this offer at any time.
The CIBC family of index funds which are eligible for the management fee rebate includes3:
|
CIBC Canadian Index Fund |
CIBC Canadian Bond Index Fund |
|
CIBC U.S. Equity Index Fund |
CIBC International Index Fund |
|
CIBC Canadian Short-Term Bond Index Fund |
CIBC Global Bond Index Fund |
|
CIBC International Index RRSP Fund |
CIBC European Index Fund |
|
CIBC U.S. Index RRSP Fund |
The CIBC 5-Year Protected Mutual Funds are not available for the management fee rebate.
As an example, an investor with an average of $200,000 in index funds within an account for 90 days, might expect to receive a management fee rebate in the amount $295.2
CIBC offers the broadest selection of index funds in Canada with nine funds. CIBC is also the only provider in Canada of a no-cost asset allocation program that allows investors to choose from seven distinct index fund investment portfolios.
1. From CIBC's mutual funds prospectus dated 09Aug02:
In general, if you hold units of a Fund outside of a registered plan, you must include in your income for a taxation year the portion of the net income and the taxable portion of the net realized capital gains that is paid or becomes payable to you in the year, even though these amounts may be reinvested in additional units of the Fund. Distributions from a Fund, including distributions as a result of management fee rebates, may be characterized as dividend income, ordinary income, capital gains or a return of capital. Each type of distribution is taxed differently.Distributions which are characterized as taxable dividends from taxable Canadian corporations are eligible for the dividend tax credit.
Distributions of interest and other ordinary income, including foreign income, are fully taxable...
If a Fund has paid foreign taxes on its foreign income, you may be entitled to claim a foreign tax credit on some or all of the foreign income distributed to you.
Net taxable capital gains realized by a Fund and distributed to you will preserve their character as taxable capital gains.
You do not have to pay tax on distributions that are a return of capital (generally, distributions in excess of a Fund’s net income and the taxable portion of the Fund’s net realized capital gains), but these distributions, other than to the extent they represent the non-taxable portion of the Fund’s net realized capital gains, will reduce the adjusted cost base of your units of the Fund. The non-taxable portion of a Fund’s net realized capital gains that is distributed to you will not be included in your income nor will it reduce the adjusted cost base of your units.
2. For illustrative purposes only. The actual rebated amount is the sum of the daily rebate amounts as calculated by the daily rebate factor multiplied by closing market value of the eligible index funds within an account.
3. Plus all the other index funds that have been introduced since the original announcement, e.g. Asia Pacific, Emerging Markets.
Original announcement received from CIBC Securities Inc., March 1999