Get the cash flow you need from mutual fund distributions
AGF Series T and V provide investors with a regular cash flow, which is paid monthly as a set percentage. For those with non-registered accounts, there can be a tax advantage with the Series T or V cash flow, in that a portion of what you receive is a return of capital (ROC) – and as ROC is considered part of your original principal invested, it’s not considered taxable income.
The other tax consequence to consider is that the ROC distribution decreases the adjusted cost base (ACB) of the original purchase. So when it comes time to sell in the future, tax will be levied on any capital gain (proceeds less the amount of the ACB).
Consequently, a portion of the Series T or V cash flow is not taken into consideration when assessing income level eligibility for government subsidiaries, such as Old Age Security.
Even while receiving a regular cash flow through Series T & V, investments can continue to grow through market appreciation. So investors looking for an income stream have the option to continue being stay diversified in equities rather than reverting solely to income-oriented solutions.
†Source: AGF Investment Operations. Calculations are based on the simplifying assumptions that $100,000 is invested over a 10-year period with a compound rate of return of 8% annually, with no distributions/dividends or taxes. The blue line shows no withdrawals, while the green line illustrates a 5% withdrawal each year (Series V). This scenario is for illustration purposes only, and is not intended to reflect actual or expected returns of an AGF Investment nor an actual investor experience.
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|FUND||Series T||Series V|
Canadian Equity Funds
|AGF Canadian Large Cap Dividend Class||✓||✓|
|AGF Canadian Large Cap Dividend Fund||✓||✓|
|AGF Canadian Stock Fund||✓||✓|
|AGF Dividend Income Fund1||-||✓|
International and Global Equity Funds
|AGF American Growth Class||✓||✓|
|AGF European Equity Class||✓||✓|
|AGF Global Dividend Class (NEW)||-||✓|
|AGF Global Dividend Fund||✓||✓|
|AGF Global Equity Class1||✓||✓|
|AGF Canadian Asset Allocation Fund1||✓||✓|
|AGF Global Balanced Fund1||✓||✓|
|AGF Monthly High Income Fund1||✓||-|
|AGF Traditional Income Fund1||✓||✓|
|AGF Floating Rate Income Fund||✓||✓|
AGF Focus Funds~
|AGF Equity Income Focus Fund||✓||-|
|AGF Income Focus Fund7||✓||✓|
|AGF Elements Yield Portfolio Class (NEW)||-||✓|
|AGF Elements Balanced Portfolio2||✓||✓|
|AGF Elements Balanced Portfolio Class2||✓||✓|
|AGF Elements Growth Portfolio2||✓||✓|
|AGF Elements Growth Portfolio Class2||✓||✓|
~For more information on the underlying funds, please visit the mutual funds section on AGF.com.
'AGF Elements', 'Elements', 'What are you doing after work?' and the AGF logo are trademarks of AGF Management Limited and used under licence. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The payment of distributions and/or dividends should not be confused with a fund's performance, rate of return or yield. If distributions and/or dividends paid by the fund are greater than the performance of the fund, your original investment will shrink. Dividends paid as a result of capital gains realized by a fund, and income and dividends earned by a fund are taxable in your hands in the year they are paid. Monthly distributions on Series T and Series V shares may generally be a return of capital so long as there is sufficient capital attributable to the relevant series. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base falls below zero, you will have to pay capital gains tax on the amount below zero.
Please refer to the prospectus for each product for complete information regarding targeted annual distributions, minimum investments and other important information.
^Under AGF's distribution policy, Series T and V unit-holders will receive 12 monthly distributions. In addition, if an annual distribution of net realized capital gains and/or net income/capital gains is required, unit-holders will receive an additional 13th distribution in December. This may result in two December distributions - one that is the regular monthly distribution and one annual distribution, if required. This annual distribution must be reinvested in additional units of the fund.
The All World Tax Advantage Group is a mutual fund corporation that currently offers approximately 20 different classes of securities. In addition to fund diversification by investment style, geography, and market capitalization, a key benefit of investing in any of the classes within the group is the possibility of sharing incurred expenses (and losses) of the combined structure potentially offsetting income earnings to minimize chance of a dividend declaration. While the articles of AGF All World Tax Advantage Group Limited provide authority to make distributions out of capital and AGF All World Tax Advantage Group Limited intend both to calculate capital in the manner contemplated by the corporate statute for corporations that are not mutual fund corporations and only to declare distributions out of capital if there is sufficient capital attributable to a series, no definitive case law exists to confirm that a mutual fund corporation may make distributions of capital and how it is to be calculated. Further, no advance income tax ruling has been requested or obtained from Canada Revenue Agency, nor is AGF aware of any published advance income tax ruling or the possibility of obtaining such a ruling, regarding the characterization of such distributions or the calculation of capital for such purposes.
Investors should consult their investment professionals and tax advisors prior to implementing any changes to their investment strategies.
The information contained in this document is designed to provide you with general information and is not intended to be tax advice applicable to the circumstances of the investor.
Publication date - April 27, 2016
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