Brompton Funds
Distributions from the Fund may have tax benefits which result in higher after-tax cash flow than if the income had been earned as interest income. 100% of the Fund's distributions are expected to be a return of capital for income tax purposes.
A return of capital results in a deferral of a unitholder's income tax as it is not included in their income but rather it reduces the adjusted cost base of their holdings of the Fund. The reduction in the adjusted cost base of the units are ultimately taxed as a capital gain when the units are sold by investors who hold their units as capital property.
As a result of the Forward Agreement, all of the 2007 distributions were classified as return of capital for tax purposes.
The actual breakdown of distributions for tax purposes will be provided to unitholders annually in February. This information will also be posted on the website as soon as it is available.
This information is of a general nature only and does not constitute legal or tax advice to any particular investor. Accordingly, prospective investors are advised to consult their own tax advisors with respect to their individual circumstances.