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Conversion Resource
FROM: D&D 3e
TO: HERO System 5th Edition
If the GM is maintaining a Character Level concept after converting into the HERO System from xD&D, then the Real Cost of Magic Items should be added to a Character's Total Points to estimate how powerful the Character is overall, but do not count as personal Character Points and cannot be tampered with, cannibalized, or altered in any way.
Further if a fixed Level based structure is being enforced, then they do not count towards the Character's Total Points for the purposes of figuring "Character Levels" either.
It is also important for players to realize and understand that if their Character looses an Independent Magic Item by whatever means, the points that are in the item are simply gone. The player does not get to recoup those points to buy their Character some other abilities.
Example: Joe's GM is converting to the HERO System from xD&D and asks Joe to convert his D&D Character to the HERO System. Joe gets a little carried away with the system when making Gaan the "1st level" Fighter.
Joe wants to start the game with a Magic 2-handed Sword of Striking (3d6 HKA, Autofire x3, 0 END (+2 1/4) Two-handed, OIF Independent (-2 3/4) that cost him 39 Real Cost out of his starting 125 Character Points.
Joe's GM is maintaining a fixed Character Level progression for some reason. Though  Gaan counts as a 125 point character for purposes of total points, he only has 86 Character Points for purposes of deciding actual "Character Levels". Without the Sword he is significantly less skilled and competent than a 125 point "1st level" character who does not rely upon magic toys, but with it he is roughly equivalent.
After play starts Joe realizes the error of his ways and wants to trade in the sword and buy new skills; however this is not allowed -- those points are permanently lost to the Magic Item and Gaan is stuck with the item until he either looses it, gives it away, sells it, or trades it in for different Magic Items.
Along comes Folor the 125 point "1st level" Thief, who has no Magic Items but is an excellent mugger. He takes the 2-handed Sword of Striking from Gaan and gains 39 Character Points for purposes of total points, but is still a 125 point character for purposes of "Character Level". He can keep the Sword and use it, sell it, give it away, or trade it in for different Magic Items, but does not have to pay Character Points for it. 
Gaan on the other hand wakes up with a nasty bump on his head and minus 39 Character Points that have been permanently lost unless he can track down Folor and recover the Sword.