CIBC and CI Investments Inc. today announced the launch of CIBC CI M.A.X. Deposit Notes, Series 1. The principal-protected notes are linked to the performance of CI’s Signature Income & Growth Fund and represents the first offering of Maximized Asset Exposure Deposit Notes (M.A.X. Deposit Notes) to retail investors.
Signature Income & Growth Fund is managed by Eric Bushell, chief investment officer of Signature Advisors of CI Investments Inc. The fund provides a diversified mix of income-generating securities, including equities, trusts and high-yield bonds, and is positioned to maximize the short-term benefits of each asset class. The fund’s approximate annual distribution is 7.0%, paid out in monthly distributions.
CIBC CI M.A.X. Deposit Notes provide investors with the opportunity to benefit from the yields offered by Signature Income & Growth Fund while protecting their principal investment at maturity.
To achieve this goal, exposure will be dynamically allocated between units of the fund and bonds in accordance with a pre-defined set of portfolio allocation rules.
“The dynamic allocation strategy not only enhances potential returns with the potential for 200% exposure to the fund during periods of strong fund performance, but such exposure is reduced at times when the fund is not performing as well,” says David McBain, senior vp of CI Investments and president and CEO of Skylon Advisors Inc., which is marketing the Deposit Notes in co-operation with CI.
Investors will be paid monthly coupons equivalent to 75% of ordinary distributions declared payable on the fund with all other distributions being reinvested in the structure. In addition, any growth in the net asset value of the Deposit Notes over the eight-year term will be paid to investors by way of a final variable interest payment on the maturity date.
While there is no cap on the amount of interest that may be payable on the Deposit Notes, it is possible that a monthly coupon may not be paid in any month and a final variable payment may not be paid at maturity. The full $100 principal amount per Deposit Note will be repaid by CIBC on the maturity date regardless of the performance of the fund.
The Deposit Notes are 100% eligible for registered plans. Series 1 is available through most financial advisors and is on sale until November 11. The issue price is $100 per Deposit Note, with the minimum investment being $5,000.
CIBC, CI launch M.A.X. Deposit Notes series
Principal protected notes linked to Signature Income & Growth Fund
- By: IE Staff
- September 27, 2005 September 27, 2005
- 14:45