CIBC and CI Investments Inc. today announced the launch of CIBC CI M.A.X. Deposit Notes, Series 2 and Series 2total, which give investors the option to receive or reinvest distributions.

The Series 2 “Coupon Option” will pay out a monthly amount equivalent to 75% of all ordinary distributions of the underlying fund units, with all other distributions reinvested in the notes. Principal repaid at maturity is not eroded by the monthly payments.

With the Series 2total “Reinvestment Option,” 100% of monthly distributions will be reinvested in the notes, providing investors with the opportunity for tax-deferred growth and enhanced returns through additional exposure to the underlying fund.

The notes are linked to the performance of Signature Income & Growth Fund, which provides a well-diversified mix of income-generating securities, including equities, income trusts and high-yield bonds.

A dynamic allocation strategy provides the potential for 200% exposure to the underlying fund with a view to enhancing returns when the fund’s performance is positive and reducing volatility when performance is negative.

The initial investment will be 100% protected if the notes are held until maturity.

“The underlying fund has a terrific five-year track record.” said David McBain, senior vp of CI Investments and president and CEO of Skylon Advisors Inc., which is marketing the notes in co-operation with CI.

Signature Income & Growth Fund is managed by Eric Bushell, chief investment officer of Signature Advisors of CI Investments. Its five-year annualized rate of return is 9.5%. The fund is positioned to maximize the benefits of each asset class and currently has an approximate annual distribution of 6.5%, paid monthly.

Exposure to the fund through the notes will be dynamically allocated between units of the fund and bonds in accordance with a pre-defined set of portfolio allocation rules. Any growth in the net asset value of the 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 notes, it is possible that a monthly coupon may not be paid in any month (coupon option) and a final variable payment may not be paid at maturity. The full $100 principal amount per note will be repaid by CIBC on the maturity date regardless of the performance of the fund.

The are 100% eligible for registered plans. Series 2 and Series 2total are available through advisors and are on sale until March 10.

The issue price is $100 per note, with the minimum investment being $5,000.