CIBC and CIBC Asset Management Inc. today announce the successful completion of the issue of CIBC Asset Management FULPAY DARTS Deposit Notes, Series 3.
The principal-protected notes aim to provide 100% principal protection and investment returns linked to a dynamically allocated notional portfolio of two funds, managed by CIBC Asset Management, as well as a basket of stocks and income trusts selected by Stephen Gerring, one of CIBC Global Asset Management’s premier fund managers.
The notes will pay monthly coupons equal to 100% of the portfolio’s distributions, as well as a final variable payment at maturity, based on the performance of the [ortfolio initially weighted as follows: CIBC Monthly Income Fund (35%); Talvest Millennium High Income Fund (35%); and stocks and income trusts selected by Stephen Gerring (30%).
To hedge its obligation to pay the reference investment returns, CIBC will purchase and sell units of the funds throughout the term of the notes, in accordance with pre-defined portfolio allocation rules, which are managed by CIBC World Markets Inc. The portfolio allocation strategy is designed to reduce an investor’s exposure to the equity account in declining markets and increase it in rising markets while protecting the investor’s principal. CIBC and CIBC Asset Management Inc., the managers of the Funds, each believe that the risks to the Funds associated with the implementation of the portfolio allocation strategy are minimal. Information regarding the assessment of risk for the funds associated with the notes can be found in Amendment no. 3 to the CIBC Mutual Funds Annual Information Form dated December 9, 2005, and in the Talvest and Renaissance Mutual Funds Annual Information Form dated November 29, 2005.