ci protected leverage deposit notes, series 2 due march 13 ... · ci protected leverage deposit...
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Info Statement_CI Protected Leverage_S2_FINAL.doc
INFORMATION STATEMENT DATED DECEMBER 17, 2007
This Information Statement has been prepared solely for assisting prospective purchasers in making an investment decision with respect to the Notes. This Information Statement should not be reproduced or disseminated in whole or in part without the permission of SG Canada. This Information Statement constitutes a public offering of these notes only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such notes. No securities regulatory authority in Canada has in any way passed upon the merits of the notes offered hereunder and any representation to the contrary is an offence. The Notes offered under this Information Statement have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or any state securities law and may not be offered or sold in the United States or to U.S. persons. The Notes offered under this Information Statement may not be offered or sold in any jurisdiction outside of Canada where it would be unlawful to do so.
CI Protected Leverage Deposit Notes, Series 2 due March 13, 2013
Payment of all amounts under the Notes
will be irrevocably and unconditionally guaranteed by Société Générale
Société Générale (Canada) ("SG Canada"), a Schedule II bank under the Bank Act (Canada) and a wholly-owned subsidiary of Société Générale, is hereby offering CI Protected Leverage Deposit Notes, Series 2 (each a "Note" and, collectively, the "Notes") due March 13, 2013 (the “Maturity Date”), the return on which is linked, in the manner provided herein, to the performance of Series A units (“Units”) of Signature Income & Growth Fund (the "Fund") managed by CI Investments Inc. The Notes are designed to provide 200% exposure to Units of the Fund, while providing principal protection at Maturity. The Notes will be offered at a price of $100 per Note (the “Principal Amount”). The Notes will mature on the Maturity Date and may not be redeemed by SG Canada prior to the Maturity Date.
At Maturity, a Note entitles the holder to payment of an amount in Canadian dollars equal to the Principal Amount plus the Variable Return, if any (collectively referred to as the “Maturity Redemption Amount”). The Variable Return is based on the performance of a notional portfolio (“Portfolio”). The Portfolio will provide 200% exposure to the Units of the Fund and 100% exposure to a Loan (as defined below) throughout the term of the Notes, regardless of the performance of the Fund. The Portfolio will be reset on a daily basis to ensure 200% exposure to Units of the Fund and 100% exposure to the Loan is continuously maintained.
The amount of the Variable Return payable at Maturity, if any, will be determined by reference to the Final Portfolio Value (as defined below). The Variable Return, if any, per Note will be payable in Canadian dollars on the Maturity Date and will equal the amount, if any, by which the Final Portfolio Value exceeds the Principal Amount. The “Final Portfolio Value” will equal the Portfolio Value (as defined below) on the third Business Day preceding the Maturity Date (the “Final Calculation Date”). The Portfolio Value per Note on the Settlement Date will equal $100. It is possible that the Final Portfolio Value will be less than $100 per Note, in which case no Variable Return will be payable on the Notes and only the Principal Amount will be payable on the Maturity Date. The Notes will mature on the Maturity Date (as defined below) and are not redeemable prior to the Maturity Date.
The Notes will be subject to a fee (the “Portfolio Fee”) equal to 2.95% per annum of the aggregate value of the Units in the Portfolio. The Portfolio Fee will be calculated and payable daily to the Calculation Agent of the Notes. From the Portfolio Fee, the Calculation Agent will pay a fee to the CI Investments Inc. in respect of any management expenses payable on the Fund.
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The Notes represent deposits under the Bank Act (Canada). The Notes will not bear interest but will rather have a return per Note, if any, equal to the difference between the Maturity Redemption Amount and the Principal Amount. All payments due under the Notes will be subject to an irrevocable and unconditional guarantee (the "Guarantee") by Société Générale ("Société Générale" or the "Guarantor"), a French banking corporation.
Prospective investors should carefully consider with their advisors the suitability of the Notes in light of their investment objectives and the information in this Information Statement, and should carefully consider certain risk factors associated with an investment in the Notes, including those set out below under “Risk Factors”.
In this Information Statement, "$" refers to Canadian dollars unless otherwise expressly specified.
PRICE: 100% of the Principal Amount Minimum Subscription: $5,000 (50 Notes)
THE NOTES WILL NOT CONSTITUTE DEPOSITS THAT ARE INS URED UNDER THE CANADA DEPOSIT INSURANCE CORPORATION ACT OR ANY OTHER DEPOSIT
INSURANCE REGIME .
SG Canada will promote, on a best efforts basis, the sale of the Notes in Canada and will form a selling group for the purposes of offering the Notes for sale if, as and when issued by SG Canada.
The settlement of this offering is scheduled to occur on or about March 13, 2008 (the "Settlement Date"). Subscriptions will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. Subscriptions for Notes must be made through the mutual fund entry system FundSERV, under the mutual fund order code SGC101. Subscription funds received will be deposited in an account established by Société Générale Securities Inc. (“SGS”) at HSBC Trust Company (Canada), in trust for the beneficial Holders. Beneficial Holders will not earn or be paid interest on the subscription funds held by HSBC Trust Company (Canada). See "FundSERV – Subscription through a dealer on FundSERV".
A global certificate for the aggregate Principal Amount of the Notes will be issued in registered form to CDS Clearing and Depository Services Inc. or its nominee ("CDS") and will be deposited with CDS on the Settlement Date. Subject to limited exceptions, certificates evidencing the Notes will not be available to Holders and registration of interests in the Notes will be made only through CDS' book-entry system. See "Description of the Notes − Book-Entry System".
This Information Statement has been prepared for the sole purpose of assisting prospective investors in making an investment decision with respect to the Notes. SG Canada has taken reasonable care to ensure that the facts stated in this Information Statement with respect to the description of the Notes are true and accurate in all material respects and that there are no other material facts in relation to the Notes the omission of which would make any statement herein, whether of fact or opinion, misleading as of the date hereof.
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No person has been authorized to give any information or to make any representations other than those that may be contained in:
(a) this Information Statement,
(b) any amendments made from time to time to this Information Statement, or
(c) any supplementary terms and conditions provided in any related global deposit note lodged with a depository or other definitive replacement deposit note;
in connection with the offering or sale of the Notes and, if given or made, such information or representations must not be relied upon as having been authorized. Neither the delivery of this Information Statement nor the issue of the Notes nor any sale thereof will, under any circumstances, constitute a representation or create any implication that there has been no change in the affairs of SG Canada since the date hereof.
This Information Statement constitutes an offering of the Notes only in those jurisdictions and to those persons where and to whom they may be lawfully offered for sale, and then only through persons duly qualified to effect such sales. This Information Statement does not constitute an offer or invitation by anyone in any jurisdiction in which such offer or invitation is not authorized or to any person to whom it is unlawful to make such offer or invitation. The distribution of this Information Statement and the offering and sale of the Notes in some jurisdictions may be restricted by law. Persons into whose possession this Information Statement comes are required by SG Canada to inform themselves of and observe any and all such restrictions.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended ("U.S. Securities Act"), and subject to certain exceptions, may not be offered or sold within the United States or to U.S. persons as contemplated under the U.S. Securities Act and the regulations thereunder.
No securities commission or similar authority has in any way passed upon the merits of the Notes or reviewed this Information Statement and any representation to the contrary is an offence.
All information in this Information Statement relating to the Fund is derived from publicly available sources. SG Canada makes no assurances, representations or warranties with respect to the accuracy, reliability or completeness of information obtained from these publicly available sources. The daily net asset value of the Units of the Fund can be found at www.ci.com. Information about the past performance of the Fund is not, and should not, be construed as being indicative of the future performance of the Fund. Past performance is not a guarantee of future results.
No person receiving a copy of this Information Statement may treat this Information Statement as constituting an invitation to purchase or subscribe for the underlying Units of the Fund, and a purchase of Notes will not constitute an investment in the Units, nor will it give a Holder any rights in or to any such securities or the investments they represent.
“Protected Leverage” is a trademark of Société Générale (Canada). “CI Investments” and the CI Investments design are registered trademarks of CI Investments Inc. and have been licensed for use by Société Générale and its affiliates. “CI” and “Signature Income & Growth Fund” are trademarks of CI Investments Inc. and have been licensed for use by Société Générale and its affiliates. CI Investments Inc. makes no representation, condition or warranty, express or implied, to the Holders or any member of the public regarding the advisability of investing in securities generally or in the Notes particularly or the ability of the Notes to track the performance of the Fund or general stock market performance or any other economic factors.
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TABLE OF CONTENTS
SUMMARY OF THE OFFERING................................................................................................5
DEFINITIONS ..............................................................................................................................11
SG CANADA AND SOCIÉTÉ GÉNÉRALE..............................................................................14
CI INVESTMENTS INC. .............................................................................................................15
THE FUND ....................................................................................................................................15
DESCRIPTION OF THE NOTES...............................................................................................20
FUNDSERV ...................................................................................................................................30
GUARANTEE ...............................................................................................................................31
CALCULATION AGENT............................................................................................................32
PLAN OF DISTRIBUTION .........................................................................................................32
SECONDARY MARKET FOR THE NOTES............................................................................32
USE OF PROCEEDS....................................................................................................................34
RISK FACTORS...........................................................................................................................34
CERTAIN CANADIAN INCOME TAX CONSIDERATIONS......... .......................................40
ELIGIBILITY FOR INVESTMENT ......................... .................................................................41
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SUMMARY OF THE OFFERING
The following is a summary of more detailed information appearing elsewhere in this Information Statement. Capitalized terms not defined in this summary are defined elsewhere in this Information Statement.
Issuer: Société Générale (Canada)
Guarantor: Société Générale
Notes Offered: CI Protected Leverage Deposit Notes, Series 2 due March 13, 2013
Fund: Signature Income & Growth Fund
Units: Series A units of the Fund
Issue Size: Maximum of $100,000,000. The maximum issue size may, however, be waived by SG Canada in its entire discretion.
Issue Price: 100% of the Principal Amount.
Settlement Date: On or about March 13, 2008.
Maturity Date: March 13, 2013, or any later date resulting from the postponement of the Final Calculation Date due to a Market Disruption Event. See “Description of the Notes – Special Circumstances – Market Disruption Event”.
Principal Amount: $100 per Note.
Minimum Subscription:
$5,000 (50 Notes).
Maturity Redemption Amount:
On the Maturity Date, each Holder is entitled to receive, in respect of each Note held by such Holder as at the Maturity Date, repayment of the Principal Amount plus payment of the Variable Return, if any (collectively referred to as the "Maturity Redemption Amount").
Variable Return: The amount of the Variable Return will be determined by the Final Portfolio Value. The Variable Return, if any, per Note will be payable in Canadian dollars on the Maturity Date and will equal the amount, if any, by which the Final Portfolio Value exceeds the Principal Amount.
Final Portfolio Value: The Final Portfolio Value means the Portfolio Value determined on the Final Calculation Date. The Portfolio Value will be $100 on the Settlement Date and, for any Calculation Date thereafter, shall equal a number equal to:
Previous Portfolio Value x (200% x Daily Fund Return – 100% x Loan Charge)
Principal Amount Repayment:
In addition to the Variable Return, if any, payable to Holders, the full Principal Amount of $100 per Note will be payable on the Maturity Date (regardless of the performance of the Portfolio and even if, for any reason, the Final Portfolio Value is less than $100). The Notes cannot be redeemed or retracted prior to the Maturity Date, but they can be sold in any available secondary market as described under “Secondary Market for the Notes”.
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Portfolio: The value of the Maturity Redemption Amount will depend on the performance of the Portfolio. Specifically, the Variable Return will be based on the increase, if any, in the Portfolio Value from the Settlement Date to the Final Calculation Date.
The Portfolio is a notional account that will hold Units of the Fund. Holdings in the Portfolio will be leveraged through a notional revolving loan facility (the “Loan”) that provides 200% exposure to Units of the Fund on a daily basis. The Loan will be reset daily to ensure that 200% exposure to Units of the Fund in the Portfolio is maintained throughout the term of the Notes. Accordingly, the notional number of Units in the Portfolio and the amount of the Loan that will be outstanding during the term of the Notes will increase or decrease on a daily basis depending on the performance of the Portfolio.
All references to “Units” are to Class A units of the Fund that are generally available for purchase to all prospective investors. The value of a Unit at any time will be equal to the net asset value of a Class A unit of the Fund grossed-up by an amount which reflects the management expense ratio (“MER”) otherwise applicable to Class A units of the Fund that are notionally held in the Portfolio. Accordingly, the value of the Units at any time will be higher than the value of the Class A units of the Fund by an amount that reflects the MER applicable to Class A units of the Fund. However, the Calculation Agent will be paid the Portfolio Fee referred to below from the assets of the Portfolio. The Portfolio Fee is 0.61% greater than the Fund’s MER for the 2006 fiscal year. All ordinary distributions and all other distributions (e.g., extraordinary and capital gains distributions) payable by the Fund will be re-invested in additional Units.
The Portfolio is a notional portfolio only. A Holder will not have, and the Notes will not represent, any direct or indirect ownership or other interest in the Units in the Portfolio. Holders will not have any direct or indirect recourse to the Portfolio or to the Fund, and will only have a right against SG Canada to be paid the Maturity Redemption Amount at Maturity. All actions taken in connection with the Portfolio are notional actions only.
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Loan: The holdings of Units will be leveraged through the Loan to provide 200% exposure to Units of the Fund. Initially, Units will be purchased using an amount equal to the offerings proceeds (namely, $100.00 per Note), together with a draw down on the Loan of $100.00 per Note, such that the total initial notional investment in Units is $200.00 per Note.
The Loan will be reset on every Calculation Date to an amount equal to 100% of the Portfolio Value on the applicable Calculation Date. Accordingly, the amount of the Loan that will be outstanding during the term of the Notes will increase or decrease on a daily basis depending on the performance of the Portfolio. If the Portfolio Value increases, the amount of the Loan will be increased to facilitate the notional purchase of additional Units. Conversely, if the Portfolio Value decreases, Units will be redeemed to pay down the Loan to the applicable amount.
Interest on the Loan will accrue daily at a rate (“Loan Rate”) equal to the one-month Bankers’ Acceptance Rate (being the average bid rate of interest for Canadian dollar bankers’ acceptances with a maturity of one-month appearing on the Reuters Data Service page “CDOR” as of 10:00 a.m., Toronto time) plus 0.25% per annum, calculated and payable daily. Payment of interest on the Loan will be satisfied by the notional redemption of Units.
Fees: SG Canada has agreed to pay the members of the selling group for the sale of the Notes a commission of 4.00% of the aggregate Principal Amount of the Notes. The amount of such fees will not reduce the Portfolio Value.
Ongoing Fees: The following fees and expenses will be deducted from the Portfolio. These fees and expenses will therefore have the effect of reducing the Portfolio Value of the Portfolio and, therefore, the amount of the Variable Return that may be payable to Holders at Maturity:
(a) Fund: A fee will be deducted in respect of Units of the Fund (the “Portfolio Fee”) equal to 2.95% per annum, calculated and deducted daily through an adjustment to the Daily Fund Return. A portion of the Portfolio Fee will be payable to CI Investments Inc. in respect of any management expenses payable on the Fund.
(b) Loan: Notional interest on the Loan will accrue daily at the Loan Rate, calculated and payable daily.
In addition, it should be noted that a sale of Notes prior to the Maturity Date may be subject to an Early Trading Charge. See “Secondary Market for the Notes”.
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Special Circumstances:
If a Market Disruption Event in respect of the Fund occurs on a Calculation Date, determination of the Portfolio Value will be postponed to the next Business Day, not to exceed the eighth Business Day following the postponed Calculation Date. If, following that eighth Business Day, the Calculation Date has not occurred, the Calculation Agent may estimate the Portfolio Value, taking into consideration the last available net asset value of the Fund, expenses accrued, the relevant market circumstances on the Calculation Date, and any other information that in good faith it deems relevant.
In the event the Calculation Date with respect to the Final Portfolio Value is postponed due to a Market Disruption Event as set forth above, the originally scheduled Maturity Date of March 13, 2013 shall automatically be postponed to five Business Days following the new Calculation Date.
Guarantee: The payment of all amounts under the Notes when and as they shall become due and payable will be irrevocably and unconditionally guaranteed by Société Générale (the "Guarantor"), a French banking corporation. The Guarantor is, at the date of this Information Statement, rated AA by Standard & Poor's Rating Service, a division of The McGraw-Hill Companies, Inc. and Aa1 by Moody's Investors Services, Inc. There can be no assurance that, if the Notes were specifically rated by rating agencies, they would have the same rating as long-term obligations of Société Générale. Credit ratings are intended to provide potential investors with an independent assessment of the credit quality of an issue or issuer of securities and do not speak to the suitability of particular securities for any particular investor. Standard & Poor's Rating Service’s, a division of The McGraw-Hill Companies, Inc. and Moody's Investors Services, Inc.’s ratings represent an evaluation that is based solely on credit related factors and not market risk factors. The credit ratings assigned to the Guarantor may not reflect the potential impact of all risks on the Guarantor. A rating is therefore not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating agency. Prospective investors should consult the relevant rating organization with respect to the interpretation and implications of the ratings. Either of the foregoing ratings may be revised or withdrawn at any time by the respective rating agency. See “Guarantee”.
Calculation Agent: Société Générale.
Rank: The Notes will constitute direct, unsecured deposit obligations of SG Canada. The Notes will be issued on an unsubordinated basis and will rank pari passu as among themselves and with all other outstanding direct unsecured and unsubordinated, present and future obligations (except as otherwise prescribed by law) of SG Canada, and will be payable ratably without any preference or priority. The Notes will not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act or any other deposit insurance regime. See "Description of the Notes - Rank".
Use of Proceeds: The net proceeds of this offering (after payment of the fees and expenses related to this offering and the commission payable to the members of the selling group) will be used by SG Canada for general banking purposes.
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Risk Factors: Prospective investors should carefully consider all of the information set forth in this Information Statement and, in particular, should evaluate the specific risk factors set forth under "Risk Factors" in which is set out a discussion of certain risks involved in an investment in the Notes.
Book-Entry System: The Notes will be evidenced by a single nominative global certificate held by CDS, or on its behalf, as registered holder of the Notes. Registration of the interests in and transfers of the Notes will be made only through the Book-Entry System of CDS. Subject to limited exceptions, no Holder will be entitled to any certificate or other instrument from SG Canada or CDS evidencing the ownership thereof and no Holder will be shown on the records maintained by CDS except through a CDS Participant. See "Description of the Notes – Book-Entry System". All payments on the Notes will be made to CDS or its nominee, as registered holder, for distribution by CDS to its participants’ accounts. All payments distributed to HSBC Trust Company (Canada), as a CDS Participant, will be credited to Holders in accordance with the register showing records of beneficial interest in the Notes maintained by SGS. Holders will have an indirect beneficial interest in the global certificate held by CDS. See "FundSERV".
Certain Canadian Tax Consequences:
There should be no deemed accrual of interest in respect of any Variable Return for any taxation year of a Holder ending before the taxation year in which the Final Calculation Date occurs. Subject to the limitations outlined under "Certain Canadian Income Tax Considerations", below, an amount received by a Holder on a disposition or a deemed disposition of a Note (other than a payment by SG Canada) should give rise to a capital gain (or a capital loss) to such Holder at such time to the extent such amount exceeds (or is less than) the aggregate of such Holder's adjusted cost base of the Note and any reasonable costs of disposition. Holders should consult their own tax advisors with respect to their particular circumstances. See "Certain Canadian Income Tax Considerations".
Eligibility for Investment:
The Notes will, at the Settlement Date, be qualified investments under the Income Tax Act for trusts governed by registered retirement savings plans, registered retirement income funds, registered education savings plans, registered disability savings plans and deferred profit sharing plans, other than a deferred profit sharing plan under which SG Canada or a person or partnership with which SG Canada does not deal at arm's length within the meaning of the Income Tax Act is an employer. See "Eligibility for Investment".
Secondary Market for the Notes:
The Notes are new obligations for which there is currently no established trading market. SG Canada does not intend to apply for listing of the Notes on any exchange.
Subject to certain conditions, SG (Canada Branch) intends to maintain, under normal market conditions, a daily secondary market for the Notes until the Maturity Date, but reserves the right, in its sole discretion, not to do so in the future without providing prior notice to the Holders. A Holder who sells a Note prior to the Maturity Date will receive sales proceeds equal to the Bid Price (as defined below) for the Note (which may be less than the Principal Amount of the Note) minus any applicable Early Trading Charge (as defined below). A sale of Notes originally purchased through a dealer on
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FundSERV will be subject to certain additional procedures and limitations established by FundSERV. In order to maintain a secondary market for Notes, SG (Canada Branch) will effect the purchase of Notes as principal and may sell the Notes purchased from Holders for a price that may be the same as or higher than the Bid Price. In those circumstances, SG (Canada Branch) will retain the difference between the Bid Price and the resale price. See "FundSERV", "Plan of Distribution" and "Risk Fa ctors – Secondary Market for the Notes / Possible Illiquidity of Secondary Market".
Holders choosing to sell their Notes prior to the Maturity Date may be unable to sell their Notes and, if a sale is possible, may receive a price which is substantially less than the Principal Amount and which does not necessarily reflect the performance of the Fund or the Portfolio at such date. See "Plan of Distribution" and "Risk Factors – Secondary Market for the Notes / Possible Illiquidity of Secondary Market".
An early trading charge (the "Early Trading Charge") will be deducted from a Holder's sales proceeds for sales effected through a dealer on FundSERV on or prior to March 13, 2010. The Early Trading Charge will be equal to a percentage of the Principal Amount and will be determined as follows:
If Sold Early Trading Charge On or before September 13, 2008 5.70% From September 14, 2008 through March 13, 2009 4.25% From March 14, 2009 through September 13, 2009 2.85% From September 14, 2009 through March 13, 2010 1.40% Thereafter Nil
See "Plan of Distribution".
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DEFINITIONS
In this information statement, unless the context otherwise requires:
"Bid Price" has the meaning ascribed thereto under "FundSERV — Sale through a dealer on FundSERV".
"Book-Entry System" means the record entry securities transfer and pledge system established and governed by one or more agreements between CDS and CDS Participants pursuant to which the operating rules and procedures for such system are established and administered by CDS.
"Business Day" means a day that is a day (other than a Saturday or a Sunday) on which commercial banks are open for business in Toronto, Canada, Montréal, Canada, New York, U.S.A., and Paris, France.
"Calculation Agent" means Société Générale.
"Calculation Date" means a day that is a Business Day, starting with the Initial Calculation Date and ending with the Final Calculation Date. The occurrence of a Calculation Date is subject to the provisions outlined under "Description of the Notes – Special Circumstances".
"CDS" means CDS Clearing and Depository Services Inc. or its nominee.
"CDS Participant" means a broker, dealer, bank or other financial institution or other person for whom CDS effects book-entry transfers and pledges of Notes under the Book-Entry System.
"CRA" has the meaning ascribed thereto under "Certain Canadian Income Tax Considerations".
"Daily Fund Return" means, for any Calculation Date, a number (which may be positive or negative) equal to (i) 1 plus (ii) the percentage change in a notional $100 investment in Units of the Fund from the previous Calculation Date (or from the Settlement Date with respect to the Initial Calculation Date), as reasonably determined by the Calculation Agent. For purposes of calculating the Daily Fund Return, the percentage change in the net asset value of the Units of the Fund will be adjusted to reflect the Portfolio Fee deducted in respect of the gross performance of the Fund, calculated and deducted daily.
"Early Trading Charge" means the amount that will be deducted from a Holder's sale proceeds for sales effected through a dealer on FundSERV on or prior to March 13, 2010. The Early Trading Charge will be equal to a percentage of the Principal Amount and will be determined as follows:
If Sold Early Trading Charge
On or before September 13, 2008 5.70%
From September 14, 2008 through March 13, 2009
4.25%
From March 14, 2009 through September 13, 2009
2.85%
From September 14, 2009 through March 13, 2010
1.40%
Thereafter Nil
"Final Calculation Date" means three (3) Business Days prior to the Maturity Date.
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"Final Portfolio Value" means the Portfolio Value as of the Final Calculation Date.
"Financial Statements" has the meaning ascribed thereto under "SG Canada and Société Générale — Société Générale".
"Fund" means Signature Income & Growth Fund.
"FundSERV" means the network to facilitate financial product order flow and payments operated by FundSERV Inc.
"Group" has the meaning ascribed thereto under "SG Canada and Société Générale — Société Générale".
"Guarantee" means the unconditional and irrevocable guarantee by the Guarantor to the Holders of the payment in full of all amounts due under the Notes.
"Guarantor " means Société Générale.
"Holder" means a beneficial or registered owner of a Note, as the context requires.
"Income Tax Act" has the meaning ascribed thereto under "Certain Canadian Income Tax Considerations".
"Initial Calculation Date " means the first Business Day following the Settlement Date.
"Loan Charge" means (i) 1 plus (ii) the Loan Rate multiplied by the actual number of days elapsed since the immediately preceding Calculation Date divided by 365.
" Loan Rate" means, for any Calculation Date, a rate equal to the one-month Bankers’ Acceptance Rate (being the average bid rate of interest for Canadian dollar bankers’ acceptances with a maturity of one-month appearing on the Reuters Data Service page “CDOR” as of 10:00 a.m., Toronto time) plus 0.25% per annum, as of that Calculation Date.
"Market Disruption Event " has the meaning ascribed thereto under "Description of the Notes — Market Disruption Event".
"Maturity Date " or "Maturity " means March 13, 2013, or any later date resulting from the postponement of a Calculation Date due to a Market Disruption Event as set forth under "Description of the Notes – Special Circumstances – Market Disruption Event".
“Maturity Redemption Amount ” means the sum of the Principal Amount and the Variable Return.
"Note" means the CI Protected Leverage Deposit Notes, Series 2, due March 13, 2013.
"Portfolio Value" will be $100 per Note on the Settlement Date and, for every Calculation Date thereafter, means a percentage amount equal to:
Previous Portfolio Value x (200% x Daily Fund Return – 100% x Loan Charge)
"Previous Portfolio Value" means, for any Calculation Date, the Portfolio Value determined by the Calculation Agent for the immediately preceding Calculation Date, provided that the Previous Portfolio Value cannot be less than $1.00.
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"Principal Amount " means $100 per Note. "Regulations" has the meaning ascribed thereto under "Certain Canadian Income Tax Considerations".
"Settlement Date" means on or about March 13, 2008, or such other date as may be determined by SG Canada, on which the Notes will be issued.
"SG Canada" means Société Générale (Canada).
"SG (Canada Branch)" means Société Générale (Canada Branch).
"SGS" means Société Générale Securities Inc.
"Tax Proposals" has the meaning ascribed thereto under "Certain Canadian Income Tax Considerations".
"Variable Return" means the return per Note, if any, payable on the Maturity Date in addition to the Principal Amount, as described under "Description of the Notes – Variable Return". The Variable Return shall equal the amount, if any, by which the Final Portfolio Value exceeds the Principal Amount.
"$" means Canadian dollar, unless otherwise specified.
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SG CANADA AND SOCIÉTÉ GÉNÉRALE
SG Canada
SG Canada, a wholly owned subsidiary of Société Générale, has had a presence in Canada since 1974, initially involved in leasing operations in Montréal. It subsequently evolved into a bank and was formed as a Schedule II bank under the Bank Act (Canada) in 1981. Its head office is located at 1501, McGill College Avenue, Suite 1800, Montréal, Québec, H3A 3M8.
Société Générale
Société Générale, a French banking corporation, is the most important constituent entity of the Société Générale Group (the "Group"). The Group is an international banking and financial services group based in France that includes approximately 300 French and foreign banking and non-banking companies. The Group also holds (for investment) minority interests in industrial and commercial companies. In this Information Statement, "Société Générale" refers to the parent company only and the term "Group" refers to Société Générale and its domestic and foreign subsidiaries and affiliates which are consolidated in full or under the equity method.
Société Générale was originally incorporated in 1864 and was nationalized along with other major French commercial banks in 1945. In July 1987, Société Générale was returned to the private sector through offerings of shares in France and abroad. Société Générale and other French financial institutions of the Group are subject to laws and regulations which are applicable generally to financial institutions doing business in the relevant jurisdictions and which cover such matters as liquidity and asset coverage, reserve requirements, risk diversification and limitations on equity investments in non-financial companies, all of which require compliance with numerous reporting and accounting requirements.
The Group is engaged in a broad range of banking and financial services activities, including deposit-taking, lending and leasing, securities brokerage services, investment management, investment banking, capital markets activities and foreign exchange transactions. The Group’s customers are served by its extensive network of domestic and international branches, agencies and other offices. The Group operates in 77 countries around the world.
The registered office of Société Générale is located at 29, boulevard Haussmann, 75009 Paris, France. Its headquarters are located at Tour Société Générale, 17 cours Valmy, 92972 Paris La Défense Cedex, France.
The Group has had operations in the United States since 1940. Société Générale maintains banking offices in New York, Chicago, Los Angeles and Dallas. The Group also conducts business in the United States through a number of subsidiaries.
At December 31, 2006, the Group had total consolidated assets of $1,472.6 billion, total customer loans of $405.6 billion, total customer deposits of $411.6 billion, and shareholders' equity of $44.8 billion (original amounts in Euro have been translated herein into Canadian dollars at the exchange rate of EUR 1 = $1.5391 at December 31, 2006). The foregoing financial figures have been derived from, and are qualified by reference to, the Group's consolidated financial statements and notes thereto (including the Notes containing a discussion of the significant accounting principles applied) (the "Financial Statements") that are contained in the Group's Registration Statement filed with the Autorité des Marchés Financiers (French Securities Regulator) on March 6, 2007.
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The Financial Statements are prepared in accordance with International Financial Reporting Standards, which differ in certain significant respects from generally accepted accounting principles in Canada. Financial information of the Group is available on the web site www.socgen.com.
CI INVESTMENTS INC.
The manager and investment advisor of the Fund, CI Investments Inc. (the “Investment Advisor”), is a corporation controlled by CI Financial Income Fund, a Canadian-owned wealth management company with approximately $95.0 billion in fee-earning assets as of November 30, 2007. CI Financial Income Fund is listed on the Toronto Stock Exchange under the symbol “CIX.UN”. CI Financial Income Fund offers a broad range of investment products and services, including an industry-leading selection of investment funds. The portfolio manager of the Fund is Eric Bushell. Eric Bushell, Senior Vice-President, Portfolio Management and Chief Investment Officer of Signature Advisors of CI Investments, has over 16 years of investment industry experience. Mr. Bushell began his career as an equity analyst and equity trader at BPI Mutual Funds before becoming a portfolio manager at the firm. He joined CI's Signature team in 1999 when BPI became part of CI Investments. He holds the CFA designation and a BA from Queen's University.
THE FUND
The Fund will be used to calculate the Maturity Redemption Amount payable on the Maturity Date.
Information on the Fund
All information in this Information Statement relating to the Fund is derived from publicly available sources and is presented in summary form. As such, neither SG Canada, SG (Canada Branch) nor SGS assumes any responsibility for the accuracy or completeness of such information or accept any responsibility for the calculation of the net asset value of the Fund or the provision of any future information in respect of the Fund. The current simplified prospectus of, and other information about, the Fund may be obtained at www.sedar.com. Information in this Information Statement is taken from the current simplified prospectus of the Fund, as amended to the date hereof, and from other publicly available sources.
The daily net asset value of the Units of the Fund can be found at www.ci.com. Information below about the past performance of the Fund is not, and should not be, construed as being indicative of the future performance of the Fund. Past performance is not a guarantee of future results.
Investment Objective
The Fund seeks to provide a steady flow of current income while preserving capital by investing in a diversified portfolio of securities composed mainly of equity, equity-related and fixed income securities of Canadian issuers. The Fund may also invest in foreign securities.
Investment Strategy
The Investment Advisor seeks to achieve the investment objective by investing in a combination of equity, fixed income and derivatives. To the extent the Fund invests in equity securities, these will include preferred and common shares broadly diversified by sector and style. Fixed income may consist of high-yielding government and corporate bonds, debentures, bank loans and floating rate debt instruments. This may include securities that are unrated or have credit rating below investment grade.
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The term to maturity of these securities will vary depending on the Investment Advisor’s outlook for interest rates. The Fund may also generate income by investing in real estate investment trusts (“REITs”), royalty trusts, income trusts, bank loans and floating rate debt instruments and other similar high yielding instruments. The Investment Advisor will seek to produce additional income through covered call writing and other derivative strategies.
The Investment Advisor uses a combination of top down macro analysis and fundamental analysis for bottom-up security selection.
When deciding to buy or sell an investment, the Investment Advisor also considers whether the investment is a good value relative to its current price.
The Investment Advisor may also choose to invest the Fund’s assets in foreign securities. It is currently expected that investments in foreign securities will generally be no more than 49% of the Fund’s assets.
The Investment Advisor may also choose to:
• use warrants and derivatives such as options, futures, forward contracts and swaps as permitted by securities regulations;
• enter into securities lending transactions, repurchase transactions and reverse repurchase transactions, to the extent permitted by the securities regulations, to earn additional income for the Fund;
• temporarily hold cash or cash-equivalent securities for strategic reasons;
• enter into securities lending transactions, repurchase transactions and reverse repurchase transactions, to the extent permitted by the securities regulations, to earn additional income for the Fund.
The Fund may, from time to time, invest a portion of its assets in securities of other mutual funds. The Fund also may engage in short selling. In determining whether securities of a particular issuer should be sold short, the Investment Advisor uses the same analysis that is described above for deciding whether to purchase the securities. The Fund will engage in short selling as a complement to the Fund’s current primary discipline of buying securities with the expectation that they will appreciate in market value. The Fund is permitted to engage in short selling as a result of special relief it obtained from the Canadian securities regulators.
Distributions and Dividends
The Fund expects to make a fixed distribution each month. If the Fund earns more income or capital gains than the fixed distributions, it will distribute the excess each December. If the Fund earns less than the amount distributed, the difference is a return of capital.
As at November 30, 2007, the indicated distribution rate of the Fund was 6.52%. The indicated rates of return of the Fund are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
The return on the Notes is linked to the total return of the Fund. As such, for the purposes of determining the Variable Return of the Notes, all distributions by the Fund on Units in the Portfolio will be considered to be reinvested in additional Units of the Fund for the Portfolio as if such distributions
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were reinvested in additional Units of the Fund on the date on which such distributions would normally be received by a holder of Units of the Fund. No payments will be made to Holders during the term of the Notes reflecting distributions made by the Fund.
Management Expense Ratio
The Fund has certain expenses from time to time including management fees paid to the Investment Advisor, the manager of the Fund, for the management services provided by it. The ratio of these expenses to the net asset value of the Fund is called the MER. The Fund’s MER for the 2006 fiscal year was 2.34%. The MER may increase or decrease over the term of the Notes. In order to ensure that there is no duplication of fees payable by Holders in the Notes, the value of a Unit in the Portfolio on any day will be equal to the net asset value per Unit of the Fund (as officially determined by the Investment Advisor as of the close of business on the previous Business Day) grossed-up by an amount which reflects the management expense ratio (“MER”) otherwise applicable to Units of the Fund that are notionally held in the Portfolio. Accordingly, the value of the Units at any time will be higher than the value of the Class A units of the Fund by an amount that reflects the MER applicable to Class A units of the Fund. However, the Calculation Agent will be paid the Portfolio Fee referred to below from the assets of the Portfolio. All ordinary distributions and all other distributions (e.g., extraordinary and capital gains distributions) payable by the Fund will be re-invested in additional Units.
Portfolio Fee
A Portfolio Fee of 2.95% per annum payable to SG Canada, calculated and deducted daily through an adjustment to the Daily Fund Return, will be charged daily against the Portfolio. The Portfolio Fee is 0.61% greater than the Fund’s MER for the 2006 fiscal year. A portion of the Portfolio Fee will be paid by SG Canada to the CI Investments Inc.
Composition of the Fund
The table below shows the top 10 holdings of the Fund as at November 30, 2007:
Holding %TD Bank 2.63%Royal Bank of Canada 2.21%Bank of Nova Scotia 1.57%Suncor Energy 1.51%CIBC 1.43%BNP Paribas 1.27%EnCana Corp. 1.27%Petro-Canada 1.04%Talisman Energy 1.04%Barrick Gold Corp. 0.88%
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The charts below show the composition of the Fund by asset class, equity sector and geographic region as at November 30, 2007.
By Asset Class:
By Equity Sector:
By Geographic Region:
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Historical Performance of the Fund
Information below about the past performance of the Fund is not, and should not be construed as, indicative of the future performance of the Fund. Past performance is not a guarantee of future results.
The table below shows the performance of the Units of the Fund as at November 30, 2007 measured over various periods. The performance is based on the total return of the Fund, on the basis that all distributions by the Fund were reinvested in additional Units of the Fund.
Year To Date 1 Month 3 Month 1 Year 3 Year 5 Year 10 Year Since Inception1.68% -1.60% -0.55% 3.26% 10.28% 11.70% N/A 9.02%
The table below shows the calendar year performance of the Units of the Fund since its inception. The performance is based on the total return of the Fund, on the basis that all distributions by the Fund were reinvested in additional Units of the Fund.
2001 2002 2003 2004 2005 20069.0% -2.4% 15.6% 13.3% 14.7% 12.7%
The graph below shows the growth of an initial investment of $10,000 in Units of the Fund from its inception on November 13, 2000 to November 30, 2007. An initial investment of $10,000 in the Units of the Fund would have grown to a value of $18,381 on November 30, 2007. This assumes that all distributions by the Fund were reinvested in additional Units of the Fund.
Signature Income & Growth Fund
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DESCRIPTION OF THE NOTES
The following is a description of the material attributes and characteristics of the Notes. Reference is made to the global certificate referred to below for the full statement of such attributes and characteristics.
General; Evidence of the Notes
This offering consists of Notes, with a Principal Amount of $100 per Note, which will be issued by SG Canada on the Settlement Date. A minimum subscription of $5,000 (50 Notes) is required to invest in the Notes. This offering of Notes is subject to a maximum issue size of $100,000,000, however, such maximum issue size may be waived by SG Canada in its entire discretion. The Notes will mature on March 13, 2013, or any later date resulting from the postponement of the Calculation Date due to a Market Disruption Event. See "Special Circumstances – Market Disruption Event".
A global certificate (the "Global Certificate") for the aggregate Principal Amount of the Notes will be issued in registered form to CDS. Subject to limited exceptions, certificates evidencing the Notes will not be available to Holders under any circumstances and registration of ownership of the Notes will be made only through the Book-Entry System. See "Book-Entry System".
Maturity Redemption Amount
On the Maturity Date, a Holder will receive, in respect of each Note held by such Holder as at the Maturity Date, a return equal to the Maturity Redemption Amount. The Maturity Redemption Amount is equal to the sum of the Principal Amount and the Variable Return, if any. The Maturity Redemption Amount is dependent on the value of the Final Portfolio Value:
i. if the Final Portfolio Value is equal to or below $100, then the Maturity Redemption Amount per Note will be equal to the Principal Amount.
ii. if the Final Portfolio Value is above $100, then the Maturity Redemption Amount per Note will be equal to the Final Portfolio Value.
The Variable Return, if any, will be payable in Canadian dollars, without any need for the Holders to elect or otherwise take any action. The Variable Return, if any, will be payable on the Maturity Date. In no event will payment of any Variable Return be made by SG Canada earlier than the Maturity Date.
The amount of the Variable Return, if any, that may be payable on the Maturity Date is uncertain until the Final Calculation Date. There is a possibility that a Holder may not receive any Variable Return. The amount of the Variable Return will depend upon the performance of the Portfolio. No Variable Return will be payable to a Holder unless the Final Portfolio Value is greater than $100 per Note.
Final Portfolio Value
The “Final Portfolio Value” means the Portfolio Value determined on the Final Calculation Date. The “Portfolio Value” will be $100 per Note on the Settlement Date and, for any Calculation Date thereafter, shall equal a number equal to:
Previous Portfolio Value x (200% x Daily Fund Return – 100% x Loan Charge)
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Leverage and Daily Rebalancing
It is important to understand the effects of leverage and compounding when investing in any financial product, especially financial products such as the Notes that employ daily rebalanced leverage. The following examples provide an illustration as to how the return of a financial product that provides leverage which rebalances periodically (i.e., daily, weekly or monthly; such as the Notes), can vary from the return of a financial product that provides leverage by way of a loan with a fixed amount.
Example #1: Effect of positive Fund performance.
In this hypothetical illustration, the Units of the Fund (assuming re-investment of all distributions) generally increase in value from the Issue Date.
Leveraged, Rebalanced Daily (e.g., CI Protected Leverage Deposit Notes):
Calculation Date
Days Fund ($100) Notional Portfolio
Value* ($100) Daily
Fund Return Loan
Charge
Portfolio
Value March 13, 2008 $100.00 $100.00 $100.00
March 14, 2008 1 $100.42 $100.42 1.0042 1.0001 $100.82
March 17, 2008 3 $100.28 $100.27 0.9986 1.0004 $100.49
March 18, 2008 1 $100.47 $100.46 1.0019 1.0001 $100.85
March 19, 2008 1 $101.12 $101.11 1.0065 1.0001 $102.14
March 20, 2008 1 $101.20 $101.19 1.0008 1.0001 $102.28
March 21, 2008 1 $101.83 $101.82 1.0062 1.0001 $103.54
March 24, 2008 3 $101.94 $101.92 1.0010 1.0004 $103.71
March 25, 2008 1 $101.77 $101.75 0.9983 1.0001 $103.35
March 26, 2008 1 $101.67 $101.65 0.9990 1.0001 $103.13
March 27, 2008 1 $101.89 $101.87 1.0021 1.0001 $103.55
March 28, 2008 1 $101.82 $101.79 0.9993 1.0001 $103.39
March 31, 2008 3 $102.22 $102.19 1.0039 1.0004 $104.15
April 1, 2008 1 $102.21 $102.18 0.9999 1.0001 $104.12
April 2, 2008 1 $102.29 $102.26 1.0008 1.0001 $104.26
April 3, 2008 1 $102.24 $102.20 0.9995 1.0001 $104.14
April 4, 2008 1 $102.31 $102.27 1.0007 1.0001 $104.27
April 7, 2008 3 $102.34 $102.30 1.0002 1.0004 $104.27
April 8, 2008 1 $102.32 $102.28 0.9998 1.0001 $104.21
April 9, 2008 1 $102.29 $102.24 0.9997 1.0001 $104.13 April 10, 2008 1 $102.44 $102.39 1.0014 1.0001 $104.42
Leverage, Not Rebalanced Daily (e.g., traditional margin loan):
Calculation Date
Days Fund ($100)
Notional Portfolio
Value* ($100)
Portfolio Return
Portfolio Return x
200% Interest
Portfolio
Value March 13, 2008 $100.00 $100.00 $100.00
April 10, 2008 28 $102.44 $102.39 2.39% 4.78% $0.39 $104.40
* “Notional Portfolio Value” represents the value of a notional $100 investment in Units of the Fund after deduction of the Portfolio Fee.
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In the above illustration, if an investor made a direct $100 investment in the Fund, the value of that $100 investment would be worth $102.44 after twenty Business Days. Alternatively, a $100 investment in a product that employed leverage by way of a fixed loan (i.e., the product offered a notional loan amount of $100 that did not rebalance during the term of the product) would, on the same date, have a notional “portfolio value” equal to $104.40. In comparison, a $100 investment in the Notes (which employs leverage with daily rebalancing) would, on the same date, have a notional Portfolio Value equal to $104.42 per Note. It is important to note that, prior to Maturity, the Bid Price of the Notes may vary significantly from the Portfolio Value.
Example #2: Effect of negative Fund performance.
In this hypothetical illustration, the Units of the Fund (assuming re-investment of all distributions) generally decrease in value from the Issue Date.
Leveraged, Rebalanced Daily (e.g., CI Protected Leverage Deposit Notes):
Calculation Date
Days Fund ($100) Notional Portfolio
Value* ($100) Daily
Fund Return Loan
Charge
Portfolio
Value March 13, 2008 $100.00 $100.00 $100.00
March 14, 2008 1 $99.82 $99.82 0.9982 1.0001 $99.62
March 17, 2008 3 $99.63 $99.62 0.9980 1.0004 $99.19
March 18, 2008 1 $99.45 $99.44 0.9982 1.0001 $98.82
March 19, 2008 1 $98.72 $98.71 0.9926 1.0001 $97.35
March 20, 2008 1 $98.90 $98.89 1.0018 1.0001 $97.69
March 21, 2008 1 $98.53 $98.52 0.9962 1.0001 $96.94
March 24, 2008 3 $98.90 $98.88 1.0037 1.0004 $97.62
March 25, 2008 1 $98.72 $98.70 0.9982 1.0001 $97.25
March 26, 2008 1 $98.17 $98.15 0.9944 1.0001 $96.14
March 27, 2008 1 $97.61 $97.59 0.9943 1.0001 $95.03
March 28, 2008 1 $97.43 $97.41 0.9981 1.0001 $94.66
March 31, 2008 3 $97.61 $97.58 1.0018 1.0004 $94.97
April 1, 2008 1 $97.43 $97.40 0.9981 1.0001 $94.60
April 2, 2008 1 $97.80 $97.77 1.0038 1.0001 $95.30
April 3, 2008 1 $97.43 $97.40 0.9962 1.0001 $94.56
April 4, 2008 1 $97.06 $97.02 0.9962 1.0001 $93.83
April 7, 2008 3 $98.17 $98.13 1.0114 1.0004 $95.93
April 8, 2008 1 $97.98 $97.94 0.9980 1.0001 $95.54
April 9, 2008 1 $97.61 $97.57 0.9962 1.0001 $94.80 April 10, 2008 1 $97.43 $97.38 0.9981 1.0001 $94.43
Leverage, Not Rebalanced Daily (e.g., traditional margin loan):
Calculation Date
Days Fund ($100)
Notional Portfolio
Value* ($100)
Portfolio Return
Portfolio Return x
200% Interest
Portfolio
Value March 13, 2008 $100.00 $100.00 $100.00
April 10, 2008 28 $97.43 $97.38 -2.62% -5.23% $0.39 $94.38
* “Notional Portfolio Value” represents the value of a notional $100 investment in Units of the Fund after deduction of the Portfolio Fee.
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In the above illustration, if an investor made a direct $100 investment in the Fund, the value of that $100 investment would be worth $97.43 after twenty Business Days. Alternatively, a $100 investment in a product that employed leverage by way of a fixed loan (i.e., the product offered a notional loan amount of $100 that did not rebalance during the term of the product) would, on the same date, have a notional “portfolio value” equal to $94.43. In comparison, a $100 investment in the Notes (which employs leverage with daily rebalancing) would, on the same date, have a notional Portfolio Value equal to $94.38 per Note. However, it is important to remember that, with an investment in the Notes, even if the Portfolio Value is less than $100 at Maturity, the Principal Amount ($100 per Note) will still be payable at Maturity. It is also important to note that, prior to Maturity, the Bid Price of the Notes may vary significantly from the Portfolio Value.
As can be seen from the above examples, the effect of compounding may be particularly pronounced with leverage and daily rebalancing. Generally speaking, when the Fund performs positively, the amount of the Loan will increase, which may enhance the combined effect of leverage and positive performance. In contrast, when the Fund performs negatively, the amount of the Loan will decrease, which may lessen the combined effect of leverage and negative Fund performance.
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Historical Example
The example set out below demonstrates how a Note would have performed if issued on December 17, 2002, assuming a constant Loan Rate of 4.87% (equivalent to what the Loan Rate would have been for December 17, 2007). The performance of the Fund is used for illustration purposes only, and is not an estimate or forecast of the future performance of the Fund. The following example assumes the Investor has purchased a single Note.
5-year performance period (December 17, 2002 to December 17, 2007)
In this historical example, the Units of the Fund (assuming re-investment of all distributions) increased in value from the Settlement Date. The Variable Return payable on the Maturity Date would have been the amount by which the Final Portfolio Value exceeded $100 (in this example, $130.57 per Note). The full Principal Amount of $100 per Note would have also been repayable on the Maturity Date (for a total of $230.57 per Note). In this historical example, the Maturity Redemption Amount would have generated an annually compounded total return of approximately 18.18% as compared with an annually compounded total return of approximately 12.36% for a direct investment in the Units of the Fund. For secondary market purposes, it should be noted that the Bid Price of the Notes may, prior to Maturity, vary significantly from the Portfolio Value.
CI Protected Leverage Deposit Notes vs. Units
75.00
100.00
125.00
150.00
175.00
200.00
225.00
250.00
275.00
300.00
12/1
7/20
02
6/17
/200
3
12/1
7/20
03
6/17
/200
4
12/1
7/20
04
6/17
/200
5
12/1
7/20
05
6/17
/2006
12/1
7/20
06
6/17
/200
7
12/1
7/20
07
Units
$230.57
$179.10
Portfolio Value
25
CI Protected Leverage Deposit Notes vs. Units
80.00
90.00
100.00
110.00
120.00
130.00
8/3
0/0
2
2/2
8/0
3
8/3
0/0
3
2/2
9/0
4
8/3
0/0
4
2/2
8/0
5
8/3
0/0
5
2/2
8/0
6
8/3
0/0
6
2/2
8/0
7
8/3
0/0
7
NA
VIllustrative Example of the Maturity Redemption Amount
The hypothetical example set out below demonstrates how the Notes might perform in the case of only moderately positive Fund performance, resulting in negative performance of the Portfolio. The hypothetical performance of the Fund is used for illustration purposes only, and is not an estimate or forecast of the future performance of the Fund. The following example assumes the Investor has purchased a single Note.
In this hypothetical example, the value of the Units of the Fund (assuming re-investment of all distributions) experiences relatively moderate positive performance from the Settlement Date. As the Final Portfolio Value on the Maturity Date does not exceed $100, only the Principal Amount of $100 per Note would have been repayable on the Maturity Date. In this hypothetical example, as the Variable Return is nil, only the Principal Amount would be repayable at Maturity. In comparison, a direct investment in the Units of the Fund as would have generated an annually compounded total return of approximately 3.35%. Accordingly, even though the performance of the Fund was positive, the Fund’s performance was not sufficient to offset the cost of leverage combined with the 0.61% per annum differential between the Ongoing Fees of the Note and the MER of the Fund.
For the Portfolio Value to increase in value on any given Calculation Date, the return of the Units of the Fund must exceed the sum of the (i) difference between the Portfolio Fee and the MER of the Fund, and (ii) 50% of the Loan Rate (an amount equivalent to approximately 3.05% per annum as of December 17, 2007).
Units
$117.93
Portfolio Value
$99.69
0 Yr1 Yr2 Yr3 Yr4 Yr5
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Special Circumstances
Good Faith Determinations
The Calculation Agent's calculations and determinations in respect of the Notes shall, absent manifest error, be final and binding on the Holders. The Calculation Agent is obligated to carry out its duties and functions in good faith and using its reasonable judgement.
Market Disruption Event
If the Calculation Agent determines that a Market Disruption Event (as defined below) has occurred and is continuing on any date that, but for that event, would be a Calculation Date, then such Calculation Date will be postponed to the immediately following Business Day on which there is no Market Disruption Event in effect. However, there will be a limit for postponement of any Calculation Date. If on the eighth Business Day following the date originally scheduled as a Calculation Date, such Calculation Date has not occurred, then despite the occurrence of any Market Disruption Event on or after such eighth Business Day:
(a) such eighth Business Day shall be the Calculation Date, and
(b) where on that eighth Business Day a Market Disruption Event has occurred and is continuing, then the net asset value of the Fund for such Calculation Date will be a value determined by the Calculation Agent as at such Calculation Date taking into consideration the last available net asset value for the Fund, expenses accrued, the relevant market circumstances on the Calculation Date, and any other information that in good faith it deems relevant.
In the event the Final Calculation Date is postponed due to a Market Disruption Event as set forth above, the originally scheduled Maturity Date of March 13, 2013 shall automatically be postponed to five Business Days following the new Calculation Date.
"Market Disruption Event" means any bona fide event, circumstance or cause (whether or not reasonably foreseeable) beyond the reasonable control of SG Canada or any person that does not deal at arm's length with SG Canada which has or will have a material adverse effect on the ability of investors generally to place, maintain or modify hedges of positions in respect of the Fund.
Extraordinary Events
If the Calculation Agent determines, acting reasonably and in good faith, that an event (an “Extraordinary Event”) has occurred or will occur, within 60 Business Days of such determination, that adversely and materially affects the ability or cost of SG Canada (or an affiliate) to hedge its obligation to pay the Variable Return or the Principal Amount under the Notes, which event may include, but is not limited to, any of the following events:
(i) a fundamental change in the investment strategy, objectives or policies of the Fund;
(ii) the failure by the Fund to comply with, or a material change to, the provisions of the Fund’s constitutive and governing documents;
(iii) CI Investments Inc. ceases to be the manager of the Fund;
(iv) the Fund announces that it will be discontinued or otherwise wound-up or that it will be merged, consolidated or combined with any other fund;
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(v) the commencement or continuation of litigation or regulatory action involving the Fund or the Fund’s manager; or
(vi) the failure by the Fund or the Fund’s manager to fulfill any of its obligations under any agreement with SG Canada (or an affiliate) in relation to SG Canada’s hedge of its obligations under the Notes.
then SG Canada may, after consultation with the Calculation Agent and CI Investments Inc. (or its successor), upon notice to the Holders providing brief details to Holders of the Extraordinary Event to be given effect on a Business Day (the effective date of such notification being the “Substitution Date”), replace the affected Fund (the “Deleted Fund”) with another mutual fund managed or sponsored by CI Investments Inc. (or its successor) that has investment objectives and strategies similar to those of the Deleted Fund that were in effect immediately prior to the occurrence of the Extraordinary Event (the “Replacement Fund”), provided that such replacement will, in the determination of the Calculation Agent, have the effect of eliminating the Extraordinary Event. The Replacement Fund will be substituted for the Deleted Fund on the Substitution Date by redeeming all of the Units of the Deleted Fund in the Portfolio on the Substitution Date and, on the following Exchange Day, with the redemption proceeds from the Units of the Deleted Fund, purchasing units of the Replacement Fund. Upon any such replacement (a “Substitution Event”), the Replacement Fund shall be deemed to be the Deleted Fund for purposes of calculating the Maturity Redemption Amount.
If SG Canada, after consultation with the Calculation Agent and CI Investments Inc. (or its successor), is unable to identify another mutual fund managed or sponsored by CI Investments Inc. (or it successor) that has investment objectives and strategies similar to those of the Deleted Fund that were in effect immediately prior to the occurrence of the Extraordinary Event, then SG Canada may, at its option and in its sole discretion upon notice to the Holders to be given effect on a Business Day (the date of such notification being the “Extraordinary Event Notification Date”), elect to accelerate the occurrence of any remaining Calculation Dates (whether or not affected by such Extraordinary Event) scheduled to occur after the Extraordinary Event Notification Date (collectively, the “Remaining Final Calculation Dates”) and thereupon have the Variable Return, if any, per Note determined and calculated effective as of the Extraordinary Event Notification Date (the “Variable Return Early Payment Amount”). Payment of the Variable Return per Note will be made on the tenth Business Day after the Extraordinary Event Notification Date. In these circumstances, payment of the Principal Amount per Note will not be accelerated and will remain due and payable on the Maturity Date.
The Calculation Agent’s calculations and determinations in respect of the Notes will, absent manifest error, be final and binding on Holders. Holders will not be entitled to any compensation from SG Canada or the Calculation Agent for any loss suffered as a result of any of the Calculation Agent’s calculations and determinations.
Variable Return
The Notes will not bear interest but will rather have a return (the "Variable Return") per Note, if any, equal to the difference between the Maturity Redemption Amount and the Principal Amount. The Maturity Redemption Amount is equal to the sum of the Principal Amount and the Variable Return, if any.
The Variable Return, if any, will not be payable prior to the Maturity Date. A Holder cannot elect to receive the Variable Return prior to the Maturity Date.
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Rank
The Notes will constitute direct unsecured deposit obligations of SG Canada. The Notes will be issued on an unsubordinated basis and will rank pari passu as among themselves and with all other outstanding direct unsecured and unsubordinated, present and future obligations (except as otherwise prescribed by law) of SG Canada, and will be payable rateably without any preference or priority. The Notes will not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act or any other deposit insurance regime.
Payment by SG Canada on the Notes
SG Canada will be required to make available to the Holders on the Maturity Date, funds in an amount sufficient to pay the Maturity Redemption Amount through CDS or its nominee, or otherwise by cheque or (with the agreement of a Holder) by wire transfer. Upon receipt in full of such amounts by CDS or the Holders, as the case may be, SG Canada and the Guarantor will be discharged from any further obligation with regard to such payments. See "Book-Entry System".
Deferred Payment
Federal laws of Canada preclude payments of interest or other amounts for the advancing of credit at effective rates in excess of 60% per annum. When any payment is to be made by SG Canada or the Guarantor to a Holder on account of the Maturity Redemption Amount of a Note, payment of a portion of such payment may be deferred to ensure compliance with such laws.
No Redemption at the Option of SG Canada or the Holder
The Notes are not subject to redemption at the option of SG Canada or any Holder prior to the Maturity Date.
Book-Entry System
The Notes will be issued in "book-entry only" form and must be subscribed, transferred and repurchased through a participant in the depository service of CDS (a "CDS Participant") either directly or through FundSERV. On the Settlement Date, SG Canada will cause all Notes in the form of a single Global Certificate to be delivered to and registered in the name of CDS. Registration of interests in and transfers of the Notes will be made only through the Book-Entry System of CDS. Subject to the exceptions mentioned hereinafter, no Holder will be entitled to any certificate or other instrument from SG Canada or CDS evidencing the ownership thereof, and no Holder will be shown on the records maintained by CDS, except through a CDS Participant. All rights of a Holder must be exercised through, and all payments or other property to which such Holder is entitled will be made or delivered by, CDS or the CDS Participant through which the Holder holds the Notes. Upon subscription for any Notes, the Holder will receive only the customary confirmation that will be sent to such Holder by SGS or by other registered dealers from whom or through whom such Notes are subscribed.
Definitive certificates in relation to the Notes will be issued to CDS Participants if SG Canada advises the Holders that CDS is no longer willing or able to properly discharge its responsibilities as depositary with respect to Notes or if CDS ceases to be a recognized clearing agency under applicable Canadian securities legislation and the Holders and SG Canada are unable to locate a qualified successor depositary system, or if SG Canada notifies CDS that it desires or is required to replace the Global Certificate with Notes in definitive form. Upon the surrender by CDS of the Global Certificate representing the Notes and instructions from CDS for registration, SG Canada will issue definitive certificates to CDS Participants appearing on the records maintained by CDS at the time of or as soon
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as practicable prior to such delivery, which definitive certificates will thereafter evidence Notes previously evidenced by the Global Certificate.
The Maturity Redemption Amount payable under the Global Certificate will be paid to the applicable CDS Participants to those participants' CDS accounts in amounts proportionate to their respective beneficial interests in the Notes as shown on the records of CDS or its nominee. It is expected that payments by CDS Participants to owners of beneficial interests in the Global Certificate held through such CDS Participants will be governed by standing instructions and customary practises, as is the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such CDS Participants. The responsibility and liability of SG Canada in respect of the Notes represented by the Global Certificate is limited to making payment of any amount due on the Global Certificate to CDS or its nominee. The Maturity Redemption Amount payable to Holders who subscribed for their Notes through a dealer on FundSERV will be paid through CDS or its nominee to HSBC Trust Company (Canada), as CDS Participant and will then be credited to Holders in accordance with the register showing record of beneficial interest in the Notes maintained by SGS.
Neither SG Canada nor SGS will assume any liability for: (a) any aspect of the records relating to the beneficial ownership of the Notes held by CDS or the payments relating thereto, (b) maintaining, supervising or reviewing any records relating to the beneficial ownership of the Notes, or (c) any advice or representations made by, or with respect to, CDS and the rules governing CDS, or any action to be taken by CDS or at the direction of the CDS Participants.
Notice to Holders
All notices to the Holders regarding the Notes will be validly given if (i) given through CDS to CDS Participants, or (ii) published once in a major French language Canadian newspaper and in the national edition of a major English language Canadian newspaper. SG Canada will give notice as aforesaid to the Holders of any material change or material fact relating to the Notes.
Monthly reports on the performance of the Fund and daily Bid Price will be available on the Investment Advisor’s website at www.ci.com.
Amendments to the Notes
The Global Certificate may be amended without the consent of the Holders if, in the reasonable opinion of SG Canada, the amendment would not materially and adversely affect the interests of the Holders. In other cases, the Global Certificate may be amended if the amendment is approved by a resolution passed by a favourable vote of the Holders of not less than 66 2/3% of the Notes represented at a meeting convened for the purposes of considering the resolution, or by written resolution signed by Holders of not less than 66 2/3% of the Notes. Each Holder is entitled to one vote per Note held by such Holder for the purposes of voting at meetings. Quorum for a meeting shall be reached if Holders of 10% or more of the Notes are present at the meeting. If a quorum is not reached at any meeting, that meeting must be adjourned by the attending Holders to a later date not earlier than seven Business Days after the original meeting date, in which case the quorum required for such adjournment shall be the Holders present at such adjourned meeting. The Notes do not carry the right to vote in any other circumstances. The records of CDS or its nominee shall be used to determine Holders entitled to vote at any such meeting.
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Subscriber’s Right of Rescission
A subscriber of Notes may rescind any order to buy such Notes from SG Canada (or its purchase if issued) by notice in writing to SG Canada within 48 hours following the earlier of actual receipt or deemed receipt of the Information Statement or any amendment or addendum thereto. Upon rescission, the subscriber shall be entitled to a refund of the subscription price and any fees relating to the purchase that have been paid by the person. This rescission right is not available to a person buying Notes in the secondary market. A subscriber of Notes will be deemed to have received the Information Statement or any amendment or addendum thereto: (i) on the day recorded as the time of sending by the server or other electronic means, if provided by electronic means; (ii) on the day recorded as the time of sending by fax machine, if provided by fax; (iii) four days after the postmark date, if provided by mail; and (iv) when it is received, in any other case.
FUNDSERV
Subscription for Notes must be made through dealers who are participants on FundSERV.
General Information
FundSERV is owned and operated by both fund sponsors and distributors and provides distributors of funds and certain other financial products with online order access to such financial products. FundSERV was originally designed and is operated as a mutual fund communications network facilitating members in electronically placing, clearing and settling mutual fund orders. In addition, FundSERV is currently used in respect of other financial products that may be sold by financial planners, such as the Notes. FundSERV acts as a conduit and facilitates payment among its participants.
Notes subscribed through a dealer on FundSERV held in an account in trust for the beneficial Holders
As stated above, all Notes will initially be issued in the form of a single Global Certificate to be delivered to and registered in the name of CDS. See "Book-Entry System" above for further details on CDS as a depository and related matters with respect to the Global Certificate. Holders of Notes will therefore have an indirect beneficial interest in the Global Certificate. That indirect beneficial interest will be recorded in CDS as being held in an account established by SGS at HSBC Trust Company (Canada), in trust for the beneficial Holders. SGS will record in its books the respective beneficial interests in the Notes subscribed by Holders. A Holder should understand that SGS will make such recordings as instructed through FundSERV by the Holder’s dealer.
Subscription through a dealer on FundSERV
In order to subscribe for Notes through FundSERV, the subscription funds must be delivered to SGS in immediately available funds at least four Business Days prior to the Settlement Date.
Upon receipt of the subscription funds, SGS will deposit the subscription funds in an account established by SGS at HSBC Trust Company (Canada), in trust for the beneficial Holders. Beneficial Holders will not earn or be paid interest on the subscription funds held by HSBC Trust Company (Canada).
If Notes subscribed through a dealer on FundSERV are not issued for any reason, the subscription funds will be returned forthwith to the investor.
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Sale through a dealer on FundSERV
Holders may sell Notes, subject to the secondary market terms and conditions established by SG (Canada Branch), by using the sale procedures of FundSERV. Holders, through their dealers, will need to initiate an irrevocable request to sell the Notes in accordance with the then established procedures of FundSERV. Generally, this means that the Holder’s dealer will need to initiate the sale request by 1:00 p.m. (Eastern Standard Time) of each day (or the following Business Day if such day is not a Business Day), or such other time as may hereafter be established by SG Canada and SG (Canada Branch). Any request received after such time will be deemed to be a request sent and received on the following Business Day. The sale of the Notes will be effected at SG (Canada Branch)'s bid price (the “Bid Price”) for the Notes (i.e., the price it is offering to purchase Notes in the secondary market) for the applicable day which is established after the close of market on the previous Business Day. It is expected that such posted Bid Price, as posted to FundSERV by SGS, will also be used as the "net asset value" of a Note by FundSERV and by intermediaries holding the Notes on behalf of Holders. A Holder who sells Notes by using the sale procedures of FundSERV will receive sale proceeds equal to the Bid Price for the Notes, minus the applicable Early Trading Charge if such sale is effected at any time on or prior to March 13, 2010. See "Secondary Market for the Notes".
Holders should also be aware that from time to time such sale mechanism to sell Notes may be suspended for any reason without notice, thus effectively preventing Holders from selling their Notes. Potential investors requiring liquidity should carefully consider this possibility.
SGS is the fund sponsor for the Notes within FundSERV. SGS intends to post to FundSERV, under normal market conditions, the Bid Price for the Notes on a daily basis, which Bid Price may also be used for valuation purposes in any statement sent to Holders. See "Risk Factors – Secondary Market for the Notes / Possible Illiquidity of Secondary Market". The Bid Price will actually represent SG (Canada Branch)'s bid price for the Notes (i.e., the price at which it is purchasing Notes in the secondary market) for the applicable day. There is no guarantee that the Bid Price for any day will be the highest bid price possible in any secondary market for the Notes, but the Bid Price will represent SG (Canada Branch)'s bid price generally available to all Holders. SG (Canada Branch) will effect the purchase of Notes as principal and may sell the Notes purchased from Holders for a price that may be the same as or higher than the Bid Price. In those circumstances, SG (Canada Branch) will retain the difference between the Bid Price and the resale price. Such Bid Price will take into account, in particular, the amount of Notes offered for sale in the secondary market.
Notes held in an investment account maintained with a particular dealer will be transferable to another account maintained with another dealer only if such other dealer has been previously approved by SG Canada. In the event the dealer has not been previously approved by SG Canada, the Holder would have to sell the Notes pursuant to the procedures outlined above.
GUARANTEE
The Guarantor will unconditionally and irrevocably guarantee to the Holders the payment in full of all amounts when due and payable under the Notes, if such amounts have not been received by the Holders at the time such payment is due and payable. The Guarantee will constitute a direct, general and unconditional obligation of the Guarantor, will be a continuing guarantee, will be irrevocable and shall not be discharged except by the payment in full of all amounts due under the Notes. The Guarantee will rank equally and rateably with all unsecured and unsubordinated indebtedness of the Guarantor. The Notes have not been rated by any rating agencies.
The long-term debt obligations of the Guarantor are rated AA by Standard & Poor's Rating Service, a division of The McGraw-Hill Companies, Inc. and Aa1 by Moody's Investors Service, Inc. at the date
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of this Information Statement. There can be no assurance that, if the Notes were specifically rated by rating agencies, they would have the same rating as long-term obligations of Société Générale. Credit ratings are intended to provide potential investors with an independent assessment of the credit quality of an issue or issuer of securities and do not speak to the suitability of particular securities for any particular investor. Standard & Poor's Rating Service’s, a division of The McGraw-Hill Companies, Inc. and Moody's Investors Services, Inc.’s ratings represent an evaluation that is based solely on credit related factors and not market risk factors. The credit ratings assigned to the Guarantor may not reflect the potential impact of all risks on the Guarantor. A rating is therefore not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating agency. Prospective investors should consult the relevant rating organization with respect to the interpretation and implications of the ratings. Either of the foregoing ratings may be revised or withdrawn at any time by the respective rating agency.
CALCULATION AGENT
Société Générale as Calculation Agent with regard to the Notes will be solely responsible for the determination and calculation of the Maturity Redemption Amount (including the components thereof), as well as for making certain other determinations with regard to the Notes and the Fund. All determinations and calculations made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding upon the Holders. Since the Guarantor and the Calculation Agent are the same person, the Calculation Agent may have economic interest adverse to those of the Holders, including with respect to certain determinations that the Calculation Agent must make in determining the Maturity Redemption Amount, in determining whether a Market Disruption Event has occurred, and in making certain other determinations with regard to the Fund. The Calculation Agent is obligated to carry out its duties and functions in good faith and using its reasonable judgment. See “Risk Factors – Conflicts of Interest”.
PLAN OF DISTRIBUTION
The Notes are being offered by SG Canada. This offering of Notes is subject to a maximum issue size of $100,000,000, however, such maximum issue size may be waived by SG Canada at its entire discretion. Subscriptions for Notes must be made through the mutual fund order entry system FundSERV, under the mutual fund order code SGC101. Subscription funds received through a dealer on FundSERV will be deposited in an account established by SGS at HSBC Trust Company (Canada), in trust for the beneficial Holders. Beneficial Holders will not earn or be paid interest on the subscription funds held by HSBC Trust Company (Canada). See "FundSERV – Subscription through a dealer on FundSERV". SG Canada has agreed to pay the members of the selling group for the sale of the Notes a commission of 4.00% of the aggregate Principal Amount of the Notes.
SECONDARY MARKET FOR THE NOTES
The Notes are new obligations for which there is currently no established trading market. SG Canada does not intend to apply for listing of the Notes on any exchange. Subject to certain conditions, SG (Canada Branch) intends to maintain, under normal market conditions, a daily secondary market for the Notes until the Maturity Date, but reserves the right not to do so in the future in its sole discretion, without providing prior notice to the Holders. A Holder who sells a Note prior to the Maturity Date will receive sales proceeds equal to the Bid Price for the Note (which may be less than the Principal Amount of the Note) minus any applicable Early Trading Charge. A sale of Notes originally purchased through a dealer on FundSERV will be subject to certain additional procedures and limitations established by FundSERV. See "FundSERV" and "Risk Factors – Secondary Market for the Notes / Possible Illiquidity of Secondary Market".
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An investment decision to purchase the Notes should not be based on the availability of a secondary market and accordingly a potential investor should be prepared to hold the Notes until the Maturity Date. Holders choosing to sell their Notes prior to the Maturity Date may be unable to sell their Notes and, if a sale is possible, may receive a price which is substantially less than the Principal Amount and which does not necessarily reflect the performance of the Fund or the Portfolio at such date. See "Risk Factors – Secondary Market for the Notes / Possible Illiquidity of Secondary Market".
See "FundSERV" for details in respect of secondary market trading where the Notes are held through participants in FundSERV.
A sale of a Note to SG (Canada Branch) will be effected at a price equal to SG (Canada Branch)’s Bid Price for the Notes (i.e., the price at which it is offering to purchase Notes in the secondary market), minus any applicable Early Trading Charge. SG (Canada Branch)’s Bid Price will be dependent upon, among other things, (i) the performance of the Fund at such time, (ii) the fact that the Principal Amount is payable on or following the Maturity Date regardless of the performance of the Fund up to such time, and (iii) a number of other interrelated factors, including, without limitation, prevailing interest rates, the time remaining to the Maturity Date, the Early Trading Charge and the market demand for the Notes. The relationship among these factors is complex and may also be influenced by various political, economic, regulatory and other factors that can affect the Bid Price for a Note. Holders should also realize that the Bid Price, especially during the first few years of the term, (a) might be at a significant discount compared to any change in the net asset value of the Units of the Fund in the Portfolio. For example, the Bid Price of a Note might increase and decrease at a different rate compared to the respective percentage increases and decreases in the net asset value of the Units of the Fund, and (b) may be substantially affected by changes in the level of interest rates independent of the performance of the Fund.
In order to maintain a secondary market for Notes, SG (Canada Branch) will effect the purchase of Notes as principal and may sell the Notes purchased from Holders for a price that may be the same as or higher than the Bid Price. In those circumstances, SG (Canada Branch) will retain the difference between the Bid Price and the resale price.
A sale of Notes to SG (Canada Branch) on or prior to March 13, 2010 will be subject to an Early Trading Charge. If a Note is sold on or prior to March 13, 2010, the proceeds from the sale of the Note will be reduced by an Early Trading Charge equal to the percentage of the Principal Amount of the Note as follows:
If Sold Early Trading Charge
On or before September 13, 2008 5.70%
From September 14, 2008 through March 13, 2009
4.25%
From March 14, 2009 through September 13, 2009
2.85%
From September 14, 2009 through March 13, 2010
1.40%
Thereafter Nil
For example, if a Holder decides to sell a Note to SG (Canada Branch) on August 20, 2008, referring to the table above, an Early Trading Charge equal to 5.70% of the Principal Amount will
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therefore apply. If SG (Canada Branch)’s Bid Price for the Note on that day is $101, the net proceeds to the Holder after application of the 5.70% Early Trading Charge will be $95.30 ($101- $5.70). Using a second example, if a Holder decides to sell a Note to SG (Canada Branch) on April 15, 2009, referring to the table above, an Early Trading Charge equal to 2.85% of the Principal Amount will therefore apply. If SG (Canada Branch)’s Bid Price for the Note on that day is $107, the net proceeds to the Holder after application of the 2.85% Early Trading Charge will be $104.15 ($107- $2.85). After March 13, 2010, the Early Trading Charge will no longer be applicable, so that a Holder will receive net proceeds equal to SG (Canada Branch)’s Bid Price.
A Holder should understand that any valuation price for the Notes appearing in its investment account statement, as well as any Bid Price quoted to the Holder to sell Notes prior to the Maturity Date, will be before the application of any applicable Early Trading Charge.
A Holder should consult with an investment advisor about whether the Holders will bear an Early Trading Charge and, if so, how much it will be, and whether it would be more favourable in the circumstances at any time to sell the Notes (assuming the availability of a secondary market) or to hold the Notes until the Maturity Date. A Holder should also consult with a tax advisor about the income tax consequences arising from a sale prior to the Maturity Date as compared to holding the Note until the Maturity Date. See "Certain Canadian Income Tax Considerations".
SG Canada reserves the right to issue additional notes which may have terms substantially similar to the terms of the Notes offered hereby, which may be offered by SG Canada concurrently with the offering of the Notes.
In connection with the issue and sale of the Notes, no person is authorized, other than a member of its selling group or duly authorized representatives of SG Canada, to give any information or to make any representation relating to this Information Statement, and SG Canada does not accept responsibility for any information not contained herein.
USE OF PROCEEDS
The net proceeds of this offering (after payment of the expenses related to this offering and the commission payable to the members of the selling group) will be used by SG Canada for general banking purposes.
RISK FACTORS
Potential investors should be aware of the risks associated with an investment in the Notes, which include but are not limited to the following:
Credit Risk
Because the ultimate obligation to make payments to Holders of the Notes is incumbent upon the Guarantor, the likelihood that such Holders will receive the payments owing to them in connection with the Notes, including the Principal Amount, will be dependent upon the financial health and creditworthiness of the Guarantor.
Notes Do Not Constitute Insured Deposits
The Notes will not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act or any other deposit insurance regime.
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Suitability of Notes for Investment
Prospective investors should determine whether an investment in the Notes is appropriate in their particular circumstances and should consult with their legal, investment, business and tax advisors to determine the consequences of an investment in the Notes and to arrive at their own evaluation of the investment. For instance, an investment in a Note is not suitable for a person seeking a guaranteed interest yield or a periodic fixed income.
Investment in the Notes is only suitable for investors who:
(i) have the requisite knowledge and experience in financial and business matters to evaluate the merits and risks of an investment in the Notes or have received adequate advice from their advisors to understand the merits and risks of an investment in the Notes;
(ii) are capable of bearing the economic risk of an investment in the Notes until the Maturity Date; and
(iii) recognize that it may not be possible to dispose of the Notes for a substantial period of time, if at all.
Prospective investors in the Notes should make their own independent decision to invest in the Notes and as to whether the investment in the Notes is appropriate or proper for them based upon their own judgment and upon advice from such advisors as they may deem necessary. SG Canada makes no recommendation as to the suitability of the Notes for investment. Prospective investors in the Notes should not rely on any communication (written or oral) of SG Canada as investment advice or as a recommendation to invest in the Notes. No communication (written or oral) received from SG Canada shall be deemed to be an assurance or guarantee as to the expected results of the investment in the Notes.
Comparison to Other Obligations
The terms of the Notes differ from those of ordinary obligations, debt instruments or fixed rate debt instruments, in that a return, if any, is payable on the Notes only at the Maturity Date and only to the extent that the Maturity Redemption Amount exceeds the Principal Amount at such date. The Maturity Redemption Amount will exceed the Principal Amount only if the Final Portfolio Value is greater than $100. Such an appreciation is contingent on events that are inherently difficult to predict and which are beyond SG Canada's control. Accordingly, there can be no assurance that any such appreciation will occur, or that more than the Principal Amount will ever be payable with respect to the Notes. Moreover, the value of an investment in the Notes may diminish over time owing to inflation and other factors that adversely affect the present value of future payments. Accordingly, an investment in the Notes may result in a lower return when compared to alternative investments.
No Guaranteed Return on Notes
While a Holder is entitled to payment on the Maturity Date which cannot be less than the Principal Amount of the Note, the Notes do not bear interest and there can be no assurance that the Notes will show any return. Historical returns of the Fund should not be considered as an indication of the future performance of the Notes. No assurance can be given, and none is intended to be given, that Units of the Fund will appreciate in the period during which the Notes are outstanding and that any return will be achieved on the Notes at the Maturity Date.
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No Pledging
The ability of a Holder to pledge the Notes or otherwise take action with respect to such Holder's interest in such Notes (other than through a CDS Participant) may be limited due to the lack of a physical certificate.
Secondary Market for the Notes / Possible Illiquidity of Secondary Market
The Notes will not be listed on any exchange. There is no assurance that a secondary market will develop. An investment decision to purchase the Notes should not be based on the availability of a secondary market and accordingly a potential investor should be prepared to hold the Notes until the Maturity Date.
Despite the fact that SG (Canada Branch) intends to maintain, under normal market conditions, a daily secondary market for the Notes until the Maturity Date, it is not possible to predict how the Notes will trade in the secondary market or whether such market will be liquid or illiquid. The price at which the Notes may be sold will be determined by SG (Canada Branch), and will be subject to any applicable Early Trading Charge. SG (Canada Branch) is not under any obligation to facilitate such a secondary market for the Notes and such secondary market, when commenced, may be suspended or discontinued at any time, in SG (Canada Branch)’s sole discretion, without prior notice. Holders choosing to sell their Notes prior to the Maturity Date may be unable to sell their Notes and, if a sale is possible, may receive a price which is substantially less than the Principal Amount and which does not necessarily reflect the performance of the Portfolio or the Fund at such date. The price at which a Holder will be able to sell the Notes prior to the Maturity Date may be at a discount, which could be substantial, from the Principal Amount, based upon one or more factors, such as the fact that the Principal Amount of $100 per Note is payable at the Maturity Date as well as a number of interrelated factors, including, without limitation, the performance and the volatility of the Fund, the interest rates and the time remaining to the Maturity Date. The factors that will affect the trading value of the Notes interrelate in complex ways, so that, for example, one factor may offset an increase in trading value of the Notes caused by another factor. As an illustration, an increase in interest rates may offset some or all of any increase in the price of the Notes attributable to the performance and volatility of the Fund. Investors should also realize that the price of the Note, especially during the first few years of the term, (a) might be at a significant discount compared to any performance of the Portfolio or the Fund, for example, the price of a Note might increase and decrease at a different rate compared to the respective performance of the Portfolio or the Fund; and (b) may be substantially affected by changes in the level of interest rates independent of the performance of the Portfolio or the Fund.
Leverage
The Portfolio will provide 200% exposure to Units of the Fund. To obtain 200% exposure, the Portfolio will have notionally borrowed money to acquire the additional notional Units. The use of borrowed money creates an opportunity for increased exposure to the Units and the potential of an increased return. At the same time, however, borrowing money creates special risks. Since any decline in value of the Units will be borne entirely by the Portfolio (and not by those persons providing the borrowed money), a decline in the value of the Units will result in a greater decrease in the performance of the Portfolio than if no money was borrowed. Decreases in the performance of the Portfolio will reduce the potential for the Notes to produce a Variable Return at Maturity.
Notionally borrowing money will create interest expenses for Holders of the Notes. SG Canada will receive the interest payable on funds notionally borrowed under the Loan, calculated at an annual interest rate equal to the Loan Rate, accrued and payable daily. The interest costs may exceed the return made from the borrowed funds. To the extent that the return on the notional Units purchased with
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borrowed funds is greater than the interest the Notes will have to pay on the borrowed money, then the performance of the Portfolio will be greater than the return if no funds were borrowed. Conversely, if the return from the notional Units acquired with borrowed funds is not sufficient to cover the interest costs on the borrowed money, then the Performance of the Portfolio will be less than if no money was borrowed.
Holders have only a notional interest in the Units of the Fund
Holders of the Notes only have a notional interest in the Units, and a purchase of Notes will not constitute an investment in the Units, nor will it give a Holder any rights in or to any such securities or the investments they represent. The Fund has no responsibility for the returns on the Notes. The Notes do not represent an interest in, or an obligation of the Fund, the Investment Advisor, CI Financial Income Fund or any affiliate thereof. Holders will not have any recourse against the Fund, the Investment Advisor, CI Financial Income Fund or any affiliate thereof in respect of any payments under the Notes.
No Control over Management
Since the Portfolio is notional, Holders will have no ownership or other interest in the Fund or securities comprising the Fund other than the right to be paid a return on the Notes based on the performance of the Portfolio. Neither SG Canada nor the Holders will have any control over the management of the Fund or any entity whose securities are reflected in the Fund. The success of the Notes will depend in part on the ability and success of the management of the Fund and the issuers of the securities held by the Fund in addition to general economic and market factors.
Risks Relating to the Fund
The Variable Return, if any, payable on the Notes is linked to the performance of the Portfolio, which in turn is based on the performance of the Fund. Accordingly, certain risk factors applicable to holders who invest directly in Units are also applicable to an investment in Notes to the extent that such risk factors could adversely affect the performance of the Fund. Such risk factors include credit risk (in the case of debt securities, factors that may result in non-payment of the obligation), currency risk (change in value of Canadian dollar compared to foreign currencies), derivatives risk (including counterparty risk), equity risk (in the case of equity investments, factors which may cause the price of the stock to rise or fall), foreign investment risk (financial, political and social factors that affect investments outside Canada and the United States), interest rate risk (factors which might cause interest rates to rise or fall, since the value of fixed income instruments varies inversely with interest rates), large transaction risk (where another mutual fund or other large investor invests some or all of its assets in the Fund, if such other investor receives large redemption requests it may, in turn, make large redemption requests to the Fund and the Fund may have to sell its investments at unfavourable prices to meet the redemption requests) and class risk (if the Fund cannot pay the expenses of one class using that class’s proportionate share of Fund assets it may have to pay those expenses out of another class’s proportionate share of the assets, which could lower the investment return of those other class). This is not a complete description of the risks applicable to the Fund. A complete description of the risks as they apply to the Fund is contained in the current simplified prospectus of the Fund, which may be obtained at www.sedar.com.
The Fund’s Net Asset Value
The trading prices of the securities comprising the assets of the Fund from time to time will affect the net asset value of the Fund. Other activities of the Fund may impact on the value of the Units. For details regarding the calculation of the net asset value of the Units, see the disclosure filed by the Fund,
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which is available at www.sedar.com. Prospective investors should recognize that it is impossible to know whether the value of the securities comprising the assets of the Fund at any time will rise or fall and whether the investment decisions of the Manager will prove to be successful. Trading prices of the securities comprising the assets of the Fund may be influenced by complex and inter-related political, economic, financial and other factors that can affect the capital markets generally or the equity trading markets on which the securities comprising the assets of the Fund are trading. Prospective investors should familiarize themselves with the basic features of the Units of the Fund, including the general method of calculating the net asset value of the Units.
Unit Value
Holders should recognize that it is impossible to know whether the net asset value per Unit at any time will rise or fall. Trading prices of the securities underlying the Fund, and therefore the value of the Units, may be influenced by complex and inter-related political, economic, financial and other factors that can affect the capital markets generally or the trading markets on which such securities are trading.
Conflict of Interest
Since the Guarantor and the Calculation Agent are the same person, the Calculation Agent may have economic interest adverse to those of the Holders, including with respect to certain determinations that the Calculation Agent must make in determining the Maturity Redemption Amount, in determining whether a Market Disruption Event has occurred, and in making certain other determinations with regard to the Fund.
In order to maintain a secondary market for Notes, the Agent will effect the purchase of Notes as principal and may sell the Notes purchased from Holders for a price that may be the same as or higher than the Bid Price. In those circumstances, the Agent will retain the difference between the Bid Price and the resale price.
Fees and Transaction Costs
In order for the payment at the Maturity Date to exceed the Principal Amount, the return of the Portfolio at the Final Calculation Date will have to exceed the aggregate fees and expenses paid in respect of the Notes during the term of the Notes.
Changes in Legislation
There can be no assurance that income tax, securities and other laws will not be amended or changed in a manner which adversely affects the Holders.
Postponement of the Maturity Date May Affect the Payment at Maturity
If there is a postponement of the Maturity Date owing to the occurrence of a Market Disruption Event, the payment at Maturity actually received by a Holder may be substantially lower than the otherwise applicable payment at Maturity if the Maturity Date had not been postponed.
Notes are Not Subject to Prospectus
The Notes are not qualified by prospectus or registered under any securities laws. No Canadian or other regulatory authority has reviewed or passed upon the Notes or the accuracy or adequacy of this Information Statement and any amendment or addendum thereto.
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Canadian Investor Protection Fund
There is no assurance that your investment in the Notes will be eligible for protection under the Canadian Investor Protection Fund. Potential investors should consult their investment advisor on whether an investment in the Notes is eligible for protection in light of their particular circumstances.
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CERTAIN CANADIAN INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Income Tax Act”) generally applicable to the acquisition, holding and disposition of a Note by a Holder who purchases Notes from SG Canada and who, at all relevant times, for purposes of the Income Tax Act, is an individual that is or is deemed to be resident in Canada, holds such Note as capital property, and deals, at arm’s length, and is not affiliated with, SG Canada (a “Canadian Holder”). This summary is not applicable to a Canadian Holder that is a corporation, partnership or trust, including a “financial institution” as defined in the Income Tax Act for the purposes of the rules governing securities held by financial institutions.
A Note will generally constitute capital property to a Holder unless the Holder holds such Note in the course of carrying on a business or has acquired such Note in a transaction or transactions considered to be an adventure in the nature of trade. Certain Holders whose Notes might not otherwise qualify as capital property may, in certain circumstances, be entitled to have the Notes and every other “Canadian security” (as defined in the Income Tax Act) owned by the Holder to be treated as capital property by making the irrevocable election provided in subsection 39(4) of the Income Tax Act.
This summary is based upon the current provisions of the Income Tax Act, the regulations made thereunder (the “Regulations”) and the current published administrative policies and assessing practices of the Canada Revenue Agency (“CRA”), all in effect as of the date hereof. This summary also takes into account all specific proposals to amend the Income Tax Act and Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (“Tax Proposals”) and assumes all Tax Proposals will be enacted substantially as proposed. However, no assurance can be given that the Tax Proposals will be enacted as proposed, or at all.
This summary is not exhaustive of all possible Canadian federal income tax considerations and, except for the Tax Proposals, does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial decision or action, or any changes in the administrative policies or assessing practices of the CRA. This summary does not take into account tax legislation of any province, territory or foreign jurisdiction. Provisions of provincial income tax legislation vary from province to province in Canada and may differ from federal income tax legislation.
This summary is of a general nature only, is not exhaustive of all Canadian federal income tax considerations, and is not intended to be, nor should it be relied upon or construed to be, legal or tax advice to any particular Holder. Accordingly, Holders should consult their own tax advisors for advice with respect to the income tax consequences to them of acquiring, holding and disposing of Notes having regard to their particular circumstances.
Taxation of the Variable Return
The Notes are “prescribed debt obligations” for purposes of the Income Tax Act and the Regulations. Accordingly, a Canadian Holder will generally be required to include annually in income any interest deemed to accrue on the Notes in accordance with the provisions of the Income Tax Act and the Regulations. Based on an understanding of the CRA’s administrative practice, there should be no deemed accrual of interest with respect to any Variable Return on the Notes for any taxation year of a Canadian Holder that ends before the taxation year in which the Final Calculation Date occurs. The interest accrual rules in the Income Tax Act and the Regulations are complex. Canadian Holders of the Notes should consult their own tax advisors regarding the application of these rules to their particular circumstances.
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In the event that a Canadian Holder holds a Note until the Maturity Date, the full amount of Variable Return, if any, will generally be included in the Canadian Holder’s income in the Canadian Holder’s taxation year that includes the Final Calculation Date, except to the extent that any portion of such Variable Return has already been included in the Canadian Holder’s income for that or a preceding taxation year.
Disposition of the Notes
In certain circumstances, where a Canadian Holder assigns or otherwise transfers a Note, the amount of interest accrued on the Note to that time, if any, but unpaid, will be excluded from the proceeds of disposition of the Note and will be required to be included as interest in computing the Canadian Holder’s income for the taxation year in which the transfer occurs, except to the extent that it has been otherwise included in income for the taxation year or a preceding taxation year. Under the terms of the Notes, there should be no amount that will be treated as accrued interest on an assignment or transfer of a Note prior to the time that a minimum amount of the Variable Return, if any, payable at Maturity becomes calculable.
Although not free from doubt, a Canadian Holder who disposes of, or is deemed to dispose of, a Note (other than a disposition by virtue of the repayment or purchase of such Note by SG Canada) should realize a capital gain (or a capital loss) to the extent that the proceeds of disposition of the Note, less any reasonable costs of disposition, exceed (or are exceeded by) the Canadian Holder’s adjusted cost base of the Note at the time of disposition.
One-half of a capital gain realized by a Canadian Holder must be included in the income of the Canadian Holder. One-half of a capital loss realized by a Canadian Holder is deductible against the taxable portion of capital gains realized in the year, in the three preceding year or in subsequent years, subject to the rules in the Income Tax Act. Capital gains realized by an individual may give rise to a liability for alternative minimum tax.
Non-Resident Withholding Tax
Any interest paid to non-residents of Canada may be subject to Canadian non-resident withholding tax. Non-resident Holders should consult their own tax advisors with respect to their tax positions and the tax consequences of holding the Notes.
ELIGIBILITY FOR INVESTMENT
The Notes will, at the Settlement Date, be qualified investments under the Income Tax Act for trusts governed by registered retirement savings plans, registered retirement income funds, registered education saving plans, registered disability savings plans and deferred profit sharing plans, other than deferred profit sharing plans under which SG Canada or any person or partnership with which SG Canada does not deal at arm's length within the meaning of the Income Tax Act is an employer.