Principal Protected Notes

All-Star Portfolio Notes, Series 3

Product Summary

Inception Date August 19, 2004
Maturity Date December 28, 2012
Offering Price $10.00
Guarantee Amount $......
Market Price Per Note $......
Investment Exposure as at June 30, 2009 25%

The ONE Financial All-Star Portfolio Notes™, Series 3 have been developed by ONE Financial to provide conservative investors with the opportunity to access a diversified portfolio of top-performing mutual funds, with the comfort of a 100% principal guarantee plus up to 1.75 times leveraged exposure to a basket of leading mutual funds. The Notes provide a simple portfolio solution; a diversified portfolio of five top-performing mutual funds with 100% principal guarantee, a tax-efficient structure, plus the potential for leveraged returns.

  • 100% principal guarantee at maturity
  • Five All-Star Funds: AGF International Value, CI Harbour, AGF China Focus Class, Elliott & Page Growth Opportunities, and AGF Canadian Bond
  • 100% RRSP eligible as Canadian property
  • Tax deferral of Portfolio returns – no annual distributions
  • Historical pro-forma average returns are 12.8% per annum
  • Initial Closing Date: July 9th, 2004

Investment Details

Style Mutual Fund / Principal-Guaranteed
Underlying investment AGF International Value Fund, AGF China Focus Class Fund, AGF Canadian Bond Fund, Elliott & Page Growth Opportunities Fund, CI Harbour Fund
Guarantor BNP Paribas S.A. (Rated AA by S&P)
Administrator ONE Financial
Leveraged return potential Yes, up to 175% "performance-based" investment exposure with monthly averaging of returns
Liquidity Weekly
RSP eligibility 100% (Canadian content)
Performance as at June 30, 2009
Returns as at June 30, 2009
1 Month -0.88%
3 Months -3.52%
6 Months -5.00%
Year-To-Date -5.00%
1 Year -16.82%
3 Year (annualized) -3.41%
Total Return since Inception -15.45%
Initial Price $10.0000
Current Price $8.4550
Diversification by Manager as at June 30, 2009
Fund Targeted % Portfolio Allocation Manager Style Investment Selection Process Region
AGF Global Value Fund 30% John Arnold, Rory Flynn, Yvonne Brett, Richard McGrath Value Obtain superior long-term capital growth; invests primarily in equity securities of companies around the world; bottom-up value investment style to uncover stocks believed to be trading at a discount to their intrinsic value. Global
AGF China Focus Class Fund 15% Nomura Asset Management Value/ Growth Blend Long-term capital growth through shares in companies based in China or companies trading in other countries that will benefit from Chinese economic development Asia
AGF Canadian Bond Fund 10% Tristan Sones & Jean Charbonneau Income Superior income and modest capital gains. The Fund invests primarily in bonds issued or guaranteed by the federal government or by a provincial government of Canada Canada
CI Harbour Fund 25% Gerry Coleman & Stephen Jenkins Value Invests in high quality Canadian companies of all sizes and across all sectors. Holds 30-40 stocks which may be held for several years under favourable circumstances Canada
Manulife Growth Opportunities Fund 20% Ted Whitehead Growth Long-term capital growth. The fund invests primarily in high quality securities and convertible instruments of small and mid-cap Canadian companies Canada

Underlying Mutual Funds

Commentary as at June 30, 2009

The ONE Financial All-Star Portfolio Notes, Series 3 (the "Notes") are linked to a portfolio of five all-star mutual funds managed by experienced managers (the "Portfolio"). Each of the funds selected for the Portfolio were chosen for their excellent long-term track records of delivering strong, consistent performance. Since the inception date of the Notes, the performance of each of the funds has been: -29.3% for the AGF Global Value Fund (formally the AGF International Value Fund), 80.6% for the AGF China Focus Class Fund, 20.1% for the AGF Canadian Bond Fund, 46.7% for the CI Harbour Fund, and 26.9% for the Manulife Growth Opportunities Fund (formerly the Elliott & Page Growth Opportunities Fund). The return of the Portfolio since inception is 1.0%.

The difference between the performance of the Portfolio and the performance of a static portfolio invested according to the Portfolio's targeted allocation can largely be attributed to the Portfolio's "Dynamic Asset Allocation" feature. This feature is designed to both protect the Portfolio's net asset value (or "NAV") on the downside, and pursue leverage returns on the upside.

Exposure to the funds is adjusted regularly and systematically according to a nondiscretionary re-weighting procedure. Generally, as the value of the Portfolio increases, the Portfolio will potentially leverage its investments according to the targeted allocation up to a maximum of 175% of its NAV in order to pursue enhanced returns, and as the value of the Portfolio decreases, it potentially (i) de-leverages its investments in order to protect its NAV, and (ii) if the exposure is less than 100%, reallocates its investments from the four equity funds to a greater weighting in the AGF Canadian Bond Fund. Although the Portfolio will not directly track the performance of an investment in the funds according to a static allocation during the term of the Notes, if the Portfolio is expected to provide solid, consistent performance throughout the term, then investors should benefit from the strong potential for leveraged returns at maturity.

Investors should keep in mind that the price of the Notes will not directly track the performance of the Portfolio and is affected by many inter-related factors including:

  • changes in the level of interest rates,
  • the Notes maturity payoff formula,
  • the performance and level of volatility of the Portfolio,
  • time remaining until the Notes' maturity date, and
  • market demand for the Bonds.

The difference between the performance of the Notes and the performance of the Portfolio to date can partly be attributed to the fact that, as a principal guaranteed investment, the Notes are highly sensitive to changes in the level of interest rates (especially in the early years following the Notes' inception date). Over time, the impact of interest rates on the market price of the Notes gradually disappears, and investors benefit from the full payoff (in accordance with the terms of the Notes) linked to the performance of the Fund at maturity.


This Note has matured.

The Guarantor

BNP Paribas

BNP Paribas was established in 1848, and according to rankings published in July 2005 by The Bank, is the sixth largest banking group in the world and the largest in Europe based on total assets of approximately CAD $1.7 trillion (approximately the size of the Canada's five largest banks combined). As one of the world's leading diversified financial institutions BNP Paribas is present in over 85 countries, and has approximately 100,000 employees worldwide.

The BNP Paribas Group is organized around three core businesses: Retail Banking, Corporate & Investment Banking and Private Banking & Asset Management. Through its 2,200 branches across France and worldwide, BNP has more than twenty million individual and small business customers and 50,000 corporate customers.

BNP Paribas' long term debt ratings are: AA with a stable outlook from Standard & Poor's, Aa2 with a stable outlook from Moody's, and AA with a stable outlook from Fitch.


Additional Information