Business Development Bank of Canada Managed Futures Notes, Series N-4, N-5, N-6, N-7, N-7A and N-8
The Business Development Bank of Canada ("BDC") hereby notifies investors in the above-referenced Managed Futures Notes that, effective January 1, 2008, all trading of Contracts in the multi-advisor managed futures program underlying the Notes is being discontinued. Only the trading of Contracts will be discontinued – the Notes will continue to remain outstanding until the applicable maturity date for the particular series.
Moreover, Business Development Bank of Canada and Tricycle Asset Management Capital Corporation hereby inform holders of Managed Futures Notes, Series N-4 and N-5 that an additional early redemption date of December 31st has been added to the schedule of early redemption dates. The next early redemption date will therefore occur on December 31, 2007, and semi-annually thereafter until maturity of the Notes. No "early redemption fee" will be payable in connection with any redemption of the Series N-4 Notes and/or Series N-5 Notes on the additional early redemption dates. All other terms applicable to the N-4 and N-5 Notes are unchanged and remain as described in the Information Statement for the applicable Series.
Investors wishing to redeem their Notes on an early redemption date should contact their financial advisor. Written notice of an investor's decision to redeem Notes on an early redemption date must be received no later than the 15th business day preceding the applicable early redemption date. For greater certainty, investors wishing to redeem Notes on December 31, 2007 must provide notice to their financial advisor through which they hold their interests before 4 pm EST on December 6, 2007.
Investors' principal for N-4, N-5, N-6, N-7, N-7A and N-8 (and guaranteed minimum yield for Series N-5 through N-8), continue to be protected by BDC and therefore guaranteed by the full faith and credit of the Government of Canada, when purchased at issue price and held to maturity.
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For further details, including information on early redemptions, please refer to the relevant Information Statement, or visit the Tricycle website at http://www.3-wheeler.com/. |
Frequently Asked Questions
Q: Why has Tricycle announced that it will discontinue trading?
A: The challenging market environment for managed futures over the past few years – particularly for our trend-following Commodity Trading Advisors – has not improved. During this period, we've reduced our allocation to the trading program as warranted, in order to preserve capital. At this time, however, given the continued difficult conditions for trading, and a pool of capital that does not permit the program operators to run a fully-diversified program (given the large minimum investment requirements of Tricycle's Commodity Trading Advisors), prudence dictates that we discontinue the trading portion of the program.
Business Development Bank of Canada and The Canadian Wheat Board, the issuers, concur with our prudent approach.
Q: What does this mean for investors?
A: No returns will be generated from the trading of Contracts. Investors who hold their BDC or CWB Managed Futures Notes to maturity, will continue to benefit from AAA-rated principal protection for all Series of managed futures Notes and in the case of Series N-5 through N-12, a guaranteed minimum yield at maturity, when purchased at issue price.
Q: Does this mean that Tricycle is no longer in business?
A: Tricycle remains in business. Only the trading of Contracts portion of the program is discontinued. Tricycle will continue to provide client service and oversee funds invested until the maturity of the final series of Managed Futures Notes in 2014.
Q: Are managed futures no longer a viable investment?
A: Managed Futures have not performed well during the past several years. While there have been times, historically, when managed futures have performed well, present market conditions have proved difficult for the sector.
Q: How can existing investors track their investment to maturity?
A: There is no change to reporting. The NAVs will continue to be reported daily and posted on this website as they always have been.
Q: Are the early redemption privileges outlined in the Information Statement still applicable?
A: Yes, redemption privileges remain the same as per the relevant Information Statements. Redemptions that take place prior to maturity (on the pre-scheduled redemption dates) will be at the applicable Net Asset Value, less any applicable early redemption fees. The next redemption window is December 2007 for all Series, including N-4 and N-5. The redemption windows for all series are posted on Tricycle's website at 3-wheeler.com, accessible from the Home Page, along with NAVs.
Q: If you aren't trading, why are fees still being charged?
A: Following the discontinuance of the trading of Contracts, no management fees will be paid to Commodity Trading Advisors and no trailer fees will be paid to members of the selling group. However, the program will still be incurring expenses as a result of continued operations, such as transfer agency fees, legal, audit and administration costs, among others. Any such expenses will be borne by the assets comprising the program. In addition, early redemption fees, if applicable, will continue to be paid by the Noteholders upon election of early redemption in accordance with the information statements for each series of notes. These costs do not have any affect on the guaranteed returns at maturity.
Q: Why can't investors collect their principal and minimum yield right now?
A: Principal protected notes are structured in this fashion. A portion of each note is invested for the term of the note to provide the required return meeting the required payment of principal and minimum yield at maturity. Any quest for a redemption prior to maturity may translate into a higher or lower amount than the one promised to be paid at maturity. All Series of Notes, including Series N-4 and N-5, may be redeemed at December 31, 2007.
