ONE Financial recently launched the ONE Financial MSCI Hedge Invest Index Notes, Series 2, which offers returns linked to a broadly diversified index of 97 hedge funds, with 100% principal guarantee at maturity.

According to Jeffrey O’Brien, president and CEO of ONE Financial, the notes are the only investment product currently available to retail investors in Canada that combines the benefits of index-based investing with all of the additional benefits of hedge fund investing.

“Index-based products are the next step in hedge fund investing,” says O’Brien. He adds that the notes “provide Canadian investors with a safer way to access the hedge fund universe. I guess you could say we wanted to provide a way to stick your toe into the hedge fund pool.”

The notes are a follow-up to the launch of the first series of the notes, which closed successfully last December.

The notes are issued by Société Générale (Canada), with 100% of principal guaranteed at maturity by its parent Société Générale.

They are available for purchase through financial advisors across Canada until September 30, 2004, for a minimum investment of only $2,000. The motes also qualify as Canadian content for RRSPs, RRIFs, RESPs, and DPSPs.

The Notes’ performance is linked to the returns of the MSCI Hedge Invest Lyxor Tracker Fund (the “Index Fund”), whose investment objective is to track the performance of a hedge fund index called the MSCI Hedge Invest Index, compiled by Morgan Stanley Capital International Inc.

The Index Fund’s pro-forma historical performance between January 31, 1995 and April 30, 2004 was 14.97% per annum (pro forma historical performance data for the period before August, 2003 relies on significant assumptions, and is provided for illustration purposes only), with 1/5 the volatility of the S&P 500 stock market index. The notes’ pro-forma historical performance over the same period was 14.59%.

When the Notes mature in approximately nine years, investors will receive their principal, plus a positive amount, if any, equal to two times the adjusted return of the Index Fund, plus the sum of the lowest monthly performance each year of the Index Fund.