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PRINCIPAL PROTECTED NOTES

Principal Protected Notes (PPNs) are investment instruments that guarantee the return of your principal amount at maturity, ensuring a minimum return equal to the initial investment. They offer high growth potential, weekly liquidity, and the ability to invest in various assets with capital protection, even in volatile markets. PPNs provide benefits to issuers, such as financial leverage and liquidity. With terms typically lasting 6-8 years, these notes appeal to risk-averse investors looking to safeguard their investments while capitalizing on favorable market conditions.

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PRINCIPAL PROTECTED NOTES

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  1. PRINCIPAL PROTECTED NOTES Ping Hu Matt Neeve Olena Olenchuk

  2. Principal Protected Notes - what are they? • An investment that guarantees a percentageof the principle at maturity i.e. the minimum return will equal the initial investment • Payoff at maturity - no coupons, principal + appreciation

  3. Principal Protected Notes - what are they? • Principal protection • High growth potential • Enhanced income potential • Weekly liquidity • The opportunity to invest in a broad range of investments • Potential for leveraged returns • Capital protection regardless of what happens in the markets • Maturity 6-8 years

  4. Principal Protected Notes - what are they? Benefits to the Issuer: • Liquidity • Financial leverage • “Callability” strategy – reduced debt when needed

  5. Global Equity Index Linked Note • Issued by the Business Development Bank of Canada • Variable interest promissory • Equally weighted in three indexes: S&P 500 Dow Jones ERUO STOXX 50 Nikkei 225

  6. Global Equity Index Linked Note • Dec 2000 issues – minimum issue of 10 million dollars with a 7- year maturity. • Each note is valued at 10 dollars (at the time of issue) Risks: • Market Risk • Inflation Risk

  7. A portfolio of 5 Basketsof shares Each Basket consists of3 shares, equally-weighted within the Basket. Note term is 7 years Global Blue-Chip RainbowDeposit Notes, Series 1

  8. Global Blue-Chip RainbowDeposit Notes, Series 1 • The return is linked to the performance of the portfolio • Amounts payable at the maturity consist of • The principal amount - $100/note regardlessof the portfolio performance • Variable interest – 100 * portfolio return • The Deposit Notes will not be listed on any exchange • Tax consideration

  9. Global Blue-Chip RainbowDeposit Notes, Series 1

  10. Linked to Nikkei 255 Index – Tokyo Stock Exchange, Japan Note term - 7 years $100 denominated Minimum subscription - 50 Not listed - trade on secondary markets Callable if Index Return equals or exceeds applicable Call Trigger Call feature – risk 2006 – 2007 Index Return 3.06% Nikkei 225 Index Note, Series 1

  11. Nikkei 225 Index Note, Series 1

  12. Nikkei 225 Index Note, Series 1 Index Performance

  13. Nikkei 225 Index Note, Series 1 Nikkei 225 vs. S&P 500, Dow and NASDAQ

  14. Principal Protected Notes Risks: • Suitability of Deposit Notes for Investment • Non-Conventional Investment • No Interest May Be Payable • No Ownership of, or Recourse to, Shares • Equity Risk • Secondary Market • Market Disruption or Extraordinary Event • Special Circumstances – Market disruption • Economic and Regulatory Issues

  15. PPNs - Who would use them? • Risk adverse investors that want to protect their investment, but still capitalize on positive changes in the market. • Investors that are confident in the market, but still believe that there is speculation

  16. Questions?

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