PRINCIPAL PROTECTED NOTESPing Hu

Matt NeeveOlena Olenchuk

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

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

Principal Protected Notes - what are they?

Benefits to the Issuer:

• Liquidity• Financial leverage• “Callability” strategy – reduced debt when needed

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

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

Global Blue-Chip RainbowDeposit Notes, Series 1

• A portfolio of 5 Basketsof shares

• Each Basket consists of3 shares, equally-weighted within the Basket.

• Note term is 7 years

• The return is linked to the performance of the portfolio

• Amounts payable at the maturity consist of

1. The principal amount - $100/note regardlessof the portfolio performance

2. Variable interest – 100 * portfolio return

• The Deposit Notes will not be listed on any exchange

• Tax consideration

Global Blue-Chip RainbowDeposit Notes, Series 1

Global Blue-Chip RainbowDeposit Notes, Series 1

Nikkei 225 Index Note, Series 1

• 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

Nikkei 225 Index Note, Series 1

Index Performance

Nikkei 225 Index Note, Series 1

Nikkei 225 vs. S&P 500, Dow and NASDAQ

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

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

Questions?