PRINCIPAL PROTECTED NOTES Ping Hu Matt Neeve Olena Olenchuk

Principal Protected Notes - what are they? An investment that guarantees a percentage of 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 Rainbow Deposit Notes, Series 1 A portfolio of 5 Baskets of shares Each Basket consists of 3 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 regardless of the portfolio performance 2.Variable interest – 100 * portfolio return The Deposit Notes will not be listed on any exchange Tax consideration Global Blue-Chip Rainbow Deposit 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

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?