Investor Solutions Education Centre

In this installment of our Scotiabank investors solutions product series, we will discuss callable contingent coupon notes. What are they and how do they work? Callable contingent coupon notes are market linked structured notes which provide investors the opportunity to receive periodic coupon payments over the term of the product if certain predetermined conditions are met. The notes can mature early on set dates before the maturity date, and they usually offer some degree of principal protection at maturity in case the underlying asset’s price falls.

There are a number of features that you need to understand with this product. The contingent coupon feature, the early redemption feature and the maturity redemption amount. Let's start with the contingent coupon feature. This note will pay coupon payments to investors as long as the underlying asset is at or above a predetermined payment threshold called the payment barrier.

The payment barrier is observed on each predefined set of valuation dates. Let's go through an example for which we'll use a three year note, which pays a 2.5% coupon on each coupon valuation date. If the underlying asset is at or above a 70% payment barrier.

The underlying asset falls in value during the first year, but is above the payment barrier on every coupon valuation date. The investor will receive all four coupons over the course of the year, even though the underlying asset had a negative performance. During the second year, the underlying asset falls below the payment barrier at each observation, the investor will receive no coupon payments during this period. In the final year, the underlying asset is below the payment barrier on the first and third quarterly observation date and above the payment barrier on the second and fourth quarterly observation dates.

Here, investors will receive two of the possible four coupons for the year. Now let's look at the early redemption feature. Whether or not this note matures before the maturity date depends on whether the underlying asset is at or above a certain level on set dates called autocall valuation dates. This level is called the autocall level.

In this example, the autocall level is set to 5% above the initial level. On each autocall valuation date, we check if the underlying asset closes at or above the autocall level. If it is, the note will mature early and the investor will receive their principal amount back. If the underlying asset does not close at or above the autocall level, the note will continue until the next autocall valuation date, at which point the same check occurs again.

Now let's look at the maturity redemption amount. This note includes a contingent principal protection feature at maturity, meaning that an investor will receive back all of their original investment, provided that the underlying asset has not fallen below a certain level on the final valuation date. This level is called the barrier level. If the underlying asset falls below the barrier level, the holder of the note will be fully exposed to any negative underlying asset performance.

For example, if the barrier level is set at 70%, this means that the product has a contingent principal protection of 30%. In this scenario, even though the performance of the underlying asset is negative on the final valuation date, it does not breach the barrier level. Therefore, investors will be repaid the principal amount in full. However, if the barrier level is breached on the final valuation date and for example, the underlying asset has fallen by 40% from the initial level, the principal amount will be reduced by 40%.

Please speak to your Scotiabank representative for more information.

On-screen legal text: 
Important Information: An investment in principal at risk notes may not be suitable for all investors. Important information about these investments is contained in the Base Shelf Prospectus, the Product Supplement and the Pricing Supplement for the note. Investors should obtain and carefully read a copy of these documents prior to investing, paying particular attention to the associated risks. 

This presentation represents information of a public nature. This material is for general informational purposes only and does not constitute an invitation, offer, solicitation or inducement to buy or sell any securities or deposits of The Bank of Nova Scotia (“BNS” or the “Bank”) in any jurisdiction. This presentation does not constitute investment advice or any form of recommendation and should not be construed as such. No securities commission or regulatory body has passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offense. Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of BNS after the date hereof. Certain of the information contained herein may be derived from information provided by industry sources. While BNS believes that such information is accurate and that the sources from which it has been obtained are reliable, it has not independently verified data from these third-party sources. BNS does not provide any tax, accounting or legal advice and in all cases independent professional advice should be sought in those areas.

The information in this document is provided as of the date hereof and in furnishing this document BNS does not undertake any obligation to update or correct any information contained herein. Historical performance will not necessarily predict future performance of the return on the Notes. Reference is made to the Base Shelf Prospectus and applicable Prospectus Supplement and/or Pricing Supplement, if and when filed, and/or Information Statement or Term Sheet which sets out the specific terms and risk factors associated with an investment in the Notes. Nothing in this document contains a commitment by BNS to sell, issue, purchase or subscribe for financial instruments, or securities, to provide debt or to invest in any way in any transaction described herein, or otherwise provide monies to any party.

Notes do not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act (the “CDIC Act”) or under any other deposit insurance regime.

Depending on the offering, Notes may be subject to bail-in conversion under the Canadian bail-in regime.

™ Trademark of The Bank of Nova Scotia, used under license (where applicable). Scotiabank is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital Inc. (Member-Canadian Investor Protection Fund and regulated by the Canadian Investment Regulatory Organization). Scotia Capital (USA) Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority, and the Securities Investor Protection Corporation. The Bank of Nova Scotia is authorized and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia’s regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank (Ireland) Designated Activity Company is authorized and regulated by the Central Bank of Ireland. The Bank of Nova Scotia and certain of its affiliates are subject to regulation by regulators in Singapore, Hong Kong, Australia, The People’s Republic of China, Japan, including by the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission and the Monetary Authority of Singapore. Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat; Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities. Banco Scotiabank Colpatria S.A. is duly authorized by the Colombian Financial Superintendence to promote and advertise The Bank of Nova Scotia’s (Scotiabank) products and services by Resolution 058 of 2014. Scotiabank Chile, Scotia Corredora de Bolsa Chile Limitada and Scotia Administradora General de Fondos Chile S.A. are each regulated by the Chilean Financial Markets Commission (Comisión para el Mercado Financiero). Scotiabank Peru S.A.A. is authorized and regulated by the Peruvian Superintendencia de Banca, Seguros y AFP and Scotia Bolsa Sociedad Agente de Bolsa S.A. is authorized and regulated by the Superintendencia del Mercado de Valores. Scotiabank Brasil S.A. Banco Múltiplo and Scotiabank Brasil S.A. Corretora de Títulos e Valores Mobiliários are each authorized and regulated by Central Bank of Brazil and the Securities and Exchange Commission of Brazil. Not all products and services are offered in all jurisdictions. Services described are available only in jurisdictions where permitted by law. This information is not directed to or intended for use by any person resident or located in any country where its distribution is contrary to the laws of such country.

Full disclaimers, and terms and conditions may apply to individual products and banking services.

In this installment of our Scotiabank investor solutions product series, we will discuss autocallable notes. What are they? And how do they work? Autocallable notes are market linked structured notes which provide investors the opportunity to receive a variable return comprised of a fixed return and an additional return if certain conditions are met.

The notes can mature early on set dates before the maturity date, and they usually offer some degree of principal protection at maturity in case the underlying asset price falls. There are a number of features that you need to understand with this product, the autocall feature, and the maturity redemption amount. Let's start with the autocall feature. Whether or not this note is called before the maturity date depends on whether the underlying asset is at or above a certain level, which we refer to as the autocall level, on any of the autocall valuation dates.

In this example, the autocall level is set to 100% of the underlying assets initial level. On each autocall valuation date, we check if the underlying asset closes at or above the autocall level, and if it does, the note will mature early and the investor will receive the principal amount back plus the variable returns. If the underlying asset closes below the autocall level, the note will continue until the next autocall valuation date, at which point the same check occurs again. Now let's look at the maturity, redemption amount, which includes the variable return and the contingent principal protection feature.

This note pays a variable return if the notes are at or above the autocall level on any of the autocall valuation dates or the maturity date. In this example, we'll use a five year note which offers investors the possibility to receive a 10% fixed return per annum. In addition to the fixed return, investors can receive an additional return of 5% of the amount by which the underlying asset exceeds the fixed return. The underlying asset is below the autocall level in the first year, but then rises above the autocall level in the second year.

In this example, since the underlying asset increases by 7% and is above the autocall level, the note will be called and investors will receive a fixed return of 20% or 10% for each year. Since the underlying asset return of 7% is less than the fixed return of 20%, no additional return is payable. In the next example, the underlying asset increases by 25% in the second year. Since it is above the autocall level, the note will be called and investors will receive not only a fixed return of 20%, or 10% for each year, but will receive an additional return since the underlying asset return of 25% is greater than the fixed return of 20%.

The variable return of 20.25% is therefore payable. In the next example, the underlying asset does not close at or above the autocall level on any of the autocall valuation dates and the note is not called. The investment therefore reaches its final valuation date.

Here, the underlying asset’s return is greater than the autocall level. A fixed return of 50% is therefore payable 10% for each of the five years. No additional return is payable because the asset return is below the fixed return. In the last example, the underlying asset remains below the auto call level for the life of the note, and no variable return is payable on the maturity date.

This type of note also includes a contingent principal protection feature at maturity, meaning that an investor will receive the return of all of their original investment, provided that the underlying asset has not fallen below a certain level on the final valuation date. This level is called the barrier level. If the underlying asset falls below the barrier level, the investor will be fully exposed to any negative underlying asset performance. For example, if the barrier level is set at 70% of the initial level, this means that the note has a contingent principal protection of 30%.

In this scenario, even though the performance of the underlying asset is negative on the final valuation date, it does not breach the barrier level. Therefore, investors will be repaid the principal amount in full. However, if the barrier level is breached on the final valuation date and for example, the underlying asset has fallen by 40% from the initial level, the principal amount will be reduced by 40%. Please speak to your Scotiabank representative for more information.

On-screen legal text: 
Important Information: An investment in principal at risk notes may not be suitable for all investors. Important information about these investments is contained in the Base Shelf Prospectus, the Product Supplement and the Pricing Supplement for the note. Investors should obtain and carefully read a copy of these documents prior to investing, paying particular attention to the associated risks. 

This presentation represents information of a public nature. This material is for general informational purposes only and does not constitute an invitation, offer, solicitation or inducement to buy or sell any securities or deposits of The Bank of Nova Scotia (“BNS” or the “Bank”) in any jurisdiction. This presentation does not constitute investment advice or any form of recommendation and should not be construed as such. No securities commission or regulatory body has passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offense. Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of BNS after the date hereof. Certain of the information contained herein may be derived from information provided by industry sources. While BNS believes that such information is accurate and that the sources from which it has been obtained are reliable, it has not independently verified data from these third-party sources. BNS does not provide any tax, accounting or legal advice and in all cases independent professional advice should be sought in those areas.

The information in this document is provided as of the date hereof and in furnishing this document BNS does not undertake any obligation to update or correct any information contained herein. Historical performance will not necessarily predict future performance of the return on the Notes. Reference is made to the Base Shelf Prospectus and applicable Prospectus Supplement and/or Pricing Supplement, if and when filed, and/or Information Statement or Term Sheet which sets out the specific terms and risk factors associated with an investment in the Notes. Nothing in this document contains a commitment by BNS to sell, issue, purchase or subscribe for financial instruments, or securities, to provide debt or to invest in any way in any transaction described herein, or otherwise provide monies to any party.

Notes do not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act (the “CDIC Act”) or under any other deposit insurance regime.

Depending on the offering, Notes may be subject to bail-in conversion under the Canadian bail-in regime.

™ Trademark of The Bank of Nova Scotia, used under license (where applicable). Scotiabank is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital Inc. (Member-Canadian Investor Protection Fund and regulated by the Canadian Investment Regulatory Organization). Scotia Capital (USA) Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority, and the Securities Investor Protection Corporation. The Bank of Nova Scotia is authorized and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia’s regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank (Ireland) Designated Activity Company is authorized and regulated by the Central Bank of Ireland. The Bank of Nova Scotia and certain of its affiliates are subject to regulation by regulators in Singapore, Hong Kong, Australia, The People’s Republic of China, Japan, including by the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission and the Monetary Authority of Singapore. Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat; Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities. Banco Scotiabank Colpatria S.A. is duly authorized by the Colombian Financial Superintendence to promote and advertise The Bank of Nova Scotia’s (Scotiabank) products and services by Resolution 058 of 2014. Scotiabank Chile, Scotia Corredora de Bolsa Chile Limitada and Scotia Administradora General de Fondos Chile S.A. are each regulated by the Chilean Financial Markets Commission (Comisión para el Mercado Financiero). Scotiabank Peru S.A.A. is authorized and regulated by the Peruvian Superintendencia de Banca, Seguros y AFP and Scotia Bolsa Sociedad Agente de Bolsa S.A. is authorized and regulated by the Superintendencia del Mercado de Valores. Scotiabank Brasil S.A. Banco Múltiplo and Scotiabank Brasil S.A. Corretora de Títulos e Valores Mobiliários are each authorized and regulated by Central Bank of Brazil and the Securities and Exchange Commission of Brazil. Not all products and services are offered in all jurisdictions. Services described are available only in jurisdictions where permitted by law. This information is not directed to or intended for use by any person resident or located in any country where its distribution is contrary to the laws of such country.

Full disclaimers, and terms and conditions may apply to individual products and banking services.

In this installment of our Scotiabank investors solutions product series, we will discuss principal protected notes PPNs for short. What are they and how do they work? This investment is designed for investors requiring full principal protection, while still seeking exposure to equity markets. The most common PPN structure pays a variable return to investors If the underlying reference asset, usually an equity index or a basket of stocks, rises in value over the life of the product.

If the underlying asset falls in value during that period, no variable return is paid. If the underlying asset increases in value over the term of the product, investors will receive a variable return based on the price performance of the asset, multiplied by a factor called the participation rate. For example, a participation rate of 100% means that for every 1% rise in the underlying asset, you will receive a variable return of 1%. For example, if the underlying asset is up 50%, the product will pay a return of 50% for a participation rate of 100%, a return of 100% for a participation rate of 200% and a return of 25% for a participation rate of 50%.

This investment includes a capital protection feature, meaning that investors will still receive the return of all of their original investment at maturity, regardless of the performance of the underlying asset. For example, in this scenario, even though the underlying asset has fallen by 80%, investors will be repaid 100% of their initial investment. The principal protection is only valid if the investment is held to maturity. If an investor sells the notes prior to maturity, the investor may have to do so at a discount from the principal amount, even if the performance of the underlying asset has been positive.

PPNs can be customized to meet specific investment objectives, risk profile, cash flow needs and time horizon. One version of this product includes a guaranteed coupon payable either over the life of the product or as a lump sum at maturity. In addition to the variable return linked to the performance of the underlying asset. The product can be structured with a higher guarantee coupon and a lower participation rate or a higher participation rate and a lower guaranteed coupon or somewhere in the middle.

For example, you may have a product paying a 2% coupon with 100% participation or no coupon at all with 200% participation. You can also make the PPN autocallable, make the coupons contingent or even build the product so it pays a return if the underlying asset goes down in value. Scotiabank also offers Market linked guaranteed investment certificates, or GICs, which work the same way as PPNs but have the addition of CDIC insurance eligibility. That means the product is eligible for deposit insurance, up to eligible limits.

Speak to your Scotiabank representative for more information.

On-screen legal text: 
Important Information: An investment in principal protected notes may not be suitable for all investors. Important information about these investments is contained in the Information Statement of each note. Investors should obtain and carefully read a copy prior to investing, paying particular attention to the associated risks.

This presentation represents information of a public nature. This material is for general informational purposes only and does not constitute an invitation, offer, solicitation or inducement to buy or sell any securities or deposits of The Bank of Nova Scotia (“BNS” or the “Bank”) in any jurisdiction. This presentation does not constitute investment advice or any form of recommendation and should not be construed as such. No securities commission or regulatory body has passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offense. Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of BNS after the date hereof. Certain of the information contained herein may be derived from information provided by industry sources. While BNS believes that such information is accurate and that the sources from which it has been obtained are reliable, it has not independently verified data from these third-party sources. BNS does not provide any tax, accounting or legal advice and in all cases independent professional advice should be sought in those areas.

The information in this document is provided as of the date hereof and in furnishing this document BNS does not undertake any obligation to update or correct any information contained herein. Historical performance will not necessarily predict future performance of the return on the Notes. Reference is made to the Base Shelf Prospectus and applicable Prospectus Supplement and/or Pricing Supplement, if and when filed, and/or Information Statement or Term Sheet which sets out the specific terms and risk factors associated with an investment in the Notes. Nothing in this document contains a commitment by BNS to sell, issue, purchase or subscribe for financial instruments, or securities, to provide debt or to invest in any way in any transaction described herein, or otherwise provide monies to any party.

Notes do not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act (the “CDIC Act”) or under any other deposit insurance regime.

Depending on the offering, Notes may be subject to bail-in conversion under the Canadian bail-in regime.

™ Trademark of The Bank of Nova Scotia, used under license (where applicable). Scotiabank is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital Inc. (Member-Canadian Investor Protection Fund and regulated by the Canadian Investment Regulatory Organization). Scotia Capital (USA) Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority, and the Securities Investor Protection Corporation. The Bank of Nova Scotia is authorized and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia’s regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank (Ireland) Designated Activity Company is authorized and regulated by the Central Bank of Ireland. The Bank of Nova Scotia and certain of its affiliates are subject to regulation by regulators in Singapore, Hong Kong, Australia, The People’s Republic of China, Japan, including by the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission and the Monetary Authority of Singapore. Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat; Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities. Banco Scotiabank Colpatria S.A. is duly authorized by the Colombian Financial Superintendence to promote and advertise The Bank of Nova Scotia’s (Scotiabank) products and services by Resolution 058 of 2014. Scotiabank Chile, Scotia Corredora de Bolsa Chile Limitada and Scotia Administradora General de Fondos Chile S.A. are each regulated by the Chilean Financial Markets Commission (Comisión para el Mercado Financiero). Scotiabank Peru S.A.A. is authorized and regulated by the Peruvian Superintendencia de Banca, Seguros y AFP and Scotia Bolsa Sociedad Agente de Bolsa S.A. is authorized and regulated by the Superintendencia del Mercado de Valores. Scotiabank Brasil S.A. Banco Múltiplo and Scotiabank Brasil S.A. Corretora de Títulos e Valores Mobiliários are each authorized and regulated by Central Bank of Brazil and the Securities and Exchange Commission of Brazil. Not all products and services are offered in all jurisdictions. Services described are available only in jurisdictions where permitted by law. This information is not directed to or intended for use by any person resident or located in any country where its distribution is contrary to the laws of such country.

Full disclaimers, and terms and conditions may apply to individual products and banking services.

In this installment of our Scotiabank Investor Solutions product series, we will discuss Enhanced participation notes. What are they and how do they work? Enhanced participation notes are principal at risk products designed for investors seeking an enhanced return based on the price performance of an underlying asset. The most common version of this product provides investors the opportunity to participate in the uncapped accelerated returns of any positive performance of an underlying reference asset, usually an equity index or a basket of stocks.

If the underlying asset falls in value during that period, no return is paid and this means that the investor may also lose some or all of the principal amount invested. Let’s dig a bit deeper into how the product works. If the underlying asset increases in value from the initial valuation date to the final valuation date, investors will receive a return based on the price performance of the underlying asset multiplied by a factor called the participation rate. For example, a participation rate of 300% means that for every 1% increase in the underlying asset, the product would pay 3%.

So, if the underlying asset is up 50%, the product will pay a return of 150%. If the underlying asset is at or above the initial level on the final valuation date, investors will be repaid the principal amount invested in full. When the underlying asset falls below the initial level, the participation rate no longer applies. In this scenario, the investors bear the same risk as with a direct investment in the underlying asset.

For example, if the underlying asset has fallen by 40% from the initial level, the principal amount will be reduced by 40%. Enhanced participation notes may be customised to meet specific investment objectives, such as level of protection, risk profile, and time horizon. One common customization is to add a contingent principal protection feature also known as a barrier. With a barrier, the investor is also protected against a decrease in the underlying asset, so long as it does not breach the barrier level.

So, if you have a barrier level of 70% and the underlying asset falls by 20% the principal amount is repaid in full. If the barrier level is breached, the note will be fully exposed to any negative underlying asset performance. If the underlying asset falls by 40% at maturity, the maturity redemption amount will also be reduced by 40%. Alternatively, this product can be built with partial principal protection, which is also known as a buffer.

With a buffer, the investor is protected from a decrease in the underlying asset, so even if the performance of the underlying asset is negative at maturity, the investor’s principal will be returned in full if the underlying asset does not fall by more than the buffer. If the underlying asset falls by more than the buffer level, the note is subject to losses on the amount by which the decline of the underlying asset exceeds the buffer. Therefore, if the underlying asset falls by 40% at maturity, the maturity redemption amount will be reduced by 1% for every 1% the underlying asset falls below the buffer level.

Enhanced participation notes can also have a capped maturity amount, which represents a maximum return of the note, but increases the participation rate for the investor compared to the comparable uncapped version. Speak to your Scotiabank representative for more information.

On-screen legal text: 
Important Information: An investment in principal at risk notes may not be suitable for all investors. Important information about these investments is contained in the Base Shelf Prospectus, the Product Supplement and the Pricing Supplement for the note. Investors should obtain and carefully read a copy of these documents prior to investing, paying particular attention to the associated risks. 

This presentation represents information of a public nature. This material is for general informational purposes only and does not constitute an invitation, offer, solicitation or inducement to buy or sell any securities or deposits of The Bank of Nova Scotia (“BNS” or the “Bank”) in any jurisdiction. This presentation does not constitute investment advice or any form of recommendation and should not be construed as such. No securities commission or regulatory body has passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offense. Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of BNS after the date hereof. Certain of the information contained herein may be derived from information provided by industry sources. While BNS believes that such information is accurate and that the sources from which it has been obtained are reliable, it has not independently verified data from these third-party sources. BNS does not provide any tax, accounting or legal advice and in all cases independent professional advice should be sought in those areas.

The information in this document is provided as of the date hereof and in furnishing this document BNS does not undertake any obligation to update or correct any information contained herein. Historical performance will not necessarily predict future performance of the return on the Notes. Reference is made to the Base Shelf Prospectus and applicable Prospectus Supplement and/or Pricing Supplement, if and when filed, and/or Information Statement or Term Sheet which sets out the specific terms and risk factors associated with an investment in the Notes. Nothing in this document contains a commitment by BNS to sell, issue, purchase or subscribe for financial instruments, or securities, to provide debt or to invest in any way in any transaction described herein, or otherwise provide monies to any party.

Notes do not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act (the “CDIC Act”) or under any other deposit insurance regime.

Depending on the offering, Notes may be subject to bail-in conversion under the Canadian bail-in regime.

™ Trademark of The Bank of Nova Scotia, used under license (where applicable). Scotiabank is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital Inc. (Member-Canadian Investor Protection Fund and regulated by the Canadian Investment Regulatory Organization). Scotia Capital (USA) Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority, and the Securities Investor Protection Corporation. The Bank of Nova Scotia is authorized and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia’s regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank (Ireland) Designated Activity Company is authorized and regulated by the Central Bank of Ireland. The Bank of Nova Scotia and certain of its affiliates are subject to regulation by regulators in Singapore, Hong Kong, Australia, The People’s Republic of China, Japan, including by the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission and the Monetary Authority of Singapore. Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat; Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities. Banco Scotiabank Colpatria S.A. is duly authorized by the Colombian Financial Superintendence to promote and advertise The Bank of Nova Scotia’s (Scotiabank) products and services by Resolution 058 of 2014. Scotiabank Chile, Scotia Corredora de Bolsa Chile Limitada and Scotia Administradora General de Fondos Chile S.A. are each regulated by the Chilean Financial Markets Commission (Comisión para el Mercado Financiero). Scotiabank Peru S.A.A. is authorized and regulated by the Peruvian Superintendencia de Banca, Seguros y AFP and Scotia Bolsa Sociedad Agente de Bolsa S.A. is authorized and regulated by the Superintendencia del Mercado de Valores. Scotiabank Brasil S.A. Banco Múltiplo and Scotiabank Brasil S.A. Corretora de Títulos e Valores Mobiliários are each authorized and regulated by Central Bank of Brazil and the Securities and Exchange Commission of Brazil. Not all products and services are offered in all jurisdictions. Services described are available only in jurisdictions where permitted by law. This information is not directed to or intended for use by any person resident or located in any country where its distribution is contrary to the laws of such country.

Full disclaimers, and terms and conditions may apply to individual products and banking services.

In this installment of our Scotiabank Investor Solutions product series, we will discuss Fixed Income Notes. What are they and how do they work? Fixed Income Notes are alternative investments to traditional fixed or floating rate bonds. These products are designed for investors requiring the return of 100% of the principal invested, access to daily liquidity, and are seeking the opportunity of earning above-market returns relative to traditional fixed income instruments of comparable maturity and credit quality.

Let’s look at some common products. Extendible Fixed Coupon Notes. These products are designed for investors who require cash flows and are seeking enhanced coupons, by giving the Bank the right to extend the maturity of the note beyond its initial maturity date. In our first example, we have a note with an initial maturity of 2 years that will pay an annual coupon of 5%.

The maturity date can be extended to up to 10 years at the option of the Bank. At the initial maturity date, the Bank provides notice of its intention to redeem the note and not to extend the note’s maturity date. The investor therefore receives their principal back at the end of year 2 along with their interest. In the second scenario, the Bank does not provide any notice of its intention to redeem the note on the initial maturity date.

However, the Bank decides to redeem the note in year 8. Because of the extension feature, there is no certainty as to the term to maturity after the initial maturity date. The investment comes to an end. Now, we’ll explore Extendible Step-Up Coupon Notes.

These products are similar to Extendible Fixed Coupon Notes in that an investor will receive regular coupon payments until the initial maturity date. Through the life of note, the coupon will periodically increase until the final maturity date. The extension feature works in the same manner as Extendible Fixed Coupon Notes. Next, we’ll look at Callable Accrual Notes.

Accrual products are designed for investors who do not require cash flows and are seeking a one-time enhanced payment at maturity, by giving the Bank the right to call the investment early before its maturity date, a feature that differentiates the product from traditional bonds. These products can come in two forms: Linear Accruals, where interest is not compounded through the life of the note and Compound Accruals, where interest is compounded periodically through the life of the note. In this example, we’ll look at a 10-year linear accrual that has an annual interest rate of 6% per annum.

The note is redeemable annually at the option of the Bank on each call date. If the note is called prior to the maturity date, investors will receive a single payment of principal and interest accrued up to the specific call date. In the first scenario, the note is not called, and the investment continues to the maturity date. Here, the investor will accrue interest at the 6% annual coupon rate for the full 10 years and the final interest rate of 60% is payable only once on the maturity date together with the principal amount.

In the second scenario, the note is called on the first call date. The investor receives the interest rate of 6% to the first call date together with the principal amount. We will now look at a compound accrual note that offers an annual interest rate of 5%. In this example, the note is not called and accrues interest at the 5% rate, compounded annually for the full 10 years.

The final interest rate of 63% is payable only once on the maturity date together with the principal amount. In the second example, the note is called in year 3. The note accrues interest at the 5% annual coupon rate, compounded annually, for 3 years. Interest of 16% is payable once on the third call date, together with the principal amount.

Investors should be aware that the principal is repaid on the notes if held to maturity. If an investor sells the Notes prior to maturity, they may receive proceeds that are less than their initial investment amount. Scotiabank also offers these products in the form of Guaranteed Investment Certificates, or GICs. These investments have the addition of CDIC insurance eligibility but give up the access to daily liquidity.

For more information, speak to your Scotiabank representative.

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Important Information: An investment in Deposit Type Instruments or Guaranteed Investment Certificates (GICs) may not be suitable for all investors. Important information about these investments is contained in the Information Statement, Pricing Document or Terms & Conditions as applicable for the note. Investors should obtain and carefully read a copy of these documents prior to investing, paying particular attention to the associated risks.  

This presentation represents information of a public nature. This material is for general informational purposes only and does not constitute an invitation, offer, solicitation or inducement to buy or sell any securities or deposits of The Bank of Nova Scotia (“BNS” or the “Bank”) in any jurisdiction. This presentation does not constitute investment advice or any form of recommendation and should not be construed as such. No securities commission or regulatory body has passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offense. Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of BNS after the date hereof. Certain of the information contained herein may be derived from information provided by industry sources. While BNS believes that such information is accurate and that the sources from which it has been obtained are reliable, it has not independently verified data from these third-party sources. BNS does not provide any tax, accounting or legal advice and in all cases independent professional advice should be sought in those areas.

The information in this document is provided as of the date hereof and in furnishing this document BNS does not undertake any obligation to update or correct any information contained herein. Historical performance will not necessarily predict future performance of the return on the Notes. Reference is made to the Base Shelf Prospectus and applicable Prospectus Supplement and/or Pricing Supplement, if and when filed, and/or Information Statement or Term Sheet which sets out the specific terms and risk factors associated with an investment in the Notes. Nothing in this document contains a commitment by BNS to sell, issue, purchase or subscribe for financial instruments, or securities, to provide debt or to invest in any way in any transaction described herein, or otherwise provide monies to any party.

Notes do not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act (the “CDIC Act”) or under any other deposit insurance regime.

Depending on the offering, Notes may be subject to bail-in conversion under the Canadian bail-in regime.

™ Trademark of The Bank of Nova Scotia, used under license (where applicable). Scotiabank is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital Inc. (Member-Canadian Investor Protection Fund and regulated by the Canadian Investment Regulatory Organization). Scotia Capital (USA) Inc. is a broker-dealer registered with the U.S. Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority, and the Securities Investor Protection Corporation. The Bank of Nova Scotia is authorized and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia’s regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank (Ireland) Designated Activity Company is authorized and regulated by the Central Bank of Ireland. The Bank of Nova Scotia and certain of its affiliates are subject to regulation by regulators in Singapore, Hong Kong, Australia, The People’s Republic of China, Japan, including by the Hong Kong Monetary Authority, the Hong Kong Securities and Futures Commission and the Monetary Authority of Singapore. Scotiabank Inverlat, S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat; Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities. Banco Scotiabank Colpatria S.A. is duly authorized by the Colombian Financial Superintendence to promote and advertise The Bank of Nova Scotia’s (Scotiabank) products and services by Resolution 058 of 2014. Scotiabank Chile, Scotia Corredora de Bolsa Chile Limitada and Scotia Administradora General de Fondos Chile S.A. are each regulated by the Chilean Financial Markets Commission (Comisión para el Mercado Financiero). Scotiabank Peru S.A.A. is authorized and regulated by the Peruvian Superintendencia de Banca, Seguros y AFP and Scotia Bolsa Sociedad Agente de Bolsa S.A. is authorized and regulated by the Superintendencia del Mercado de Valores. Scotiabank Brasil S.A. Banco Múltiplo and Scotiabank Brasil S.A. Corretora de Títulos e Valores Mobiliários are each authorized and regulated by Central Bank of Brazil and the Securities and Exchange Commission of Brazil. Not all products and services are offered in all jurisdictions. Services described are available only in jurisdictions where permitted by law. This information is not directed to or intended for use by any person resident or located in any country where its distribution is contrary to the laws of such country.

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