Structured notes overview

Structured Notes have existed in Canada since the mid 1990s. They are flexible and customizable investments that provide investors with exposure to a wide variety of payout strategies and asset classes. Notes can be designed to perform in different market conditions and to meet a wide range of investment needs and their payoffs can be linked to a variety of underlying assets including one or more equities, exchange traded funds or indices. Notes offer pre-defined returns according to a payout formula, meaning the return investors receive at maturity is rules based and is not subject to decision making by one or more individuals, like with a mutual fund.

They can be tailored to achieve specific risk and return objectives, including income, return enhancement, capital preservation and hedging. Structured Note investment categories Scotiabank offers three broad categories of equity-linked structured notes, each with different characteristics designed to help investors realize specific financial objectives. Scotiabank Principal Protected Notes offer the potential for variable returns in excess of traditional bonds based on the performance of their underlying assets. These variable returns may be combined with fixed coupon payments and may be paid during the life of the investment or as a lump-sum at maturity.

The investor’s principal amount is 100% protected by Scotiabank at maturity. Scotiabank Market linked GICs offer the same payouts as principal protected notes, but also come with CDIC insurance eligibility, up to applicable limits. Principal At Risk Notes are designed for investors seeking the opportunity for an enhanced return over other traditional equity or fixed rate investments and who are prepared to assume the risks associated with an investment linked to equity markets. These products can be built with some contingent principal protection in the form of a buffer or barrier, or with no downside protection at all.

Scotiabank also offers fixed-income notes, which are rate-linked alternative investments to traditional fixed or floating rate bonds. How do Structured Notes work and how can they fit into your portfolio? A typical Principal Protected Note is created by combining two components or building blocks. A bond or deposit that aims to provide the capital repayment feature and the variable return component linked to the underlying asset.

The two components combined, create a unique investment, and the level of risk and return can be customized to meet the needs of the target investor. A principal at risk note is created in a similar manner, except the variable return component can also erode the invested principal, in exchange for a higher return than the comparable principal protected note. In general, structured notes can be used to either replace existing positions or to augment or hedge their current portfolio. Things To Consider When Choosing a Note: Do you require full principal protection, or are you willing to accept some market risk in exchange for a higher potential return?

What is your market view over the term of the product? Do you require periodic cash flows? What is your investment horizon? Are you looking for broad diversification, sector specific exposure or specific single stock exposure?

If you desire index exposure, what type of index do you wish to link? If you are an investment professional looking to learn more about Scotiabank’s structured notes or market linked GICs including current offerings please speak with your Scotiabank representative. If you are an investor, please reach out to your investment advisor to see whether this product is right for you.

On-screen legal text: 
Important Information: An investment in structured notes may not be suitable for all investors. Important information about these investments is contained in the offering documents of each note or Market Linked GIC. Investors should obtain and carefully read a copy of the offering 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.

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