Transcript: Principal Protected Notes

 

[Title Name:  Roni Taza - Director Wealth Solutions Group.]

[Music plays.]

[CIBC logo. Principal Protected Notes.]

[Roni sits at a desk and speaks to the camera.]

>> Roni Taza: If you're looking to benefit from market exposure in your investment portfolio, but fear the potential risks associated with direct investment in stocks or mutual funds, then Structured Notes may be a good option for you.

[A graphic is titled: “Principal Protected Notes (PPNs):”. Below is a graphic of a table holding a lamp, closed laptop. The laptop opens and an icon of a certificate is shown. Above is the following: “Combine the protection of bonds and growth potential of equities”. Then the icon on the laptop of the certificate slides to the left and a new icon of a bar graph is shown to the right with an arrow pointing upwards.]

Principal Protected Notes, or PPNs, are investment solutions that effectively combine the protection and income potential of bonds, along with the growth potential of equities.

[To the right of Roni is the following title: “Principal Protected Notes (PPNs):”.  Below are the following points: “Provide investors with full protection of principal if held to maturity; Increased return potential relative to traditional fixed rate products”.]

[These points disappear and are replaced  with the following point: “Potential return is based on the performance of the underlying asset”. Below are the following sub-points: “equities; equity index”.]

Principal Protected Notes provide investors with full protection of principal if held to maturity, with an increased return potential relative to traditional fixed rate products, as the potential return is based on the performance of the underlying asset, such as equities or an equity index.

[A graphic is titled: “PPN Potential Benefits:”. Below and to the left an icon of a shield with a checkmark in it is shown through a magnifying glass. To the right is the following: “Principal protection, if the note is held to maturity”.]

[The magnifying glass moves down to a new icon of a gage which has the following information to the right: “Exposure to the upside potential of the underlying asset, without the downside exposure”.]

[The magnifying glass moves down to a new icon of a bar graph with an arrow moving up and down but ends in an upward trajectory. The following information is to the right: “Exposure to underlying reference assets which may not be otherwise directly accessible”.]

[The magnifying glass moves down to a new icon of a dollar with an arrow point right below it which has the following information to the right: “Potential interest payments.]

[This last icon changes to a coin with the following information to the right: “Or a potential return payable at maturity linked to the performance of an underlying asset”.]

There are a number of potential benefits and potential risks associated with Principal Protected Notes, so it's good to understand them before making an investment decision. PPNs offer, hence the name, principal protection, if the note is held to maturity. Exposure to the upside potential of the underlying asset without the downside exposure, when held to maturity. Exposure to underlying reference assets which may not be otherwise directly accessible. Potential to receive periodic interest payments throughout the term or a potential return payable at maturity linked to the performance of an underlying asset.

[A graphic is titled: “PPN potential Risks:”. Below and to the left an icon of a bar graph with an arrow showing and down and ending in a downward trajectory is shown through a magnifying glass. To the right is the following: “May not earn any return if the underlying asset performs poorly”.] 

[The magnifying glass then moves down to an icon of a document with a check marked shield on it. To the right is the following: “Not eligible for CDIC coverage”.]

[The magnifying glass then moves down to an icon of a dollar with a down arrow appearing. To the right is the following: “Selling prior to maturity may result in a loss of principal”.] It's important to note that they are different from traditional fixed income products, as they may not earn any return if the underlying asset performs poorly during the term, and they are not eligible for CDIC coverage. Selling a PPN prior to maturity may result in a loss of principal.

[The magnifying glass then moves down to an icon of a document. To the right is the following: “May also contain terms that cap your potential return at maturity”.]

[This last icon then changes to an icon of two circles overlapping with % on top of the top circle. To the right is the following: “Or offer a participation rate that is less than 100%”.]

PPNs may also contain terms that cap your potential return at maturity or offer a participation rate that is less than 100%. It's always important to read the terms and conditions of any PPN you're interested in purchasing, to make sure you understand all of the features.

[To the right of Roni is the following title: “Principal Protected Notes (PPNs):”. Below are the following points that appear as each are talked about: “No direct currency exposure if the underlying reference asset is in a foreign currency; Potential to sell the note prior to maturity, through a daily secondary market1”.]

It should also be noted that the Principal Protected Notes provide no direct currency exposure, if the underlying reference asset is denominated in a foreign currency. In addition, there is the potential to sell the note prior to maturity through a daily secondary market.

[These two points are replaced with the following: “Multiple types of PPNs, with exposure to different underlying  reference assets; Variety of payout structures”.]

There are multiple types of PPNs with exposure to different underlying reference assets, with a variety of payout structures that may help you to meet your short and long-term goals. An important consideration is whether you require periodic interest payments during the term of your investment, or are you focused on long term growth potential, or even a combination of the two?

[A graphic is titled: “Ask yourself whether you are looking for:”. Below is a graphic of a table holding a lamp, closed laptop and wall calendar. The laptop opens and shows arrows and coins moving in a circular pattern. Above is the following: “Cash flow from your investments”. Then the calendar is highlighted for the year 2025. To the left is the following: “Higher return potential at the end of the term”. The calendar then flips to 2026.]

When trying to determine which type of PPN might be right for you, you need to ask yourself whether you are: looking for cash flow from your investment during the term, or don't require cash flow and would rather invest in a growth product that offers higher return potential at the end of the term.

[To the right of Roni is the following title: “Principal Protected Notes (PPNs):”. Below are the following points that appear as each are talked about: “Track the performance of the underlying asset; Fluctuate in value over the duration of the investment”.]

[The title then changes to: “The Return is based on:”.  Below are the following points that appear as each are talked about: “The change in value over the term; The structural features of the PPN”.]

As mentioned, Principal Protected Notes track the performance of the underlying asset, and these different assets fluctuate in value over the duration of the investment, and the return is based on the change in value over the term of the investment and the structural features of the PPN you choose.

[A graphic is titled: PPN Example:”. Below a line graph is shown. Along the horizontal X axis are the time periods: “June 2024; Dec 2024; June 2025; Dec 2025; June 2026”. Along the vertical Y axis are the following amounts, starting at $3,500 and moving up by $500, ending at $8,000. The $5,000 amount is highlighted, with a line moving straight across the graph.]

[The title changes to: “CIBC Canadian Blue Chip (AR) Index”. Three different coloured line graphs. The first is red and moves down with peaks that do not go above the $5,000 mark and ends at the $4,500 mark which is labelled -10%. The blue line graph goes above the $5,000 point and goes below, but ultimately ends at $5,500, which is labelled +10%. The green line graph goes up and down sharply to end at the $6,000 point and is labelled +20%.]

[The graph slides to the left and further information is shown to the right of each label. The green graph indicates: “Principal = $5,000; Average Asset Returns - 20% x 100% = $1,000; Total paid at maturity (principal + interest) = $6,000”.  The Blue graph indicates: “Principal = $5,000; Average Asset Returns - 10% x 100% = $500; Total paid at maturity (principal + interest) = $5,500”. The Red graph indicates: “Principal = $5,000; Average Asset Returns - 10% = $0; Total paid at maturity (principal + interest) = $5,000”. Each graph information is highlighted in the colour of its graph.]

Let's walk through an example of how this works. As a hypothetical example, you purchase a two-year product linked to the performance of an equity index, like a Canadian Blue Chip index. This product has variable interest that will be paid at maturity and will be equal to 100% of the performance of the index.

There are several options and lots of great information available. 

[To learn more, talk to your advisor]

[CIBC Structured Notes. Increase your return potential, not your risk.]

CIBC Structured Notes. Increase your return potential, not your risk.

[CIBC logo. 1The bid price at which an Investor will be able to sell the PPNs in the secondary market prior to maturity may be at a discount, which could be substantial from the amount that would be payable if the notes were maturing on such day. While issuers of PPNs intend to provide a secondary market, they reserve the right not to do so, in their sole discretion, at any time without prior notice to Investors.]

[The CIBC logo and CIBC Investor’s Edge are trademarks of CIBC. CIBC Investor’s Edge is a division of CIBC Investor Services Inc. S&P 500® is a trademark of Standard & Poor’s Financial Services LLC and has been licensed for use by CIBC.]