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Your Future >> Investing >> Term Deposits >> Index and Equity Linked >> Index Equity Linked Term Deposit

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Canadian Index-Linked Term Deposit

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The Canadian Index-Linked Term Deposits offers the member a fixed term investment that will pay a return based on the S&P/TSX 60 Index. The investment has the security of principal protection no matter what happens to the stock market, you are guaranteed the return of your principal when your deposit matures. Deposits are also RRSP eligible and have no fees or commissions.

Calculating the Interest

S&P/TSX 60 Index
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The investment return on the deposit will be based upon the participation rate multiplied by the average return of the S&P/TSX 60 Index over the term of the deposit. The average is calculated by adding the monthly averaging date closing values for the S&P/TSX 60 Index between the start date and the maturity date and dividing that total by the months in the term (36 for the three-year deposit and 60 for the five-year deposit). That average is then compared to the starting level of the S&P/TSX

Index-Linked
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60 Index at the close of business on the last day of the subscription period for the series. The investor will receive the percentage difference between the average and the starting value, multiplied by the participation rate.

Examples: Each example starts with an investment size of $1,000 with the index starting value at 450.

Three-year example (for example purposes only):

The average of the monthly values of the S&P/TSX 60 Index over the term of the deposit is 500. The Participation Rate is 100%. At the maturity date of the deposit the investor will receive:

[(500 - 450)/450] * 1.00 = 11.11%
$1,000 x 11.11% = $111.10 plus the original $1,000.

The compounded annual rate of return based on the exact term of the deposit is 3.57%.

Five-year example (for example purposes only):

The average of the monthly values of the S&P/TSX 60 Index over the term of the deposit is 550. The Participation Rate is 125%. At the maturity date of the deposit the investor will receive:

[(550 - 450)/450] *1.25 = 27.78%
$1,000 x 27.78% = $277.80 plus the original $1,000.

The compounded annual rate of return based on the exact term of the deposit is 5.02%.

For both the three-year and five year deposits, should the average of the monthly index sets be lower than the start value of the index, the return on the deposit will be 0.00% and the investor will receive only their principal investment back at maturity.

Risks

Unlike other term deposits, there is no guaranteed return on this product. Depending on the performance of the stocks comprising the S&P/TSX 60 Index over the term, it is possible that, at maturity, the investor will receive only their principal back.

Prairie Basket Equity-Linked Term Deposit

PRAIRIES BASKET™ Equity-Linked Term Deposit blends a guaranteed investment product with the capacity to generate market-like returns. You have the potential to achieve unlimited returns with the comfort of knowing there is no risk to your principal.

How Does It Work?

The investment stays at your credit union as a non-redeemable term deposit. The rate of return earned is linked to the average monthly performance of a basket of 12 prairie company stocks. Monthly averaging links your gain to the long term performance of the stocks.

If the stocks perform well over the life of the term, interest is paid to you at maturity. If the average monthly index value decreases, there is no payment of interest. In either case, the good news is there is no loss to your principal.

Benefits

• Principal is guaranteed

• Unlimited return potential

• Low minimum investment

• RRSP eligible

• No management fees or commissions

Features

• Return linked to a basket of stocks from Alberta, Saskatchewan & Manitoba

• Rate of return determined by monthly averaging

• Monthly averaging protects against sharp decline in index

Wise Financial Guidance To Empower You

Get the advantages of playing the market and take ownership of your investments without risking your principal.

For more information on any of our investment options, you can meet with an OMISTA Expert at any of our three branches, or our Credential Financial Strategies Inc. Representative Ozzie MacKay. To develop an investment portfolio that meets your needs and objectives, you can meet with Ozzie MacKay, our Credential Financial Strategies Representative. He can explain your options and design the most cost effective plan for you.

Credential Financial Strategies Inc. is a member company under Credential Financial Inc., offering financial planning, life insurance and investments to members of credit unions and their communities. Credential® is a registered mark owned by Credential Financial Inc. and is used under license.

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