Bond & InterNotes Basics:

The following brief definitions will assist those new to investing in bonds and InterNotes. This 'bond basics' section is meant to be a quick overview only. More comprehensive information is available on other pages of this site and in the applicable issuer prospectus.

• Bonds: Bonds are issued by companies, banks, governments and other large entities to raise money, and represent “IOUs” from the issuers.¹
• InterNotes: InterNotes are corporate, bank or government bonds specifically designed for individual investors to purchase in an easy and straight-forward manner.
• Fixed income: Fixed income refers to an interest-paying bond.
• Coupon: The coupon is another term for the interest rate to be paid on a bond, and is expressed as a percentage (i.e. 3.50%, 4.25%, 5.75%)
• Par: Par means a price of 100.00. InterNotes are offered with a starting price of par and mature at a price of par. This means that it costs $1000 to buy $1000 worth of bonds, and $1000 is paid back at maturity, plus interest.

• Call: A call is an option that the issuer has to repay bonds at a date earlier than the scheduled maturity date. For instance, a “10-year non-callable 2-year bond” is one with a maximum maturity of 10 years, but that may be repaid after 2 years at each interest payment date.
• Interest Payments: Bonds normally pay an interest rate that may be calculated monthly, quarterly, or semi-annually in the form of a coupon.
• Offering Period: The offering period means the time during which investors can buy new bonds. For new-issue InterNotes, this is typically a one-week period, from Monday afternoon through Monday morning of the following week.
• Payment Date or Settlement Date: The payment or settlement date is the actual day on which investors pay for the bonds they have bought. Interest begins to accrue from the settlement date onwards.
• Maturity: Most bonds have a start date from when they begin paying a coupon and an end date (maturity) when they are reimbursed. This is typically 1 to 30 years.
• Settlement Period: The settlement period is the time between the end of the offering period and the payment date.
• Principal: Principal simply refers to the amount purchased by investors and issued by the borrower. It equals the amount that will be repaid at maturity by the issuer.
• Rates: Rates is a shortened version of the term “interest rates.” It is the interest percentage paid on a bond.
• Secondary Market: Once a bond has been issued, it can be bought sold in the secondary market, where bonds are traded between bond dealers.
• Additional Features of InterNotes: InterNotes offer a way to diversify portfolios with high quality fixed-income investments. InterNotes are easy to purchase, straight-forward, and may be resold prior to maturity in the secondary market.
• Structured Products: Structured products is the generic name given to more complex investments that have some sort of option attached to them. Some InterNotes may be 'structured' with features such as calls, step-ups, or links to other securities or indexes.²

For more complete informaton, please continue viewing About InterNotes.

¹A Bond is a certificate which is evidence of a debt on which the bond issuer promises to pay the bond holder a specified amount of interest for a specified length of time, and to repay the loan on its maturity. Bonds are issued by corporations and by federal, provincial and municipal governments. Bond holders are first in line before shareholders to claim any of a company's assets in the event of liquidation.

²Structured products are hybrid instruments which typically combine characteristics of fixed income investments and other features. Investors should consult with their financial adviser prior to investing in these products.