What is a principal protected note?

A principal protected note is an investment that protects your principal at maturity while giving you the opportunity to earn a return linked to market performance.

The FlexiFonds secure investment option consists of principal protected notes with enhanced return linked to the performance of the Fonds de solidarité FTQ shares. Let's break this product name down to understand it better.

Principal protected note

A principal protected note (PPN) is a debt security. In other words, it's a loan made to an issuer for a fixed amount of time.

In exchange for this loan, the issuer agrees to:

  • Return your initial investment (the principal) to you at the end of the investment term
  • Pay you a minimum return, confirmed from the outset

A PPN is similar to a guaranteed investment certificate (GIC). The main difference between the two is that a PPN has the potential for enhanced returns.

Enhanced return

The issuer may also offer you the opportunity to earn an enhanced, or additional, return. This return may be paid out if certain markets, stock indexes, or other assets perform well.

Linked to the performance of Fonds shares

Enhanced returns for the FlexiFonds secure investment option are linked to the performance of the Fonds de solidarité FTQ shares. That's what makes this product unique. When your investment matures:

  • If the Fonds share performance exceeds the guaranteed minimum cumulative return over the term of your investment, you will receive an additional return. This amount is added to your principal and the cumulative guaranteed minimum return.
  • If performance doesn't exceed the guaranteed minimum, you'll receive only your principal and the cumulative guaranteed minimum return at maturity.

For more information, read all about additional returns.

Legal Notes

Principal protected notes with enhanced return linked to the performance of the Fonds de solidarité FTQ shares are issued by the Fonds de solidarité FTQ and distributed solely in Québec by FlexiFonds de solidarité FTQ inc., a mutual fund dealer wholly owned by the Fonds de solidarité FTQ. National Bank Trust Inc. acts as the administrator and registrar of these notes. Please read the prospectus and pricing supplements before investing. These notes are not covered by the Canada Deposit Insurance Corporation nor any other government deposit insurer. The return component linked to the performance of the Fonds de solidarité FTQ shares fluctuates from one issuance to another, and past performance may not be repeated. This investment may not be suitable for all investors. We recommend that you contact your registered FlexiFonds mutual fund representative.

The rate offered on principal protected notes with enhanced return linked to the performance of the Fonds de solidarité FTQ shares may vary from one issuance to another.