MARKET LINKED CERTIFICATES OF DEPOSIT (MLCDs) FDIC Insured and Principal Protected + The Potential for Real Interest

Transcription

1 MARKET LINKED CERTIFICATES OF DEPOSIT (MLCDs) FDIC Insured and Principal Protected + The for Real FEBRUARY 2014

2 INTRODUCTION MLCDs were developed by Chase Bank in 1987, and offer the potential for enhanced returns by linking the interest paid to the performance of Commodities, Equities, or an Equity Index. With traditional bank CDs still paying less than 1.00% annually, Market Linked Certificates of Deposit have become a popular alternative for many conservative investors. MLCDs offer the following potential benefits: 1. interest up to 1.50% annually 2. The potential for maximum interest up to 7.00% annually % principal protection when held to maturity 4. Full FDIC protection in the unlikely event that the issuing bank fails 5. The potential to sell the CDs at par or greater during the 2 nd half of the term Five year traditional CDs are currently paying an average of only.79% annually, while most of our MLCDs offer guaranteed interest of at least 1.00% with the potential to earn much more. 2

3 MLCD BENEFITS Risk vs. Reward: MLCDs are the only product to offer safety plus the potential to earn reasonable rates of return. : The majority of our MLCDs pay annual interest up to a CAP. CAPS currently range from 5.50% to 7.00%, depending on which CD is purchased. : Most of our MLCDs also offer guaranteed minimum interest. Minimum s currently range from 1.00% to 1.50%, depending which CD is purchased. FDIC Insurance: The CDs qualify for FDIC coverage, generally up to $250,000 per issuer. Principal Protection: MLCD purchasers will receive a full return of their deposit at maturity, regardless of the performance of the underlying asset the CDs are linked to. Survivor Option: In the event that the owner passes away, the beneficiaries will receive 100% of deposit back. This unique feature potentially makes MLCDs the perfect investment for elderly investors looking for higher returns without risking their principal. Liquidity: While MLCDs are designed to be held to maturity, the issuer will buy the CDs back prior to maturity. If the CDs are sold before the maturity date, the liquidation price may be less or more than the original deposit amount. Liquidation prices generally (but not always) return to par during the second half of the term. 3

4 FEBRUARY 2014 MLCDs This document is for discussion purposes only and is not intended to constitute an offer or a solicitation to engage in the purchase of any financial instruments. Prior to any purchase, depositors must carefully review the preliminary disclosures produced by the issuing bank. These documents are available upon request. MLCDs will be held at Provident Trust Group, which was founded in 2004 and offers account services to over 30,000 clients, who hold in excess of $3 Billion at Provident Trust. To participate in this month s offerings, the Provident account must be open and funded prior to the monthly deadlines. February CDs are highlighted on pages

5 FEBRUARY 2014 OFFERING SUMMARY MLCD SUMMARY MLCD OVERVIEW MAXIMUM INTEREST MINIMUM INTEREST MAXIMUM YIELD MINIMUM YIELD MONTHLY DEADLINE BOW 7CIA BANK OF THE WEST 7 YEAR COMMODITY BASKET LINKED CD THIS CD PAYS EITHER 1.25% or 5.50% ANNUAL INTEREST LINKED TO: COCOA, COFFEE, CORN, LEAD, NATURAL GAS 38.50% 8.75% 5.50% 1.25% Friday February 21st 1pm EST BOW 7EIA BANK OF THE WEST 7 YEAR EQUITY BASKET LINKED CD THIS CD PAYS EITHER 1.00% or 7.00% ANNUAL INTEREST LINKED TO: ABBV, INTC, LO, PPL, T 49.00% 7.00% 7.00% 1.00% Monday February 24th 1pm EST GS 8EQ GOLDMAN SACHS 8 YEAR EQUITY BASKET LINKED CD THIS CD PAYS FROM 1.50% to 5.50% ANNUAL INTEREST LINKED TO: AAPL, ABBV, CAT, CSCO, MCD, MRK, MSFT, OXY, WAG, WMT 44.00% 12.00% 5.50% 1.50% Tuesday February 25th 1pm EST BOW 6.5MSP BANK OF THE WEST 6.5 YEAR EQUITY INDEX LINKED CD THIS CD PAYS UNLIMITED INTEREST AT MATURITY LINKED TO: The Morningstar Ultimate Stock Picker's Index (+15.54% in 2013) UNLIMITED (at maturity) 0.00% 110% Index Participation (at maturity) 0.00% Tuesday February 25th 1pm EST 5

6 BANK OF THE WEST COMMODITY LINKED CD EITHER 1.25% OR 5.50% ANNUAL INTEREST 5.50% paid if all 5 Commodities are at least equal to their initial price on the anniversary date 1.25% paid when any of the commodities are below their initial price on the anniversary date interest is linked to the performance of the following Commodities: 1. COCOA 2. COFFEE 3. CORN 4. LEAD 5. NATURAL GAS Best Case: 38.50% interest + 100% deposit returned Worst Case: 8.75% interest + 100% deposit returned The CDs qualify for FDIC coverage and will return the full deposit amount if held to maturity Maturity Date: February 26, 2021 (7 year MLCDs) Applications must be faxed to by 1pm EST on February 21,

7 BANK OF THE WEST EQUITY LINKED CD EITHER 1.00% OR 7.00% ANNUAL INTEREST 7.00% paid if all 5 Stocks are at least equal to their initial price on the anniversary date 1.00% paid when any of the Stocks are below their initial price on the anniversary date interest is linked to the performance of the following Equities: 1. AbbVie (ABBV) 2. Intel (INTC) 3. Lorillard (LO) 4. PPL (PPL) 5. AT&T (T) Best Case: 49.00% interest + 100% deposit returned Worst Case: 7.00% interest + 100% deposit returned The CDs qualify for FDIC coverage and will return the full deposit amount if held to maturity Maturity Date: February 26, 2021 (7 year MLCDs) Applications must be faxed to by 1pm EST on February 24,

8 GOLDMAN SACHS EQUITY LINKED CD ANNUAL INTEREST RANGING FROM 1.50% % Each year, this MLCD will pay interest ranging from 1.50% to 5.50%. interest will be linked to the performance of the following Stocks: 1. Apple (AAPL) 2. AbbVie (ABBV) 3. Caterpillar (CAT) 4. Cisco Systems (CSCO) 5. McDonald s (MCD) 6. Merck (MRK) 7. Microsoft (MSFT) 8. Occidental Petroleum (OXY) 9. Walgreen(WAG) 10. Wal-Mart (WMT) Best Case: 44.00% interest + 100% deposit returned Worst Case: 12.00% interest + 100% deposit returned The CDs qualify for FDIC coverage and will return the full deposit amount if held to maturity Maturity Date: February 27, 2022 (8 year MLCDs) Applications must be faxed to by 1pm EST on February 25,

9 BANK OF THE WEST EQUITY INDEX LINKED CD UNCAPPED INTEREST PAID AT MATURITY At maturity, this MLCD will pay unlimited interest linked to at least 110% participation in the positive performance of an Equity Index developed and managed by Morningstar: 1. The Morningstar Ultimate Stock-Pickers Target Volatility 7 Index 2. The Index returned 15.54% in 2013 Best Case: Unlimited + 100% deposit returned Worst Case: 0% interest + 100% deposit returned The CDs qualify for FDIC coverage and will return the full deposit amount if held to maturity Maturity Date: August 28, 2020 (6.5 year MLCDs) Applications must be faxed to by 1pm EST on February 25th 9

10 This presentation has been prepared by Alternative Design or an affiliate thereof ( ADIS ). ADIS distributes a variety of investment and deposit products and such products may contain complex terms and risk. This document is for discussion purposes only and is not intended to constitute an offer or a solicitation to engage in the purchase of any financial instruments. Given its general nature, the information included in this documents does not contain all the elements that may be relevant for a recipient to make an informed decision in relation to any strategies or financial products discussed herein. Market Linked Certificates of Deposit are 100% principal protected when held to maturity. While there are no surrender charges when selling MLCDs prior to maturity, the liquidation value may be less than the original deposit amount if the CDs are sold prior to maturity. The information contained in this presentation has been distributed to you on a stand alone basis and is not to be combined with, consolidated, incorporated or otherwise used with any other written materials provided by Alternative Design or any of the issuers recommended by Alternative Design. IRS Circular 230 Disclosure: This communication was written in connection with the promotion or marketing, to the extent permitted by applicable law, of the transaction(s) or matter(s) addressed herein. Alternative Design Insurance Services, LLC and its affiliates do not provide tax advice. Any recipient of this communication should seek advice from an independent tax advisor. 10