Download Dynamic deposit – Higher profit opportunities

Dynamic deposit – Higher profit opportunities,
guaranteed principal amount
• What is a dynamic deposit? A dynamic deposit is an investment which gives you the opportunity to invest free funds for a specific period
of time with larger profit opportunities and guaranteed deposit amount at the end of the investment period. Contrary to a term deposit,
the upside potential is unlimited and depends on the return of the underlying asset in the financial markets.
• Higher profitability. The interest earned potentially can be much higher than interest on a term deposit. However, under unfavorable
market conditions, the deposit does not bring any interest.
• Guarantee and safety. The amount of your deposit is absolutely safe – the bank guarantees that it will return 100% of the invested deposit amount at deposit maturity even if the value of the financial assets to which deposit is linked at the maturity date will be below the
initial value. Deposit can be concluded with risk premium – additional payment of 10% from deposit amount which increases participation
rate. Risk premium is not returned at deposit maturity. In case of early termination of the agreement the termination fee can be applied.
• There is no fee for concluding Dynamic deposit agreement.
August offer – “Developed countries” • Deposit selling period – 17 August 2010 to 20 September 2010.
• Deposit period – 3 years.
• Minimum amounts – 200 LVL, 300 EUR.
There are four alternatives:
• Deposit in LVL without risk premium, participation rate: 65-85%;
• Deposit in LVL with 10% risk premium, participation rate:
120-150%;
• Deposit in EUR without risk premium, participation rate: 30-50%;
• Deposit in EUR with 10% risk premium, participation rate:
85-115%.
Participation rate is set as an interval given that its precise size will be defined after
successful subscription of deposits and will be announced on Bank’s website
www.swedbank.lv on 27 September 2010. Participation rate indicates which part
of rise of the index will be distributed to investor.
Dynamic deposit is linked to three major developed equity markets –
Western Europe, US and Japan. Underlying assets of the deposit is a
basket of the index and exchange traded funds (ETFs):
• Dow Jones EURO STOXX 50 (Price) Index;
• Exchange traded fund SPDR S&P 500 ETF Trust;
• Exchange traded fund iShares MSCI Japan Index Fund.
Dow Jones EURO STOXX 50 (Price) Index covers 50 stocks from
12 Euro zone countries. Exchange traded fund SPDR S&P 500 ETF
Trust tracks the performance of US equity index S&P 500 which is
widely regarded as best gauge of the US equity market and is one
of the major indices in the world while iShares MSCI Japan Index
Fund tracks the performance of MSCI Japan Index.
Example: Let‘s assume the following final participation rates were approved for the dynamic deposits: for deposit without risk premium – in
LVL 75%, in EUR - 40%; for deposit with 10% risk premium - in LVL 135%, in EUR - 100%. The table below shows the return of the dynamic
deposits at maturity (shown as a percentage of the invested amount) under various performances of the basket of the index and exchange
traded funds:
Dynamic deposit type
Deposit in LVL without risk premium
Deposit in LVL with 10% risk premium *
Deposit in EUR without risk premium
Deposit in EUR with 10% risk premium *
-30%
0%
-10%
0%
-10%
Basket performance at deposit maturity
-10%
0%
10%
30%
0%
0%
7.5%
22.5%
-10%
-10%
3.5%
30.5%
0%
0%
4%
12%
-10%
-10%
0%
20%
60%
45%
71%
24%
50%
* after deduction of 10% risk premium.
Why is it worth to invest in dynamic deposits “Developed countries”?
• Recently almost all measures of economic activity around the
globe show positive tendencies. GDP growth, unemployment,
business and consumer confidence, housing market and other
indicators are stabilizing or improving in many countries. These
tendencies are reflected in equity market as well, with major
world equity indices being on a rising trend for more than a year.
• According to International Monetary Fund (IMF), global economy
recovery in continuing. IMF sees global growth to be 4.5% this
year and 4.25% next year. That means that stimulus measures
provided by world governments bear results and worst is over for
the world economy.
• Central banks of the three regions further pursue policy of
historically low interest rates. Analysts do not forecast interest
rates hikes in near future. That shows that central banks do not
risk withdrawing support for economy too early and are waiting
until recovery has strong footing. All these factors are positive for
equity markets and should lift their prices further.
Performance of the basket:
Date
Basket performance (in %)
2005
+19.88
2006
+8.43
2007
-0.89
2008
-34.83
2009
+15.05
2010*
-8.52
Source: Bloomberg
* from 2010.01.04 till 2010.07.20
Index and exchange traded funds values may rise or fall over time. Their historical performance does not guarantee similar performance in the future.
Should you have any questions, call us at 6744444 or visit www.swedbank.lv
The EURO STOXX 50® is the intellectual property (including registered trademarks) of STOXX Limited, Zurich, Switzerland and/or its licensors (“Licensors”), which is used
under license. The securities [or financial instruments, or options or other technical term] based on the Index are in no way sponsored, endorsed, sold or promoted by STOXX
and its Licensors and neither of the Licensors shall have any liability with respect thereto.