Leistung schafft Vertrauen

Bull & Bear certificates?

How to invest with

Nordnet / 19 May 2016

Heiko Geiger,

Bank Vontobel Europe AG

Important legal information

This presentation serves solely to provide you with information and does not constitute a solicitation or offer by Bank Vontobel

Europe AG, Frankfurt am Main branch (referred to collectively with affiliates as "Vontobel"), to purchase or sell securities. The

information provided to you in this presentation does not constitute financial analysis and also does not satisfy the statutory

requirements for ensuring the unbiased nature of financial analysis; nor is such information subject to a ban on trading prior to the

publication of financial analyses.

The information included in this presentation does not constitute any investment, tax or other advisory service. Such information

does not take into account your specific situation as regards to your investment targets and risk appetite. Such information does not

replace the advice by your bank or any other tax or financial adviser which is essential in each individual case prior to taking any

purchasing decision.

In order to receive detailed information pertaining in particular to the structure and the risks associated with an investment in the

securities, you should read the relevant base prospectus which, in addition to the final terms and any supplements to the base

prospectus, is published on the webpages of the Issuer (https://certificates.vontobel.com) and which is obtainable free of charge

from the Issuer, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany. Investors are

requested to comply with the applicable selling restrictions.

Historical price performance is not a reliable indicator of future price performance of the underlying or the securities. Note that the

payment of tax, commissions and fees may have a negative impact on the return of investment.

Not all structured products issued by the Issuer are suitable or appropriate for an investment by an interested investor. The purchase

of such securities may be linked to risks. It is strongly recommended to seek for independent advice by tax or financial advisers as

well as distribution partners prior to taking any purchasing decision.

The reproduction, distribution, modification or any other use of this presentation (in full or in part) without the written consent of

Vontobel is prohibited.

Publisher: Bank Vontobel Europe AG, Frankfurt am Main branch, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany.

Copyright© 2016 Vontobel. All rights reserved.

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Vontobel – Bull & Bear Certificates

� Presentation of the Vontobel Group

� What are Bull & Bear certificates

� Functionality of Bull & Bear certificates

� Bull & Bear certificates at http://certificates.vontobel.com

� Vontobel specialises in asset management for private clients and institutional investors as well as in investment banking.

� Founded in 1924

� 90 years of entrepreneurial independence� Still family-run via majority shareholding

� Listed on the SIX Swiss Exchange since 1986

� Head office in Zurich, 21 locations worldwide

� Around 1.500 employees

� Moody‘s rating Aa3 (long-term deposit rating Bank Vontobel AG)

� Three divisions: Private Banking, Asset Management, Investment Banking

� Key figures:*- Total client assets: CHF 187 bn- Equity: CHF 1,40 bn

- CET1 capital ratio: 17,9%

- Dividend per share CHF 1,85 for 2015

Vontobel in brief

Global investment advisor with a long tradition and strong capital base

*as of 30 June 2015

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Our core capabilities

1. Protect and build wealth

3. Deliver tailor-made investment solutions

2. Manage assets actively

We take a long term approach in protecting and building the wealth, our clients

have entrusted to us. In doing so, we provide our clients with responsible and

forward-looking advice, transcending generations.

We implement tailor-made investment solutions for our clients. Additionally our

products and processes are based on the latest forward-looking research.

As active asset manager, we provide financial added value for our clients and

develop first-class solutions for return optimisation and risk management.

10 September 2015

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Vontobel - Bull & Bear Certificates

� Presentation of the Vontobel Group

� What are Bull & Bear certificates

� Functionality of Bull & Bear certificates

� Bull & Bear certificates at certificates.vontobel.com/

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Bull & Bear certificates

Definition:

Bull & Bear certificates are bonds issued by the respective issuer. They

are leveraged financial products, without a fixed expiry. They allow

investors to participate disproportionately in the performance of the

respective reference instrument. The leverage remains constant, thus the

investment is equivalent to a reinvestment on a daily basis.

� Investors can participate disproportionately on stable (positive or negative) price trends

� Special strengths in stable trends� Although they offer opportunities for disproportionately high gains, the leverage works in both

directions and can also result in disproportionately heavy losses

Bull & Bear certificates – Investing with a constant leverage

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Characteristics of Bull & Bear certificates

Optimally harness stable price trends without a fixed expiry

In normal market phases nearly no impact on the pricing of the factor certificate due to

volatility

Constant leverage over the product’s lifetime and a transparent structure due to the underlying factor index

Application scenarios:

Not suitable for an alternately rising and falling trend -> sideways

markets

Rising market trend:Bull certificate (Long)

Declining market trend:Bear certificate(Short)

Functionality of Bull & Bear certificates

� Each certificate replicates the performance of an underlying factor index at a fixed

ratio

� The factor index disproportionately reflects the performance of the reference instrument on a daily basis by multiplying the change in its value by a constant factor

� The factor index ensures a high degree of transparency with a dedicated index portal: https://indices.vontobel.com

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Example: The value of a Bull certificate with a leverage of 4 will rise four-times as much as the reference instrument. If the reference instrument rises by 2%, the value of the certificate will rise by 8%. On the other

side it will lose 8% of its value when the reference instrument decreases by 2%.

Bull certificate on the 4x Long

Index linked to DAX

4x Long Index linked to DAX DAX

Calculating the Factor Index I

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Factor Index

Leverage component

+ / -

-

Leverage financing

Index fee

Financing component

Calculating the Factor Index II

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1 The current daily financing spread and the index fee are published on the index portal page for the index in question (https://indices.vontobel.com)2 Appreciative effect only as long as income from overnight funds exceeds the costs of the purchase (financing spread), otherwise depreciative effect

Long Factor Index

Financing component

Multiple short selling of the reference instrument

in accordance with the leverage (factor)

Factor financing: Costs of obtaining capital for multiple purchases of the reference instrument

in addition to the financing spread -› depreciative effect

Index Fee1: fee for administration and the

calculation of the factor index, charged on an

ongoing basis -› depreciative effect

Factor financing: Income from the overnight

funds of the proceed from multiple short selling

of the reference instrument less the costs of the purchases -› appreciative effect is possible2

Index Fee1: fee for administration and the

calculation of the factor index, charged on an

ongoing basis -› reduces value of the factor index

Short Factor Index

Leverage component

Multiple investment in the reference instrument in

accordance with the leverage (factor)

Financing component

Leverage component

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Vontobel - Bull & Bear Certificates

� Presentation of the Vontobel Group

� What are Bull & Bear certificates

� Functionality of Bull & Bear certificates

� Bull & Bear certificates at certificates.vontobel.com/

� Stable performance – constantly rising price trend

- The higher the factor, the higher the

performance gains of a Factor Index (long)

- Factor Indices (short) behave in the

opposite manner, and they suffer disproportionately high losses when the

reference instrument rises

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Note: The examples shown above are fictitious and for illustrative purposes only. In the interests of simplicity, only the leverage of a factor index is shown here. The financing component is not taken into account.

Price scenario examples – I. Price increase (Bull market)

Price scenario examples – II. Price decrease (Bear market)

� Stable performance – constantly declining price trend

- The higher the factor of the Factor Index

(short), the higher the returns

- By contrast, Factor Indices (long) suffer

corresponding losses when the reference instrument declines.

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Note: The examples shown above are fictitious and for illustrative purposes only. In the interests of simplicity, only the leverage of a factor index is shown here. The financing component is not taken into account.

Price scenario examples – III. Sideways markets

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� Fluctuating performance – alternately rising and falling price trend

- The reference instrument rises and falls alternately day by day, and therefore remains in a sideways phase, hovering around the starting point. The factor

index is subject to strong fluctuations and alternately posts strong gains and losses

- General rule: - Heavy losses can arise within just a few days when the reference

instrument is in a sideways phase – even leading to a total loss- This risk increases, the stronger the price fluctuations and the higher the

leverage

Bull & Bear

certificates are not

suitable for a

sideways phase and

are not Buy-and-Hold products!

Note: The examples shown above are fictitious and for illustrative purposes only. In the interests of simplicity, only the leverage of a factor index is shown here. The financing component is not taken into account.

Intraday index adjustments

� The barrier sets the maximum negative price change in the reference instrument compared with the last valuation price that is permitted before an

intraday index adjustment is made

� The barrier is a fixed percentage of the valuation price and depends on the leverage; the absolute amount is defined daily.

� Illustration on the basis of a Bull certificate with leverage 4

� The reference instrument hits the barrier of 68.00 EUR during day 2, therefore an intraday index adjustment is made

� For calculating the remaining day’s yield the new valuation price of 8.00 EUR is taken into account. The new barrier will be at 54.40 EUR (80%

of the respective valuation price of the reference instrument)

� Disadvantage: occurred losses are realized without the chance of recovery

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Time Reference Instrument Factor Index x4 Barrier

in EUR return in EUR return in EUR Percentage of valuation price

End of day 0 100.00 100.00 80.00 80%

End of day 1 85.00 -15.00% 40.00 -60.00% 68.00 80%

During day 2 68.00 -20.00% 8.00 -80.00% 54.40 80%

End of day 2 75.00 10.29% 11.29 41.18% 60.00 80%

End of day 3 100.00 33.33% 26.35 133.33% 80.00 80%

Note: The examples shown above are fictitious and for illustrative purposes only. In the interests of simplicity, only the leverage of a factor index is shown here. The financing component is not taken into account.

Barrier in order to reduce losses up to the prevention of a total loss

Effects of market behavior on Bull & Bear certificates

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Effects of extremely volatile markets:

� During sharply declining markets the costs for the market maker for hedging and taking risks increase

� The costs for these hedging-instruments are highly variable and extremely high in volatile markets

� They influence the pricing of Bull & Bear certificates.

� During a recovery of the reference instrument the increase of the certificate will be less than expected according to its leverage

� This premium for risk will be phased out the following days

Distressed Bull & Bear CertificatesIllustrated with an example of a Long Certificate

Intrinsic Value of the Bull & BearCertificate

Price of the Bull & Bear Certificate

Mark

et Tu

rbulences

Value of the FIC

Risk Margin

Price of the Bull & BearCertificate

Risk Margin

Distressed Bull & Bear CertificatesIllustrated with an example of a Long Certificate

60

80

100

120

140

160

180

DAX Index

BULL DAX X10

� Bull certificate offer much greater return possibilities to investors than a direct investment.

However, the leverage works both ways and heavy losses may occur.

� Short-term investment product to take part disproportionately of a stabile rising price trend.

A comparison of leverage products

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Bull & Bear certificates Knock-out warrants Mini-futures

Leverage Constant Variable Variable

Volatility impact No No No

Lifetime Open end Limited Open end

Knock-out No Yes Yes

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Opportunities and risks of Bull & Bear certificates

Opportunities Risks

� Benefits from stable (positive or negative) price

trends

� Constant leverage (factor) over the product‘s

lifetime

� In normal market phases Volatility does not

have an impact on the pricing of the certificate

� No knock-out: only built-in barrier allowing for an intraday adjustment

� No fixed expiry (open end)

� Big product palette offers multiple market access: visit certificates.vontobel.com/FI/ for

details

� The leverage works both ways (also if performance

takes a direction contrary to the market

expectation)

� The barrier cannot be seen as a buffer, since it can only mitigate further losses

� The worst-case scenario is a total loss of the capital invested, even if the barrier is triggered

� Investors bear the currency risk and the risk of

the issuer defaulting (issuer risk)

� Not suitable for an alternately rising and falling

trend

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Vontobel - Bull & Bear Certificates

� Presentation of the Vontobel Group

� What are Bull & Bear certificates

� Functionality of Bull & Bear certificates

� Bull & Bear certificates at certificates.vontobel.com/FI/

Vontobel Webpage

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1

3

2

4

5

Product features1. Current valuation price of the

reference instrument2. Barrier

3. Current financing spread4. The factor index on which the

factor certificate is based with a

direct link to the index portal5. Reference instrument underlying

the factor index

� certificates.vontobel.com/FI/ offers an overview of all

products, current and historical prices and much more

� Relevant product information can be found on

certificates.vontobel.com/FI/

Factor index portal

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1

4

2

5

3

Product features1. Factor index name with symbol

and ISIN2. Current factor index value with

currency3. Current valuation price of the

reference instrument

4. Current financing spread5. Index fee and relevant interest

rate for the financing component

� Transparent structure due to the factor index portal

(https://indices.vontobel.com)

� Adjustments of Index Parameters are displayed under

“Index History*”

*

Overview Bull & Bear Certificates(currently 457 Bull & Bear Certificates)

Asset-class Bull certificates Bear certificates

Indices- OMX®

- DAX®

- EURO STOXX 50®

- EURO STOXX 50® Banks Index- Nasdaq-100 Index®

- Standard & Poors 500® Index

- Dow Jones

+3, +5, +8,

+10, +12, +15

-3, -5, -8,

-10, -12, -15

Scandinavian stocks- 33 underlyings

+3, +5 -3, -5

American stocks- 14 underlyings

+3, +5 -3, -5

German stocks- 9 underlyings

+2, +3, +4, +5 -2, -3, -4, -5

Precious metals &

commodities- 12 underlyings

+3, +4, +6, +5, +8, +10 -3, -4, -6, -5, -8, -10

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Stand: 18.05.2016

Bull & Bear Matrix

Tag Monat JahrAutor, Version Seite 26

The Bull & Bear Certificates-brochure in Finish!

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Bank Vontobel Europe AG

Frankfurt am Main

Bockenheimer Landstr. 24

60323 Frankfurt am Main

Germany

www.certificates.vontobel.com/FI/FI

Thank you for your attention!

Heiko Geiger

Head of Public Distribution Europe

0800 91 77 91 (phone)

sertifikaatti@vontobel.com (mail)

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