Things to consider

Understand the risks

Your original capital will be returned at maturity provided the Index does not fall by more than 50% from its Initial Index Level during the five year investment period. In exchange for the prospect of improved returns you need to accept a degree of risk to your capital. If the Index falls by more than 50% (from its Initial Index Level) at any time during the five year investment period and it is not at least equal to the Initial Index Level by the time the Plan matures, you will receive less than your initial investment. The amount of money you receive back will be reduced by the percentage amount by which the closing level (the ‘Final Index Level’) is below the Initial Index Level (to two decimal places).

Your maximum investment return

Even if the Index rises by more than 12.55% over the five-year investment term you will still only receive back the maximum investment growth of 75%. Conversely, if the Index only experiences modest gains over the life of the Plan, because of the ‘multiplier effect’ you can still expect to benefit from a significant investment return.

Access to your money will be restricted

You should only invest in the Plan if you are sure that you will not need to access your invested capital for the next five years. If you withdraw early, you are unlikely to receive back the full amount you originally invested.

Investing in this product is not the same as investing in shares

Payment of the investment return depends upon the performance of the FTSE 100 Index. You need to bear in mind that the FTSE 100 Index measures only capital values of the shares included; no allowance is made for dividends paid on the shares.

Will I get an income?

 No, the objective of the Plan is to provide capital growth.

You need to consider inflation

Remember, whatever payment is made when your Plan matures, inflation over the investment term will have reduced the value of what you receive.

Will I have to pay tax?

If you invest via an ISA there will be no further obligation on you to pay tax: all ISA investments and transfers are tax efficient. However, if you invest directly into the Plan (outside of an ISA) the returns will normally be subject to Capital Gains Tax (CGT). All payments are made gross for declaring any tax due to HM Revenue and Customs.

All UK resident individuals have an annual CGT exemption (for 2008/09 it is £9,600) which means that the total of gains made by an individual up to this amount in a tax year will be free of CGT. Any gain achieved in excess of this amount, would be liable to tax at a fixed rate of 18%. This could include the gains made under the Plan in the year of maturity. This said, the effects of taxation depend on your individual circumstances and tax rules can change. You should seek independent tax advice.   

How does the Plan compare to  a deposit account? 

A deposit account is usually seen as the safest form of investment and normally allows you ready access to your investment. However, it provides no opportunity for your capital to grow as cash deposits only pay interest. In addition, the income generated by deposit accounts is dependent upon interest rates and these can vary with the general health of the economy. In an environment of low interest rates, the returns from cash deposits can be correspondingly low especially once tax is taken into account. In contrast, the Plan does not offer a regular income but provides the opportunity for capital growth. Of course, the Plan might still provide less return than a deposit account would have done, or no return at all. All UK resident individuals have an annual CGT exemption (for 2007/08 it is £9,200) which means that the total of gains made by an individual up to this amount in a tax year will be free of CGT. This could include the gains made under the Plan in the year of maturity. This said, the effects of taxation depend on your individual circumstances and tax rules can change. You should seek independent tax advice. Following changes announced in the 2008 Pre- Budget Report, it is anticipated that any gain achieved in excess of this amount would be liable to tax at a fixed rate of 18%. The rates of tax and allowance quoted are those applying in the 2007/08 tax year and, where relevant, those proposed for the 2008/09 tax year. These rates and the basis of taxation may change.

What are the implications of investing via an ISA?

There are two main types of ISA – the Stocks and Shares ISA and a Cash ISA. Stocks and shares (such as the investments within the Super tracker) and cash can be invested into an ISA. Investors can have up to one Stocks and Shares ISA and one Cash ISA in any one tax year, providing they do not exceed their annual allowance – for the 2008/09 tax year this is £7,200, although the maximum investment into a Cash ISA is £3,600. All ISA investments are tax efficient.

You can only use your ISA allowance once in any tax year, so if you use it to invest and later decide to withdraw your money, you will not be able to invest in another ISA for the same tax year. Furthermore, if you invest less than £7,200 in a Stocks and Shares ISA in this Plan you will lose the remainder of your allowance for the tax year as no further contributions can be made after the closing date.

It is important to remember that the favourable treatment of ISAs might not continue. Existing ISAs may lose their tax advantages and new ones might not be permitted, although the Government has stated that it sees ISAs as part of the Government’s primary savings vehicle outside pensions. The value to you of these and other tax reliefs depends on your individual circumstances. You should bear in mind that tax rules can change.

Please refer to the Brochure and the Terms & Conditions for full details.