Risk Factors

RISK FACTORS

This Plan is designed for those investors who want to benefit from the potential growth of the commodities in the Portfolio and, in respect of the Protected Super Growth Option only, are prepared to accept a degree of risk to their capital in return for the prospect of enhanced returns. Before investing, however, it is important that you are comfortable with the Plan and the risks that exist in return for the potential rewards. You should also be aware that if you do not hold this Plan for the full term, you may not get back the amount you invested. In addition, please note that as this investment is linked to commodity prices it is different from depositing money in a building society or bank account. Access to your capital during the investment term is restricted. To help you decide if this Plan is right for you, below is a brief list of pros and cons which you should consider before investing:

Yes, I wish to invest because:

• I am willing to invest for a set period of time,
known as the investment term; (see page 2 of the brochure)

• I am not likely to need access to my money
during the investment term; (see page 11)

• I want the potential to benefit from any rise in
commodity prices but do not want to invest
directly in the commodity markets; (see page 6)

• I know that the commodity prices can fall as
well as rise and can be volatile; (see page 4/5)

• I understand that although the assets will be
provided by a major investment bank with a
current credit rating from Standard & Poor’s
of at least ‘A’ there is a chance that they may
default on the payments due and this means
that I may lose some, or all, of my investment,
known as the counterparty risk; (see page 3/9)

• I am prepared, and can afford to accept the
investment risks; (see page 9)

• I have asked my Financial Adviser to answer
any questions or queries I had.

No, I don’t think I should invest because:

• I am not prepared to accept any risk of loss
to my capital (only applicable to the Protected
Super Growth Option); (see page 6)

• I may need access to my money before the
end of the investment term; (see page 11)

• I want an income from my investment

• I don’t want to lose the dividend income
that I may get if I invested in shares or other
similar investments

• I don’t want an investment where the returns
are linked to commodity prices; (see page 3)

• I don’t fully understand how the Plan works;
(see page 3)

• I don’t have any other savings or investments;
(see page 11).

What are the risks involved with investing?

• The investment return you receive will depend on the movement in the prices of the eight commodities described on page 3 of the brochure and it is possible that you might not receive any investment return at all. Please see the ‘How is my Investment Return calculated?’ section and table on page 6.

• Commodity prices could be volatile and could be affected by changes in interest rates, as well as international economic and political developments during the investment term.

• The Protected Super Growth Option of the Plan 5 is suitable only if you can afford to accept an element of risk to your capital. The capital return would be reduced by 1% for each 1% of the average price by which the commodities have fallen, to a minimum of 90% of the amount you have invested. Please see the ‘How is the Capital Return calculated?’ section on page 6.

• If your circumstances change and you need to withdraw your investment early we will have to sell your Securities back to the Issuer and the value will depend on the price they are prepared to pay. You will also have to pay an administration charge.

• The underlying Securities you purchase will be issued by a major financial institution, which has a current credit rating from Standard and Poor’s or a similar rating agency, of at least A, which denotes high financial strength. It is unlikely that such an institution would not be able to meet its obligations but you must be aware that if it were unable to do so you could lose some or all of your investment.

• If you tell us that you want to cancel your investment after we have bought the Securities you will only get back the value of the Securities when we sell them, which is likely to be less than your original investment.

• The values of any tax reliefs will depend on your individual circumstances. You should note that the levels and bases of taxation could change in the future.

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