Risk Factors

RISK FACTORS

Is this product right for me?

This Plan is designed for those customers who want to benefit from the potential long-term growth of the Indices and 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 two stockmarkets, it is different from depositing money in a Building Society or Bank account, and 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 5 of the brochure)

• I am not likely to need access to my money during the investment term; (see page 6 of the brochure)

• Although the Plan might pay out early I understand this is a ten-year investment; (see page 4 of the brochure)

• I want the potential to benefit from any rise in the Indices but do not want to invest directly in stockmarkets; (see page 3 of the brochure)

• I know that the value of the Indices can fall as well as rise; (see page 5 of the brochure)

• 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 9 of the brochure)

• I am prepared and can afford to accept the investment risks; (see page 5 & 9 of the brochure)

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

• I am not prepared to accept any risk of loss to my capital; (see page 5 of the brochure)

• I may need access to my money before the end of the investment term; (see page 6 of the brocure)

• I want an income from my investment;

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

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

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

• I don’t have any other savings or investments; (see page 6 brochure).

What are the risks involved with investing?

• The investment return you receive will depend on the performance of the FTSE100 & the EuroStoxx50 and it is possible that you might not receive any investment return at all. Please see the ‘How are my returns calculated?’ section and table on page 4.

• If the early maturity conditions are achieved you will receive 15% for each year the Plan has been in force. If the Indices have grown by more than this you will not receive the benefit of any growth over the predetermined levels stated.

• The payment and timing of the maturity proceeds will depend on the closing levels of the Indices on the measurement dates, as set out in the ‘How are my returns calculated’ section on page 4. The Plan may therefore be affected by short-term market fluctuations.

• The capital return at maturity will also depend on the performance of the Indices and it is possible that you could lose some, or all, of the amount you invest. The capital return will only be affected if one or both of the Indices are more than 50% down from their Opening Levels at the end of the investment term. Please see the ‘How is the capital return calculated?’ Section on page 5.

• 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. You should note that while the asset provider intends to make a secondary market a material change in market or corporate conditions could affect this.

• The 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.

What are the risks of transferring my ISA?

• Your existing ISA must be transferred in cash, which means that your existing Plan Manager will sell your investment holdings.

• Your existing Plan Manager may charge you an exit or transfer fee. There is the potential for loss of income or growth if markets should rise while your transfer remains pending.

• Please note that to ensure your funds are received from your existing Plan Manager in a timely manner, we will not normally accept ISA transfer applications after 4th June 2008.

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