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FTSE® 150 Defensive Kick Out Plan October 2017

Potential gross 7% payable for each year in force from year 1

  • The FTSE® 150 Defensive Kick Out Plan October 2017 is a maximum 6 year 2 week investment offering a potential gross 7% payable for each year in force from year 1.
  • The capital and investment return are linked to the performance of the FTSE Custom 150 Equally Weighted Discount Return Index (the 'Index').The Securities purchased will be Notes issued by Natixis Structured Issuance SA and guaranteed by Natixis.
  • This is a capital-at-risk product. The investor will lose some, or all, of their money if the Final Level of the Index is below 60% of its Opening Level. The amount the investor would lose will equal the percentage that the Final Level of the Index is below its Opening Level. 
  • If, on any Measurement Date before the Final Measurement Date, the Closing Level of the Index is at least equal to its Reference Level, the Plan will kick out (i.e. mature early) and make a gross investment return. If the Plan matures early on any Measurement Date, the gross investment return payable will be 7% for each year that the Plan has been in force.
  • The Reference Levels are as follows: year 1 at 105%; year 2 at 100%; year 3 at 95%; year 4 at 90%; year 5 at 85% and year 6 (Final Level) at 80%.
  • The first Measurement Date will be on 31 October 2018, one year after the Start Date. 
  • If, on a Measurement Date before the Final Measurement Date, the Closing Level of the Index is below its Reference Level, no investment return will be made and the Plan will remain in force. 
  • If the Final Level of the Index is at least equal to its Reference Level, the Plan will make a gross investment return at the Maturity Date equal to 42% of the money invested in the Plan. If the Final Level of the Index is below its Reference Level, no investment return will be payable at the Maturity Date.
  • It is possible that the Counterparty could collapse or fail to make the payments due from the Plan. If this happened the investor would lose some, or all, of the money they invest in the Plan, as well as any investment return to which they might otherwise have become entitled.
  • It is our understanding that any investment return from this Plan will be subject to Capital Gains Tax.

Target Market

This Plan could be appropriate as part of an investment portfolio for investors who:

  • have knowledge and experience of equity based investments;
  • are willing and able to invest for a period of up to six years and two weeks; 
  • are looking for potential growth rather than income;
  • want to benefit from the performance of the Index;
  • understand that the return of capital is based on the performance of the Index;
  • are willing and able to bear any loss of capital; 
  • do not believe the Index is likely to fall below 60% of its Opening Level;
  • understand that, due to the nature of the capital protection barrier, in the event of a capital loss occurring this will be at least 40% of the Net Subscription;
  • are prepared to accept the investment risk to their capital in return for a higher potential investment return than would be available via a deposit based investment;
  • understand that any investment return is based on the performance of the Index and accept that it it possible that no investment return may be payable;
  • understand the effect of macroeconomic policies on global equity markets; 
  • appreciate that future inflation will reduce the value of any potential growth.

For further information, refer to the 'Risks' section.

Risks

Cancellation risks

  • If the investor wants to cancel their investment after the Securities have been purchased, they will only get back the value of the Securities when they are sold, which will be less than their original investment.
  • If we pay an adviser charge amount to the investor's financial adviser on their behalf and they subsequently change their mind about investing, the investor will be responsible for obtaining any refund which may be due to them from their adviser.

Concentration risk

  • Each available security should only be considered as part of the investor's overall investment portfolio.

Counterparty risks

  • There is a risk that the Counterparty could fail to make the payments due under the Securities. In the event of this happening the investor would lose some, or all, of their investment as well as any investment return to which they may otherwise have been entitled.
  • The actual and perceived ability of the Counterparty to meet its obligations may affect the market value of a gross investment over the term. If the Counterparty fails to meet its obligations, the investor will get back less than is due to them or nothing at all.

Early encashment risk

  • If the investor decides to encash the investment before maturity they could get less back than they invested.
  • Please note there is no guarantee the Issuer will make a market in the Securities.

Inflation risk

  • Any inflation will reduce the real value of the investment over time.

Investment risks

  • This is a capital-at-risk product. The capital return at maturity will depend on the performance of the Index and the investor could lose some, or all, of the money they invest.
  • Should the Index increase by more than the returns provided by the Plan, the investor would not receive the benefit of any additional investment return above that provided by the Plan.
  • If the investor's circumstances change and they need to withdraw from the Plan prior to the Maturity Date, the Securities would have to be sold and the investor may not receive back all of the amount they originally invested in the Plan. The investor will also have to pay an administration charge. Please note that there is no guarantee that the Counterparty will provide pricing.
  • Should the Plan be oversubscribed, the purchase might not be completed for the investor. As we near capacity we will flag this on our website.
  • The value of the Securities that back the Plan may vary significantly throughout the life of the investment. Whether the investor decides to sell a Security at its prevailing value during its life, or whether they wait until maturity, they could receive back significantly less than they invested.
  • The value of the Securities that back the Plan will be initially impacted by any fees or costs that were built into it. Subsequently, factors such as, but not limited to, movements in interest rates, the performance of the Index, and the creditworthiness of the Counterparty will all affect the price of a security.
  • The Opening Level of the Index applies on the Start Date of the Plan and not the date on which the investor applies for the Securities. The level may vary significantly between these dates.
  • When the Plan matures the investor might not be able to reinvest the proceeds to achieve the same, or similar, level of potential investment return.
  • If we pay an adviser charge/fee amount to the investor's financial adviser on their behalf and they subsequently change their mind about investing, the investor will be responsible for obtaining any refund which may be due to them from their adviser.

ISA transfer risks

  • If the investor wishes to transfer an existing ISA this must be done in cash, which means their existing ISA Manager will sell the investment.
  • The investor could lose some interest if they transfer a cash ISA and decide not to wait for the expiry of any notice period. The investor's existing ISA Manager may also charge them an exit or transfer fee.
  • There is the potential for loss of investment returns if markets should rise while the investor's transfer remains pending.
  • We have a deadline for receipt of ISA transfer applications, to allow time for us to receive the proceeds from the investor's existing ISA Manager. However, if they do not send us the funds the investor requests before the Start Date we will not be able to purchase the Securities on their behalf.
  • If the investor has asked us to pay, on their behalf, any adviser fees in relation to an ISA transfer request, this will be paid from the transfer value received and therefore reduce the amount invested with the tax advantages of an ISA.

Liquidity risks

  • The investor should have other savings that they can access immediately to meet any emergency cash needs.
  • In normal market conditions, it is expected that the Counterparty will provide pricing of the Securities for investors who need access to their capital before the Maturity Date. However, there is no guarantee that the investor will be able to redeem any investment before the Maturity Date as the decision about whether market conditions are normal will be taken by the Counterparty. 
  • The terms of the investment may permit the Counterparty to delay, reduce or withhold payments. These provisions are not intended to circumvent what is legally due to the investor, but are intended to cover unforeseen events which affect their return from the Plan; for example, a suspension or delay in receiving prices.

Market risk

  • External factors could affect national economies, regions or an asset class and cause a fall in value of the Securities held in the investor's account or in extreme cases, the collapse of the Counterparty. Please see page 3 of the Brochure for further information on which factors could influence the returns payable under the Plan.
  • In the event that a Business Disruption, Market Disruption or Adjustment Event occurs (see page 11 of the Brochure), the Securities may be subject to such changes as determined by the Counterparty and Meteor or terminated by the Counterparty, and in either such case the investment return applicable to such Security may be varied by the Counterparty, in its discretion.

Pricing risk

  • The Counterparty may not be able to quote regular prices making it difficult to value the investment and delaying any early encashment request the investor may make.

Product risk

  • The design of the Plan could produce a return that is lower than a direct investment in the Index or may produce no return at all.

Tax risks

  • Before investing in this Plan the investor should conduct independent investigation and analysis regarding the tax treatment of the investment to evaluate the merits and risks of the Plan. Tax risks include, without limitation, a change in any applicable law, treaty, rule or regulation or the interpretation thereof by any relevant authority which may adversely affect payments in respect of the investment.
  • The values of any tax reliefs will depend on the investor's individual circumstances and could change at any time and be applied retrospectively. The investor should note that the levels and bases of taxation could change in the future and these changes may be applied retrospectively. The investor should also consider whether they should consult their own tax adviser and carefully review and consider the investment in light of their personal circumstances.
  • Re-registration of this investment to a new holder may alter the tax implications.

What are capital-at-risk products?

They are investments from banking, insurance or investment management firms that can offer attractive returns. Capital-at-risk products usually invest in a variety of stockmarket investments, such as shares or debt securities. Products that put capital at risk include:

  • stockmarket based investments.
  • investment bonds and funds that invest in debt securities.
  • investments linked to the performance of a stockmarket or some other factor such as a collection of shares.

What are the main risks involved with capital-at-risk products?

  • The investor's capital can fall below the amount they put in.
  • The rate of return advertised might be achieved only after a set period; the investor may not know until that date how well their investment has performed.
  • The rate of return the investor gets may depend on specific conditions being met. Even professionals may not be able to judge accurately how likely that will be.
  • If the investor takes their money out early, they may get back less than they put in.

Key Facts

Investment Term

  • A maximum 6 year 2 week investment

Availability

  • As direct investments
  • Stocks and Shares ISA for 2017/18
  • ISA transfers
  • Pension funds
  • Trustees, companies and partnerships.

This Plan is available to residents of the United Kingdom only. 

Underlying asset

  • FTSE Custom 150 Equally Weighted Discount Return Index (the 'Index')

Investment return

  • If on any Measurement Date, before the Final Measurement Date, the Closing Level of the Index is at least equal to its Reference Level, the Plan will mature early and make a gross investment return. If the Plan matures early on any Measurement Date, the gross investment return amount payable will be 7% of the money invested for each year that the Plan has been in force.
  • If, on a Measurement Date, before the Final Measurement Date, the Closing Level of the Index is below its Reference Level, no investment return will be made and the Plan will remain in force.
  • The Reference Levels are as follows: year 1 at 105%; year 2 at 100%; year 3 at 95%; year 4 at 90%; year 5 at 85% and year 6 (Final Level) at 80%.
  • The first Measurement Date will be on 31 October 2018, one year after the Start Date. 
  • If the Plan has not matured early and the Final Level of the Index is at least equal to its Reference Level, it will provide a gross investment return at the Maturity Date equal to 42% of the money invested. If the Final Level of the Index is below its Reference Level, no investment return will be payable at the Maturity Date.

Capital Return

  • This is a capital-at-risk product and the investor will lose some or all of the money if the Final Level of the Index is below 60% of its Opening Level. In this case, the reduction in the money invested in the Plan at the Maturity Date will equal the same percentage that the Final Level of the Index is below its Opening Level.

Counterparty Risk

  • If the financial institution were to fail to meet the repayments due, the investor could lose some or all of their investment. Counterparty risk is common to all similar investments.

Tax

  • It is our understanding that any investment return from a direct investment by individuals or Trusts into this product is expected to be subject to Capital Gains Tax (CGT).

Securities

  • The Securities purchased will be Notes issued by Natixis Structured Issuance SA and guaranteed by Natixis. The Securities can be viewed in a similar way to a loan to the Issuer and are linked to the performance of Preference Shares issued by Cannon Bridge Capital Ltd., which are in turn linked to the performance of the Index.

Key Dates

Offer period

Available until 27/10/2017

NISA transfers

Applications must be received by 13/10/2017

Start date

31/10/2017

Opening Level

31/10/2017

Final Level

31/10/2023

Maturity date

14/11/2023

Measurement Dates 

  • 31 October 2018
  • 31 October 2019
  • 2 November 2020
  • 1 November 2021
  • 31 October 2022

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