The product is a kick-out plan, which means it has the potential to mature earlier than the full six-year term, depending on the performance of the stocks to which it is linked.
If at least eight out of the 10 shares are at or above their initial values at the end of the first year of investment, the product will mature providing investors with 17 per cent growth plus their original capital. The product will continue on the same basis each year if this condition is not met, returning 34, 51, 68, 85 or 102 per cent growth plus capital at the end of years two, three, four, five or six respectively.
If at least eight shares are never at or above their initial value, no growth is paid but investors will get their original capital back at the end of the term provided no more than two shares fall by more than 50 per cent by the final day of the term. If three or more shares fall by more than 50 per cent by the final day of the term, investors will lose 1 per cent of their capital for each fall in the third worst performing share, which will rank eighth out of the 10 shares in the basket.
This is calculated by looking at the performance of each share and ranking the best performing share number one, and the worst performing share 10.
As at February 2, 2011, it was difficult to find any similar products to this product, as the majority are linked to indices rather than a basket of stocks. Linking returns to 10 stocks rather than an index of 100 means the performance of every stock will count. The plan’s higher potential returns relative to index-based products such as issue nine of the Walker Crips annual growth kick-out plan, are matched by higher potential risks.