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Top 10 from Meteor

Meteor Asset Management has introduced a structured product that is linked to the 10 biggest stocks on the FTSE 100 index as at March 31, 2010. These are HSBC, Vodafone, BP, Royal Dutch Shell, Glaxosmithkline, BHP Billiton, Rio Tinto, British American Tobacco, Barclays and AstraZeneca.

The Meteor top 10 kick out plan has a term of six years and two weeks, but has the potential to mature earlier, depending on the performance of the share basket. If eight or more of the shares are at or above their initial values at the end of year one, investors receive a 17.5 per cent return plus their original capital. If this kick-out, or auto call, feature is not triggered by the performance of the share basket, the product will continue on the same basis. It will pay out 35, 52.5, 70, 87.5 or 105 per cent growth at the end of years two to six respectively.

If the plan does not mature early, no growth will be paid if three or more of the shares are below their initial values on the final day of the term, but the original capital will be returned in full provided the 50 per cent protection barrier is not breached. If three or more of the shares are more than 50 per cent below their initial values, this breach will result in a 1 per cent loss of the original capital for every 1 per cent fall in the third worst performing share.

This product takes a different approach to many FTSE 100 linked products by focusing only on the top 10 biggest stocks, which account for almost 50 per cent of the index.

This concentration enables Meteor to provide higher potential returns than products that are linked to the performance of the entire FTSE 100 index. However, the flip side is that capital is at risk if just three shares are more than 50 per cent below their initial value. The plan is not available as an Isa, which may put off some investors.



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