Download Special Edition Bond Series `Autopilot` (Issue 5)

902838
18/3/10
12:34
Page 1
Special Edition Bond Series
‘Autopilot’ (Issue 5)
Exclusive to Private Banking Clients
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:34
Page 2
The Private Banking Special Edition
Bond – ‘Autopilot’
Autopilot from the Private Banking Service allows you to benefit from exposure to a
broad and diversified portfolio of four markets, and is designed to return your capital
as long as the bond is held until maturity.
With Autopilot, the trends of four distinct Market Sectors: Developed Markets; Emerging
Markets; Property and Commodities are followed, and by using an innovative monthly
management strategy you can avoid many of the risks and costs associated with
direct investment.
The monthly management strategy links your interest upon maturity to the
performance of one or more of the Market Sectors when they are trending upwards
(i.e. expected to rise) and diverts to Cash – the Reserve Asset – when they are trending
downwards (i.e. expected to fall).
Tax free returns
Any interest earned upon maturity is subject to income tax on the Autopilot (Standard)
Bond. To enable any potential interest upon maturity to be paid tax free, however,
Autopilot allows you to invest your Cash ISA allowance for the current tax year as well
as transfer in allowances from previous tax years. Tax free interest means that interest
payable is exempt from UK income tax. Separate applications and an RBS Cash ISA
account are required for an Autopilot (ISA) Bond.
The tax reliefs referred to are those applying under current UK legislation which may
change. The availability and value of tax relief will depend on your individual circumstances.
Important things to consider
•
Funds are not invested directly into the shares of the underlying listed companies of the
specified Indices. Instead, your funds are held in a deposit account with RBS with interest
at maturity linked to the performance of the Indices (subject to certain conditions).
As you do not invest directly in shares, you will not receive any dividend payments.
•
The value of the market sectors can fall as well as rise and past performance is not a
guide to future performance.
•
Autopilot is designed to return your initial Deposit, in full on the Maturity Payment
Date only, regardless of the performance of the Market Sectors, as long as the Bond
is held until maturity.
•
If you close Autopilot before the Maturity Payment Date you may not receive back
the full amount of your original deposit, this includes any Cash ISA allowances.
Partial withdrawals are not permitted.
•
There is no cooling off period as Autopilot is reliant on financial Markets outside of
our control. Please ensure you are in a position to invest for the full five year Term.
2
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:35
Page 3
•
In the event of RBS being unable to meet its obligations, usually if it stops trading or
becomes insolvent, you may lose some or all of your money. You may have recourse
under the Financial Services Compensation Scheme, outlined in the accompanying
Terms and Conditions.
•
•
Inflation will reduce the future buying power of your money
It is your responsibility to ensure you subscribe the correct amount into the Autopilot
(ISA) Bond.
Main Features
•
•
•
•
Exclusive to Private Banking
Five year fixed term
Designed to return your capital as long as the bond is held until maturity.
A maximum monthly positive performance of 6.75% will be contributed by the
Market Sectors to the calculation of the Autopilot Level
•
There is no maximum to the negative performance that will be contributed in any
one month
•
•
No management fees
Applications accepted before 14 June 2010 for an Autopilot (Standard) Bond will earn
a rate equal to base rate until the Start Date of your bond. Any interest earned will be
added to the initial bond Deposit
•
Applications for an Autopilot (ISA) Bond will remain in the Cash ISA until the Start
Date with any interest earned remaining in the Cash ISA
Minimum/maximum deposit
You can make a deposit into either the Autopilot (Standard) Bond or Autopilot (ISA) Bond
or both, however, separate applications will be required. With the Autopilot (ISA) Bond
you are able to use your current tax year Cash ISA allowance as well as transfer in
allowances from previous tax years. However you choose to invest, your total deposit must
be at least £10,000.
Minimum overall deposit
£10,000
Maximum Autopilot (Standard) Bond deposit
No maximum
Maximum Autopilot (ISA) Bond deposit
(for current tax year)
Maximum Autopilot (ISA) Bond deposit
(with transfer)
£5,100
No maximum
Hurry, this bond offer is subject to availability and may close early if fully subscribed!
3
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:35
Page 4
Key dates for your application:
Available
6 April 2010 – 24 June 2010
Last date for external ISA transfers
24 May 2010
Last date for current tax year and
24 June 2010
RBS internal ISA transfers
Last date for Standard Bonds
24 June 2010
Start Date
1 July 2010
Expiry Date
1 July 2015
Maturity Payment Date
3 July 2015
Cash ISA transfers from another institution may take up to 30 days, however if your
Cash ISA required notice it may take longer. Please check with your existing
manager for information on any notice requirements and any potential charges.
4
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:35
Page 5
Your Autopilot Explained…
Autopilot is a five year structured deposit that gives an investor exposure to a broad and
diversified portfolio of four Market Sectors; Developed Markets, Emerging Markets,
Property and Commodities:
Market Sectors and assets explained
Market
Sectors
Autopilot
split
Index/Asset
Index
Description
weighting
Developed
Equity Markets
25%
FTSE 100™
25%
The FTSE 100™ is an index of the largest 100
companies traded on the London Stock
Exchange. The index includes shares such as BP,
GlaxoSmithKline, British Airways, Royal Dutch
Shell, Tesco and Vodafone.
S&P 500
25%
The Standard & Poor’s 500 is an index of 500 US
shares. The index is designed to measure
performance of the broad domestic economy and
is based upon shares representing all major
industries. The index includes shares such as
Coca-Cola, Citigroup, eBay, Exxon Mobil, Ford,
General Electric, Microsoft, Nike, Proctor and
Gamble, Time Warner and Disney.
Dow Jones
Euro Stoxx 50
25%
The Dow Jones Euro Stoxx 50 index is comprised
of 50 European blue-chip stocks from those
countries participating in the EMU. The index
includes shares such as Banco Santander, Daimler
Chrysler, L’Oreal, Nokia, Siemens and Total.
Nikkei 225
25%
The Nikkei 225 is an index of the 225 top rated
Japanese companies listed in the first section of the
Tokyo Stock Exchange. The index includes shares
such as Canon Inc, Toyota Motor Corporation and
Sony Corporation.
Emerging
Equity Markets
25%
MSCI iShare
Emerging
Markets Index
Exchange
Traded Fund
(ETF)
100%
The MSCI iShares Emerging Market Index
Exchange Traded Fund seeks to provide
investment results that correspond generally to
the performance of the MSCI Emerging Market
Index. The Index is an equity benchmark for
emerging market stock performance aiming to
cover 85% or more of the available free float
adjusted market capitalisation in emerging
markets. Examples of the countries covered are
Argentina, Brazil, Chile, China, Colombia, Czech
Republic, Egypt and Hungary.
Property
25%
FTSE EPRA
Index
100%
The FTSE European Public Real Estate Index, is a
market capitalisation weighted index consisting
of the most heavily traded real estate stocks in
Europe.
Commodities
25%
Dow Jones
100%
UBS Commodity
Excess Return
Index
The Dow Jones UBS Commodity Index is
designed to be a diversified benchmark for
commodities as an asset class. It is currently
composed of 19 futures contracts on physical
commodities, e.g. oil, coffee, gold.
Reserve Asset
Reserve
Asset –
100%
Maximum
1 month GBP
LIBOR
LIBOR is the London Interbank Offer Rate at
which deposits are offered by one prime bank
to another. For deposits in GBP interest is
calculated on an actual/365 day basis.
100%
5
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:35
Page 6
The monthly management strategy explained
On the start date, Autopilot compares the current market price of each of the four market sectors against
the average monthly price of each sector taken from the previous 12 months. This process is referred to as
the Autopilot ‘Market Direction Assessment’.
If the current market price is above the average of recent market prices, Autopilot will link to the performance
of the sector where the ‘Market Direction Assessment’ has concluded that the sector is in a ‘growth phase’
showing rising prices.
If the current price is below the average of recent market prices, Autopilot will divert out of that particular
sector and link to the performance of Cash since the ‘Market Direction Assessment’ has concluded that the
sector is in a ‘declining phase’ showing falling prices.
The Autopilot ‘Market Direction Assessment’ is conducted for each of the four market sectors on a monthly
basis throughout the term of the account and will either link to the performance of one or more Market Sectors
or divert to the performance of Cash for the following month as appropriate.
Developed
Equity
Markets
Property
CASH (Reserve Asset)
1 month GBP LIBOR
Emerging
Equity
Markets
Commodities
For each Market Sector the maximum positive performance per month is capped at 6.75%. Every month the
performance of each Market Sector/Reserve Asset is calculated and the average taken and contributed to the
Autopilot Level. As each Market Sector is equally weighted at 25%, after averaging, the maximum that will
be contributed to the Autopilot Level overall is 6.75% per month. This is known as the Weighted Monthly Return.
There is no maximum to the negative performance each Market Sector can contribute to the Autopilot Level.
Things to consider
•
There is no maximum to the negative performance that a Market Sector can contribute to the calculation
of the Autopilot Level in any one month.
•
The maximum positive performance that can be contributed to the Autopilot Level is 6.75%. For example,
if the positive return in a month was 10%, the maximum weighted return that would be contributed to
the Autopilot Level would be capped at 6.75%.
•
•
6
Generated at: Thu Mar 18 12:37:57 2010
The value of stock markets can fall as well as rise and past performance is not a guide to future performance.
Please see Terms and Conditions for more information.
902838
18/3/10
12:35
Page 7
Calculating your potential return:
A key element of the Autopilot is the calculation of the monthly ‘Autopilot Level’.
The level is initially set at 100 and will rise or fall each month depending upon
the performance of each of the Market Sectors and/or the Reserve Asset deposit rates.
Example
The table below shows an example of how the ‘Autopilot Level’ would be calculated over
the first six months of the account given the specified returns of the Market Sectors:
•
In Month 1 25% of your capital would be linked to the performance of each of the
Emerging Equity Markets, Commodities and Property Market Sectors as the Autopilot
Market Direction Assessment indicates a rising price trend in each of these sectors
•
Autopilot would not link to the Developed Equity Market Sector as in Month 1
however, the Market Direction Assessment has indicated a fall in this Market Sector
on the Start Date. In this instance, Autopilot would link the 25% of the Deposit
allocated to the Developed Equity Market Sector to the performance of the Reserve
Asset – earning the equivalent of 1 month GBP LIBOR* until the next Market Direction
Assessment is undertaken a month later
•
In Month 2, 25% of your Deposit would be linked to all four Market Sectors as the
Autopilot Market Direction Assessment indicates a rise in each sector and so on . . .
Market Sector
Monthly
Return
Month 1
3.00%
1.50%
–0.50%
0.35%
2.50%
–0.40%
1.10%
0.90%
1.50%
0.80%
1.30%
-0.10%
0.86%
1.15%
0.80%
Market
Direction Rise – link to Rise – link to Rise – link to Rise – link to
Assessment Market Sector Market Sector Market Sector Market Sector
Monthly
Return
Month 6
n/a
Market
Direction Rise – link to Rise – link to Rise – link to Rise – link to
Assessment Market Sector Market Sector Market Sector Market Sector
Monthly
Return
Month 5
Commodities
Market
Direction Rise – link to Rise – link to Rise – link to Rise – link to
Assessment Market Sector Market Sector Market Sector Market Sector
Monthly
Return
Month 4
Property
Market
Direction Rise – link to Rise – link to Rise – link to Rise – link to
Assessment Market Sector Market Sector Market Sector Market Sector
Monthly
Return
Month 3
Emerging
Equity
Markets
Market
Decline – link
Direction
to Reserve Rise – link to Rise – link to Rise – link to
Assessment
Asset
Market Sector Market Sector Market Sector
Monthly
Return
Month 2
Developed
Equity
Markets
-0.87%
-0.45%
0.47%
-0.11%
Market
Decline – link Decline – link Decline – link Decline – link
Direction
to Reserve to Reserve to Reserve to Reserve
Assessment
Asset
Asset
Asset
Asset
Monthly
Return
n/a
n/a
n/a
n/a
Reserve
Asset
Weighted
Monthly
Return
Autopilot
Level**
1.01%
101.01
0.89%
101.91
1.13%
103.05
0.68%
103.75
-0.24%
103.50
0.05%
103.55
n/a
0.05%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0.05%
*1 month GBP LIBOR 0.52% annualised as at 27/01/10.
**The return upon maturity is the compounded Weighted Monthly Return. In this example, after 6 months an investment
of £10,000 is worth £10,355.
Generated at: Thu Mar 18 12:37:57 2010
7
902838
18/3/10
12:35
Page 8
What will you receive at maturity?
The Autopilot Level determines the final return on Autopilot. At maturity you will
receive the greater of 100% of your initial Deposit or 100% of your initial Deposit plus
an interest return linked to the growth in the Autopilot if positive. Please see full
terms and conditions.
Things to consider
•
This is purely an example of how Autopilot may perform and is not an indication
of future performance.
•
It is possible that the Weighted Monthly Return of Autopilot may be a negative
return, however, Autopilot is designed to return your initial Deposit, as long as the
bond is held until maturity.
•
If you close the Autopilot before the Maturity Payment Date, you may not receive
back the full amount of your initial Deposit. Partial withdrawals are not permitted in
any circumstances.
8
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:35
Page 9
The Private Banking Special Edition
Bond – ‘Autopilot’
Your questions answered
Can I make additional deposits and withdrawals?
No, however, you can have more than one Autopilot (Standard) Bond. A separate
application form will be required for any additional Autopilot (Standard) Bond.
I have £5,100 that I want to invest in an Autopilot (ISA) Bond, can I do this?
Yes, however, you will need to place at least £4,900 into an Autopilot (Standard) Bond
to ensure you are fulfilling the minimum £10,000 deposit requirement.
I want to apply for an Autopilot (Standard) Bond and Autopilot (ISA) Bond, how do I do this?
Two separate application forms are required for the Autopilot (ISA) Bond and the Autopilot
(Standard) Bond. The aggregate value must meet the minimum deposit requirement
of £10,000 for both types to qualify. If you do not have a Cash ISA, one will need to
be opened prior to applying for an Autopilot (ISA) Bond.
How much can I pay into the Autopilot (ISA) Bond?
You can pay in up to the annual subscription limit for the current tax year (currently
£5,100) plus any amount from subscriptions made in previous tax years. Remember if
you use your full annual subscription for the current tax year you will not be able to
subscribe into a Cash ISA until the start of the new tax year.
What happens if you don’t receive my Cash ISA transfer into my Autopilot (ISA)
Bond before the start date?
We will make every effort to contact your ISA manager to effect a transfer, however, if it
is not received by the end of the offer period your application will not be processed.
What happens if I have oversubscribed into my Autopilot (ISA) Bond?
If the funds subscribed to your Autopilot (ISA) Bond are found to contain an invalid
subscription the Autopilot (ISA) Bond will be closed with the funds deposited in the
Relevant Account and subsequently dealt with in accordance with HMRC requirements.
Will I receive dividends?
No, as your money is not invested directly in the markets you are not entitled to receive
dividends.
What happens if I want to close my Autopilot?
You should be aware that there is no cooling-off period. As this product is reliant on
financial markets outside of our control, once your application has been accepted it
cannot be cancelled. Please ensure you are in a position to invest your funds for the full
five-year term. Autopilot will only be closed in exceptional circumstances at the Bank’s
discretion and you may not receive back the full deposit originally invested.
9
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:35
Page 10
What will happen to my Autopilot in the event of death?
In the event of death of a sole Autopilot holder, Autopilot can be closed and the amount
returned will reflect investment conditions prevailing at the time. This means the amount
returned may be less then the amount originally invested. Alternatively it can be continued
until maturity at the discretion of the executors of the estate of the deceased Autopilot holder.
If the Autopilot is held in joint names the Autopilot will revert into to the name of the
remaining Autopilot holder.
Can Autopilot be held in trust?
No, this product is available to Private Banking Clients aged 18 and above in a personal
capacity only.
Will I receive regular statements?
On the Start Date you will be sent a certificate confirming details of your Autopilot.
Then just after the anniversary of your Autopilot, you will receive an annual update on
the performance of your Autopilot.
What happens if the Market Sectors underperform?
Whatever the performance of the four underlying Market Sectors and the resulting Final
Level of the Autopilot, this bond is designed to return your initial Deposit, as long as the
bond is held until the Maturity Payment Date.
How have the markets performed to date?
Although this is the fifth issue of Autopilot, we are able to use actual historical market
prices from the past 5 years to simulate how our Autopilot management strategy would
have performed, had it existed historically, when compared to the price performance of the
FTSE 100TM (a UK benchmark index) and MSCI World (which monitors the performance of
stocks from around the world). In the past performance chart, for comparative purposes both
the stock market indices and the Autopilot performance are indexed (October 2004 = 100%).
5 Year Autopilot Performance v FTSE100TM and MSCI World
Autopilot Performance
FTSE100™ TR
MSCI World Local
190
170
150
130
110
90
70
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Past performance is not a guide to future performance. Information sourced from
RBS Global Banking and Markets division.
10
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:35
Page 11
Summary Box
Key Product Information for our Savings Account
Account name
Special Edition Bond ‘Autopilot’ (Issue 5)
Interest Rates (AER)
Not applicable – return dependent on
Market Sector performance
Tax status
Interest is paid after the deduction of
20% tax on the Autopilot (Standard) Bond.
Interest on the Autopilot (ISA) Bond will be
paid gross
Conditions for bonus payments
Not applicable
Withdrawal arrangements
Withdrawals not permitted
Access
Access not permitted
What do I do next?
If you are interested in applying, please contact your Private Banking Manager for
more information.
11
Generated at: Thu Mar 18 12:37:57 2010
902838
18/3/10
12:35
Page 12
This brochure is available in Braille, large print and on audio tape.
Please ask at any branch for a copy of ‘The Disability Discrimination Act –
How we make our services accessible to everyone’ leaflet.
RBS is a member of the Financial Services Compensation Scheme (FSCS). The Scheme
can pay compensation to customers if they are eligible and a regulated firm is unable
to pay claims against it, usually if the firm stops trading or is insolvent.
Compensation limits apply depending on the type of claim:
Savings, current accounts, packaged accounts
For deposits that are held in a bank or building society in the UK, the scheme will
cover up to the greater of £50,000 or €50,000 per person. Deposits in all currencies
are treated the same.
Deposits with RBS, Direct Line, Virgin Money, Lombard, the One Account, Child & Co,
Drummonds and Holt’s are all covered by a single FSA authorisation. This means the
total deposits with these firms will count towards the one compensation limit.
Most retail consumers (this includes private individuals and some small businesses)
are eligible under the Scheme. For further information on the conditions governing
compensation and details on how to apply please refer to the FSCS at www.fscs.org.uk
The Royal Bank of Scotland plc.
Registered Office: 36 St. Andrew Square, Edinburgh EH2 2YB.
Registered in Scotland No. 90312.
Authorised and regulated by the Financial Services Authority.
www.rbs.co.uk
06249 6 April 2010
Generated at: Thu Mar 18 12:37:57 2010