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Glossary

The terminology surrounding structured products can be confusing. Below you will find descriptions of the most commonly used terms. These descriptions are made available throughout the site indicated by the symbol.

The methods available by which investors may invest in the plan.

Capital-at-Risk Barrier Observation

There are eight types of Capital-at-Risk Barrier Observation commonly used in Capital-at-Risk products.

Capital 'Protected':

Such investments aim to return the original capital investment in full at maturity, regardless of the movement in the underlying product index link throughout the investment term. Please note, however, all protection is subject to the ongoing solvency of the underlying counterparty to the investment.

No Barrier Protection:

The Final Index measurement typically dictates the extent of any capital reduction. E.g. if the Final Index Level has fallen below 60% of the Initial Index Level, capital will be reduced by 40%.

No Barrier Protection but reduced Downside Participation:

The Final Index measurement typically dictates the extent of any capital reduction. The percentage fall in the underlying index should be greater than the percentage by which the capital is reduced. E.g. for a plan with a downside of 0.5:1, if the Final Index Level is below 60% of the Initial Index Level, capital will be reduced by 20% (half of 40%).

End of Term Only:

Such investments aim to return the original capital investment at maturity, providing that the Final Index Level of the underlying product index is not below the Initial Index Level by more than the specified percentage. E.g. 60% End of Term Only Barrier - providing that the Initial Index Level has not fallen below 60% of its Initial Index Level, capital should be returned in full at maturity. The movement in the underlying index has no bearing other than at maturity. Please note, however, all protection is subject to the ongoing solvency of the underlying counterparty to the investment.

Full Term Intra-Day:

Such investments aim to return the original capital investment at maturity, unless the underlying product index trades below the Initial Index Level by more than the specified percentage at any point during the investment term, at which point the “barrier” is said to have been breached. E.g. 60% Full Term Intra-Day - provided that the index does not fall below 60% of its Initial Index Level at any point during the investment term, capital should be returned in full at maturity. If, however, this level is broken during the term, the final index measurement usually dictates the extent of any capital reduction. Please note, however, all protection is subject to the ongoing solvency of the underlying counterparty to the investment.

Full Term Daily Close:

Such investments aim to return the original capital investment at maturity, unless the closing level of the underlying product index on any day of the investment term is below the Initial Index Level by the specified percentage, or more, at which point the “barrier” is said to have been breached. E.g. 60% Full Term Daily Close Barrier Observation - provided that the closing index level on each day during the investment term has not fallen below 60% of its Initial Index Level, capital should be returned in full at maturity. If however the level is broken during the term, the Final Index measurement usually dictates the extent of any capital reduction. Please note, however, all protection is subject to the ongoing solvency of the underlying counterparty to the investment. In addition, the return of capital invested will be dependant upon the continued solvency of the underlying counterparty or deposit taker throughout the term of the investment. Before proceeding, investors must be aware that should the plan's underlying counterparty or deposit taker file for bankruptcy during the term of the plan, or be unable to repay its liabilities, some or all of the capital invested may be lost. As with all investments, it is imperative that investors read the plan brochure and terms and conditions thoroughly and understand the risks involved before proceeding.

Part Term Close of Business

Such investments aim to return the original capital investment at maturity, unless the closing level of the underlying product index during a defined period during the investment term is below the Initial Index Level by the specified percentage, or more, at which point the “barrier” is said to have been breached. E.g. 60% Part Term Daily Close Barrier Observation - provided that the closing index level on each day during a defined period during the investment term has not fallen below 60% of the Initial Index Level, capital should be returned in full at maturity. If however the level is broken during the defined period during the term, the final index measurement usually dictates the extent of any capital reduction. Please note, however, all protection is subject to the ongoing solvency of the underlying counterparty to the investment.

Part Term Intra-Day

Such investments aim to return the original capital investment at maturity, unless the underlying product index trades below the Initial Index Level by more than the specified percentage during a defined period during the investment term, at which point the “barrier” is said to have been breached. E.g. 60% Part Term Intra-Day - provided that the index does not fall below 60% of the Initial Index Level during a defined period during the investment term, capital should be returned in full at maturity. If, however, this level is broken during the defined period, the Final Index measurement usually dictates the extent of any capital reduction. Please note, however, all protection is subject to the ongoing solvency of the underlying counterparty to the investment.

Such investments can accept the transfer of existing Cash ISAs or Equity ISAs from a different provider whilst retaining the tax sheltered status on those funds and without affecting current year ISA subscription allowances. Exit charges may apply from the existing provider From 1st July 2014, it has been possible for ISA's to be invested fully into a Cash ISA, Stocks and Shares ISA or a combination of both subject to an annual allowance (£15,240 for 2015/2016).

Some products have commission incorporated into its terms. In these cases we offer rebates or investment uplifts of any commission in excess of 1.65% on products purchased where no advice has been sought or given. The offer of a rebate should not however deter you from seeking advice if you have any doubts as to the suitability of an investment for you.

If the issuing institution becomes insolvent, the collateral will be called upon. This could result in an enforced early maturity which could result in a return of less than the original investment but a catastrophic loss is unlikely to occur unless the institution issuing the collateral fails.

When investing in a plan of this type, the capital will, in effect, be loaned to a financial institution known as the 'counterparty'. The return of capital will be dependant upon the continued solvency of the counterparty throughout the term of the investment; therefore, the capital will be at risk from the date of investment. Before proceeding, investors must be aware that, should the plan's underlying counterparty file for bankruptcy during the term of the plan, or be unable to repay its liabilities, some or all of the capital invested may be lost. As with all investments, it is imperative that investors read the plan brochure and terms and conditions thoroughly and understand the risks involved before proceeding.

In addition to investment risk, the return of capital will be dependant upon the continued solvency of the underlying counterparty or deposit taker throughout the term of the investment. Before proceeding, investors must be aware that, should the plan's underlying counterparty or deposit taker file for bankruptcy during the term of the plan, or be unable to repay its liabilities, some or all of the capital invested may be lost. As with all investments, it is imperative that investors read the plan brochure and terms and conditions thoroughly and understand the risks involved, before proceeding.

When investing in a Structured Deposit based plan, the capital will be placed in a fixed term deposit account held with a financial institution known as the 'deposit taker'. The return of capital will therefore be dependent upon the continued solvency of the deposit taker throughout the term of the investment. Before proceeding, investors must be aware that, should the deposit taker file for bankruptcy during the term of the plan, or be unable to repay its liabilities, some or all of the capital invested may be lost. Investors may, however, be eligible for cover provided by the Financial Services Compensation Scheme (FSCS) up to a certain amount of their investment. The availability of such compensation is defined under the terms of the FSCS, and certain investment limits will apply. As with all investments, it is imperative that investors read the plan brochure and terms and conditions thoroughly and understand the risks involved before proceeding.

Direct refers to holding the investment outside of a tax-sheltered wrapper such as an ISA or SIPP. Thus, any returns generated by direct investments will be subject to tax as detailed in the plan's individual terms and conditions.

Our fee is 1.65% of the amount invested. Please note that minimum investment limits exclude any applicable fees. For investments over £100,000 please contact us for preferential terms.

The financial strength of the counterparty, as rated by Fitch Ratings, the smallest of the three major Credit Rating Agencies (Standard & Poor's and Moody's the other two). Fitch Ratings provides both short-term and long-term credit ratings; rating institutions on a sliding scale from 'AAA' to 'D', where 'AAA' denotes the highest level of financial strength and 'D' the lowest. Intermediate ratings are also offered at each level within the major categories between 'AA' and 'CCC', sometimes with the inclusion of a '+' representing the higher end of the category, or '-' representing the lower end of the category. Fitch Ratings's generic long-term credit ratings are explained below.

AAA - Highest credit quality. Such ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly likely to be adversely affected by foreseeable events.

AA - Very high credit quality. Such ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

A - High credit quality. Such ratings denote expectations of low default risk. The capacity for payments of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

BBB - Good credit quality. Such ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.

Investments are categorised as follows:

  • Growth - those investments designed to potentially provide growth
  • Income - those investments designed to potentially provide income
  • Growth & Income – those investments designed to potentially provide a combination of both growth and income
  • Auto-Call / Kick-Out – those investments which have the potential to mature on pre-determined anniversary dates
  • Growth with Auto-call – Growth investments which also have the potential to mature on a pre-determined anniversary date.

Such investments can accept the transfer of existing Cash ISAs or Equity ISAs from a different provider whilst retaining the tax sheltered status on those funds and without affecting current year ISA subscription allowances. Exit charges may apply from the existing provider. It should be noted that a Cash ISA transferred to an Equity ISA cannot subsequently be transferred back into a Cash ISA.

From 1st July 2014, it has been possible for ISA's to be invested fully into a Cash ISA, Stocks and Shares ISA or a combination of both subject to an annual allowance (£15,240 for 2015/2016).

Investments held within ISAs (Individual Savings Account) are sheltered from Income Tax and Capital Gains Tax. ISAs are available in two forms: Cash ISAs and Equity (Stocks & Shares) ISAs, which are described below.

Cash ISA: Cash ISAs do not expose the capital to risk other than in exceptional circumstances. You can usually only make an investment within a Cash ISA for a structured deposit.

Equity (Stocks & Shares) ISA: Stocks & Shares ISAs expose your capital to risk and are therefore different to Cash ISAs as you can invest into funds, bonds, shares and/or structured investments. Cash can also be held pending future investment in a Stocks & Shares ISA, however interest earned on the cash held in this component will be subject to a flat 20% tax charge.

The financial strength of the Counterparty, as rated by Moody's Investors Service, a leading global credit rating, and research and risk analysis firm. Moody's publishes both short-term and long-term credit ratings, rating institutions on a sliding scale from 'Aaa' to 'Caa', where 'Aaa' denotes the highest level of financial strength and 'Caa' the lowest. Moody's includes numerical modifiers '1', '2' and '3' to each generic rating classification from 'Aa' and 'Caa'. The modifier '1' indicates that the obligation ranks in the higher end of its generic rating category; the modifier '2' indicates a mid-range ranking; and the modifier '3' indicates a ranking in the lower end of that generic rating category. Moody's generic long-term credit ratings are explained below.

Aaa - The highest rating assigned by Moody's. The financial institutions' obligations are judged to be of the highest quality, with minimal credit risk.

Aa - The financial institutions' obligations are judged to be of high quality and are subject to very low credit risk.

A - The financial institutions' obligations are considered upper-medium grade and are subject to low credit risk.

Baa - The financial institutions' obligations are subject to moderate credit risk, considered medium-grade and as such may possess certain speculative characteristics.

Some plans have more than one counterparty or are collateralised with assets provided by more than one institution, we have shown the highest and lowest credit ratings of the counterparties/collateral providers. The highest rating is shown at the top of the rating bar and the lowest along the bottom.

This is the subjective opinion or observations by Lowes and should not be construed as advice or a recommendation to invest. Products shown as 'Preferred' are those that, following our research and cross-referencing against other plans available at the date of review, we would usually expect to utilise in the course of our day-to-day role of advising our clients. This is not to say that plans not marked as 'Preferred' would be unsuitable or inappropriate for other investors and could produce better returns.

Products shown as 'Preferred' are those plans that, following our research and cross-referencing against other plans available at the date of review, we would usually expect to utilise in the course of our day-to-day role of advising our clients. However, plans not marked as 'Preferred' may well be more appropriate or suitable for you . It must be appreciated that it is very possible that none of the investments featured on this site are suitable for you and so the ‘Preferred' status or lack of it should not be construed as advice or a recommendation to invest.

The financial strength of the Counterparty, as rated by Standard & Poor's, a leading Credit Rating Agency for financial institutions worldwide. Standard & Poor's provides both short-term and long-term credit ratings, rating institutions on a sliding scale from 'AAA' to 'D', where 'AAA' denotes the highest level of financial strength and 'D' the lowest. Intermediate ratings are also offered at each level within the major categories between AA and CCC, sometimes with the inclusion of a '+' representing the higher end of the category, or '-' representing the lower end of the category.

AAA - The highest rating assigned by Standard & Poor's. The capacity of the financial institution to meet its financial commitments is considered to be "extremely strong" (the world's major companies and governments);

AA - The capacity of the financial institution to meet its financial commitments is considered to be "very strong";

A - The financial institution is more susceptible to the adverse effects of circumstantial and economic changes than those financial institutions appearing in higher-rated categories. However, the financial institution's capacity to meet its financial commitments is still considered to be "strong";

BBB - Adverse economic conditions or changing circumstances are more likely to lead to the financial institution having a weakened capacity to meet its financial commitments. However, the capacity to meet financial commitments is still considered to be "stable".

Such investments can be held in a Self Invested Personal Pension (SIPP) subject to the rules of the pension provider / individual scheme.

The tax treatment of any income or growth arising from the investment if held directly, i.e. outside of a tax shelter such as an ISA as outlined in the product literature.

The investment term stated in the product literature. There may, however, be some additional weeks between the date on which the offer ends and the start date and also between the final investment date and the maturity proceeds distribution date.

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