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The In-Cap Thematic Fund
Current Issue: Agriculture / Infrastructure
High Guaranteed Coupon plus the opportunity to share in Capital Growth / Recovery in Agriculture and Infrastructure, two sectors that will strongly benefit in the future as demographics, growing urban population and higher quality of living standards will lead to increased consumption in these sectors and subsequent ancillary sub-sectors.
Key Features:
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A Medium Term `EMTN` Note [5 year max-term]
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12% Guaranteed Coupons* payable in years 1, 2 and 3
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Potential for Uncapped Returns plus 12% Coupon and 100% Capital Return in year-4, or year-5
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Linked to a basket of 15 Blue Chip stocks in the Agriculture and Infrastructure sector
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Generous 60% Barrier Level
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Tradeable asset with daily liquidity
* Target Indicative Coupon Rate
How In-Cap Thematic Works:
The Reference Basket
In-Cap Thematic is linked to the evolution of a basket of 15 Blue Chip stocks. The Reference Basket is made up of the five stocks which, at the observation date (end year-4), have recorded the lowest performance from inception. If the product is rolled over to year-5, a second observation date (end year-5), is set and the five lowest stocks on this date form the new Reference Basket.
Basket of Stocks
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The Mosaic Co.
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CF Industries Holdings Inc
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Archer-Daniels-Midland Co
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Yara International ASA
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Syngenta AG
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Williams Cos Inc
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Potash Corp of Saskatchewan
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Hyundai Heavy Industries
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Deere & Co
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Atlantia SpA
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Monsanto Co
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Exelon Corp
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Kubota Corp
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Caterpillar Inc
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Veolia Environment
The 60% Barrier Level
A 60% Barrier Level is set at the outset and used to measure the performance of the stocks on the observation date. If the average value of the Reference Basket is above the 60% Barrier Level at the observation date (end year-4), investors will receive a fourth 12% Coupon and 100% Capital Returned, as well as any positive performance of the Reference Basket (above 100% from inception). This means the Reference Basket can fall by a combined 199% before the Barrier is breached. If this happens the product is rolled over to a second observation period (end year-5).
The Mechanism
End Year-1: Payout of a 12% Guaranteed Coupon
End Year-2: Payout of a 12% Guaranteed Coupon
End Year-3: Payout of a 12% Guaranteed Coupon
End Year-4: [If the Reference Basket is above the 60% barrier at Observation Date]:
- Payout of 12% Coupon
+ Early Recall with 100% Capital Returned
+ 100% Positive Performance of the Reference Basket (if above 100% issue date value)
[If the Reference Basket is below the 60% barrier at Observation Date]:
- No Coupon is paid out
The product continues to the following year..
End Year-5: [If the Reference Basket is above the 60% barrier at Observation Date]:
- Payout of 12% Coupon
+ 100% Capital Returned
+ 100% Positive Performance of the Reference Basket (if above 100% issue date value)
[If the Reference Basket is below the 60% barrier at Observation Date]:
- No Coupon is paid out
+ Redemption Value = Final Value of Reference Basket
Solid Back-Testing Results
Having conducted a back testing analysis* by observing historical results of stocks constituting the basket, 3,473 simulations were computed from January 1990 to May 2003 with the following results:
- 98% of Cases - Early Recall in year-4
- > 98% of Cases - Investors received a further 10% Coupon and 100% Capital Returned in year-4
- 100% of Cases - 100% Capital returned
- Remaining 2% of Cases - all investors receive a further 12% Coupon and 100% Capital Returned in year-5
A Tradeable Asset with Daily Liquidity
In-Cap Thematic is a tradeable asset with full daily liquidity. It has an identifiable value and can be cashed at any time between one year after issue and maturity. KBL European Private Bankers operates a secondary market from the beginning of the second year onwards to "buy back" the investment, or a proportion of it, with a bid-offer spread of 1% of the amount cashed, pricing subject to market conditions.
Downloads:
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UK FSA Regulator No. 484294
Europe Regulator No. FOS 13 Ref EA/B 8110
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