Key terms
Instreet Link DS is an investment in a Deferred Purchase Agreement (Units). The performance of Instreet Link DS is linked to the decline in value of the Australian stock market as measured by the S&P/ASX 200 Price Return Index (S&P/ASX 200 Index)
The Units offer Investors the potential to benefit from a fall in the value of the S&P/ASX 200 Index below a certain level (the Strike Level) and provided the market does not rise above a certain level (the Barrier Level).
|
Reference index |
Term |
Strike Level |
Indicative Barrier Level1 |
Unit price |
|
S&P ASX 200 Index |
Approximately 1 year |
95% |
115% |
$0.86 |
|
S&P ASX 200 Index |
Approximately 1 year |
100% |
115% |
$1.06 |
1 The Barrier Level will be set on the Commencement Date. The Barrier Level is expressed as a percentage of the Reference Index at the Commencement Date (subject to averaging across the three Issuance Observation Dates).
How the investment works - case study
John is looking to protect his Australian share portfolio through various market conditions. After speaking to his financial adviser and reading the PDS, John has decided to invest in Instreet Link DS.
John invests in 10,000 Units in Series 1 to obtain a notional exposure to the S&P/ASX 200 Index of $100,000. To obtain this notional exposure of $100,000, John pays one up front payment of $8,600. This will provide John with the potential to benefit from any decline in the Australian share market and may put him in a better position to benefit from any subsequent rebound2. John remains in the investment until the Maturity Date.
John’s potential return is based on the Reference Level at the Commencement Date, the Reference Level at the Maturity Date, the Strike Level and the Barrier Level. John is investing in Series 1, which has an indicative Barrier Level of 115% and a Strike Level of 95%.
In this example, over the term of the investment the S&P/ASX 200 Index falls as shown below:
| Reference Index at Commencement Date |
4,800 |
| Reference Index at Maturity Date |
3,8403 |
| Reference Index Return |
-20% (3,840 / 4,800) |
The Final Value of each Unit is equal to the Notional Exposure per Unit x (Strike Level – Reference Index Return).
| Notional Exposure per Unit |
$10 |
| Strike Level |
95% |
| Reference Index Return |
80% (100%-20%) |
| Final Value per Unit |
$1.50 (10 x (95%-80%)) |
| Final Value at Maturity |
$15,000 ($1.50 x 10,000 Units) |
This example demonstrates how John can receive a positive return from a fall in the Australian share market, helping him achieve his goal of managing risk within his portfolio.
2 This assumes that John’s Australian share portfolio remains fully invested.
3 This assumes that the Barrier Level is never reached or exceeded.
Important information
Document: This Document has been prepared by Instreet Investment Limited ACN 128 813 016 (Instreet), an Authorised Representative of EA Financial, LP ACN 971 745 471, AFSL 246801, and is current as at 27 March 2010. Instreet is the Arranger for the Instreet Link DS Series I and II Linked Deferred Purchase Agreements (Instreet Link DS Series I and II).
Issuer and PDS: Instreet Link DS Series I and II will be offered in a product disclosure statement to be dated on or around 22 April 2010 (PDS). It will be made available when the product is released or otherwise becomes available, which is expected to be on or around 22 April 2010. The PDS is available above. In deciding whether to acquire or continue to hold an investment, investors must obtain the PDS and carefully consider its contents.
General advice warning: The information contained in this Document is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. Advisers must form their own views on whether Instreet Link DS Series I and II is appropriate after considering their clients’ objectives, financial situation and needs. We recommend you seek your own legal and taxation advice.
The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Document to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.
The case study is a hypothetical example only and is not a forecast. Due care and attention has been used in the preparation of hypothetical examples. However, actual results may and will vary and any variation may be materially positive or negative.
No responsibility or liability is accepted by Instreet or any third party who has contributed to this Document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.
Past performance: Past performance is not a reliable indicator of future performance.
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