OAM1118 Protected ITS Bro aw11

Octopus Protected ITS
Brochure with Application Forms
Contents
Introduction
1
The Risks
14
The Problem
2
The Charges
16
The Solution
3
Questions and Answers
17
The Service
4
Appendix 1 – AIM
19
An Example
6
Appendix 2 – Portfolio Holdings
20
The Investment Strategy
8
Appendix 3 – Track Record
22
The Protection
9
The Customer Agreement
23
Life Assurance Payout
11
Application Procedure
30
About Octopus
12
Application Forms
The Team
13
31
What financial advisers say about us
“Octopus has consistently provided 5-star customer
service for my clients and me. It’s the type of
service that you don’t always recognise as problems
rarely occur and when they do, they are handled
quickly and efficiently. In addition they have product
development that is at the forefront of the industry.
It is easy to make Octopus the first choice as a
solution provider to my clients’ situations.”
Jamie Perkins, IFA,
Westminster Wealth Management, April 2006.
“Octopus is a winning mix of innovation, investment
expertise, and a personalised high standard of
administration, we can’t fault them. As an adviser,
it is a pleasure to deal with an innovative company
that wants what’s best for my clients, rather than
just wants my clients’ money!”
Jon Cobb, IFA,
Trinity Wealth Management Ltd, April 2006.
“It’s great to be able to pick up the phone directly
to a fund manager who speaks in plain English
rather than spouting the standard City jargon.”
“I’ve never met a team this passionate about fund
management. Their products and customer service
address the historic failings within the fund
management industry head-on. A real breath
of fresh air.”
Drew Forrest, IFA,
Key Financial Strategies, April 2006.
Hitesh Shah, Managing Director,
Flemmings Financial Services Limited, April 2006.
Introduction
The Octopus Protected Inheritance Tax Service (‘ITS’) offers you a simple and
effective solution to the problem of inheritance tax.
Since its establishment in 2000, Octopus has built a reputation for creating innovative and successful
investment products that meet the needs of individual investors. This means that we offer a range of products
for different types of investor, from those looking to reduce their income tax or defer capital gains to those
simply seeking to protect their capital.
We first launched an Inheritance Tax Service almost two years ago. As you will see from the track record details
set out on page 22, performance has been very good. However, in spite of this performance, a number of
our clients and their financial advisers asked us to create a lower risk version of this product. That’s why
we’ve launched the Octopus Protected ITS.
The Octopus Protected ITS offers you a number of advantages over other products in the market. First,
in addition to the opportunity for long-term capital growth, you will benefit from an in-built life assurance
policy which will cover any loss should your initial investment have fallen in value when you die.
Secondly, you retain access to your money at all times. This means that if your circumstances change and
you need to withdraw money, you can. Additionally, instead of waiting for seven years, as you would with
many other estate planning products, any investments made through the Octopus Protected ITS are exempt
from inheritance tax after just two years.
I hope that you find this Brochure clear and easy to understand. We always recommend that you seek
independent financial advice before you invest but if you do have any questions – or if it would help to
speak to one of the fund managers – please call us on 0800 316 2295.
Simon Rogerson
Chief Executive
1
The Problem
Millions of people now potentially find themselves facing a substantial
inheritance tax liability.
Nobody likes the idea of the Government taking
40% of their hard-earned assets when they die.
But that’s what can happen. When you die,
HM Revenue & Customs can claim 40% of your
estate above a threshold of £285,000*.
There are a number of ways to limit your exposure
to inheritance tax. However, these can be risky, take
years to implement or mean that you permanently
lose control of and access to your money.
That’s why so many people are choosing the
Octopus Protected ITS. It’s a simpler, more flexible
way to reduce your inheritance tax liability. It
provides you with control over your assets, the
potential for attractive long-term returns and peace
of mind that the value of your initial investment
is protected when you die.
*The threshold above which your estate is liable for inheritance
tax (based on the tax year to 5 April 2007).
2
More than 60% of UK consumers aged over
50 have not sought advice about inheritance tax
planning.
Source: Norwich Union Capibus Survey, 2004.
£3.3 billion was paid in inheritance tax last year,
with the average estate faced with a bill of more
than £88,000.
Source: HM Revenue & Customs, 2006.
The Solution
The Octopus Protected ITS is a straightforward method of inheritance tax planning.
It is also one of the quickest and easiest ways to
reduce your liability to inheritance tax, and offers
a number of advantages over other alternatives:
Safety
If your portfolio rises in value, you keep all of the
increase. In addition, the in-built life assurance
policy will cover any loss should your initial
investment have fallen in value when you die.
Control
Unlike other solutions, you retain access to your
money at all times. If your circumstances change
and you want to make additional contributions
or withdraw money, you can (although money
withdrawn may not be shielded from inheritance
tax, nor will such sums be protected from capital
loss by the life assurance policy).
“Once again, Octopus has designed an innovative,
low risk product to address one of the biggest
problems our clients face. Full marks.”
Max Tennant, IFA,
Ifamax Limited.
“A simple and fast solution to a huge problem.
The reaction of clients to the capital protection
couldn’t be better. It’s going to be very successful.”
Tony Ahearne, IFA,
Anthony, Bryant & Company.
Speed
Unlike gifts and simple transfers of assets, which
take seven years before they’re fully exempt
from inheritance tax, investments made through
the Octopus Protected ITS are exempt after just
two years.
You can invest from £30,000 in the Octopus
Protected ITS. If you would like to invest more than
£250,000, please call us on 0800 316 2295 or
contact your financial adviser.
3
The Service
The Octopus Protected ITS will invest your money in a portfolio of companies
quoted on the Alternative Investment Market (‘AIM’), Europe’s largest stock market
for smaller companies.
How does the Octopus Protected ITS work?
Under legislation introduced in 1996, any money
invested in qualifying AIM companies and held for
more than two years at the time of death offers
investors an exemption from inheritance tax.
As this tax benefit depends on your money being
invested in AIM companies for at least two years
at the time of death, we will seek to invest your
funds promptly (typically within 12 weeks).
An investment in the Octopus Protected ITS will
also provide you with exposure to UK smaller
companies, one of the most exciting sectors in
the market, and the proven expertise of the team
at Octopus.
In addition, the in-built life assurance policy will
cover any loss, should your initial investment
have fallen in value when you die.
4
How do I follow the progress of my investments?
A contract note will be sent to you each time we
carry out a transaction. Furthermore, a formal
valuation statement will be sent to you every three
months, but you can call us at any time. In addition,
we encourage you to attend the regular investment
seminars and workshops we run at various
locations throughout the UK.
Important note
The value of the underlying investments in AIM
companies and the income derived from them may
go down as well as up and the final value of the
AIM portfolio may be less than the full amount
invested. That is why we have obtained the
life assurance policy that provides the Octopus
Protected ITS with its downside protection. Further
information about the life assurance policy and the
risks is given on pages 9 and 14 respectively.
To benefit from the Octopus Protected ITS, your estate (including your home) should
be valued in excess of £285,000*.
Is the Octopus Protected ITS right for me?
For the millions of individuals with estates worth
more than £285,000, the impact of investing in
the Octopus Protected ITS can be significant and
can considerably reduce the inheritance tax due
on these assets.
Table 1: Potential Impact of Inheritance Tax
Total Estate Value
Table 1 shows the impact of inheritance tax on
estates ranging from £400,000 to £2,000,000.
For example, an estate worth £1 million could
see almost 30% disappear in the form of
inheritance tax.
*The threshold above which your estate is liable for inheritance
tax (based on the tax year to 5 April 2007).
Tax Payable
£400,000
£46,000
£500,000
£86,000
£600,000
£126,000
£800,000
£206,000
£1,000,000
£286,000
£1,500,000
£486,000
£2,000,000
£686,000
Please note that Octopus is not able to provide you
with advice. If you’re unsure of your own potential
tax liabilities or your suitability for this product,
you should always take professional advice from a
qualified financial adviser. The above calculations
are based on current tax rules and regulations,
which are subject to change.
Potential Impact of Inheritance Tax
£2,000,000
Inheritance tax payable
£1,500,000
Estate retained
£1,000,000
£500,000
£0
£400,000
£500,000
£600,000
£800,000
£1,000,000
£1,500,000
£2,000,000
The value of your estate
5
An Example
Let’s look at an example to understand how an investment in the
Octopus Protected ITS might work in practice.
Mr Jones, a widower, has an estate (including
house, investments and savings) of £800,000.
He is 70 years old and is thinking of ways in which
he can minimise his inheritance tax bill. If Mr Jones
does nothing (Scenario 1), the inheritance tax bill
will be £206,000, equivalent to over 25% of all
his assets.
Scenario 1: Without the Octopus Protected ITS
£900,000
£700,000
Total Assets
Remaining Assets
£500,000
£300,000
This is calculated as follows:
£100,000
Scenario 1: Without the Octopus Protected
ITS Investment
-£100,000
Total assets
-£300,000
Less tax-free allowance
Taxable assets
Inheritance tax payable*
£800,000
-£285,000
£515,000
£206,000
*ie 40% of £515,000
Summary
Value of assets before inheritance tax
Less inheritance tax
Value of assets after inheritance tax
£800,000
-£206,000
£594,000
This example is based on current legislation and the tax-free
allowance of £285,000, which could change in the future.
6
Inheritance Tax
Faced with this situation, Mr Jones decides to put
money into the Octopus Protected ITS and he
invests £200,000 (Scenario 2). The first impact of
this, assuming the Qualifying Investments made
by the Octopus ITS have been held for at least two
years at the time of death, is that the value of his
taxable assets falls from £515,000 to £315,000.
Scenario 2: With the Octopus Protected ITS
£900,000
Total Assets
Remaining Assets
£700,000
£500,000
£300,000
Scenario 2: With the Octopus Protected
ITS Investment
Total assets
£800,000
Less tax-free allowance
-£285,000
Less the amount invested*
-£200,000
Taxable assets
£315,000
Inheritance tax payable**
£126,000
*This assumes no change in the value of the investment after
charges. Provided the life assurance policy remains valid, and
the full investment is maintained until death, this is the
minimum amount that will be returned to beneficiaries or
your estate.
£100,000
-£100,000
Inheritance Tax
-£300,000
Inheritance Tax Due
£250,000
£200,000
**ie 40% of £315,000
£150,000
Summary
£100,000
Value of assets before inheritance tax
£800,000
£50,000
Less inheritance tax
Value of assets after inheritance tax
-£126,000
£674,000
By investing £200,000 in the Octopus Protected
ITS, Mr Jones’ estate is £80,000 better off than
he would have been under Scenario 1.
£0
Scenario 1
Scenario 2
Without the
Octopus
Protected ITS
With the
Octopus
Protected ITS
This example is based on current legislation and the tax-free
allowance of £285,000, which could change in the future.
7
The Investment Strategy
We will invest in a diversified portfolio of between 20-50 established companies
that are quoted on the Alternative Investment Market (‘AIM’).
How established is AIM?
AIM has accounted for almost 70% of all company
flotations in Europe in the last two years. As at
30 June 2006, the 1,549 companies quoted on AIM
had a combined market value of £73.6 billion. Of
these, 372 companies were individually valued at
over £50 million (Source: London Stock Exchange).
More information on AIM and potential portfolio
companies is included in Appendices 1 and 2.
How do we invest the money?
We believe that the primary reason for investing
in the Octopus Protected ITS is to protect the
wealth that you have already accumulated and
to pass this on to your beneficiaries without the
burden of inheritance tax.
8
For this reason, we focus predominantly on
established companies. These companies must
occupy strong market niches and have proven
management teams with a clear record of
success in growing their company’s business.
To understand and evaluate each investment
opportunity, we go through a rigorous process
that involves spending time with a company’s
management team, evaluating their competitors
and assessing financial projections.
The Protection
The in-built life assurance policy will cover any loss should your initial investment
have fallen in value when you die.
Although most people appreciate the potential
returns that can come from investing in UK
smaller companies, it’s also quite natural to be
concerned about the risks.
That’s why we have built a life assurance policy
into the Octopus Protected ITS which is designed
to protect the value of your original investment.
So, if the portfolio rises in value, you keep all of
the increase. If, on the other hand, your initial
investment has fallen in value when you die, you
still get back the full amount you originally sent
to us because the life assurance policy will make
up any shortfall.
Example
Mr Ward invests £100,000 in the Octopus Protected
ITS in September 2006. At the time of his death
in November 2009, the value of the portfolio has
fallen to £85,000.
Initial investment
£100,000
Value of portfolio at death
£85,000
Loss on portfolio
-£15,000
Payout from life assurance policy
£15,000
Total value at death of portfolio
plus life assurance policy payout
£100,000
The Octopus Protected ITS
£120,000
£100,000
Initial
Investment
Total Value
at Death
Value of Holdings
at Time of Death
£80,000
£60,000
£40,000
£20,000
£0
Payment from
Life Assurance
Policy
There is no maximum age on entry and no limit
to the amount that can be paid out by the life
assurance policy. However, you can only invest up
to £250,000 in the product through this Brochure.
For portfolios above this size, please call us on
0800 316 2295 or contact your financial adviser.
The life assurance policy is provided to Octopus
by a specialist life assurance provider that is
experienced in structuring policies of this type.
9
The Protection (continued)
What happens if my portfolio performs well?
After we have managed your portfolio for
five years, the level of protection is re-set to the
greater of the original level of investment or 75%
of the portfolio value at that date. This is designed
to provide you with a greater level of protection
in the event that the portfolio has risen significantly
in value during the first five-year period.
How do I apply for the life assurance?
On applying to invest in the Octopus Protected
ITS, you will need to answer four simple questions
about your health and lifestyle. These questions
are set out in Section 4 of the application form. If
you are able to answer ‘No’ to all four questions,
then you will automatically be eligible for the life
assurance protection that is described in this
Brochure. If you are not able to answer ‘No’ to
all four questions, then you will need to complete
a supplementary questionnaire. We will send
this to you on receipt of your application form.
Alternatively, you can obtain one in advance
from Octopus or your financial adviser. The
supplementary questionnaire will allow the
provider of the life assurance to check that they
are able to provide you with cover. It is possible
that the company providing the life assurance
may need to contact your GP to obtain clarification
of the answers provided on your supplementary
questionnaire and your consent will be sought in
this regard.
Please note that if you need to complete the
supplementary questionnaire, we are not able
to make any guarantee about your eligibility for
the life assurance cover described in this Brochure
or any exclusions that the life assurance provider
may determine are required. If for any reason the
10
premium quoted for you exceeds the standard
premiums we are paying we will discuss this with
you before processing your application. In the
unlikely event that it is not possible to provide you
with life assurance cover (or you decide for any
reason not to take the cover), we will still be able to
provide you with a portfolio of investments in AIM
companies to address the inheritance tax issue, but
without the protection against capital loss when
you die (the track record for a typical portfolio
within our standard ITS is set out on page 22). To
give you every possible certainty, please note that
we will not start the process of investing your
money in AIM companies until the final completion
of the processing of your enrolment in the life
assurance policy.
When will the life assurance not apply?
No benefit is payable under the life assurance
policy in the event of death arising directly or
indirectly as a result of:
•
Flying, other than as a passenger on any
fully-licensed aircraft operated by an airline
•
Participating in, or training for any dangerous
or hazardous sport
•
Suicide or attempted suicide, whether sane
or insane
•
Intentional self-inflicted injury or misuse of
drugs or alcohol
•
The commission or attempted commission
of an assault or any unlawful act, or being
engaged in any illegal activity
Life Assurance Payout
The life assurance policy can be written into trust in order to maximise
tax efficiency.
We have produced a draft trust document to
enable you to put in place a trust structure that
you can choose to use if you wish to (without
additional charge to you). Based on current
legislation, by using the trust, any payout under
the terms of the life assurance policy will be
channelled directly to your beneficiaries, rather
than being paid into your estate, where it may be
subject to inheritance tax.
Please note that we or the appointed solicitors
may follow up with you or your financial adviser
in order to complete the documentation for the
establishment of the trust but this will not delay
our getting to work investing your money. If you
are in any doubt regarding this additional element
of this product or of the suitability of the draft
trust provided, you should contact your adviser.
If you wish to take advantage of the trust
structure, please tick the box in Section 5 of
the application form and we will send you the
required documentation.
11
About Octopus
Octopus is one of the fastest growing fund management companies in the UK,
with almost 10,000 investors and more than £170 million under management
across our range of products.
A different kind of investment company
Our success comes from listening to our customers
and designing products and services around what
you want, not what we think you want. Nothing is
too much trouble and we do things the way you
want them. It’s a simple recipe and it’s working.
That’s why we’re attracting thousands of new
investors every year.
“Octopus is unlike any of the other companies
I deal with. Your people are knowledgeable,
intelligent and relaxed. This is refreshing. It is
not only because you have a lot of my money
that I wish you all good fortune.”
Mr Hirsch, Phoenix VCT Investor.
12
Earning your trust
When you trust your money to a fund management
company, we believe you should be kept up to date
as to how your investment is progressing. And
that‘s what we do – you can receive as much or
as little information as you want. And we use
straightforward, simple language to explain our
products. There’s no small print and our fees are
transparent and easy to understand.
This approach, in combination with our track
record, has made us one of the fastest growing
fund management companies in the UK. It’s also
why Octopus has been named one of the UK’s
Top 50 Firms to Watch, has won its category in
the National Business Awards and has attracted
some of the country’s most talented investment
managers to continue to produce results for
investors like you.
The Team
Members of our team have substantial experience and a strong track record
in smaller company investing.
Octopus currently manages over £170 million
in smaller company investments including AIM
portfolios. As you can see from the information
set out on page 22, the investments in the model
portfolio managed by this team were up by
39.2% in the 20-month period from the start of
2005 until the end of August 2006.
Please be aware that past performance is no
guide to future performance and that the value
of investments in AIM shares can fall as well as
rise. AIM shares may be more volatile and risky
than shares quoted on the Official List of the
London Stock Exchange. That is why we have
obtained the life assurance policy which will
cover any loss should your initial investment have
fallen in value when you die.
Chris Hulatt
Chris is head of the AIM
investment team and has
9 years of fund management
experience.
Guy Myles
Guy is Head of Investment at
Octopus and has more than
11 years’ experience of managing
investment portfolios.
Richard Power
Richard is an award-winning
fund manager with 11 years’
experience investing in
smaller companies.
Simon Rogerson
Simon is Chief Executive of
Octopus and previously worked
at Mercury Asset Management,
one of Europe’s largest and most
successful fund management
companies.
13
The Risks
As with most investments, there are risks associated with this service.
We’ve tried to explain these risks as clearly as possible.
This investment may not be suitable for all
investors. You should not invest in this product
unless you have carefully thought about whether
you can afford it and whether it is right for you.
Potential investors are recommended to seek
specialist independent tax, legal and financial
advice before investing. Please note that Octopus
is not able to provide you with advice about your
suitability for this product or the life assurance
policy that forms a part of it.
The value of investments in AIM companies and the
income derived from them may go down as well as
up and the final value of the AIM portfolio may not
be as large as the original amount invested. That
is why we have obtained the life assurance policy
that provides the Octopus Protected ITS with
its downside protection when you die. Please
remember that the product does not provide
protection from loss of capital on any money
withdrawn prior to death.
Past Performance
Past performance is no guide to future
performance and there is no guarantee that
a portfolio’s objective will be achieved. We can
make no guarantee of investment performance
or the level of capital gains or income that will
be generated by the portfolio. This product has
not been designed to provide you with income.
Current Legislation
Rates of tax, tax benefits and allowances described
in this Brochure are based on current legislation
and HM Revenue & Customs practice. These may
change from time to time, are not guaranteed, and
their use in this Brochure may not suit individual
circumstances.
The AIM Market
Investments made by the Octopus Protected ITS,
because they are quoted on AIM, are likely to be
higher-risk than securities on the London Stock
Exchange Official List.
The risks include, but are not limited to, the loss
of a key member of a company’s management
team and the fact that, due to the relatively thin
trading in many AIM stocks compared with stocks
listed on the main market, it can be difficult to sell
them at a fair price.
14
The Octopus Protected ITS has been designed
with UK resident taxpayers in mind. If you are
not resident or ordinarily resident in the UK
for tax purposes, it may not be appropriate or
advantageous for you to invest in the Octopus
Protected ITS.
Qualifying Investments
We will acquire for your portfolio investments in
AIM companies which we reasonably believe to be
Qualifying Investments at the time of acquisition
based on our understanding of HM Revenue &
Customs’ interpretation of the current rules and
regulations (but please be aware that we give no
commitment that any such investment will remain
a Qualifying Investment at all times thereafter).
In some instances, investments in particular
companies will be sold if we believe that the
investment rationale outweighs the tax benefits
associated with retaining the holding. Holdings
will also be sold if a particular company leaves
AIM or is taken over. This may give rise to a
capital gains tax charge.
If the investment was qualifying at the time of
sale and a new Qualifying Investment is acquired
with the proceeds of sale, the two year holding
period can be satisfied by combining these
periods of ownership. If not, the relief available
on that particular investment will be lost and the
two year holding period will begin afresh. Any
cash held within your portfolio when you die will
not be exempt from inheritance tax.
Life Assurance and Trust
The protection of the value of your investment
when you die is provided by a group life
assurance policy taken out on behalf of investors
in the Octopus Protected ITS with a specialist
life assurance provider. This insurer reinsures a
large proportion of its exposure with a leading
specialist reinsurance company which has a credit
rating of AAA. In the unlikely event of a default
by the provider of the life assurance policy, the
protection offered through this product will not
be available. Octopus is not able to accept any
liability for any loss suffered by an investor in
this eventuality.
If you choose to have the life assurance policy
written into trust (as described on page 11), under
current tax rules this should mean that your
beneficiaries may not have to pay inheritance tax
that would ordinarily have to be paid by your
estate on any payout under the policy. However,
please note that trust legislation may change and
that therefore we are not able to make any
guarantee about this, nor do we accept liability
for the suitability of the trust in meeting individual
requirements. Trusts in excess of the nil rate band
(£285,000 in the tax year to 5 April 2007) are
subject to taxation.
In the unlikely event that in the future it becomes
impossible to obtain ongoing appropriate group
life assurance cover at an economic rate, Octopus
reserves the right to discontinue the protection
available on the initial value of the investment in
the Octopus Protected ITS.
15
The Charges
If you have any questions about the charges, or if it would help to speak to
one of the fund managers, please call us on 0800 316 2295.
Initial Charge
There is an initial charge of 5% plus VAT, which
will be deducted from the amount invested.
Of this, 2.5% may be payable to your financial
adviser if you have one. If appropriate, your
financial adviser will receive an annual trail
commission of 0.5% of the value of your
portfolio, but this will be paid by Octopus out
of our management fee.
Cost of Life Assurance
The dividend income from your portfolio, which is
expected to be between 1.5% and 2.0%, will be
payable to Octopus. This will be used to pay the
annual premium for the life assurance policy which
will cover any loss should your initial investment
have fallen in value when you die. Investors should
bear in mind that they may have an income tax
liability with respect to the dividends payable.
Management Fees
There is an annual management fee of 2% plus
VAT of the value of your portfolio, paid quarterly
in advance.
Creation of Trust
Octopus will cover the costs of the establishment
of the trust should you wish to use it. However,
you will be liable to pay for any independent advice
you choose to take. If you decide not to proceed
with the trust, this will not affect the validity of
the life assurance policy but remember that any
payout by the life assurance policy may be liable
to inheritance tax.
Administration Charges
A dealing commission of 1% will be applied to
all transactions which will cover administration,
settlement, custodian and broker fees. In addition,
stamp duty reserve tax (currently 0.5%) is also
payable to HM Revenue & Customs on purchases
of AIM shares.
16
Questions and Answers
Below is a list of some of the most commonly asked questions about the
Octopus Protected ITS.
Does an age limit apply to investors in this
product?
No.
Can I withdraw money from the Octopus
Protected ITS?
You may give written notice to withdraw money at
any time and there are no penalty charges. You
should expect to receive funds within 10 days,
although very large transactions may take a few
days longer. Please remember that any money
withdrawn from the Octopus Protected ITS will
not qualify for inheritance tax relief as investments
in qualifying AIM shares must be held at the date
of death.
Will I receive any income?
No, as the dividend income from your portfolio
will be used to pay for the life assurance policy.
However, unlike other solutions, you retain access
to your money at all times, so if your circumstances
change and you want to withdraw money, you can.
Is there a minimum holding period?
Not in respect of the life assurance protection –
this will be put in place before we start to invest
your money. However, inheritance tax may apply
to investments not held for two years.
What happens if I die before an investment has
been held for two years?
If the investment is left to your husband or wife
there will ordinarily be no inheritance tax payable.
They will also be regarded as having acquired the
investment at the time you did. If the investment
does not pass to your husband or wife and has
not been held for two years at the time of death,
then the asset may be liable to inheritance tax at
the full rate.
No capital gains tax is payable on investments in
AIM shares held at the time of death. However,
any payout to your estate that is due under the
life assurance policy may, under current tax rules,
be taxable if you have not chosen to write the
policy into trust.
What is the minimum and maximum I can invest?
You can invest from £30,000. If you would like to
invest more than £250,000, please call us or
contact your financial adviser. Once you are an
investor, additional contributions of £10,000 or
more can be made at any time (providing that
this does not take the total amount invested
above £250,000). You won’t usually need to fill in
another application form although, depending on
the size of the additional contribution, the
provider of the life assurance may require you to
resubmit answers to the health questions.
How do I apply?
Please complete the application form at the end
of this Brochure.
Whom do I make my cheque payable to and
where do I send it?
Your cheque should be made payable to ‘Octopus
Protected ITS’. This cheque, along with your
application form, should be sent to:
Octopus Investments Limited
8 Angel Court
London
EC2R 7HP
17
Questions and Answers (continued)
What should I expect after I invest?
We will acknowledge receipt of your application
by return post. Once your cheque has cleared, we
will send the money to our custodian, awaiting
investment. While the funds remain in cash,
interest will be credited to your account. If you
have answered ‘No’ to all the health and lifestyle
questions that are set out in Section 4 of the
application form, then you will automatically be
eligible for inclusion in the life assurance policy
described in this Brochure and we will commence
investing your money into AIM shares.
If you answered ‘Yes’ to one or more questions, we
will send you a supplementary questionnaire which
you will need to fill in and return to us so that the
life assurance provider can determine whether it
may need to impose any exclusions on your cover
or, in rare situations, refuse to provide cover.
What happens after I die?
Following your death, your executor should
inform us in writing as soon as possible. We will
then send them a valuation of the portfolio as at
the date of written notification of your death.
What happens to the investments held in the
portfolio?
Our usual policy is to sell the investments as soon
as practicable following written notification of
your death. This limits the potential impact on
the value of your portfolio of any downward
market movements that might occur following
18
death. Please note that we are able to continue
to manage the portfolio of investments in AIM
companies if requested by the executor, rather
than liquidating the portfolio.
When can the investment be returned to my
beneficiaries?
We will hold the proceeds from the sale of the
investments in your portfolio in cash until we are
directed by the executor to remit the proceeds
following the granting of probate.
How is a claim made?
Following receipt by Octopus of written notification
of your death, we will contact the life assurance
provider in order to make a claim under the terms
of the life assurance policy, if applicable. To make
a claim, your executor will need to send us proof
of your death (such as the death certificate). In
order to be able to make a claim under the life
assurance policy, we must receive written
notification within six months of your death.
Please note that the reference date in calculating
whether or not there is a claim to make under the
life assurance policy will be the date of receipt
by Octopus of written notification of your death
(ie the first date that we can act). In calculating
the size of the payout, the reference investment
amount will be the aggregate gross amounts you
have sent to us less any withdrawals you may
have made.
Appendix 1 – AIM
The Alternative Investment Market (‘AIM’) was launched in 1995 by the London
Stock Exchange as a flexible market for growth companies.
As at 30 June 2006, there were 1,549 companies
quoted on AIM, including 270 international
companies, with a combined market value of
£73.6 billion. With its flexible regulatory regime,
institutional support and range of tax benefits, AIM
has become the market of choice for small
company listings.
The Octopus Protected ITS will invest
predominantly in established AIM companies
with strong management teams that have a
clear record of success. The Octopus investment
team will look for businesses with a niche or
proprietary product or service, earnings visibility
and a strong balance sheet.
Number of Companies on AIM by Market Capitalisation
400
350
300
250
200
150
100
50
0
0-5
5-10
10-25
25-50
50-100
100-250
250 +
2003
2004
Market capitalisation (£ million)
Number of Companies on AIM
1600
1400
1200
1000
800
600
400
200
0
1998
1999
2000
2001
2002
2005
June 2006
Year
19
Appendix 2 – Portfolio Holdings
This appendix includes examples of typical companies that may be included
in your portfolio.
Majestic Wine
Majestic Wine operates the largest wine warehouse chain in Britain with 129 stores. The
company floated on AIM in 1996 and has enjoyed twelve consecutive years of profit
growth. The company has successfully funded its expansion from cash generation and
has differentiated itself by the high quality of its customer service. Majestic Wine, which
is now valued at £197 million, achieved a pre-tax profit of £14.1 million on turnover of
£172 million for the year ending March 2006.
Mears Group
Mears Group is the leading social housing repairs and maintenance provider in the UK.
The company benefits from high earnings visibility due to long-term contracts with its
customers, and currently has an order book of over £1 billion. Mears, which is valued at
£185 million, is expected to achieve a profit before tax of £12.1 million on turnover of
£242.4 million for the year ending December 2006.
Glisten
Glisten is a food manufacturer specialising in the production of chocolate and sugar-based
confectionery, edible decorations, and cereal and health bars. It serves a variety of
customers including high-street retailers, major food manufacturers, the food service
sector and global export markets. The company floated on AIM in 2002 and has since
grown rapidly, both organically and through acquisition. Glisten, which is valued at
£45 million, is expected to achieve profit of £4.6 million on turnover of £56 million for
the year ending June 2006.
RWS Holdings plc
20
RWS Holdings
RWS is one of the world’s leading providers of translation and search services in the
specialist area of patent and document translation, a growth market with high barriers
to entry. RWS, which is currently valued at £111 million, is expected to achieve a profit
of £8.2 million on turnover of £38.7 million for the year to September 2006. RWS
has £12 million of cash on its balance sheet so further market consolidation is anticipated.
Genus
Genus is a world leader in animal breeding. The company’s proprietary technology,
products and services enable producers and farmers to enhance milk and meat quality
and improve efficiency. Headquartered in Hampshire, Genus operates in thirty countries
on five continents. Genus, which is valued at £239 million, is expected to achieve a profit
of £15 million on turnover of £221 million for the year ending June 2006.
group plc
Cello Group
Cello is a specialist marketing services company which floated on AIM in 2004. The
company was founded on three main platforms; market research, brand advertising and
direct marketing and database management. All three divisions are delivering strong
organic growth and Cello, which is currently valued at £38 million, achieved a pre-tax
profit of £4.2 million on turnover of £52 million for the year ending December 2005.
Hamworthy
Hamworthy is a world leader in the design and manufacture of innovative shipping and
offshore fluid handling systems. The company, which has its headquarters in Poole, serves
international markets and its customers include commercial and naval shipbuilding yards,
ship owners and oil and gas companies. Hamworthy is expected to achieve a profit
before tax of £12.7 million on turnover of £170 million for the year ending March 2007.
The company had a forward order book of £207 million in March 2006.
Spice Holdings
Spice is a support services company that operates within the electricity, facilities
management, telecoms and water sectors. The company was founded in 1996
following a management buyout from Yorkshire Electricity and now operates from
over 30 sites across the UK. Spice, which is valued at £148 million, achieved a pre-tax
profit of £7.4 million on turnover of £133 million for the year ending April 2006.
The above examples are for illustrative purposes only and may not necessarily be incorporated into
Octopus Protected ITS portfolios that are established in the future. Historic data is correct as at
21 July 2006. Past performance is no guide to future performance and share prices may fall as well as
rise. Profit and turnover estimates are based on broker consensus forecasts and may change in the future.
21
Appendix 3 – Track Record
We currently manage hundreds of AIM portfolios for investors who are looking to shelter assets from
inheritance tax. The table below shows the performance over the 20 months to 31 August 2006 of the
investments within a typical portfolio in our existing inheritance tax service. The companies shown below
have an average market value of £90 million and average turnover of £123 million. Please bear in mind
that portfolios that will be constructed for investors in Octopus Protected ITS are likely to contain a
larger number of stocks than are included in the example shown below.
Share price as at
31/12/04
Share price as at
31/08/06
Specialty and Other Financial
130.0
194.5
49.6%
Augean
Support Services
207.5
152.0
-26.7%
Avingtrans
Engineering and Machinery
84.5
146.5
73.4%
Bond International
Software and Computer Services
82.0
145.5
77.4%
Cello Group
Media and Entertainment
126.0
123.5
-2.0%
Connaught
Support Services
114.0
203.25
78.3%
Fountains
Support Services
145.0
99.0
-31.7%
Genus
Support Services
270.0
455.0
68.5%
Glisten
Food Producers and Processors
274.5
322.5
17.5%
Huveaux
Media and Entertainment
49.25
-12.8%
IBS OPENsystems
Software and Computer Services
145.0
187.5
29.3%
Inter Link Foods
Food Producers and Processors
627.0
439
Interior Service Group
Support Services
198.5
255.5
28.7%
Maintel
Telecommunications
113.5
168.0
48.0%
Majestic Wine
Food and Drug Retailers
283.0
314.0
11.0%
Mayborn Group*
Housing Goods and Textiles
260.0
500.0
92.3%
Media Square
Media and Entertainment
Michelmersh Brick
Construction and Building Materials
NWF
Diversified Industrials
Reliance Security
Support Services
RWS Holdings
Support Services
Spice Holdings
Company
Activity
Albemarle & Bond
56.5
-30.0%
23.25
4.5%
71.5
1 1 1 .5
55.9%
715.0
955.0
33.6%
422.0
625.0
48.1%
191.5
285.5
49.1%
Support Services
201.0
289.0
43.8%
Staffline Recruitment
Support Services
90.5
126.5
39.8%
Tanfield Group
Engineering and Machinery
10.5
31.0
195.2%
AVERAGE
22.25
Change in price
39.2%
The average share price rise of 39.2% for the companies shown above compares favourably with the 4.0%
rise in the FTSE AIM All-Share index over the same time period.
The list of shares shown above is for illustrative purposes only and these shares may not necessarily be
incorporated into Octopus Protected ITS portfolios that are established in the future. Past performance is no
guide to future performance and the value of shares may fall as well as rise. Individual portfolios that were
established in previous years may not necessarily have performed in line with the above data or contained all of
the above shares. The above data does not take dividends or fees into account and is based on mid-market prices.
22
The Customer Agreement
Definitions:
AIM
The London Stock Exchange plc’s
Alternative Investment Market
Application Form
The application form attached to the
Brochure
Associate
Any holding, sister or subsidiary
company of Octopus and any
director thereof
Brochure
The current edition of the Octopus
Protected ITS marketing Brochure
published by Octopus
Business Day
Any day on which AIM is open for
business
Custodian
Any entity (which may be an
Associate or a third party), whom
we appoint to carry out safe custody
and administration (and related)
services in relation to investments
comprised in your Portfolio
FSA
Financial Services Authority
FSA Rules
Those rules made by the FSA for the
regulation of the conduct of our
business
with the features set out on page 9
of the Brochure
‘Octopus’, ‘Octopus Investments’,
‘us’ or ‘we’
Octopus Investments Limited, a
company registered in England &
Wales under company number
3942880 and with a registered
address at 8 Angel Court, London
EC2R 7HP
Portfolio
Your portfolio of investments which
are managed in accordance with the
investment policy for the Octopus
Protected ITS as described in the
Brochure
Qualifying Investment
Shares which qualify as relevant
business property for the purposes
of Inheritance Tax Act 1984 Part V
Chapter I Section 105 (1) bb
Trust
The trust which you may establish if
you so choose and into which any
payout from the Life Assurance Policy
may be paid on your death and
referred to on page 11 of the Brochure.
ITS
Octopus Protected Inheritance Tax
Service
1.
Agreement
This Agreement constitutes the
contract between you and us
appointing us to arrange and
manage your Portfolio in accordance
with the Octopus Protected ITS
service. By signing this agreement
you confirm that you have read and
understood the Brochure and accept
its terms and that your investment in
ITS will be operated on the terms and
conditions of this Brochure.
Life Assurance Policy
The life assurance policy that protects
the value of your investment at
the time of notification of your death
2. Regulatory Status
Octopus Investments Limited is
authorised and regulated by the
FSA with a Firm Reference Number
Insurer
Omnilife Insurance Company Limited,
the insurance company providing the
Life Assurance Policy
ITSP0806
of 194779. Details of our registration
can be checked on the FSA’s website
at www.fsa.gov.uk.
3. Start Date
3.1 This Agreement will come into
force (and therefore we are able at
our discretion to start managing your
Portfolio) on the later of the following:
(1) the date of receipt by us of your
duly completed and signed
Application Form; (2) the date by
which we have completed any
compliance procedures required of
us in accordance with the Money
Laundering Regulations 2003; or
(3) approval from the Insurer.
3.2 The compliance procedures
discussed at 3.1 above include
requiring proof of your identity and
of your address. Under the Money
Laundering Regulations 2003, we are
required to check the identity of
clients who invest over £10,000 or
who invest using third party cheques.
Octopus may therefore undertake an
electronic search for the purposes of
verifying your identity. To do so,
Octopus may check the details you
supply against your particulars on
any database (public or other) to
which we have access. Octopus may
also use your details in the future to
assist other companies for verification
proposes. A record of this search
will be retained. If we cannot verify
your identity, we may ask you to send
us further documentation.
4. Cancellation Rights
4.1 Other than where this Agreement
was entered into between you and a
representative of Octopus or your
own independent financial adviser
on a face-to-face basis, you have the
right to cancel this Agreement.
23
Customer Agreement (continued)
If so, we will issue you with a form of
cancellation notice on receipt of your
application. If you wish to exercise
your right to cancel, you must notify
us in writing within 14 days of receipt
of that form, by sending it duly
completed to us at our address as
printed in the Brochure.
4.2 If you exercise your cancellation
rights, we shall refund any monies
paid by you less any charges we have
already incurred for any service
undertaken in accordance with the
terms of the Agreement, although
this would exclude the initial charge
stipulated in the Brochure.
4.3 We will endeavour to return any
such monies as described at 4.2 as
soon as possible (but in any event,
not more than 30 days following
cancellation). You will not be entitled
to interest on such monies.
4.4 If you do not exercise this right
to cancel within the requisite time
period, you will still be entitled to
exercise your right under clause 16
below to terminate this Agreement
which is a separate right.
4.5 The right to cancel under the
FSA Rules does not give you the right
to cancel/terminate/reverse any
particular investment transaction
executed for the account of your
Portfolio before cancellation takes
effect.
5. Customer Status
We have classified you as a private
customer for the purposes of the
FSA Rules.
6.
Investment Management
Services
6.1 The Octopus Protected ITS
is a discretionary investment
management service. By entering
24
into this Agreement, you and every
other investor who enters into the
same form of agreement grant to us
the right to select and manage, at
our discretion, investments which
correspond with the objectives and
principles for the Octopus Protected
ITS, as set out in the Brochure. Your
Portfolio will be comprised of such
number or proportion of such
investments as corresponds to the
amount which you have chosen to
invest. The investment objective of
the portfolio is long-term in nature
and is focused on capital growth.
You acknowledge receipt of and
understand the Brochure and the risk
factors set out in it and acknowledge
that Octopus has not provided you
with advice about this product or
your suitability for it. You agree that
investment in equities involves risks
arising from the effect of a variety
of factors on the share price of a
company.
6.2 Subject to the generality of 6.1,
and also to 12.2 below (aggregation
of orders), all transactions for
your Portfolio will be undertaken
in accordance with the overriding
principles of ‘Suitability’ and ‘Best
Execution’ as such terms are used in
the FSA Rules.
6.3 We will acquire for your Portfolio
Investments which we reasonably
believe to be Qualifying Investments
at the time of acquisition (but please
be aware that we give no commitment
that any such investment will remain a
Qualifying Investment at all times
thereafter). Subject thereto, there
shall be no restriction on the amount
invested in any one investment, or on
the proportion of your Portfolio in any
one investment, or any particular type
of investment, or on the markets on
which transactions are effected,
unless specified in this Brochure. If we
sell Qualifying Investments on your
behalf, there may be capital gains tax
consequences about which you should
speak to your adviser.
6.4 You should be aware that some
investments in your Portfolio are likely
to be classified under FSA Rules as
“not readily realisable”. It may be
difficult to deal in such investments
on a regular basis, for example
because there is only a very limited
market in which dealing is possible.
7. Fees and Expenses
7.1 The fees and expenses that you
will bear are set out on page 16 of
the Brochure.
7.2 An initial charge shall be
deducted from the amount you
subscribe before the balance is
invested in your Portfolio.
7.3 Our management fee and any
other charges relevant to your
Portfolio will be deducted from any
uninvested monies in your Portfolio
or, where there are insufficient
monies available to meet the fees
and charges, then we may either:
(i) allow this to roll up (interest
free); or
(ii) sell Investments within your
Portfolio of a sufficient value to cover
charges or commissions involved.
7.4 The dividend income from your
portfolio shall be payable to Octopus
which shall be entitled to retain them.
You shall remain liable for further
income tax payable in respect of the
dividends.
7.5 Octopus shall be responsible
for the payment of life assurance
premiums.
ITSP0806
7.6 As discussed, Octopus shall be
responsible for the costs of the set up
of your trust (if you take advantage
of this extra benefit), however, you
shall be liable for any additional
independent advice you may choose
to seek.
8. Delegation and Use of Agents
8.1 We may delegate any of our
functions under this Agreement to
any Associate or third party of our
choosing which is competent (and if
relevant, appropriately regulated) to
perform such functions.
8.2 We will act in good faith and with
due diligence in the selection, use and
monitoring of third party delegates.
8.3 With the exception of matters
relating to the Insurer, (for the
avoidance of doubt) we will accept
responsibility for the acts and
omissions of any Associate as if
they were our own.
8.4 You agree that we may at our
discretion delegate the provision of
administration, nominee and safe
custody services to such professional
Custodian as we shall reasonably see
fit. We may from time to time change
or amend the terms of the relationship
with the Custodian, including
replacement thereof but such terms
shall never be more onerous than
those we presently have without
your consent in writing.
9. Custody
9.1 The Custodian will hold all
investments in your Portfolio in safe
custody, on the following basis:
(a) title documents to investments
in respect of which such documents
are issued will be physically held by
the Custodian;
(b) any registerable investment
ITSP0806
acquired for your Portfolio will
normally be registered in the name
of the Custodian or its nominee
company; and
on account of any tax required to be so
deducted or withheld and provide you
with evidence of such deduction or
withholding for your tax records.
(c) any documents of title to
investments in bearer form will be
held by the Custodian.
10. Client Money
10.1 All uninvested cash received or
held for the account of your Portfolio
shall be treated by us under the FSA
Rules as ‘client money’. Our Custodian
will hold all such cash in one or more
client money accounts in accordance
with the FSA Rules.
9.2 Please note that investments
held by the Custodian for the account
of your Portfolio may be pooled with
other holdings held by the Custodian.
Such investments may not be
identifiable by separate certificates,
other physical documents of title or
equivalent electronic record and,
should the Custodian default, you will
share in any shortfall in proportion to
your original share of any investments
in the pool. On occasion, your
investments may be used to settle
another person’s transaction, which
will not affect the Custodian’s record
of your entitlements.
9.3 We have discretion to exercise
(or if we so choose, not to exercise)
any conversion, subscription, voting
or other rights (such as may arise in
takeover situations, other offers and
capital reorganisations) relating to
investments held in your Portfolio,
and to give suitable instructions to
the Custodian, without consulting
with you first and by entering into
this Agreement you hereby authorise
Octopus to act on your behalf and
exercise all rights attaching to shares
held in your Portfolio as it shall deem
fit and at its discretion.
9.4 The Custodian, as soon as
reasonably practicable, will claim and
account to you for all dividends,
interest and other payments or
entitlements received in relation to
investments in your Portfolio, but is
entitled to deduct or withhold any sum
10.2 Interest earned on uninvested
cash within your Portfolio will accrue
daily at a rate equal to the prevailing
HSBC base lending rate less 1% and
will be credited to your Portfolio
quarterly.
11. Valuations and Reports
11.1 You will receive periodic
statements, comprising the cost,
current value, and dividends of all
holdings within your Portfolio as at
the last Business Day of the period
in question. Statements will be
produced for the period ended
31 March, 30 June, 30 September
and 31 December in each year. We
will provide all such reports within
25 Business Days of the end of the
period in question.
11.2 All Investments will be valued
using mid-market prices at the close
of business on the last Business Day
before the end of the quarter or, if
there is no such price, at the value
which is, in our opinion, a reasonable
valuation as at that date. Periodic
statements will also show income and
interest credited to your Portfolio,
fees charged and transactions made
within the period.
11.3 A contract note will be forwarded
to you within 10 Business Days of
each transaction.
25
Customer Agreement (continued)
12. Dealing, Counterparties and
Aggregation
12.1 We will act in good faith and
with due diligence in our choice and
use of counterparties. All transactions
will be effected in accordance with
the rules and regulations of the
relevant market, exchange or trading
facility, and we may take all such
steps as may be required or permitted
by such rules and regulations and/or
by appropriate market practice.
12.2 We may aggregate your
transactions with those of other
customers and of our employees in
accordance with the FSA Rules. It is
likely that the effect of such an
allocation will not work to your
disadvantage however occasionally this
may not be the case. We will allocate
aggregated transactions promptly on
a fair basis in accordance with the
requirements of the FSA Rules.
13. Our Liability
13.1 We will act in good faith and
with due diligence in managing your
Portfolio in accordance with this
Agreement. We accept responsibility
for loss to you only to the extent that
such loss is due to our negligence,
wilful default or fraud or that of our
Associates.
13.2 If the Custodian should fail to
deliver any necessary documents or
to account for any investments, we
will take all reasonable steps on your
behalf to recover such documents or
investments or any sums due or
compensation but subject to our
general duty of good faith, shall not
be liable for such failure.
13.3 In the event of any failure,
interruption or delay in the
performance of our obligations
resulting from acts, events or
26
circumstances not reasonably within
our control (including, but not limited
to acts or regulations of any
governmental or supranational
bodies or authorities, breakdown,
failure or malfunction of any
telecommunications or computer
service or services; and acts of war,
terrorism or civil unrest) we shall not
be liable to you for consequent loss
in the value of, or failure to perform
investment transactions for the
account of, your Portfolio.
13.4 Nothing in 13.1 – 13.3 is deemed
to limit any liability we may have to
you under the terms of the FSA Rules.
13.5 Your Life Assurance Policy is
issued to you on the basis of the
replies you gave to the supplementary
questionnaire and in good faith. We
do not accept any liability for nonpayment of any claim made in
respect of the Life Assurance Policy.
Our liability in respect of the Life
Assurance Policy shall be limited to
payment of the requisite insurance
premiums and of no other loss
whatsoever.
13.6 We have instructed a reputable
firm of solicitors to draft, establish
and administer the Trust in the form
contained in this Brochure. We do not
accept any liability for failure or
inadequacy of the Trust. Our liability
in respect of the Trust shall be
limited to payment of the requisite
legal fees we have agreed to pay
the appointed solicitors to establish
your Trust and of no consequential
loss whatsoever.
14. Quantifying the Life Assurance
Payout
14.1 The life assurance payout will
be calculated on a two-fold basis,
depending on when the claim is made.
(a) During the initial five years, the
payout will be equal to the total gross
amount of your investment (plus any
later sums you have invested with us
under this product) less:
(i) the mid-market value of your
Portfolio of investments in AIM
companies on the day we received
written notification of your death (or
previous day on which the London
Stock Exchange was open) if the
instructions received by us are to
liquidate your Portfolio; or
(ii) the actual realised value of your
Portfolio following notification of
your death; less, in each case, any
investment amounts withdrawn by you.
(b) After the initial five years, and
then subsequently each five years,
the minimum assured amount will be
re-set to be the greater of:
(i) 75% of the mid-market value of
your Portfolio on the fifth anniversary
of the start date (and then tenth, and
so on); and
(ii) the total gross investment and
applying the principles set out in
14.1(a).
15. Making Additional Investments
15.1 You are able to make further
additional investments under this
product by contacting Octopus directly
or by contacting your financial adviser.
When calculating your total gross
investment for insurance purposes in
14.1, this shall include the aggregate
gross value of any additional
investments you make. There is no
obligation on you to make further
investments. Octopus shall have the
right to levy the initial charge in
respect of additional sums invested at
the rate as set out on page 16. The
annual management fee will be
ITSP0806
applied quarterly in advance. Octopus
shall reserve the right to apply this
charge from the date of investment, or,
a later date on which the annual
management fee is levied against the
initial investment.
15.2 The Insurer may require you to
provide answers to the questions set
out at Section 4 of the Application
Form when you make further
additional investments (“Top-ups”)
and this requirement will depend on
the value of such Top-ups. This will
be the case every time a Top-up
exceeds in any given calendar year
the initial investment by the
following thresholds:
(a) 50% of the initial investment
during the first year; or
(b) 40% of the initial investment
during the second year; or
(c) 30% of the initial investment
during the third year; or
(d) 20% of the initial investment
during the fourth year; or
(e) 10% of the initial investment
during the fifth year; or alternatively
(f) 10% during each of the first five
calendar years.
Octopus shall inform you each time
a Top-up triggers the need for this
confirmation. Octopus on behalf of
itself and the Insurer reserve the right
to seek further confirmations and to
decline life assurance cover in respect
of Top-ups.
16. Termination
16.1 You may terminate this
Agreement at any time by immediate
written notice to us and we may
terminate this Agreement by giving
you one month’s written notice.
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16.2 We reserve the right to settle
outstanding transactions for your
Portfolio at the effective date of
termination.
may be reasonably requested by the
solicitors administering the Trust and
you hereby agree to act reasonably in
respect of the winding-up of the Trust.
16.3 Further to 6.4 above, you should
be aware that where on termination
we are required to liquidate your
Portfolio, this may take place over
an extended period of time as there
may be limited liquidity for your
Portfolio’s investments.
17.
16.4 Termination will not affect
accrued rights, or any contractual
provision intended to survive
termination.
16.5 On termination, you will be
liable to pay (meaning that we may
debit from your Portfolio):
(a) all fees and other charges
mentioned at 7 above, pro rata to
the date of termination;
(b) any additional expenses
necessarily incurred by us in
terminating this Agreement; and
(c) our charges (if any) in connection
with transferring your Investments
into your name or as you may direct.
16.6 On termination, we may retain
and/or realise such investments as
may be required to settle transactions
already initiated and to pay your
outstanding liabilities. If there is a
dispute as to the payment of fees to us,
you may require the disputed amount
to be held in an escrow account
pending resolution of the dispute.
16.7 On termination, your rights
under the Life Assurance Policy shall
cease and consequently you shall
have no rights or benefits in respect
of either the Life Assurance Policy or
the Trust. You may be required to
complete additional paperwork as
Data Protection and
Confidentiality
17.1 We are registered under the Data
Protection Act 1998, and as such may
keep records in which your name and
certain personal information provided
by you to us will be stored. We may
share this information with other
persons (including Associates) if we
consider that they have products or
services to draw to your attention
that may be of interest. However, if
you so indicate when executing this
Agreement, we will not do so.
17.2 You have a right, upon payment
to us of a reasonable fee, to be
informed of all data which we hold
on you.
17.3 We will keep confidential any
data or other information which we
hold on you. We may however share
some or all of this with the FSA if we
are required to do so in accordance
with FSA Rules, and with other
governmental, judicial, law
enforcement or regulatory bodies
if similarly required to do so.
18. Risk Warnings and Further
Disclosures
18.1 General
Your attention is drawn to the risk
warnings set out on page 14 of the
Brochure.
18.2 Penny Shares Risk Warning
There is an extra risk of losing money
when shares are bought in some
smaller companies including ‘penny
shares’ (as defined in the FSA Rules).
Because the spread between the
buying price and the selling price of
27
Customer Agreement (continued)
such shares is a substantial part of the
share price, they are more susceptible
to movement in market price than
other investments, and in addition a
dealing in such shares is liable to cost
proportionately more on purchase
and yield proportionately less on
disposal on account of the effect of
the dealing spread.
18.3 Borrowing and lending
We will not borrow money for the
account of your Portfolio, nor lend
securities or enter into stock lending
or similar transactions.
18.4 Limit on investment powers
We will not invest in warrants, in units
in collective investment schemes or
in derivatives of any sort.
18.5 Stabilisation
We draw your attention to the
Stabilisation Risk Warning Notice in
Annex 1 of this Agreement.
18.6 The life assurance policy
protecting your investment is provided
by a group life assurance policy taken
out on behalf of investors with a
specialist life assurance provider
which reinsures a large proportion of
its exposure with a leading reinsurance
company which has a credit rating of
AAA. However, Octopus accepts no
liability for default or insolvency of
the Insurer or any failure to payout
on a valid claim, or any liability
whatsoever.
18.7 Octopus has sought independent
legal advice in providing the form of
trust which is provided to you as a
draft document. Octopus does not
accept liability for the suitability of
the trust in meeting individual
requirements. The provisions relating
to the trust are as set out in the
document entitled, ‘Trust Document’
which will be issued to you on receipt
of your application form.
28
19.
Complaints Procedure and
Compensation
19.1 If you have a complaint, you
should write to our Compliance
Officer, who will acknowledge receipt
of your letter, investigate the
circumstances and report back to
you. If we have given you our final
response and you are still dissatisfied
you may refer your case to the
Financial Ombudsman Service (FOS).
The FOS is an independent body
that arbitrates on complaints. It will
only consider complaints after we
have provided you with written
confirmation that our internal
complaints procedure has been
exhausted. The FOS can be contacted
at South Quay Plaza, 183 Marsh Wall,
London E14 9SR. A copy of our
complaints handling procedure is
available on request.
19.2 We are covered by the Financial
Services Compensation Scheme. You
may be entitled to compensation
from the scheme if we cannot meet
our obligations. This depends on
the type of business and the
circumstances of the claim. Most
types of investment business are
covered for 100% of the first
£30,000 and 90% of the next
£20,000 so the maximum
compensation is £48,000. Further
information about compensation
arrangements is available from the
Financial Services Compensation
Scheme.
20. General
20.1 We may assign this Agreement
to any appropriately authorised and
regulated person, such assignment
being effective upon written notice
to you. This Agreement is personal
to you and you may not assign it.
20.2 Amendments to this Agreement
shall be effective only if in writing and
agreed by both parties, provided that
we may amend the Agreement in
circumstances where we are required to
do so in accordance with applicable law
or to reflect changes in regulations and
any such amendment will be effective
when notified to you in writing.
20.3 This Agreement, together with
your Application Form, constitutes
the basis of our entire relationship
with you. In this connection, you
should also note that no person
is authorised by us to make any
representation to you concerning
the Octopus Protected ITS or our
management thereof which is not
contained in the Brochure.
20.4 No person who is not party to
this Customer Agreement may
enforce its terms.
20.5 We may send any communication
to you at the address which you
provide to us in the Application Form
(or to any provided address). You
may communicate with us at
Octopus Investments Limited,
8 Angel Court, London EC2R 7HP.
Notice sent by first class post is
deemed to have arrived on the second
Business Day after posting. Notice
sent by fax or email or hand-delivered
is deemed to be delivered immediately
(or on the next Business Day if sent
on a non-Business Day).
20.6 This Customer Agreement is
governed by English Law and the
parties hereby submit to the Courts
of England and Wales.
20.7 The Terms are supplied in
English, and we will communicate
in English during the course of our
relationship with you.
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Annex 1
Risk Warning: Dealing in securities
which may be subject to stabilisation
This statement complies with the rules
of the Financial Services Authority
(FSA). Octopus Investments Limited
or its representatives may, from time
to time, recommend transactions in
securities to you, or carry out such
transactions on your behalf, where
the price may have been influenced
by measures taken to stabilise it. You
should read the explanation below
carefully. By signing the Application
Form you hereby authorise Octopus
to carry out any such transaction on
your behalf without first having to
consult you.
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What is stabilisation?
Stabilisation enables the market
price of a security to be maintained
artificially during the period when a
new issue of securities is sold to the
public. Stabilisation may affect not
only the price of the new issue but
also the price of other securities
relating to it. The FSA allows
stabilisation in order to help counter
the fact that, when a new issue
comes onto the market for the first
time, the price can sometimes drop
for a time before buyers are found.
Stabilisation is being carried out by a
‘stabilisation manager’ (normally the
firm chiefly responsible for bringing
a new issue to market). As long as
the stabilising manager follows a
strict set of rules, he is entitled
to buy back securities that were
previously sold to investors or
allotted to institutions which have
decided not to keep them. The effect
of this may be to keep the price at a
higher level than it would otherwise
be during the period of stabilisation.
The Stabilisation Rules:
(1) Limit the period when a
stabilising manager may stabilise
a new issue;
(2) Fix the price at which he may
stabilise (in the case of shares and
warrants but not bonds); and
(3) Require him to disclose that he
may be stabilising but not that he is
actually doing so. The fact that a new
issue or a related security is being
stabilised should not be taken as any
indication of the level of interest
from investors, nor of the price
at which they are prepared to buy
the securities.
29
Application Procedure – Octopus Protected ITS
Please send the completed Application Form together with your cheque or bankers’ draft to
Octopus Investments Limited, 8 Angel Court, London EC2R 7HP.
If you have any questions on how to complete the Application Form please contact
Octopus Investments on 0800 316 2295.
Section 1
Please insert your full name, permanent address, daytime and evening telephone numbers, date of birth and email address
in Section 1.
Section 2
Please insert the amount you would like to invest in Section 2. Please note that the minimum and maximum investment is £30,000
and £250,000 respectively. For investments above £250,000 please call us or contact your financial adviser.
Make cheques payable to ‘Octopus Protected ITS’ and crossed ‘A/C Payee only’. Cheques must be from a recognised UK
Bank or Building Society account and your payment must relate solely to this application.
Section 3
Read the declaration below and sign and date the Application Form.
If this form is completed and signed by the investor named in Section 1:
By signing this form I HEREBY DECLARE THAT:
i.
I have received the Brochure and have read the Customer Agreement therein and agree to be bound by it;
ii.
I understand the risks associated with the Octopus Protected ITS;
iii.
I will be the beneficial owner of the Shares acquired on my behalf by Octopus Protected ITS; and
iv.
To the best of my knowledge and belief, the personal details I have given are correct.
If this form is completed and signed by an authorised financial intermediary or any other person apart from the investor:
By signing this form on behalf of the individual whose details are shown above, I make a declaration (on behalf of such
individual) on the terms of sub-paragraphs i. to iv. above.
Section 4
Please answer the health questions by circling ‘Yes’ or ‘No’ as appropriate.
Section 5
If you wish to take advantage of the trust structure (see page 11), please tick the box. This will prompt us to send to you or your
financial adviser the trust document for your signature. The establishment of the trust will not delay your application.
Section 6
Authorised financial intermediaries who are entitled to receive commission should stamp and complete Section 6, giving their
full name and address, telephone number and details of their authorisation under the Financial Services and Markets Act 2000.
The right is reserved to withhold payment of commission if Octopus Investments is not, in its sole discretion, satisfied that the
authorised financial intermediary is authorised.
Frequently asked questions
Q:
A:
Who should I make the cheque payable to?
Cheques should be made payable to
‘Octopus Protected ITS’.
Q:
A:
Where should I send my application?
Your application form and cheque should be sent to
Octopus Investments Ltd, 8 Angel Court, London EC2R 7HP.
Q:
A:
What happens after I invest?
We will send you confirmation that we have received
your application by return of post.
For other frequently asked questions, please see
pages 17 and 18.
Application Form – Octopus Protected ITS
Before completing this application form you should read the Customer Agreement and Application Procedure.
If you have any questions on how to complete the Application Form please contact us on 0800 316 2295.
Section 1
Mr/Mrs/Miss/Other
First name
Middle Name
Surname
Address
Postcode
Date of Birth
Email (optional)
Telephone (Daytime)
Telephone (Evening)
Section 2
Investment Amount (minimum £30,000) £
I ENCLOSE A CHEQUE OR BANKERS’ DRAFT DRAWN ON A UK CLEARING BANK, MADE PAYABLE TO ‘OCTOPUS PROTECTED ITS’.
Section 3
Signature
Date
Section 4
Are you currently receiving treatment for any symptoms, illnesses or injuries?
Yes/No
Have you been advised to undergo any medical treatment or are you waiting to undergo any medical treatment?
Yes/No
Has a proposal for Life, Disability or Private Medical Insurance ever been declined, postponed, withdrawn
or accepted on special terms?
Yes/No
Do you reside outside the European Union for longer than three months in a calendar year or travel frequently
outside the European Union?
Yes/No
Please note that if you answered ‘Yes’ to any question then the provider of the life assurance will require you to fill in a
supplementary questionnaire and may wish to make further enquiries of your health and seek your consent to contact your
GP. The provider of the life assurance reserves the right to decline any application.
Section 5
I would like to take advantage of the trust structure mentioned on page 11 (please tick box).
Section 6
Financial Adviser
Mr/Mrs/Miss/Other
Telephone
First Name
Surname
Administrator
Mr/Mrs/Miss/Other
Telephone
First Name
Surname
FSA Number and Company Stamp
Special IFA Instructions
Investor Services Program
At Octopus, we pride ourselves not only on our track record but
also on the level of service we provide to all our investors. That’s
why we provide you with quarterly updates that keep you
involved and informed throughout the investment process.
These quarterly updates will include:
(i)
A portfolio valuation
(ii)
An explanation of all transactions over the period
We encourage you to speak to the fund managers investing
your money. If you have any questions, or if it would help to
meet one of the team, please call us on 0800 316 2295.
ITSP0806 W
Application Form – Octopus Protected ITS
Before completing this application form you should read the Customer Agreement and Application Procedure.
If you have any questions on how to complete the Application Form please contact us on 0800 316 2295.
Section 1
Mr/Mrs/Miss/Other
First name
Middle Name
Surname
Address
Postcode
Date of Birth
Email (optional)
Telephone (Daytime)
Telephone (Evening)
Section 2
Investment Amount (minimum £30,000) £
I ENCLOSE A CHEQUE OR BANKERS’ DRAFT DRAWN ON A UK CLEARING BANK, MADE PAYABLE TO ‘OCTOPUS PROTECTED ITS’.
Section 3
Signature
Date
Section 4
Are you currently receiving treatment for any symptoms, illnesses or injuries?
Yes/No
Have you been advised to undergo any medical treatment or are you waiting to undergo any medical treatment?
Yes/No
Has a proposal for Life, Disability or Private Medical Insurance ever been declined, postponed, withdrawn
or accepted on special terms?
Yes/No
Do you reside outside the European Union for longer than three months in a calendar year or travel frequently
outside the European Union?
Yes/No
Please note that if you answered ‘Yes’ to any question then the provider of the life assurance will require you to fill in a
supplementary questionnaire and may wish to make further enquiries of your health and seek your consent to contact your
GP. The provider of the life assurance reserves the right to decline any application.
Section 5
I would like to take advantage of the trust structure mentioned on page 11 (please tick box).
Section 6
Financial Adviser
Mr/Mrs/Miss/Other
Telephone
First Name
Surname
Administrator
Mr/Mrs/Miss/Other
Telephone
First Name
Surname
FSA Number and Company Stamp
Special IFA Instructions
Investor Services Program
At Octopus, we pride ourselves not only on our track record but
also on the level of service we provide to all our investors. That’s
why we provide you with quarterly updates that keep you
involved and informed throughout the investment process.
These quarterly updates will include:
(i)
A portfolio valuation
(ii)
An explanation of all transactions over the period
We encourage you to speak to the fund managers investing
your money. If you have any questions, or if it would help to
meet one of the team, please call us on 0800 316 2295.
ITSP0806 W
To find out more about the Octopus Protected ITS
call us today on 0800 316 2295
Octopus Investments Limited 8 Angel Court London EC2R 7HP T: 0800 316 2295 F: 020 7710 2801 www.octopusinvestments.com
Authorised and regulated by the Financial Services Authority.
ITSP0806