This information is for professional investors only and should not be presented to, or relied upon by, private investors

1. Innovative Solutions Immaculate Service Meteor Asset ManagementStructured Products for Retail Investors2009 This information is for professional investors only and should not be presented to, or relied upon by, private investors.

2. Contents Topic Slide Background Asset Classes x Rationale for Structured Investments Client Motivations x Market Factors and Sensitivities Price Sensitivities x The Greeks x Structured Products Overview x Advantage and Disadvantages x A Basic Structured Product x Risks in Structured Products x Volatility Dynamics x

3. Background • Structured products are sometimes referred to as Protected Investments and may be seen to combine the safety of a bond whilst potentially achieving higher returns by providing exposure to equity, commodity or other indices • Derivative markets are relatively inaccessible to non-professional / non expert investors • Lack of knowledge among investors • High levels of investor protection, especially for private investors • Lack of access to professional pricing • Some products simply not available such as bank zero-coupon bonds

4. Background • Many investors in the early 90s lost out to poorly designed ‘Precipice Bonds’ where investors were exposed to geared downside in the event of a market decrease i.e. for every 1% fall, the investor lost 2% • The reputation of structured products has been damaged due to this and other mis-selling examples • More recently, counterparty risk has been a hot topic with the collapse of Lehman Brothers in 2008

5. Rational for Structured Products Overview • Capital protection • Leveraged upside exposure • Exposure to difficult to access assets classes i.e. inflation, • Exposure to bespoke baskets of assets • Income or growth • Defined returns • Completely bespoke!

6. Rational for Structured Products Client Motivations • Client would like to participate if the stock market recovers, but not suffer if it declines • Structured products provide a means by which to benefit from stock market growth but not suffer from declines • This has to cost something • How? • No dividends, <100% upside participation, capped upside

7. Rational for Structured Products Client Motivations • Client would like exposure to commodities but doesn’t know where to start • There is obvious potential merit in buying access to an unfamiliar market • To diversify a portfolio • Through a structured vehicle • Sold by a familiar organisation

8. Rational for Structured Products Client Motivations • Client would like exposure to commodities but doesn’t know where to start • There is obvious potential merit in buying access to an unfamiliar market • To diversify a portfolio • Through a structured vehicle • Sold by a familiar organisation

9. Rational for Structured Products Client Motivations • Clients like the idea of having a limited range of pre-determined outcomes for my portfolio • Sky is the limit for equity investing however total, or near complete loss is possible • Can clients make money in sideways or falling markets? • Yes, the direction of a market is an important investment class, up or down • However, the volatility of a market is also an important area of prediction and opportunity

10. Rational for Structured Products Client Motivations • Clients ask, how can they make money in the current difficult markets. Analysts would suggest: • Government bonds • Corporate bonds • Gold • Special situation stocks • Structured products

11. Rational for Structured Products Client Motivations • Do clients care about income or capital preservation primarily? • The answer depends on their personal circumstances and requires detailed analysis • However, do not forget that with BoE base rate at 0.5% and 5 year gilts yielding 2.5%, a structured note that offers 11.5% income must be giving you principal risk • Credit? Real value? Cash value?

12. Important Information This information has been prepared solely for information purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. This information is being delivered to IFAs and distributors in order to assist them in determining whether they have an interest in the type of securities described herein and is solely for internal use. This information is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information, or with respect to the terms of any future offer of transactions conforming to the terms hereof. We do not undertake to update this information. Certain assumptions may have been made in the analysis that resulted in any information and returns/results detailed herein. Changes to the assumptions may have a material impact on any results/returns detailed. Meteor Asset Management Limited and its affiliates disclaim any and all liability relating to this information, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, this information. Additional information is available on request. Meteor Asset Management Limited does not give investment, tax, accounting and legal or regulatory advice and prospective investors should consult with their professional advisors. This memorandum is not a product of Meteor’s Research Department and should not be regarded as a research report. This communication is not directed in the UK to those persons who are retail customers (as defined in the UK Financial Services Authority's rules).

13. Introduction to Meteor Who we are • Meteor was established in early 2006 with the aim of providing individuals, institutions, trustees and their advisers with access to an organisation that is committed to designing and implementing innovative and attractive financial solutions. We are always striving to provide a consistently friendly and efficient service, in addition to delivering imaginative solutions at a competitive price. • Our product range offers a mix of closed ended structured products, open ended investment funds and a deposit based account that we believe provide a unique opportunity to bring positive benefits to a diversified portfolio • Our open ended investments are based on a variety of underlyings ranging from American ‘Whole of Life’ Policies, FTSE 100 volatility to our soon to be announced Clean Energy and Commercial and Retail property funds • The cornerstone to our structured product range is our ‘Prima’ series, which are autocallable structures offering attractive headline participation rates, with the investment being based on one or two stock market indices and using established and respected counterparties

14. Introduction to Meteor Principal Biographies • Graham Devile, Managing Director: • Graham has spent some 25 years working in the financial services sector, including ten years with one of the larger UK accountancy practices. The majority of this time Graham has spent as an IFA working with high net worth individuals and corporate clients, providing advice across the whole financial services spectrum. From 1999 to 2006 he was Managing Director of an IFA and a structured product provider, and with the latter he was heavily involved in the product design and marketing activities. In 2006 Graham decided to set up a new business from scratch with a team who shared his vision of product and investment innovation and as a result they established what is now called Meteor Asset Management. • Simon Bottomley, Finance Director: • A chartered accountant, having trained with KPMG, Simon became Finance Director of a property investment & management firm. During this time he played a key role in a venture capital backed management buyout and the subsequent sale of the business. In 2001 he joined a financial services group as Finance Director. Here his activities included managing the finances of its offshore operation and its structured product division. He brings to Meteor his knowledge of the accounting, taxation, product development, regulatory requirements and financial implications of operating in the investment sector.

15. Introduction to Meteor Principal Biographies • Philip Saunders, Business Development Director • Phil began his career as a Broker Consultant with Legal & General before joining an IFA business where he pioneered Guaranteed Income Bonds and created new types of income and growth investment products. In 1984 he established a business specialising in broker funds before selling this and setting up a new business in 1992 focused on the traded endowment policy market. For the last ten years he has specialised in the structured product arena working closely with the derivatives desks at a number of leading banks and designing the products for the retail and corporate markets. At Meteor he can fully exploit his wide range of banking contacts, which extend around the globe, with a view to securing the best terms possible for our clients. • Susan Valler, Compliance Director: • A Fellow of the Chartered Insurance Institute and former Chairman of the Investment and Life Assurance Group (ILAG) Susan has specialised in the area of compliance for nearly 20 years. Prior to specialising in the compliance arena she was the Administration Manager of a life assurance company. Since moving into Compliance she has developed and implemented compliance procedures, systems, control, risk mitigation and internal audit programmes in a number of different environments. Other key areas of input include working with the product development and marketing departments, as well as the handling of issues relating to Treating Customers Fairly. Her role on the ILAG Regulations committee means she has an excellent working relationship with and knowledge of the FSA and brings a wealth of experience to Meteor in this vital area.

16. Introduction to Meteor Product Range Meteor Asset Management Fund Management Structured Products Meteor Senior Life Settlements Sterling Fund Bespoke Products: Leverage Protected Autocallable Growth Income Meteor Clean Energy Fund Cashcade (Enhanced Cash Fund) Linked to: Equities Fixed Income Commodities, FX Funds Protected Equity Funds: UK Europe Meteor UK Property Funds: Commercial Residential e.g. Prima Series

17. Meteor are ideally positioned to provide bespoke structured products to fit the exact specifications for investors portfolio requirements We have key relationships with leading investment banks in order to procure the best prices as well as having a varied choice of counterparty depending on the risk objectives of our clients Products can be created to help hedge systemic portfolio risks (equity, interest rate, currency…) as well as simply satisfy stringent portfolio performance objectives Products can be linked to any asset class including equities, bonds, currencies, commodities and funds Flexibility: Products range from capital protected, leveraged, defined maturity, autocallable including capital growth and income options We have the experience and expertise to work closely with our clients and industry counterparties to create completely flexible products at the right price in a timely manner Structured Products Bespoke Service

18. An autocallable structured product offering 11.25% per annum (not compounded) with 5 early maturity opportunities Investment returns linked to the performance of the FTSE100 (the Index) No Index growth required to achieve quoted returns Early maturity will be triggered as long as the level of the Index is at or above its Opening Level at any anniversary date 100% capital return provided the Index doesn’t fall by more than 50% over the term of the investment Should the Index fall by more than 50% and not recover by the end of the investment term there will be a capital loss of 1% for each 1% the Final Index Level is below the Opening Index Level Available to 26 May 2009 Please refer to the brochure for full plan details Prima Growth Plan 15 Active Product Example

19. An autocallable structured product offering 9% per annum (not compounded) with 9 early maturity opportunities Investment returns linked to the performance of the FTSE100 and DJ EuroStoxx50 (the Indices) No Index growth required to achieve quoted returns Early maturity will be triggered as long as the level of the Index is at or above the pre-determined barrier levels at any anniversary date. The pre-determined Index levels are 100% of their Opening Levels at the end of year 1, 95% at the end of year 2, 90% at the end of year 3, 85% at the end of year 4, 80% at the end of year 5 and 75% at the end of years 6-10. 100% capital return provided the neither of the Indices are more than 50% below their Opening Levels on 19 June 2019 If one or both of the Indices are more than 50% below their Opening Levels on 19 June 2019 capital will be reduced by 1% for each 1% the lower performing Index finishes below its Opening Level Available to 12 June 2009 Please refer to the brochure for full plan details Prima Plus Plan 6 Active Product Example

20. Income Structures Proposal • G7 Countries Income Structure • 5 year investment term • Linked to the G7 countries (UK, USA, France, Germany, Italy, Japan, Canada) • Income of LIBOR + 0.90% paid each year (distributed quarterly) • Full return of capital at maturity providing none of the G7 countries default on their debt • If any G7 member state defaults on its debt then capital and future income reduced by 1/7th at maturity for each one that does Data as at 12 May 2009

21. Income Structures Proposal • FTSE 100 ’20 Stock’ Income Structure • - 5 year investment term • - Linked to 20 stocks across a broad range of industries in the FTSE 100 • - Will not be linked to ‘Tobacco’ or ‘Arms’ companies at the request of the Hospice • - Income of LIBOR + 3.0% paid each year (distributed quarterly) • - Full return of capital at maturity providing none of the 20 stocks default on their debt • - If any company defaults on its debt then capital and future income is reduced by 5% for each one that does

22. Growth Structures Proposal • HPI (Halifax Price Index) Growth Structure • - 5 year investment term • Linked to the movement in the HPI which is an indicator of residential property prices • 100% Capital Protected at maturity • 100% of the rise in the market over the 5 years • If the market ends at a lower point, full return of capital

23. Growth Structures Proposal • FTSE ‘Bull & Bear’ Structure • - 5 or 6 year investment term • - Linked to FTSE 100 and can create a return in both positive and negative markets • - 100% Capital Protected at maturity • - Downside barrier of 25% (FTSE at 3300 points) and upside barrier of 50% (FTSE at 6750 points) • - 100% of the rise in the market between these barriers • - Upside capped at 10% simple growth only if the market ends 5 year term at over 50% growth

24. Cost of Solutions • Income & Growth Structures • 100% Allocation (No initial charge) • No Ongoing Annual Charges • Meteor Costs Built in at outset • Daily Priced and nominal administration fee on exit Future revenue and profit for Meteor is dependent on ‘successful’ initial structures over the first 5 years to highlight to the Trustees the benefits of investing for a further 5 year period at maturity of the various structures

25. Risk Considerations • Autocallable structures are very popular at the moment • Historically high levels of volatility in equity markets make for attractive coupons with possibility of early redemption • Current products pay out early if markets trade sideways or up offering attractive returns in uncertain times • Investors need to be secure with both the payoff profile of the product and the levels of protection inherent in the them as well as the credit quality of the underlying issuer • Many banks have been downgraded in the last 12 months so choosing the right counterparty requires in depth due diligence

26. Autocallable Structures Explained Product Objective • Autocallable structures are designed to appeal to investors who have an uncertain view on a given underlying investment that is not necessarily bullish or bearish • The product is designed to offer a pre-determined performance coupon over a specific time period based on the underlying asset being above its initial strike level on day 1 on any given pre-determined observation date • Autocallable structures can be both capital at risk and capital protected. If capital protected, an attractive coupon payoff can only be achieved if some capital is put at risk should a low barrier be breached by the underlying asset. • For instance, if the barrier is 50%, the underlying asset would have to fall by 50% (or more) before any capital is put at risk • Typically, if the underlying asset recovers this loss and ends up greater than 100% on any given observation date (n), then the (coupon * n) payoff would still be achieved. • If, at maturity, the underlying asset has not recovered then the capital returned to investors will be initial investment – underlying asset performance at maturity • Autocallable structures typically comprise a bond (synthetic zero coupon bond) and derivatives • Aside from the investment risk inherent in the structure, investors should also be aware that the products are only as safe as the underlying bank issuing them

27. Inherent Income Streams: Sell OTM Call Option = Premium Sell OTM Put Option = Premium Index and Deposit Dividends = Premium T0 T1 T2 T3 T4 T5 70% 1 1 56% 2 42% 3 28% 14% 100% Autocall Level 92% Synthetic Zero Coupon Bond 80% 84% Maturity -50% -50% Barrier 2 See overleaf of explanation Autocallable Structures Explained Diagrammatic Overview

28. Autocallable Structures Explained Overview Explanation • The autocall structure contains inherent revenue streams in order to purchase securities and ultimately pay out a pre-defined coupon (14% * n) as well as principal returned in full • There are 3 revenue streams • Premium earned from selling an out of the money (OTM) call option (capped upside potential in structure) • Premium earned from selling and OTM put option • Dividends from Equity Index and deposit • Revenue streams are required to be enough to cover: • Structure coupon (No of years (n) * 14%) • Shortfall between level of synthetic Zero Coupon Bond (ZCB) and 100% initial capital • Scenario 1: Index up in Year 1 (T1), product calls. Premiums earned would need to cover: • 14% coupon • ZCB: 100 – 84 = 16% • Total = 30% (Premiums earned in Year 1) • Scenario 2: Index up by Year 3 (T3), product calls. • Index down 10% in T1, down 10% in T2 and up 25% in T3. Year 1 and 2 do not satisfy the callable criteria but by the end of Year 3, the index is above its initial level on day 1. Premiums earned though the life of the product would need to cover: • 42% coupon • ZCB: 100 – 92 = 8% • Total = 50% (Premiums earned and Year 1, 2 and 3)

29. Autocallable Structures Explained Product Example Product example Illustration Return on Redemption Date • Maturity: 3 years • Underlying: Equity Index • Coupon: 14% Product terminates at 142% after Year 3 • Knock In Put Barrier: 50%, only observed at maturity Product terminates at 128% after Year 2 • Payoff at maturity: • Index>= 100%: 100% + (n x Coupon), else: • Index> 50%, <100%: 100%, else: • Index>-50% Percentage level of negative Index Product terminates at 114% after Year 1 0% 50% 100% Index Level • Zero bond with conditional maturity (it will repaid early, if the Equity Index is above 100% of it’s initial level on one of the observation dates) • A series of long digital options with annual observation dates on the Equity Index with barrier 100% • A series of short digital options with a barrier of 50% on the Equity Index with digital payout of 50% and a short put with strike 50% on the Equity Index Product Composition Price Factors

30. Autocallable Structures Explained Autocall Decomposition Scenario Analysis Start Date Fixing of the initial value Offer Price 100% yes Payout: 114% Year 1 Equity Index > = initial level? no yes Year 2 Equity Index > = initial level? Payout: 128% no yes Equity Index > = initial level? Year 3 Payout: 142% no yes Equity Index > 50%? Payout: 100% no - % Level of the Equity Index • Zero Bond: Zero bond with conditional maturity, i.e. it will repaid early, if the Equity Index is above 100% on one of the observation dates • Rationale: Facilitates the capital guarantee • Long digital option: with annual observation dates on the Equity Index with barrier 100%; digital payout depending on the timing of the coupon being triggered (No of year since inception x coupon) • Rationale: Facilitates the coupon payments • Short options: Short digital option with barrier 50%, digital payout of 50%. Short put strike of 50% on the Equity Index: 3 year maturity with knock out, if early redemption was triggered • Rationale: To finance the long option and capital guarantee in case of early redemption

31. Payout Underlying Autocallable Structures Explained Pricing Factors Hedging a “Cash-or-Nothing“ Call Digital Options Vanilla Call “Cash-or-Nothing” Call Strike Payout 14.0% Underlying Strike 0% 86% 100% Digital options have a discrete rather than a continuous payout profile. There are two types of digital options: “cash-or-nothing“ and “asset-or-nothing“. The former pays out a predefined amount, if the strike has been crossed. The latter pays out the value of the underlying if the strike is crossed. Digital options which never crossed the strike expire worthless and the investor loses his option premium. Digital options can be replicated using call spreads. A digital option with a payout of 14% can be replicated by a 86% - 100%call spread. The call payout of 14% will only be paid to the investor, when the underlying is above the 100% level on the observation date. The trader is therefore over hedged, which is the name of this strategy (“over hedge-strategy”). Underlying • Rising levels in the underlying will lead to increases in price of the Autocallable • The coupon payout levels are the upper limit for any value increases as the product payout is capped at those levels • The product payout is linked to the performance of the Equity Index • Rising volatility will reduce the value of the product. The maximum payout is capped, at the same time the investor only has a soft capital guarantee, i.e. for any falls in the underlying beyond the barrier he will fully participate in the downside Volatility

32. Summary and Questions • Solutions that are ‘removed’ from the volatile nature of world stock markets • Solution to Virtually ‘Zero’ Cash Rates • Income & Security of assets aligned as primary objective • Growth Strategies implemented with ‘Protection’ caveat & ‘crystallisation’ mechanism • Utilising completely non-correlated asset class to aid with income generation • Returns achieved with risk profile well within given parameters