Accumulator Series 2

C2 Accumulator Series 2 - Description

C2 Accumulator – Series 2 is a Series of Units which offer Investors the potential to receive fixed growth returns, linked to a basket of shares.

The “Reference Asset” is comprised of a notional share in each of:

• Visa Inc; and
• Alphabet Inc (Google); and
• Commonwealth Bank of Australia Limited; and
• CSL Limited; and
• Woodside Petroleum Limited

(Individually, a “Share”)

C2 Accumulator Series 2 may appeal to Investors who:

• Want an investment with the potential to pay a 9.50% p.a. Conditional Return for each full year that’s passed (on a non-compounded, pro rata basis) if an Auto Call Event occurs on an Auto Call Date;
• Want a Memory Auto Call Feature that improves the likelihood of an Auto Call Event occurring on an Auto Call Date;
• Have a view that none of the Shares will have fallen by 40% or more at the end of the 2 year Series duration (a Knock-In Event);
• Are comfortable with the risk that they will have exposure to the Share with the lowest percentage return (“Worst Performing Share”) at Maturity if a Knock-in Event occurs and no Auto Call Event has occurred; and
• Are comfortable with the risk that they will have a neutral return if neither an Auto Call Event or a Knock-In Event occurs (in such case they will receive a Final Value of $1 per Unit).

What is an Auto Call Event?

For Investors to generate a positive return the Units needs an Auto Call Event to occur.

An Auto Call Event occurs on an Auto Call Date when the Closing Price of ALL of the Shares are deemed to be at or above the required Auto Call Price (see Figure 1 in the Term Sheet PDS). The Closing Price of a Share is deemed to be at or above the required Auto Call Price if:

(a) its Closing Price is at or above the required Auto Call Price on the Auto Call Date; or

(b) its Closing Price was at or above the required Auto Call Price on any previous Auto Call Date.

To assist with an Auto Call Event occurring, the Series has incorporated a “Memory Auto Call Feature” that improves the likelihood of an Auto Call Event occurring. The Memory Auto Call Feature ”looks back” to an earlier Auto Call Date to determine if any of the Shares have previously closed at or above its respective Auto Call Price.

Because of this Memory Auto Call Feature, an Auto Call Event will occur on an Auto Call Date if the Closing Price of ALL of the Shares are at or above the Auto Call Price on an Auto Call Date or, for any Share where the Closing Price is not above the Auto Call Price on the Auto Call Date, the Closing of Price of each relevant Share was previously at or above its respective Auto Call Price on any earlier Auto Call Date. (See Figure 2 in the Term Sheet PDS).

This feature assists Investors in situations where one or more Shares have previously been above the Auto Call Price on an earlier Auto Call Date, however, the Share Price has subsequently fallen below the current Auto Call Price.

What is the Auto Call Price?

The Auto Call Price is a predefined price expressed as a percentage of the Starting Price that ALL the Shares must be at or above, or have been at or above (when including the Memory Auto Call Feature), on an Auto Call Date.

The first Auto Call Price is 92.50% of the respective Starting Price of each of the Shares (representing a 3.75% quarterly decrease for the first 6 months).

The Auto Call Price decreases by 3.75 percentage points every 3 months until Maturity (reducing to 70% of the respective Starting Price at the Maturity Date)

¹Please refer to Section 2 – “Term Sheet” for a full description of a Conditional Return.

C2 Accumulator Series 2 - Key Dates

C2 Accumulator Series 2 - Key Risks

• Capital invested in the Units is at risk. There is no capital protection or guarantee of financial return in respect of your investment in the Units. The value of the Units is calculated by reference to the performance of the Shares comprising the Reference Basket. Depending on the performance of the Shares during the Investment Term, you may incur a loss of all or part of your Total Investment Amount. You may lose the entire amount you have invested in the Units. You will lose your entire Total Investment Amount if the Maturity Price of the Worst Performing Share is zero ($0). The risk of a loss of your Total Investment Amount means that, in order to recover and realise a return upon their investment, Investors must generally be correct about the direction, timing and magnitude of an anticipated change in the value of the Shares over the Investment Term.
• Occurrence of a Knock-In Event. At Maturity, if an Auto-Call Event did NOT occur during the Investment Term and if you are still holding your Units you will receive a Delivery Parcel the value of which is calculated by reference to the definition of Final Value in this Term Sheet PDS (or cash if the Agency Sale Facility is elected).
• i) If a Knock-In Event has NOT occurred and an Auto-Call Event has NOT occurred during the Investment Term, the Final Value will be equal to the Issue Price of $1.00 per Unit
• ii) If a Knock-In Event has occurred at the Maturity Date and an Auto Call Event has not occurred, then Investors will be exposed to the performance of the Worst Performing Share at Maturity. Please note there is NO capital protection in this product. Hence you may lose some or all of your Total Investment Amount if a Knock-In Event occurs.
• Secondary Offer Period: Investors who purchase Units in the Secondary Offer Period at an Issue Price greater than the initial Issue Price of $1.00 will receive a lower overall return, or receive a greater loss, as the Conditional Return and exposure to the performance of the Worst Performing Share following a Knock-In Event are applied to the Initial Issue Price of $1.00 and not the Investor’s Issue Price. You will not receive any Delivery Assets if the Final Value is zero.
• Performance of the Shares in the Reference Basket: Historical performance of the Shares should not be taken as an indication of the future performance of the Shares during the Investment Term. It is impossible to determine with certainty whether the Shares will rise or fall. Investors should consider all appropriate publicly available information in relation to the Shares. These factors include, but are not limited to, movements in international financial markets, interest rates, currency rates and global economic, political, technological and environmental factors. In particular, as the Final Value depends on whether a Knock-In Event has occurred in respect of any Shares throughout the Investment Term, the Final Value may be less than an Investor’s Issue Price if a Knock-In Event has occurred in respect of only one Share, even if the other Shares have increased in value. The Units are a speculative investment and may produce less returns than other investments, or no return at all. Investors should not expect the return on their investment to be the same as a return on the equivalent investment in the Shares. In many cases, the Units will not be correlated with an investment in the actual Shares.
• Share price. The performance of the Shares reflects the movements in the price of the Shares on the Relevant Exchange and does not take into account dividends, interest or other income paid on those shares. 
• Value of the Units before the Maturity Date. The Final Value of the Units is calculated by reference to the performance of the Shares on each Auto Call Date and the Maturity Date. The market value of the Units before the Maturity Date will be determined by many factors. These include: value of each of the Shares in the Reference Basket; volatility of each of the underlying Shares in the Reference Basket; time to Maturity; interest rates; general market risks, including but not limited to, general index movements, macro- economic risks and supply and demand; fees and costs; and perceived creditworthiness of the Hedge Counterparty. Investors should be aware the Units are designed to be held to Maturity and are not designed to be a trading instrument.
• No secondary market - liquidity risk. You may not be able to realise your investment when you want to. There is no secondary market for the Units and the Issuer Buy-Back facility is at the discretion of the Issuer. Issuer Buy-Back requests are only available monthly and may not be accepted by the Issuer as determined in the Issuer’s discretion. Issuer Buy-Back requests may be held over and may not be executed at all. Generally, the Issuer would only reject or defer an Issuer Buy-Back request if it is unable to adequately unwind its hedging arrangements.
• Withdrawal risks. There is a risk that Investors will lose some of their Total Investment Amount if Investors dispose of the Units before Maturity. There is no assurance that the Issuer will buy back your Units (and there is no obligation on the Issuer to do so). Buy-Back requests are irrevocable and the Issuer might not accept a request immediately but hold it over. This may delay the processing of an Investor’s Buy-Back request and may impact the Buy-Back Price an Investor receives and, if the Issuer does not buy back your Units, you may not be able to realise your investment until the Maturity Date.
• Value of the Units during the Investment Term. The value of the Units may fluctuate between the date you purchase Units and the Maturity Date due to market conditions. Several factors will influence the market value of the Units including (among other things) the prevailing price and volatility of the Shares. The Issuer may issue additional series of Units in the future. The Issue Price for these Units will reflect (amongst other things) the prevailing market conditions at the commencement date of those units, and which may be different to the market conditions as at the date of Units offered under this Term Sheet PDS.  You should invest in Units offered under this Term Sheet PDS only if you are satisfied that the Units are appropriate for your individual circumstances.
• Early Maturity. The Units may mature early following an Early Maturity Event, including as a result of an Auto-Call Event, Adjustment Event or Market Disruption Event or if your request for an Issuer Buy-Back is accepted. The Issuer may nominate an Early Maturity Event in certain circumstances, including if its hedging arrangements are terminated early, certain corporate actions taken by an issuer of a Share, any Share being suspended from listing, or if the Issuer has to pay an additional amount as a result of a Change of Law. If the Units are subject to Early Maturity for any reason you will not be entitled to a refund of the Total Investment Amount or any Fees and the amount that the Issuer receives from the Hedge Counterparty may be significantly less than would have otherwise occurred had the Investment reached Maturity. In the case of an Auto-Call Event, the Investor will receive the Delivery Parcel at Maturity, unless an Investor elects the Agency Sale Option in the relevant annual Notice of Maturity. If there is an Early Maturity Event, then any Final Value or Conditional Return will not apply on the portion of your Units subject to the Early Maturity Event and you will receive the Early Maturity Amount or Termination Payment (if any) as described in section 1.9 of the Master PDS. In this instance you may lose your entire Total Investment Amount.
• Indirect Investment Risk. Compared to a direct investment in the Reference Basket, the investor will not be entitled to receive dividend payments (if any) nor have any voting rights for corporate actions to do with the Shares comprising the Reference Basket.
• Delivery Assets. The Delivery Assets are subject to market risks and other risks inherent in owning listed instruments. For example, the market value of the Delivery Assets could fall between the date the Issuer buys them for the Investors and the date they are transferred to Investors or sold on the Investor’s behalf. The Delivery Assets might not be very liquid so Investors may not be able to sell when they would like to. Investors could be delivered something other than the Delivery Assets if the Issuer decides to substitute them or the delivery of the Delivery Assets may be delayed. Although the Issuer does not intend to substitute the Delivery Assets, the Issuer may need to make a substitution because they decide it is not practical to transfer or sell the Delivery Assets to Investors.
• Conflicts of interest. C2 Specialist Investments Pty Ltd and its affiliates, and sister companies (“C2 Financial Group”) may face possible conflicts of interest in connection with its roles as Issuer, Arranger and any other role as described in this Term Sheet PDS and Master PDS. For example, C2 Financial Group entities may engage in other financial service activities or trade in the underlying Shares that comprise the Reference Basket or Delivery Assets or financial instruments linked thereto for their own account, or for the account of others. All of these activities may result in conflicts of interest with respect to the financial interests of the C2 Financial Group.
• Hedge Risks. The following risks may affect the Hedge Agreement, and in turn affect the value of your Units or result in an Early Maturity Event:
• i) The occurrence of any event that prevents, restricts or delays the Hedge Counterparty from converting or delivering relevant currencies or otherwise leads to a delayed and/or reduced payment under the Hedge Agreement.
• ii) The Hedge Counterparty may make certain modifications to the Hedgewithout the consent of the Issuer.
• iii) Foreign tax legislation may impose taxes on payments made by the Hedge Counterparty, received by the Hedge Counterparty or on payments made under the Hedge.
• iv) Counterparty risk of Issuer, Hedge Counterparty, Security Trustee. If the Issuer goes into liquidation or receivership or statutory management or is otherwise unable to meet its debts as they fall due, the Investor could receive none, or only some, of the amount invested. However, the Issuer is a special purpose vehicle that only Issues Deferred Purchase Agreement or other structured products and has put in place a corporate structure which is designed to give Investors security over the Issuer’s rights against the relevant Hedge Counterparty (through the Hedge Security Deed and Security Trust Deed) in the event of the Issuer becoming insolvent.
• Custodian risk. The Custodian is a related party to the Issuer. The primary role of the Custodian is to hold the beneficial interest in the Delivery Parcel and arrange for the sale of the Delivery Parcel if the Agency Sale Option is elected by the Investor at Maturity. The role of the Custodian is set out in the Custody Deed. There is a risk that the Custodian may be unable to perform its obligations under the Custody Deed and that Investors may not receive the Sale Monies or other amounts or assets due to them when due under the Terms. However, the Custodian is a special purpose vehicle set up to act as Custodian for the Issuers Deferred Purchase Agreement or other structured products and has no other obligations.
• Default under Hedge for another Series risk. There is a separate Hedge for each Series and, except in the case of an insolvency event, the right to set off and net payments applies separately to the Hedge for each Series. However, if there is an insolvency event (in relation to either the Issuer or the Hedge Counterparty) under a Hedge, then the Hedges for all Series may terminate and the relevant Hedge Counterparty and the Issuer will have the right to set off and net the amounts payable on termination across the Hedges for all Series (where the Hedge Counterparty is the counterparty).

Accumulator Series 2 Literature

• Flyer
• Term Sheet Product Disclosure Statement
• Master Product Disclosure Statement (No Loan)

C2 Accumulator Series 1 - Disclaimer