National Grid 2008 Annual Report Download - page 360

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 48939
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.7.1, Doc: 8, Page: 17
Description: EXH 2(B).7.1
0/1771.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/771/1*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 48939
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.7.1, Doc: 8, Page: 17 Description: EXH 2(B).7.1
0/1771.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/771/1*
Some Instruments are complex financial instruments and such instruments may be purchased as a way to reduce risk or
enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should
not invest in Instruments which are complex financial instruments unless it has the expertise (either alone or with the help of a
financial adviser) to evaluate how the Instruments will perform under chan
g
in
g
conditions, the resultin
g
effects on the value of
such Instruments and the impact this investment will have on the potential investor’s overall investment portfolio.
Risks related to the structure of a particular issue of Instruments
A wide ran
g
e of Instruments may be issued under the Pro
g
ramme. A number of these Instruments may have features which
contain particular risks for potential investors. Set out below is a description of certain such features:
Instruments subject to optional redemption by the Issuer
An optional redemption feature is likely to limit the market value of Instruments. Durin
g
any period when the Issuer may elect to
redeem Instruments, the market value of those Instruments
g
enerally will not rise substantially above the price at which they
can be redeemed. This also may be true prior to any redemption period.
The Issuer may be expected to redeem Instruments when its cost of borrowin
g
is lower than the interest rate on the
Instruments. At those times, an investor
g
enerally would not be able to reinvest the redemption proceeds at an effective interest
rate as hi
g
h as the interest rate on the Instruments bein
g
redeemed and may only be able to do so at a si
g
nificantly lower rate.
Potential investors should consider reinvestment risk in light of other investments available at that time.
Index Linked Instruments and Dual Currency Instruments
The Issuer may issue Instruments with principal or interest determined by reference to an index or formula, to chan
g
es in the
prices of securities or commodities, to movements in currency exchange rates or other factors (each, a “Relevant Factor”). In
addition, the Issuer may issue Instruments with principal or interest payable in one or more currencies which may be different
from the currency in which the Instruments are denominated. Potential investors should be aware that:
17
where the currenc
y
for
p
rinci
p
al or interest
p
a
y
ments is different from the
p
otential investor’s currenc
y
;
(iv) understand thorou
g
hly the terms of the relevant Instruments and be familiar with the behaviour of any relevant indices and
financial markets; and
(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and
other factors that ma
y
affect its investment and its abilit
y
to bear the a
pp
licable risks.
(
i
)
the market
p
rice of such Instruments ma
y
be volatile;
(ii) they may receive no interest;
(
iii
)
p
a
y
ment of
p
rinci
p
al or interest ma
y
occur at a different time or in a different currenc
y
than ex
p
ected;
(iv) the amount of principal payable at redemption may be less than the nominal amount of such Instruments or even zero;
(v) a Relevant Factor may be subject to si
g
nificant fluctuations that may not correlate with chan
g
es in interest rates,
currencies or other indices;
(vi) if a Relevant Factor is applied to Instruments in conjunction with a multiplier
g
reater than one or contains some other
leverage factor, the effect of changes in the Relevant Factor on principal or interest payable likely will be magnified; and