Guaranteed fixed-rate return with euro, sterling and dollar options
Bank of Scotland International (BoSI) has launched a five-year guaranteed savings bond that will not fall under the EU Savings Directive.
The five-year Capital Guaranteed Savings Bond Issue 14 offers investors a guaranteed fixed-rate return and exposure to the growth of a stock market index. Half the investor's capital is invested in an account promising a fixed return and half in a bond that tracks an index.
There is a sterling, euro and dollar version of the product. The sterling option tracks the FTSE 100, the euro tracks the Dow Jones Euro Stoxx 50 and the dollar tracks the S&P 500.
Michael Chaytor, head of sales and service at Bank of Scotland, said: "Investors are protected against last minute dips in the market. For the sterling and dollar options, the closing level of the index is calculated by taking the average level of the index over the six months prior to the bond's maturity date. For the euro option, it is calculated over the 12 months prior to maturity."
Sterling investors will receive a fixed annual rate of return of 6% pa on half their investment, while the remainder will earn 60% of the percentage rate increase of the FTSE 100 index in the five-year life of the bond.
Dollar investors will receive a fixed annual rate of return of 5.25% pa on half of their investment, while the remainder will earn 50% of the percentage rate of increase of the S&P 500 index in the five-year life of the bond.
Euro investors start with half their balance invested in a one year fixed rate account paying 4%. The other half of their investment is used track the Dow Jones Euro Stoxx 50 index. After the end of the first year, they receive their capital and interest back from the fixed rate account. Then, after a further four years, investors will receive a return based on 50% of the percentage rate of increase of the Euro Stoxx index based on the second half of their original investment.
The closing date for applications is 23 September 2005. The bond starts on 30 September 2005, however BoSI is encouraging early investors to open an account before the start of the bond by offering 4.55% gross/AER on sterling deposits, 1.90% gross/AER on euro deposits and 2.75% gross/AER on dollar deposits.
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