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Balancing act

GE Life is offering a balanced income and growth plan, the latest in its series of guaranteed equity bonds.

Clients can choose either a guaranteed annual income of 8 per cent or monthly income of 0.64 per cent for the five-year term. Alternatively, the growth option promises 50 per cent growth in capital at the end of the term.

The bond will track the Dow Jones Eurostoxx 50 index, which covers 50 established companies in the Eurozone, including Unilever, Nokia and Philips. The Dow Jones Eurostoxx 50 index rose from 1,724.98 points on November 6, 1996 to 3,611 points on November 6, 2001.

The return of the investor&#39s original capital depends on the performance of the index. If it falls by 30 to 40 per cent during the term and the final level is lower than the initial level, the original capital will decrease by 1 per cent for each 1 per cent fall in the index. If the index falls by more than 40 per cent, the capital will go down by 2 per cent for each 1 per cent fall.

GE Life&#39s balanced income and growth plan is similar to the NDF extra income and growth plan, which invests in the Dow Jones Eurostoxx 50 index. However, the NDF plan only invests for three years compared with the five years of GE Life. The original capital of the NDF plan starts to drop if the index falls by 20 per cent over the term and ends below its initial level. The GE Life product sees capital erode only after a 30 to 40 per cent fall.


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