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HSBC Bank goes FTSE crazy

HSBC Bank is aiming its performance plus individual savings

account (Isa) at investors who are looking to reinvest their

maturing tax exempt special savings accounts (Tessas).

The Isa is linked to the performance of the FTSE 100 index and

returns the original capital at the end of the five year term.Investors also get up to 55 per cent of the average growth of the FTSE 100 during the term.

To calculate this, the level of the index is recorded at the beginning of the term and again at the end of the term. If the index has risen by anything up to 55 per cent, investors, investors will get this percentage of growth. But if the index rises by more than 55 per cent, the final return is capped at 55 per cent.

This product may suit investors with maturing Tessas who want higher returns

than they would get from a savings account but who are unwilling to risk the

capital they have built up by investing in the stockmarket without a capital

guarantee.

However, as the return is capped at 55 per cent of growth in the FTSE 100,

investors could miss out if there is a significant rise in the index after five years and this could be seen as the price they pay for capital protection over a product with no guarantee.

The FTSE 100 index rose from 3704.28 points on July 23, 1996 to 5405.28

points on July 24, 2001.

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