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Select income from Scottish Life

Scottish Life International&#39s select income and growth bonus bond is a stockmarket-linked offshore bond that can be tailored towards individual attitudes to risk.

The bond has a term of three years and two months and is linked to three indices – the FTSE 100, S&P 500 and Eurostoxx 50. Two options are offered – opportunity or cautious.

Opportunity offers annual income of 11 per cent, quarterly income of 2.65 per cent or growth of 35 per cent at the end of the term. Cautious provides annual income of 8.65 per cent, quarterly income of 2.1 per cent or growth of 27.5 per cent at the end of the term.

Both options return the original capital providing none of the indices falls by more than 30 per cent between April 3, 2002 and April 29, 2005. Even if this condition is not met, opportunity investors get their original capital providing all the indices recover to at least their starting level between May 2 and May 30, 2005.

For investors in the cautious option the indices need to recover to 85 per cent of the starting level between May 5 and May 30, 2005.

Where the safety nets are breached, capital return for growth investors under both options is reduced by 1 to 2.166 per cent for each 1 per cent fall in the index. Capital is reduced by 1 to 2.1 per cent for each 1 per cent fall in the index for annual income investors. Capital for quarterly income investors is reduced by 1 to 2.06 per cent for every 1 per cent fall in the index.

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