The product has a three year term and is open for investment until 26th June 2009. The income payments will be made on each of the three anniversaries with the return for the first year fixed at 6 per cent of the capital invested.
At the end of years two and three, the income payments will be determined by the value of dividends issued during each of those years by the FTSE 100 companies. These returns are calculated by dividing the total number of dividend points generated by the FTSE 100 companies in that year by the FTSE 100 level at the start of the investment period. This value is then multiplied by a fixed ‘enhancement factor’ of 1.5 to provide the percentage return.
Investors capital will be returned at the end of the plan provided the FTSE100 has not fallen by 50 per cent from its level at the start of the investment. Should the FTSE 100 falls by more than 50 per cent the original capital invested will fall by the same amount.
The product has a minimum investment of £3,000 and is available as a direct investment and through an Isa, Sipp, Ssas, trust or company. The commission available to financial advisers is 2 per cent.
Skandia head of investment marketing Graham Bentley says: “This is a unique type of income generating protected product and we think it will provide a popular choice for the many investors who may be nervous of equity markets at the moment. Unlike other protected products, this one is linked to the dividends issued by the FTSE100 companies, and not their share prices so the income it pays will not be affected by volatile share price movements.”