Unlike conventional with-profits bonds, investors do not receive annual or terminal bonuses but instead they buy units in the top-performing Liverpool Victoria fund in the same way as investors buy units in a unit trust. The unit price is published on the company’s website.To protect investors from short-term volatility, the unit price is averaged out over a six-month period. Investors could still lose money if the stockmarket falls but they have the option of buying a flexible five-year guarantee which ensures the return of the original investment less any withdrawals after five years. If the value of the fund goes up during this period, it is possible to replace the existing guarantee with a new five-year guarantee, effectively locking in the gains. Investors can choose between three portfolios – a cautious portfolio which has only 10 per cent invested in equities, 10 per cent in property and 80 per cent in fixed interest, a balanced fund and a growth portfolio which invests 85 per cent in equities, 5 per cent in fixed interest and the balance in property. The guarantees cost between 0.25 and 1 per cent a year. The annual charge is low at only 1 per cent and there is no initial charge but the commission is a generous 7 per cent. Liverpool Victoria must be congratulated on producing such an attractive, secure investment. Its track record is outstanding. I rate this product as the best innovation of 2005, especially for conservative investors.