Take advantage of the FTSE 100 with no risk to your capital
What matters to you when it comes to your savings? The reassurance of knowing your capital is protected?
If you like the idea of a return linked to FTSE 100 growth, but are concerned by the unpredictability of the markets, our Capital Protected Double Asset Bond may offer you a solution.
Capital protected† means that as it's a building society account, your capital will be repaid to you on maturity and is not at risk from market volatility enabling you to invest without the risk of investing directly in stocks and shares. However, you could benefit from a return linked to the growth in the FTSE 100.
†Your money is protected in the same way as any other bank or building society deposit. Skipton Building Society is a participant in the Financial Services Compensation Scheme in the event of default. See our general Investment Account Terms and Conditions and www.FSCS.org.uk for more details.
What is the FTSE 100 Index?
The FTSE 100 Index is a benchmark index, tracking the performance of the London Stock Exchange. The full name is the Financial Times Stock Exchange 100, but it is commonly called the Footsie. The FTSE 100 Index comprises the 100 largest companies trading on the Exchange.
As your money is not invested directly in the companies that make up the FTSE 100 index, you do not receive a dividend income. The potential return of this element of the bond is linked to the performance of the index as a whole. Whilst the potential return is lower when compared to a direct stock market investment, your capital is protected. With a direct stock market investment there is no guarantee that you would receive your original investment back.
How the bond works – a simple guide
Investment requirements
Minimum investment: £3,000, by cheque or transfer
- £1,000 in the 1 Year Fixed Rate Bond
- £2,000 in the Index Linked Bond
Maximum investment: £250,000
A member of the team at your local branch can discuss the features to help you decide if this bond is right for you. We recommend you take advice about any savings or investment decision – this is available through Skipton Financial Services Limited.
Additional Investments allowed until the bond is made a closed issue which may be at any time and at short notice. The latest date this will be is 11 January 2011.
Our bonds in detail
As the name suggests, our Capital Protected Double Asset Bond is split into two parts. When you initially invest into this product a fixed rate of 2.00% gross pa/AER will apply until midnight 25 January 2011. Then your capital plus any interest will be invested as detailed in the following two sections.
1 - The 1 Year Fixed Rate Bond
One third of your capital is invested into a 1 Year Fixed Rate Bond with a guaranteed interest rate of 5.25% gross pa/AER, for 12 months, which will be added to your bond at maturity.
Start Date:
26 January 2011
Maturity Date:
Midnight, 26 January 2012 - We'll drop you a note to remind you.
For added flexibility during the one year term, you can withdraw up to 50% of your initial investment from the 1 Year Fixed Rate Bond, should the need arise. However, once you make a withdrawal, please remember that funds cannot be replaced.
2 - The Index Linked Bond - FTSE
Two thirds of your capital is invested into an Index Linked Bond, which offers a return of 100% of any positive growth dependent on the performance of the FTSE 100 Index, subject to a maximum growth of 50%.
- The initial reading is the closing level of the FTSE 100 Index on 26 January 2011.
- The final growth value will be based on the average of the readings from and including 23 July 2015, up to and including 22 July 2016.
The effect of averaging may affect the final level of the Index used to calculate the benefits. The final reading is compared to the initial reading and you will receive 100% return of any positive growth of the FTSE 100 Index, subject to a maximum growth of 50%.
Maturity date:
Midnight, 26 July 2016 - We'll drop you a note to remind you.
Index Linked Bond – further information
The Index Linked Bond will mature at midnight on 26 July 2016. Following the final readings, we require further time to calculate any growth in the FTSE 100 Index. During these last few days, no growth will accrue and there will be no interest payable.
In the event that the Index performs badly and there is no growth, or there is a reduction in the overall value of the Index, on maturity you will receive your original capital, plus the interest earned up to 26 January 2011.
Due to the nature of our Index Linked Bond, we don’t allow withdrawals before the bond matures.
What will happen when my investment matures?
As the Capital Protected Double Asset Bond has the two elements there are two maturity dates to make a note of:
- The 1 Year Fixed Rate Bond matures at midnight, 26 January 2012.
- The Index Linked Bond matures at midnight, 26 July 2016.
To make life easier, your funds (minus any withdrawals you have made), plus the interest you have earned will be automatically transferred into a variable rate access account – giving you time to plan your next move. We’ll also send you details of other products you may be interested in.
With the index linked bond, you will have access to your capital and any return, no later than 14 days after the maturity date. During this time we calculate any interest payment and your investment earns a variable rate of interest equivalent to that of the Maturity Account (or equivalent account applicable at that time). We’ll send you full details of this account shortly before each maturity date.
Frequently asked questions
Who is Skipton Financial Services Limited?
Skipton Financial Services Limited is a wholly owned subsidiary of Skipton Building Society. They can offer fee-free, whole of market financial advice on a range of financial products and advisers are on hand in every branch to find the best products for you to suit your individual needs.
When will my funds be transferred into the Capital Protected Double Asset Bond?
Your funds will be transferred into the bond on 26 January 2011. Until this date you'll receive an attractive fixed interest rate of 2.00% gross pa/AER on your investment.
Can I top up my bond?
Additional Investments allowed until the bond is made a closed issue which may be at any time and at short notice. The latest date this will be is 11 January 2011.
Can I withdraw my investment before the maturity date?
You may withdraw up to 50% of your initial investment from the 1 Year Fixed Rate Bond element during the one year term. For the Index Linked Bond no withdrawals are allowed prior to maturity. You should make sure you have other funds available.
Is my capital at risk?
No, your capital is protected and will be returned to you when your bond matures.
What about Tax?
Although the return from both elements of the bond is subject to Income Tax, it is free from Capital Gains Tax. Interest will be paid net of basic rate income tax unless you are eligible to register for gross interest. You may have to pay more tax if you are a higher rate tax payer when each part of the bond matures. Any age allowances may also be affected.
Will I receive annual statements or passbooks?
No. However, within 14 days of 26 January 2011, we'll send you a Certificate of Investment confirming your total investment as at 26 January 2011, including interest earned at the fixed rate of 2.00% gross pa/AER. Please keep this in a safe place.
Something to remember
At Skipton, we continually monitor the market to make sure we offer great rates of interest. However, things can change quickly – and sometimes we have to stop offering products sooner than we expected. That's why we recommend that if you're interested in a particular product, you act as soon as you can.