Protected Deposit Bonus sub-funds

How the sub-funds work

The Protected Deposit Bonus sub-funds pay investors a bonus when the UK and US stock markets - as measured by the FTSE 100 and S&P 500 indices - do not fall over the quarter.

At the start of each quarter a fixed bonus rate is declared for the sub-fund. This rate is different for each sub-fund and depends on the level of capital protection of the sub-fund - the higher the protection level, the lower the bonus rate. An indication of the likely bonus rates is made available by Scottish International Fund Managers shortly before the start of each quarterly period. This enables investors and their advisers to review the investment and make adjustments if desired - free of charge. The actual rates for the period are issued shortly after the start of the quarter.

At the end of each quarter, as long as the FTSE 100 and S&P 500 have not fallen over the period, the bonus rate is added to the protected amount to form the starting value for the following quarter. The closing level of the index is normally an average value of the index over the last five days of the quarter.

A worked example

Consider an investor who has an investment worth USD20,000 at the start of the quarter and has selected the sub-fund with 97.5% capital protection. The FTSE 100 and S&P 500 indices stand at 4,000 and 900 respectively and the bonus rate for this sub-fund for the quarter is 7.5%. Let us say that the closing level of the FTSE 100 index is 4,100 and the S&P 500 closes at 925. As both indices have risen the bonus is added. The investment value to be carried forward to the next quarter would be calculated as shown:

Protected amount: 97.5% of USD20,000.00 = USD19,500.00
Bonus: 7.5% of USD19,500.00 = USD1,462.50
New investment value: USD19,500.00 + USD1,462.50 = USD20,962.50

If either index had fallen, the new investment value would be £19,500.00 - the protected amount.

These figures are for example only and are not guaranteed.