How it works
The plan is linked to the performance of the FSTE 100, DJ EuroSTOXX 50® and Nikkei 225 indices.
It guarantees the return of your original investment at the end of the six year term. Additionally you will receive either a minimum return of 12% gross (1.90% AER*) or if greater, 80% of the capital growth of those stock market indices, subject to final year averaging (see below).
Key dates for this issue:
- Application received: - Your completed form and payment must be received by 13 September 2008. To help your Plan at the start, a rate of 4.00% gross/AER is payable on your investment up to the end of the offer period on 13 September 2008. Legal & General will add this interest to your original investment, automatically enhancing the amount that goes into your plan.
- The start date for the plan will be 17 September 2008 and your money will be invested on that date.
- The end of the fixed term (maturity date) is 17 September 2014.
How is the return calculated?
- The offer period opens on 21 July and closes 13 September 2008.
- Legal & General records the start level of each index at the close of business on 17 September 2008. This is the Plan start date.
- Legal & General calculates the closing level of each index during each business day in the final year of your Plan. This gives an average closing index figure.
- From this Legal & General can work out the percentage growth to apply to the investment.
- If the Stockmarkets' return is less than 12% your final value will be your Plan's original investment (plus any pre-investment interest) plus 12% return.
The table below shows what would happen to a £10,000 investment based on various growth levels of indices. These figures are examples only.
| Example 1 | Example 2 | |
|---|---|---|
| FTSE100 (UK) Index Performance | 40% | 15% |
| Dow Jones Euro STOXX50® Index Performance | 35% | -5% |
| Nikkei 225 Index Performance | 45% | -30% |
| Total percentage change | 120% | -20% |
| Average Index Growth | 40% | -6.67% |
| Growth received at the end of the six year term | 32% (stock market return) | 12% (minimum return) |
| Amount received at the end of the six year term | £12,560 | £10,960 |
The amounts received in the above table are shown after the deduction of income tax at the basic rate.
These are just examples of the potential performance of the indices. Please note that the performance of the index is subject to averaging in the final year. The actual performance and the return on your plan may vary. The above calculation does not take into account any pre-investment interest earned on your initial investment.
Important things for you to know before investing
Higher rate taxpayers will have further tax to pay on growth payments, and if you are in receipt of age allowance, the interest could impact on your entitlement. If you are a non-taxpayer you may be able to reclaim some or all of the tax deducted from HM Revenue & Customs. All information is based on our understanding of current taxation in the United Kingdom which may be subject to statutory change. Actual tax treatment will depend on your individual circumstances.
Your money will not be invested directly in the companies that make up the FTSE 100 Index, DJ Euro STOXX 50® Index and Nikkei 225 Index. As a result, you will not be eligible to receive any dividend income or have the opportunity for reinvestment of the dividends from the companies that form these indices.
Your money will not be invested with Legal & General. It will be passed to Cater Allen Limited, an authorised deposit taker.
*AER stands for the Annual Equivalent Rate which illustrates what the interest rate would be if interest was paid and compounded once a year.
If you need advice, contact your local branch for an appointment with your Senior Financial Consultant