Chelsea launches 50:50 Balance Bond

Following the launch of Guaranteed Equity Bond (Issue 1) earlier this year, Chelsea have decided to launch an alternative style of equity product – the Chelsea 50:50 Balance Bond. This Balance Bond splits the customer’s deposit in two, one half invested in a 1 Year Fixed Rate Bond and the other half with returns linked to the performance of the FTSE-100 Index over a 5 year period (GEB). If the FTSE falls or doesn’t move, the investor will get this half of their original investment back in full. If the market rises, then a percentage of the increase is added to the initial investment, in this case 100%.

There is no direct investment into the stock market; all of the funds invested are held in a straightforward savings account.

The Chelsea 50:50 Balance Bond will be available to new investors to open between 27 October 2007 and 24 November 2007. During this period, investors may open a new 50:50 Balance Bond and invest up to the maximum limit of £1 million provided that the account holder’s total investment in this and any other accounts with Chelsea does not exceed £2 million.

Initial interest rates

From the date the investor opens their account, up to 10 December 2007, they will earn an initial fixed rate of:

Deposit
£1,000 plus
Annual rate
Gross pa: 5.75%
Net pa: 4.60%

On 10 December 2007, the interest earned during this period will be added to the account balance and divided equally between the fixed rate and the GEB. Investors will receive a certificate outlining their investment and the opening level of the FTSE-100 Index.

After 10 December 2007 the deposit will be divided and the 1 Year Fixed Rate Bond and the 5 Year Guaranteed Equity Bond both start.

1 Year Fixed Rate Bond

From 10 December 2007 until 10 December 2008, the interest rate on 50% of the investment will be:

Deposit
£500 plus
AER: 8.50%
Gross pa: 8.50%
Net pa: 6.80%

The 1 Year Fixed Rate Bond will mature on 10 December 2008. On this date, investors will be able to access this half of their initial deposit.

Interest accrued will be added to the account on this date and be paid annually on 10 December thereafter.

The interest rate will become variable and be equivalent to that of Chelsea PostSaver Advantage.

5 Year Guaranteed Equity Bond information

From 10 December 2007 until 10 December 2012, the return on 50% of the initial investment will be linked to the performance of the FTSE-100 Index. If the FTSE-100 doesn’t grow or falls over this period, the investor will receive this 50% of their original investment back in full plus the interest earned from the date they opened their account up to 10 December 2007.

On 10 December 2012, the 5 Year Guaranteed Equity Bond matures. The return will be calculated within 7 days of maturity and any interest will be paid. Investors will be able to access this half of their funds from 17 December 2012.

Investors will receive 100% of any increase in the FTSE-100 Index (adjusted by averaging over the final 12 months) once it has been calculated.

The interest rate will then become variable and be equivalent to that of Chelsea PostSaver Advantage.

Minimum investment

The minimum opening and interest earning balance is £1,000.

Withdrawals

An investor may change their mind and close their account during the 14 day cooling off period following the date of account opening.

After this period, withdrawals are not permitted (other than in the case of death) until relevant maturity dates as authorised above.

To find out more about Chelsea 50:50 Bond call the free phone information line on 0800 169 1076. Calls may be recorded and/or monitored for security, training and customer service purposes.

Should you require any further details on this product, please let us know and a pdf containing full product details can be sent out.