The growth and income friendly investment

Invest in the Growth & Income Bond and you are putting your money into a 'with profits' bond. This is an investment designed to achieve steady capital growth over the medium to long-term by investing in Scottish Friendly's With Profits Fund.

Growth

The Fund is expertly managed for growth potential, with investments spread across a wide range of shares, commercial property, bonds and cash assets for a degree of security.

Your Growth & Income Bond is designed to grow steadily through the addition of regular bonuses and, when you cash in your bond, a potential final bonus.

The regular bonus rate is normally declared once a year and the value of your bond grows daily in line with this rate. While this bonus rate can vary, and future bonus rates are not guaranteed, the fund price is guaranteed not to fall provided you hold your bond until the 10th anniversary of your investment.

The value of any with profits bonus depends on how much profit we make and how we decide to distribute it.

Income

Which leaves the question of 'income'. Unlike other investment plans which lock your money away, the Growth & Income Bond allows you to draw a regular income in the form of secure regular withdrawals of up to 5% of your original investment each year. That could be monthly, quarterly, half yearly or annually. Irrespective of whether you are a higher or basic rate taxpayer, when you take withdrawals, there will be no immediate tax charge.

It's worth remembering though that if your withdrawals exceed the growth of the Bond the value of your investment will be depleted. It's about letting you choose the right balance between enjoying your money now and enjoying its growth 5 or more years down the line.

Plus a potential final bonus

As well as a regular bonus, when you cash in your Bond, you may also receive a final bonus. And while with profits bonuses cannot be guaranteed in advance, the addition of a final bonus could mean a further boost to the amount you get back.

Cashing in your Bond

You should look on this plan as a medium to long-term investment of at least 5 years, however you can cash in your Growth & Income Bond at any time. If you cash-in soon after your bond has started, you may get back less than you have paid in.

If you cash in your plan at any time other than the 10th anniversary of your investment, a Market Value Reduction (MVR) may apply which would reduce the value of your Bond. An MVR will only apply if the returns of the underlying With Profits Fund have been particularly poor. Its purpose is to protect the interest of all other Bondholders, as the Bond is designed to provide the best possible growth over the medium to long term. Full details are given in the Key Features

Scottish Friendly guarantees that there will be no MVR on specific occasions: when regular withdrawals of up to 5% per annum of your original investment are taken; when part or all of the Bond is cashed in on the 10th anniversary of investment, or when death benefit is paid out.

Tax friendly

Scottish Friendly will pay all necessary taxes on the With Profits Fund before any bonuses are added, so you will have no personal liability to basic rate or capital gains tax, under current tax legislation. If you're a higher rate tax payer, then you may have some liability when you cash in some or all of your Bond – although there will be no immediate tax liability on any regular withdrawals up to a maximum of 5% of your original investment per annum. You'll find a full explanation of this in the Key Features link. Tax legislation is subject to change.

Charges

There is an initial charge of 5% of the amount you invest. The initial charge is included as the difference between the offer price, at which you buy units, and the bid price, at which units are cashed in. There is no explicit annual management charge. Please refer to the Key Features for full details.

When it comes to the crunch we've delivered some tasty past performance

The figures speak for themselves. Scottish Friendly's With Profits Bond was launched in 1998. If you had invested £5,000 on 1 February 1998 and cashed it in on 1 August 2007 you would have received a cheque for £8,124*. That's a growth rate of 5.3% per annum after charges and tax.

See how our returns compare

Past performance is not a guide to future performance. Future with profits bonuses are not guaranteed but once added, cannot be taken away. Capital values are not guaranteed with this plan, but they are in building society accounts where growth prospects are more certain and where they benefit from ease of access. You should remember that in some circumstances an MVR may be made if you cash in your investment. However, Scottish Friendly guarantees that no MVR will apply if you cash in on the 10th anniversary of your investment or to regular withdrawals.

<sup>* Source: Scottish Friendly. Based on investment in Scottish Friendly with profits bond originally known as 'Growth & Security Bond', now branded 'Growth & Income Bond'.

** Source: Morningstar. Bid-bid. A Balanced Managed insurance fund invests directly in the stock market and its value can go down as well as up.

*** Source: Morningstar. UK Savings £2,500+ Investment net refers to both current and ex-building societies.</sup>

Life cover is included

The tax-friendly Growth & Income Bond automatically includes life cover. If you (as the plan holder) were to die, the amount payable on death is 101% of the fund value held, plus any final bonus that applies and no MVR. The life cover can also extend to your spouse or partner if you jointly start a Bond.

Apply now

Applying is easy. Simply click on the Apply Now link to download an application form and read the Key Features. Then complete it and post it to:

Scottish Friendly Assurance, FREEPOST, Glasgow G2 4BR

If you apply for this product, for your records, we recommend you print or save a copy of this and any other relevant pages together with a copy of the Key Features.