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Press Release

For Immediate Release: Tuesday 8 May 2001

QUARTERLY CHARTPACK SHOWS EFFECT OF STOCKMARKET SLOWDOWN ON LONG TERM INVESTMENT FUND SAVINGS

The UK stockmarket has slipped by some 9% over the three months to the end of March and this period is covered in the attached charts. Although the effect was to trim the returns on all equity based investment, over the long term the stockmarket still proves to be the more rewarding place to save.

  • Over 10 years to 1 April 2001, the annual income on £1,000 invested in an average UK Equity Income fund rose to £62 after 10 years. The income from a Corporate Bond fund slowed to £58;while the savings income on an average building society deposit account dropped to £24 in the tenth year, falling from £72 in 1991. [Chart 1]
  • The capital invested in an average Corporate Bond fund in March 1991 had grown by 29% over the 10 years, compared to 85% in an average UK Equity Income fund. [Chart 2]
  • A lump sum of £1,000 invested in an average building society deposit account in March 1991 added £402 to its value over 10 years, whilst the investment in an average Corporate Bond fund (including both income and capital growth) more than doubled to £2,162. The equity income fund grew by 165% to £2,654 or £2,899 in an equivalent ISA/PEP. [Charts 3/5]
  • Over the ten year period to April 2001 average returns from UK Equity Income funds were similar to those achieved by UK All Companies and Global Growth funds. After 10 years, £1,000 invested in the UK Equity Income sector had become £2,654, compared to £2,556 in the Global Growth sector and £2,729 in the UK All Companies sector. [Chart 4]
  • On regular savings of £50 a month, an equity investment in a UK All Companies fund beat the savings account deposit after 5 years by £97. The difference increased to £2,920 over 10 years and £7,690 after 15 years. [Chart 6]
  • A £1,000 investment in a UK Equity Income fund was 21% higher than an equivalent Managed Life Fund investment after 10 years, but 89% higher than the average building society deposit account for the same period. The difference on a £50 regular savings plan over 10 years was 15% on the Managed Life Fund and 43% on a deposit. Charts 7/8]
  • After 15 years, a £1,000 lump sum investment in a UK Equity Income Fund ran 136% ahead of the deposit account and 57% ahead of the Managed Life Fund; while the £50 regular savings unit trust/OEIC plan ended 66% higher than the deposit account and 23% higher than the managed life fund. [Charts 7/8]
  • After 10 years, £1,000 in an average UK Equity and Bond Income Fund beat the Retail Price Index by 77% or 96% in an ISA/PEP. The deposit account was 7% ahead of the Retail Prices Index. [Chart 9]
  • £1,000 invested in an average fund in the following sectors over ten years, would have achieved returns of more than £3,000 - Europe ex UK, Europe inc UK, European Smaller Companies, North America, North American Smaller Companies and UK Smaller Companies.
  • A £50 per month regular savings plan over ten years, would have achieved returns of more than £11,000 in the average funds of the following sectors - Europe excluding UK, Europe including UK, European Smaller Companies, North America, North American Smaller Companies and UK Smaller Companies sectors. [Chart 10]

For further information please contact:
Anne McMeehan, Director of Communications, AUTIF - +44 (0)20 7831 0898
Dorian Carrell, Head of Statistics, AUTIF - +44 (0)20 7831 0898
Clare Arber, PR Manager, AUTIF - +44 (0)20 7831 0898

Attachment 1- Charts 1 - 9 (in PDF format)
Attachment 2 - Chart 10 (in PDF format)

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