Your questions about Endowment Warrants answered

What is an Endowment Warrant?
An Endowment Warrant is an investment product which gives you the right to purchase a share in around 10 years time based on its price today.
You acquire this right by making an initial payment now, which is just a fraction of the current share price and then pay a final payment in around 10 years time to acquire the share.
Even though you initially only pay part of the value of the share, you receive the full benefit of any dividends and growth on that share for the entire term of your investment.
Endowment Warrants are issued by Macquarie Bank Limited and can be sold at any time.

How do Endowment Warrants work?
Each series of Endowment Warrant has an issue price that is your initial payment. The issue price varies with movements in the price of the underlying shares. You can easily find out the current price for each series by visiting the Endowment Warrants page on Good Returns click here, or calling Challenger Asset Management on 0800-446259, or (09) 3090474.
An outstanding amount is set for each series of Endowment Warrants at the opening of each series. This is the difference between the issue price and the current value of the share plus costs and risk premium.
Your final payment - due in approximately 10 years - will be the outstanding amount after the accrual of interest and deduction of the dividends earned by those shares over the term. Interest accrues at the Australian 90-day bank bill rate plus a margin of three per cent. It is reset to market rates regularly.
If you hold your Endowment Warrants for the full term, you pay the issue price and make no further payment until expiry of the warrants.
At the end of the term, you choose to pay the residual outstanding amount and receive the relevant shares, OR receive a cash payment equal to the then share price less the residual outstanding amount.
You can sell your investment in each series or Endowment Warrants on the Australian Stock Exchange at any time prior to the end of the term.
Endowment Warrants are available over individual Australian stocks or as a portfolio covering the top 20 stocks by capitalisation in Australia.
The top 20 stocks are:

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