New guaranteed equity bond from NS&I

NS&I (National Savings and Investments) is to launch a new issue of its Guaranteed Equity Bond on 21 May 2008. This will offer a gross return that matches any FTSE 100 Index growth, up to a maximum return of 75%, over the five-year term of the Bond, without any risk to investors' capital.

For example, if the FTSE rose by 20% over the five-year term, £10,000 invested would earn a gross return of £2,000 (customer receives £12,000 in total) at the end of the five years. If the FTSE rose by 80% over the five years, £10,000 invested would earn a gross return of £7,500 (customer receives £17,500 in total), as the maximum return is 75%.

If the FTSE falls or stays the same over the term, investors' initial investments are returned in full.

While the returns paid on NS&I Guaranteed Equity Bonds are linked to the FTSE, NS&I does not invest the money in equities, so investments in the Guaranteed Equity Bond will not be eligible for dividends. Therefore investors may not get as high a return as they might through investing directly in the stock market. However, unlike investments in the stock market, any money invested is 100% secure.

The launch of GEB 15 coincides with the maturity of Issue 5 of NS&I's five-year Guaranteed Equity Bond on 17 June 2008. Issue 5 went on sale in May 2003, with a maximum return of 65% gross over five years and a FTSE start level of 4155.40. NS&I will be writing to investors this month to remind them that their Bond is about to mature and to let them know about the new issue of NS&I's Guaranteed Equity Bond.

NS&I GEB offer period

Issue 15 of the GEB goes on sale for a limited period from 21 May to 1 July 2008. It may close earlier if fully subscribed so investors are encouraged to invest early, particularly because their investment will earn interest at 4.50% p.a. gross until the Bond's investment term starts on 16 July 2008. This interest will be paid when the Bond matures. The minimum investment level for this GEB remains at £1,000 and the maximum investment is £1 million per person or £2 million for a joint investment.

NS&I Guaranteed Equity Bond key features

A five-year investment
No fees or charges
Minimum investment of £1,000 and a maximum of £1 million (£2 million for joint investments), (online and telephone investments have a transaction limit of £99,999 but customers wanting to invest can make multiple applications)
A gross return that matches FTSE growth, up to a maximum of 75%, over the term of the investment
The start and end FTSE 100 index levels allow for initial five days averaging and final six months daily averaging
100% guarantee that customer's original investment will be returned at the end of the five-year term, regardless of the performance of the FTSE 100 index, backed by HM Treasury
All returns paid gross at maturity; returns liable to UK Income tax
Investors do not receive dividends
No access to the funds invested once the term has started except upon death

How to buy NS&I's Guaranteed Equity Bond

Investors can apply online at nsandi.com, by phone with a debit card on 0500 500 000 or by post using an application form which can be requested by phone or downloaded from NS&I's website at nsandi.com. Application forms for the NS&I Guaranteed Equity Bond will not be available at the Post Office.