New Guaranteed Equity Bond from NS&I

NS&I (National Savings and Investments) is launching a new issue of its Guaranteed Equity Bond (GEB) on 30 June 2009. This will offer a potential return that is linked to the FTSE 100 index - up to a maximum of 40% over the 5-year term - without any risk to investors' capital.

For example, if the averaged index end level is 20% greater than the averaged index start level at the end of the 5-year term, £10,000 invested would earn a gross return of £2,000 at the end of the term. If the index end level was 45% greater than the index start level at the end of the term, £10,000 invested would earn a gross return of £4,000, because the maximum return is 40%. The returns are calculated by comparing the start level of the FTSE 100 index (averaged over the first five days of the investment term) to the end level (averaged over the final six months).

While the returns paid on NS&I Guaranteed Equity Bonds are linked to the FTSE 100 index, 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 guaranteed 100% secure, backed by HM Treasury. If the FTSE 100 index end level is the same as or lower than the start level, investors' initial capital would be returned in full.

The launch of the 18th Issue coincides with the maturity of Issue 8 of NS&I's 5-year Guaranteed Equity Bond on 28 July 2009. Issue 8 went on sale in June 2004, offering a potential return of 75% of FTSE 100 index growth over five years or a minimum return of 15%, with an index start level of 4406.70. NS&I has written to investors this month to inform them that their Bond is about to mature.

NS&I's previous Guaranteed Equity Bond issue , Issue 17, which went on sale on 21 April 2009, closed two weeks early on 18 May as a result of customer demand.

NS&I Guaranteed Equity Bond offer period

Issue 18 of the Guaranteed Equity Bond goes on sale for a limited period from 30 June to 11 August 2009. It may close earlier if fully subscribed so investors are encouraged to invest early. Investments will earn interest at 0.50% pa gross until the Bond's investment term starts on 26 August 2009. This interest will be paid when the Bond matures. The minimum investment level for this Guaranteed Equity Bond remains at £1,000 and the maximum investment is £1 million per person or £2 million for a joint investment.

For more information, visit nsandi.com