NS&I to launch Guaranteed Equity Bond

National Savings and Investments (NS&I) is to launch its first Guaranteed Equity Bond for nearly a year on 14 March 2007, since its eleventh issue was launched in May 2006.

This will offer a return equal to 120% of any growth in the FTSE 100 index over the five-year term of the Bond, without any risk to investors' capital.

New GEB - on sale 14 March 2007 for six weeks only
Invest online, by phone or by post
Can be invested in a SIPP with tax-efficient benefits

120% of FTSE growth

With no upper limit or cap on the return of the FTSE and the 120% figure means the investment will earn a return equivalent to all of the growth in the FTSE 100 index over the five-year term, plus an extra 20% of FTSE growth on top.

For example, if the FTSE 100 index rose by 20% over the five-year term, £10,000 invested would earn a gross return of £2,400 (customer receives £12,400) at the end of the five years, a 24% return. If the FTSE rose by 30% over five years, £10,000 would earn £3,600 (customer receives £13,600, a 36% return).

If the FTSE 100 index falls or fails to rise over the term, investors' initial investment is returned in full as NS&I is fully backed by HMT.

'A great opportunity'

Peter Cornish, NS&I's marketing director, said: "This new Guaranteed Equity Bond is a great opportunity for any investor who wants to try and outperform the FTSE, without risking their capital. The returns on the Guaranteed Equity Bond are linked to the performance of the FTSE, but will also exceed that performance by a further 20% of FTSE growth, as long as the FTSE rises over the five years.

"Investors can feel safe in the knowledge that all capital is completely secure, even if the FTSE falls, and you can invest from the comfort of your own home, either online or by phone. It couldn't be simpler."

Investors can now invest in the Guaranteed Equity Bond (GEB) through a SIPP (self-invested personal pension). Provided the total investment in the SIPP does not exceed the lifetime limit the returns will be free of UK income tax. Investors should contact their SIPP provider for further details.

The launch of GEB 12 coincides with the maturity of National Savings and Investments' first issue of the five year Guaranteed Equity Bond on 16 April 2007. This first issue went on sale in March 2002, with a maximum return of 65% gross over five years and a strike rate of 5220.7. National Savings and Investments will be writing to investors this month to inform them of the maturity of their investment on 18 April 2007 and the launch of the new Guaranteed Equity Bond.

NS& I GEB offer period

Issue 12 of the GEB goes on sale for a limited period of six weeks from 14 March to 24 April 2007. It may close earlier if fully subscribed so investors are encouraged to buy early, particularly because their investment will earn interest at 4.75% p.a. gross until the Bond's investment term starts on 9 May. 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
Minimum investment of £1,000, maximum of £1 million (£2 million for joint investments), maximum online investment £99,999 per person
A gross return linked to any growth in the FTSE 100 index over the term
A competitive 120% participation rate
The start and end FTSE 100 index levels allow for five days initial averaging and six months final daily averaging
No cap, giving unlimited growth potential
100% guarantee that all of a customer's original capital investment will be returned at the end of the five-year term, regardless of the performance of the index, backed by HM Treasury
Any returns from a GEB not held within a SIPP will be subject to income tax in 2012-13 so must be declared to the Inland Revenue
Investors do not receive dividends from this Guaranteed Equity Bond.
No access to the funds invested once the term has started except in death.