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 13 October 2009. This will offer a potential return that is linked to the FTSE 100 index - up to a maximum of 50%/8.45% AER 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 55% greater than the index start level at the end of the term, £10,000 invested would earn a gross return of £5,000, because the maximum return is 50%. 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.

NS&I's previous Guaranteed Equity Bond issue, Issue 18, which went on sale on 30 June 2009, closed almost three weeks early (on 22 July) as a result of customer demand.

NS&I Guaranteed Equity Bond offer period

Issue 19 of the Guaranteed Equity Bond goes on sale for a limited period from 13 October to 23 November 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 8 December 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.

NS&I Guaranteed Equity Bond key features

A potential return linked to the FTSE 100 index - up to a maximum of 50%/8.45% AER over the 5-year term

No fees or charges

Minimum investment of £1,000 and a maximum of £1 million (£2 million for joint investments)

The start and end FTSE 100 index levels allow for initial five days averaging and final six months daily averaging respectively

100% guarantee that customers' original investments will be returned in full at the end of the 5-year term, regardless of the index start and end levels. As with all of NS&I's savings and investments, customers' money is 100% secure as NS&I is 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