95% of the up with 0% of the down

Following strong demand from customers, National Savings and Investments (NS&I), the government-backed savings and investments provider, has launched its sixth Guaranteed Equity Bond (GEB), which offers a return linked to the performance of the FTSE 100 index.

It goes on sale for a limited period from 14 October to 24 November 2003, although may close earlier if fully subscribed.

Issue 6 of NS&I's GEB offers investors a gross return equivalent to 95% of any growth in the FTSE 100 index over the five year term, with no upper limit or cap on this return - otherwise known as a 'participation' Bond.

This is this first time NS&I has offered a 'participation' GEB - its previous five Bonds offered 'capped' returns of between 60% and 70%1 - and by offering a 'participation' GEB, NS&I is offering customers the opportunity to invest in a different type of GEB, which will also provide the unrivalled security of HM Treasury backing. While this sixth Issue is on sale, NS&I will not have any other GEBs available.

A 'participation' GEB has no maximum limit on returns but pays a proportion of the growth in an index, while a 'capped' GEB means investors will receive all of the growth in an index up to a certain limit.

Demand has been high for NS&I's previous issues - the first five sold over £300 million since Issue one was launched just 18 months ago - and more than 22,000 people have asked to be given advance information about Issue 6.

NS&I Guaranteed Equity Bond key features

• A five-year investment Minimum investment of £2,000, maximum of £1 million (£2 million for joint investments)
• A gross return linked to any growth in the FTSE 100 index over the term
• A competitive 95% participation rate 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
• On sale for a limited period from 14 October to 24 November 2003, may close earlier if fully subscribed.

Gill Cattanach, National Savings and Investments commercial director, said:

"Our new Guaranteed Equity Bond represents another excellent opportunity for customers to invest in a stock market linked product without any risk to their capital.

"This Bond provides the best of both worlds by giving customers a return of 95% of any growth in the FTSE with no upper limit while offering the reassurance that, should the market fall, they will always get their capital back.

"The decision by National Savings and Investments to offer a 'participation' GEB where the upside potential is unlimited shows that we are committed to providing a wider choice of product for our customers and that we have the flexibility and capacity to react to the marketplace."

Independent backing

NS&I's new GEB is receiving favourable support from independent financial advisers.

Karen Ritchie, of Cambridgeshire-based Finance 4 Women, says:

"The fact that NS&I's guaranteed equity bond offers a true 100% capital guarantee makes it a completely safe investment for the more cautiously-minded, and the 95% participation rate is certainly among the most competitive in the marketplace right now. "At the present time, of all the guaranteed equity bonds currently on the market, this is the only one I would recommend."

Stock market growth

After three years of falls the FTSE 100 index has risen from its five-year low of 3287.00 on 12 March 2003 and, to date, has recovered by 979 points2.

Why have investors purchased NS&I Guaranteed Equity Bonds?

In just 18 months, NS&I has become an established provider for these investments. Customer research has found that the main reasons people invest in the NS&I Guaranteed Equity Bond are:

• They are guaranteed to get back all of the money invested even if the market falls as it is 100% secure - backed by HM Treasury
• The NS&I GEB is a low risk way to benefit from potential stock market growth.

How to buy NS&I's Guaranteed Equity Bond

As well as picking up an application from Post Office Branches or downloading one online at www.nsandi.com, investors can apply (using a debit card) for the Bond 24 hours a day, seven days a week by calling 0500 500 000.

Notes to Editors

1. NS&I's previous GEBs offered the following capped rates of return: GEB 1: 65%, GEB 2: 70%, GEB 3: 65%, GEB 4: 60%, GEB 5: 65%. Issue 6 offers unlimited potential return with a participation rate of 95% so investors will receive 95% of any of the growth in the FTSE 100 index over the five-year term however high it goes
2. Source: Yahoo. FTSE 100 index as at end 6 October 2003: 4266.90
3. NS&I has GEB case studies available on request
4. In summary, the NS&I Guaranteed Equity Bond Issue 6 also offers: 3.00% p.a. gross interest during the offer period (paid at maturity) All returns paid gross at maturity, liable to income tax at the rates applicable to savings No fees or charges The start and end FTSE 100 Index levels allow for five days initial averaging and six months final daily averaging A launch date of 14 October, with an offer period that closes on 24 November 2003 (earlier if fully subscribed). Investment starts on 25 November 2003 and the Bond matures on 25 November 2008
5. National Savings and Investments is one of the largest savings organisations in the UK which offers a range of savings and investments products. It has 30 million customers and £63 billion invested. All products offer 100% security, because they are backed by HM Treasury
6. Further information and digital images are available from the NS&I Media Team
7. NS&I is the exclusive sponsor of The Classical BRIT Awards, the UK's premier classical awards show, at the Royal Albert Hall on 26 May 2004.