Another chance to beat the FTSE with new Guaranteed Equity Bond from NS&I

This new GEB offers a return equal to 105% of any growth in the FTSE 100 index over the five-year term of the Bond, without any risk to investors’ capital and is backed by HM Treasury.

Offer period

Issue 9 of the GEB goes on sale for a limited period of eight weeks from 15 September to 9 November 2004. It may close earlier if fully subscribed, so investors are encouraged to buy early, particularly because their investment will earn interest at 4.00% p.a. gross during the eight week offer period, paid when the Bond matures.

Investment level

The investment level for this GEB remains at £1,000 – as with the previous two offers – consistent with NS&I’s approach to make this offer more accessible to a wider number of people. The minimum for the previous six GEBs was £2,000.

How to buy NS&I’s Guaranteed Equity Bond

Investors can apply by phone with a debit card on 0500 500 000 or by post using an application form which can be downloaded from NS&I’s website at www.nsandi.com. NS&I Guaranteed Equity Bond application forms are also available at the Post Office.

Return on investment

This new GEB offers a gross return equivalent to 105% of any growth in the FTSE 100 index over the five-year term, with no upper limit or cap on the return. The 105% 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 5% of FTSE growth on top.

For example, if the FTSE 100 index rose by 40% over the five-year term, £10,000 invested would earn a gross return of £4,200 (customer receives £14,200) at the end of the five years – i.e. 42%. If the FTSE rose by 60% over five years, £10,000 would earn £6,300 (customer receives £16,300, i.e. 63%). Even if the FTSE 100 index falls or fails to rise over the term, investors get their initial investment back in full.

Demand has been high for NS&I’s previous issues – the first eight have sold over £600 million since Issue one was launched in March 2002 – and more than 23,000 people have asked to be given advance information about Issue 9. NS&I’s last GEB (Issue 8) was on sale between 2 June and 27 July 2004.

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)
• A gross return linked to any growth in the FTSE 100 index over the term
• A competitive 105% 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, backed by HM Treasury
• On sale for a limited period from 15 September to 9 November 2004, may close earlier if fully subscribed
• Returns are subject to income tax in 2009 so must be declared to the Inland Revenue.

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

“This is our second guaranteed equity bond which gives customers a chance to invest in a stock market linked product where the returns will beat the performance of the FTSE 100 index

“Our first FTSE 100-beating guaranteed equity bond, available earlier this year, was hugely popular and there is a lot of customer demand for another, similar offer. We are in a position to offer a competitive product for customers, guaranteeing 105% of any growth in the FTSE 100 over the five years of the investment.

“What makes this offer unique among all others is that we provide a 100% capital guarantee, backed by HM Treasury, which provides the reassurance that, even if the FTSE falls, you will get all of your original investment back.”

Why have investors purchased NS&I Guaranteed Equity Bonds?

NS&I has become an established provider of these investments. Recent customer research has found that the main reasons people invest in the NS&I Guaranteed Equity Bond have stayed consistent since the first Issue in March 2002:

• Customers 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
• Potentially higher returns than a deposit-based savings account.

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%. GEB 6: 95% participation rate, GEB 7: 110% participation. GEB 8: 75% participation or 15% guaranteed minimum return.
2. NS&I has GEB case studies available on request
3. In summary, the NS&I Guaranteed Equity Bond Issue 9 offers: 4.00% 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 15 September, with an offer period that closes on 9 November 2004 (earlier if fully subscribed). Investment term starts on 10 November 2004 and the Bond matures on 10 November 2009
4. 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 around 30 million customers and £66 billion invested. All products offer 100% security, because they are backed by HM Treasury