New Guaranteed Equity Bond from NS&I

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.

NS&I Guaranteed Equity Bond key features

• A potential return linked to the FTSE 100 index – up to a maximum of 40% 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), (online and telephone investments have a transaction limit of £99,999 but customers wanting to invest more can make multiple applications)
• 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 www.nsandi.com, by phone with a debit card on 0500 500 000* or by post using an application form which can be requested by phone or downloaded from NS&I’s website at www.nsandi.com

Notes to Editors

1. Inflation may reduce the true value of the original capital over time.
2. NS&I has almost 27 million customers and over £94 billion invested. It is best known for Premium Bonds, but also offers Inflation-Beating Savings, Guaranteed Equity Bonds and Children’s Bonus Bonds in its range. All products offer 100% security, because NS&I is backed by HM Treasury.