New Guaranteed Equity Bond from NS&I launched

This will offer a gross return that matches any growth in the FTSE 100 index over a 5-year term, up to a maximum of 35%, without any risk to investors’ capital.

For example, if the FTSE rose by 20% over the 5-year term, £10,000 invested would earn a gross return of £2,000 at the end of the five years. If the FTSE rose by 40% over the five years, £10,000 invested would earn a gross return of £3,500, as the maximum return is 35%.

If the FTSE falls or stays the same over the term, investors’ initial capital would be returned in full.

While the returns paid on NS&I Guaranteed Equity Bonds are linked to the FTSE, 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.

The launch of the 17th Issue coincides with the maturity of Issue 7 of NS&I’s 5-year Guaranteed Equity Bond on 19 May 2009. Issue 7 went on sale in April 2004, offering a potential return of 110% of any FTSE growth over five years and a FTSE start level of 4435.80. NS&I has written to investors this month to inform them that their Bond is about to mature. As a consequence of market conditions and the falls in the FTSE 100, savers will receive their initial investment in Issue 7 of our Guaranteed Equity Bond back in full – in line with NS&I’s commitment to a 100% guarantee on the capital originally invested. They will also receive interest earned during the offer period – but with no further return.

NS&I Guaranteed Equity Bond offer period

Issue 17 of the Guaranteed Equity Bond goes on sale for a limited period from 21 April to 1 June 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 16 June 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 gross return that matches any growth in the FTSE growth over five years, up to a maximum of 35%
• 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
• 100% guarantee that customers’ original investments will be returned in full at the end of the 5-year term, regardless of the performance of the FTSE 100 index.
• 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 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.