NS&I launches new win-win minimum return Guaranteed Equity Bond
National Savings and Investments (NS&I) is launching a new variation of its Guaranteed Equity Bond, this time offering a guarantee that investors will gain whether the FTSE 100 index rises or falls, by offering a return equal to 75% of any growth in the index or a minimum return of 15% gross, whichever is the greater.
As with NS&I's previous GEBs, returns are linked to the performance of the FTSE 100 index over the five-year term and investors' capital is completely secure.
Offer period
Issue 8 of the GEB goes on sale for a limited period of eight weeks from 2 June to 27 July 2004. It may close earlier if fully subscribed, so investors are encouraged to buy early, especially because their investment will earn interest at 3.50% p.a. gross during the eight week offer period, paid when the Bond matures. The minimum investment is just £1,000.
Returns GEB Issue 8 offers:
- A guaranteed minimum return of 15% OR
- 75% of any growth in the FTSE 100 index over five years.
| Example of an initial investment | Increase in FTSE over five years | 75% of FTSE growth or 15% minimum | Initial investment plus gross return |
|---|---|---|---|
| £10,000 | -25% | Minimum 15% | £11,500 |
| £10,000 | 5% | Minimum 15% | £11,500 |
| £10,000 | 20% | 15% | £11,500 |
| £10,000 | 50% | 37.5% | £13,700 |
| £10,000 | 80% | 60% | £16,000 |
This table provides examples of how NS&I calculates the gross return on the GEB. Figures are calculated according to the start and end level of the FTSE 100 index over five years (averaged over the first five days and the last six months).
If the FTSE 100 index falls or only rises by up to 20% over the five-year term, investors will receive the minimum return of 15%. A high street savings account would need to offer a gross annual compound interest rate of 2.83% to provide a return of 15% over five years.
If the FTSE 100 index climbs by 20% or more over the five-year term, investors will receive a gross return equivalent to 75% of that growth, with no upper limit or cap on the return.
Demand has been high for NS&I's previous issues - the first seven sold over £650 million since Issue one was launched in March 2002 - and more than 20,000 people have asked to be given advance information about Issue 8. NS&I's last GEB (Issue 7) was on sale between 24 March and 18 May 2004.
How to buy NS&I's Guaranteed Equity Bond
- By phone: with a debit card by calling 0500 500 000
- By post: application forms can be downloaded from www.nsandi.com and are available at Post Office branches.
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
- Returns are subject to income tax in 2009 and so must be declared to the Inland Revenue
- A competitive 15% minimum return or 75% participation rate, whichever is the greater
- No cap, giving unlimited growth potential 100%
- guarantee that the customer's original capital investment - plus 15% if the FTSE falls or only rises by up to 20% - will be returned at the end of the five year term
- On sale for a limited period from 2 June to 27 July 2004, may close earlier if fully subscribed
No fees or charges
Gill Cattanach, National Savings and Investments marketing director, said:
"This is an unmissable win-win investment for customers who want the opportunity to gain from growth in the FTSE, with the added advantage of receiving a guaranteed return on their capital should the FTSE drop.
"With some recent fluctuations but an overall general rise in the FTSE 100 index, this Guaranteed Equity Bond provides the opportunity for some excellent returns, while providing the reassurance that, should the market fall, not only will you get your capital back, you'll also receive a guaranteed minimum return on your investment."
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 1117.70 points2.
Why have investors purchased NS&I's Guaranteed Equity Bonds?
In just two years, 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
- Potentially higher returns than a deposit-based savings account.
Notes to Editors
- 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 offered a participation rate of 95% and GEB 7 offered 110% (investors receive 95% or 110% of any growth in the FTSE 100 index over the five-year term however high it goes).
- Source: Ceefax. FTSE 100 index as at 25 May 2004: 4404.70
- NS& I has GEB case studies available on request
- In summary, the NS&I Guaranteed Equity Bond Issue 8 offers: 3.50% 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 2 June, with an offer period which closes on 27 July 2004 (earlier if fully subscribed). Investment term starts on 28 July 2004 and the Bond matures on 28 July 2009
- 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 £66 billion invested. All products offer 100% security, because they are backed by HM Treasury
- Further information and digital images are available from the NS&I Media Team
- 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.