Outperform the FTSE with new Guaranteed Equity Bond

National Savings and Investments (NS&I) is back with its first Guaranteed Equity Bond (GEB) of 2004 giving investors the opportunity to receive a return equal to 110% of any growth in the FTSE 100 index over the five-year term of the Bond, without any risk to their capital.

When is this product on sale?

Issue 7 of the GEB goes on sale for a limited period from 24 March to 18 May 2004. Due to high customer demand for its previous six GEBs, NS&I has extended the offer period to eight weeks, two weeks longer than the offer period on the earlier GEBs. It may close earlier if fully subscribed, so investors are encouraged to buy early, particularly because their investment will earn interest at 3.25% p.a. gross during the eight week offer period, paid when the Bond matures.

Lower investment level

NS&I has also introduced a new lower minimum investment of just £1,000 for this GEB to make the 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

As well as picking up an application form at Post Office branches, or downloading one online at www.nsandi.com, investors can apply (using a debit card) for the Bond by calling 0500 500 000.

Return on investment

This new GEB offers a gross return equivalent to 110% of any growth in the FTSE 100 index over the five-year term, with no upper limit or cap on the return. The 110% 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 10% of FTSE growth on top.

For example, if the FTSE 100 index rose by 40% over the five-year term, the return would be 44%, so £10,000 invested would earn a gross return of £4,400 (customer receives £14,400). If the FTSE rose by 60% over five years, £10,000 would receive 66%, or a return of £6,600 (customer receives £16,600). Even if the FTSE 100 index falls or fails to rise over the term, investors will receive their initial investment back in full.

Demand has been high for NS&I's previous issues - the first six sold over £500 million since Issue one was launched two years ago - and more than 22,000 people have asked to be given advance information about Issue 7. NS&I's last GEB (Issue 6) was on sale between 14 October and 24 November 2003.

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 110% 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 24 March to 18 May 2004, may close earlier if fully subscribed
• Returns are subject to income tax in 2009 and so must be declared to the Inland Revenue.

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

"With our new Guaranteed Equity Bond, customers have a chance to invest in a stock market linked product where the returns will outperform the FTSE 100 index.

"In the present financial climate where the FTSE has continued to rise over the past 12 months, a GEB which offers 110% of any FTSE growth represents a superb opportunity for some outstanding returns, while providing the reassurance that, should the market fall, you will always get your capital back." 

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 1,146.90 points2.

Why have investors purchased NS&I 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

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 offered a participation rate of 95% (investors receive 95% of any of the growth in the FTSE 100 index over the five-year term however high it goes).
2. Source: Ceefax. FTSE 100 index as at publication 15 March 2004: 4433.90
3. NS&I has GEB case studies available on request
4. In summary, the NS&I Guaranteed Equity Bond Issue 7 also offers: 3.25% 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 24 March, with an offer period that closes on 18 May 2004 (earlier if fully subscribed). Investment term starts on 19 May 2004 and the Bond matures on 19 May 2009
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 £64 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.