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Financial Services

Date issued: 1 Mar 2010

Nationwide Building Society: www.Nationwide.co.uk

From today, Monday 1 March 2010, Nationwide Building Society offers the Protected Equity Bond - a deposit-based plan which offers returns linked to the performance of some of the world's leading stock market indices. The Protected Equity Bond currently available is the Stock Market Linked Savings Bond (SMLSB) 2 provided by Legal & General (L&G). The Protected Equity Bond is designed to return a minimum 11.00% gross (1.75% AER*) at the end of six years. Subject to final year averaging, there is also the potential for further stock market linked growth of up to 50% of the original investment when held for the full six years1. If the maximum potential return is achieved, this is the equivalent to 6.99% AER*.

As the Protected Equity Bond does not invest directly in company shares or investment funds, balances are protected from any negative stock market movement.

Nationwide provides a range of options to help customers make the most of their full annual ISA allowance and the Protected Equity Bond is available as both a deposit plan and as a cash ISA.

Increased annual ISA allowance for all
On 6 April 2010, the increased annual ISA allowance limit of £10,200 will be available to all, giving consumers a bigger tax break opportunity on their savings and investments. People aged 50 or over on, or before 5 April 2010, are already entitled to the increased overall annual ISA allowance limit.

Of the new £10,200 annual ISA allowance, up to £5,100 of this can be invested in a cash ISA and the remaining amount in a stocks and shares ISA. Alternatively, up to the full annual allowance can be invested in a stocks and shares ISA.

Until the new tax year, the annual ISA allowance limit for the under 50s is £7,200, of which up to £3,600 can be invested in a cash ISA and the remaining amount in a stocks and shares ISA, or up to the full amount in a stocks and shares ISA.

Back-to-back ISA option
The end of the tax year is fast approaching and Nationwide encourages all consumers to make the most of their annual ISA allowance before it is lost forever.

As the Protected Equity Bond spans both the 2009/2010 and 2010/2011 tax years, customers will be offered the option to invest both years' subscriptions in a single branch appointment when applying for a Protected Equity Bond ISA before the end of the tax year.

This means that the over 50s can save up to £20,400 tax-efficiently in just one single visit to a Nationwide branch, while the under 50s can save up to £17,400 tax-efficiently in a range of stocks and shares ISAs and the Protected Equity Bond ISA. This will save time for customers and therefore make it easier for them to make use of their tax-efficient annual ISA allowance.

ISA transfers
Within the ISA, customers can also transfer their previous year's cash ISA allowances without it counting towards their current year allowance. This means that consumers can save previous years' cash ISA balances in a Protected Equity Bond ISA, potentially benefiting from higher returns compared to deposit-based cash ISAs.

Combination Savings Bond
Customers who invest in the Protected Equity Bond also have the opportunity to take out an exclusive one year fixed rate Combination Savings Bond paying 4.00% gross p.a./AER*, based on the annual interest rate.

The Combination Savings Bond is exclusively available for customers who invest in the six year Protected Equity Bond at the same time and could help savers make the most of their money in the current low interest rate environment. The minimum investment of the Combination Savings Bond is £3,000 and the same amount or more must be invested in a six year Protected Equity Bond.

Robin Bailey, Nationwide's director for investments and savings, said: "With the end of the tax year fast approaching, many people will be looking to use up their annual ISA allowance before they lose it forever. The Protected Equity Bond - or PEB - is available as a cash ISA as well as a deposit account to help customers try to really maximise on the potential returns available.

"The PEB provides an alternative option for those who want to see potentially higher returns on their savings, but do not like the idea of losing their capital if stock markets fall. This is because - unlike some stock market linked investments - the PEB is designed to protect customers from any negative stock market movement. It's also designed to return your capital plus a minimum of 11.00% gross - 1.75% AER - after six years, as well as a potential growth rate of up to 50% of your original investment if the stock markets do well.

"In addition, the one year fixed rate Combination Savings Bond, which can only be opened at the same time as a PEB, continues to offer an additional way to help savers make their money work harder."

Summary table

Account name	Combination Savings Bond	Legal & General Stock Market Linked Savings Bond 2
Term	One year	Six year deposit plan	Six year cash ISA
Start date	Date account opened	20 May 2010
Pre-investment	n/a	0.87% gross/AER* from the date of investment until 14 May 2010
Return	Annual: 4.00% gross p.a./AER*. Monthly: 3.97% AER*, 3.90% gross p.a.	Min. return: After six years, the plan is designed to return customers to their original capital plus 11.00% gross (1.75% AER). Potential growth: based on 100% of the growth of the FTSE 100 Index, EuroSTOXX 50® Index and S&P 500 Index, subject to final year averaging, capped at 50% maximum growth of the original investment. If the maximum potential growth is achieved this is equivalent to 6.99% AER*.
Tax status	Interest is paid net of basic rate tax, depending on status.	Any return is paid net of basic rate tax.	Any return is paid tax-free.
Conditions for bonus payment	N/A	N/A	N/A
Withdrawals	No part withdrawals permitted. The Combination Savings Bond can be closed at any time subject to the loss of 90 days' interest.	No withdrawals permitted before maturity.	Withdrawals of less than £500 are not permitted and customers must maintain a balance of at least £500. Customers could get back less than they originally invested if any withdrawals are made.
Access	Available when investing in a six year PEB.	Offer available: 1 March 2010 to 1 May 2010 via branch, post and internet. Limited availability - may close early. Important dates 2009/2010 ISA application deadline: 10am on 5 April 2010. ISA transfer application deadline: 16 April 2010. 2010/2011 ISA application deadline: 1 May 2010. Any applications received after these dates cannot be accepted.
Minimum investment	Minimum investment £3,000 where a rate of 4.00% gross p.a./AER will be achieved, / 3.97% monthly AER. The same amount or more must be invested in a six year PEB.	£3,000	£3,600 for current year cash ISA allowance and for transfers from each ISA Manager.
Maximum investment	£2,000,000	Unlimited	On or before 5 April 2010 (2009/2010 tax year): £3,600 if you are under 50 on 5 April 2010, £5,100 if you are aged 50 or over. From 6 April 2010 (2010/2011 tax year): £5,100 for everybody. ISA transfers: unlimited
Further deposits	No further deposits can be made after opening.

Information and rates correct on 1 March 2010. The rates for the Combination Savings Bond are subject to change and may be withdrawn without notice.

* AER stands for Annual Equivalent Rate which illustrates what the interest rate would be if interest was paid and compounded each year.

For the Protected Equity Bond, this allows you to compare more easily the minimum and maximum potential returns with other savings accounts.

For the Combination Savings Bond, the gross rate of interest is the interest rate payable before any income tax is deducted (if you pay tax) and the net rate of interest is the interest payable after any income tax is deducted (if you pay tax).

• The final calculation of the Protected Equity Bond is based on 100% of the average growth in the value of three of the world's leading stock market indices, subject to final year averaging. The growth of the FTSE 100 Index, DJ EuroSTOXX 50® Index and S&P 500 Index will be measured using the initial level of the Index at close of business on 20 May 2010 and the average level of the Index in the last 12 months of the investment, commencing 20 May 2015 to 20 May 2016 inclusive. This gives the final year averaging level using daily closing stock market values.

• The original investment amount must be held to the end of the six year term to benefit from the stated returns. Withdrawals are not available from the deposit plan but if access is required from the ISA you may get back less than you invested.

• You won't benefit from any dividend income which you could have if you invested directly.

• The value of the Protected Equity Bond may depreciate in real terms due to inflation.

• In case of death of the investor and encashment of the plan by the beneficiaries, the amount returned may be less than the original investment.

• Issue 2 of the Protected Equity Bond is available until 1 May 2010. If the selected Protected Equity Bond closes early, the Combination Savings Bond will be withdrawn from sale.

• Although this is a Legal & General product, whilst invested, your funds are held by Nationwide as the deposit taker. This means that from the investment start date, all the way through to maturity we will be helping to look after your money. Before the start date and after the fixed term, Legal & General put your money in a client bank account separate from their own money. If Nationwide, or the bank or building society providing the client bank account were to become insolvent, you may lose some or all of the money invested.

The Combination Savings Bond is a Nationwide account. If Nationwide becomes insolvent during this period your original investment amount may be at risk and you may not receive all of your money back.

• If the Protected Equity Bond is withdrawn, or if you cancel your investment, you will not be eligible for the Combination Savings Bond, which is exclusive to customers opening a Protected Equity Bond. The Combination Savings Bond interest rates are subject to change during the offer period and may be withdrawn from sale without notice.

• Investments made for the 2010/11 tax year will earn pre-investment interest from 6 April 2010.

• Tax treatment is dependent on individual circumstances. The tax information is based on Nationwide's understanding of current law and HM Revenue & Customs practice, which can change.

FIXED RATES FOR COMBINATION SAVINGS BOND, EFFECTIVE FROM 12 FEBRUARY 2010

1 year CSB (annual)	AER	Gross p.a.	Net p.a.
£3000+	4.00%	4.00%	3.20%
1 year CSB (monthly)	AER	Gross p.a.	Net p.a.
£3000+	3.97%	3.90%	3.12%

• Rates on the Combination Savings Bond may be withdrawn without notice.
• The Combination Savings Bond can be opened with a minimum investment of £3,000. There is an upper investment limit of £2,000,000.
• The Combination Savings Bond can be closed at any time subject to the loss of 90 days' interest.
• No part withdrawals are allowed.