Money: The great PEP countdown

There's still time to invest in a final PEP, though you may have to give up a chunk of your Easter weekend to sign up for pounds 6,000 of tax- free investments.

Many big fund managers and discount brokers are staying open until midnight tomorrow to collect PEP applications from personal callers before the doors close on these tax-free investments forever (see box). The drawback is that if you have left it this late you may have to drive miles to get to a PEP form collection point and then queue up behind other would-be investors.

Don't worry if you haven't sent off for the PEP application forms. All the last-minute operators have large stocks of forms on-site.

All you have to do is arrive with a cheque book and some form of identification (it is a good idea to take along a selection of bills with your address on them, plus your passport and driving licence).

There is still time to buy from a discount house, which means you will save pounds 180 to pounds 300 on a pounds 6,000 investment, compared with buying a PEP from a financial adviser or direct from the fund managers. The discounters report phenomenal amounts of business. "Last week we passed the pounds 200m mark for this year's PEP business. That's already double what we did last year," says Don Clark, managing director of Wolverhampton-based PEP Direct.

The firm has chartered a helicopter to drop completed application forms around the country tomorrow. Would-be investors can turn up at PEP Direct's Wolverhampton HQ before 8pm today to fill in forms.

Some firms have forms on their internet sites that you can download, sign, and take along for collection. Fidelity (www. fidelity.co.uk) and Virgin (www.virgin-direct.co.uk) are among the popular providers offering this service. If you download the Virgin PEP form and call before 8pm today (0345 900 900) it will send a courier round to collect your signed PEP application.

Should you buy a PEP today?

All this PEP mania has sent some people rushing for their cheque books without thinking through the consequences.

Jim White, managing director of the national independent advisers' group Investor Intelligence, says: "My concern is that so much money is being thrown at PEP advertising that the public is being pressurised into thinking that unless they act quickly they are a failure. They are not. PEPs are not necessary for everyone."

If you don't buy a PEP you will lose the chance to invest pounds 6,000 in a general stock market fund, tax-free. But a generous tax break is not going to make up for high charges and poor performance if you pick a PEP that fails to deliver. The vast majority of actively managed general unit trust funds (where a management team selects shares it thinks will do well) don't outperform the FT-SE All Share index. Recent research by the WM Company found that over five years, your PEP has a one in four chance of doing better than the overall stock market.

Yet all the evidence is that the public has been swayed by blanket advertising by the big-name active fund managers: Autif, the unit trust trade body, says the vast majority of last-minute PEP business is concentrated among a small number of firms.

Estimates of how much money poured into PEPs during March vary from pounds 2.5bn to pounds 6bn. (February's figure was pounds 1.1 bn).

If you do want a PEP but are not sure which fund to buy, remember you should be looking at a long-term investment. Don't stick several thousand pounds you cannot afford to spare into the stock market. The market is very high, so it is expensive to buy popular shares. (This also applies to people who are putting lump sums into tracker funds that follow the stock market up and down.)

It is not the end of the investment world if you miss out on a PEP. You can start looking for an ISA investment this week, and can put in up to pounds 7,000 during the 1999/2000 tax year. And if you invest each month, rather than in one lump sum, you should get better value from your share purchases because your money buys shares at different prices each month.

PEPS: THE LAST 48 HOURS

Popular PEP managers

n Fidelity, 0800 414171. Offices in Kent and Surrey will be open 9am- 8pm today and the Kent HQ is open all day tomorrow until midnight. You can also have applications faxed or download from www.fidelity.co.uk.

n Fleming/Save & Prosper, 0800 829100. Open today 8am-9pm in Romford and tomorrow until midnight.

n Gartmore, 0800 289 336. Offices in Brentwood, the City of London, Glasgow and Manchester are open today and until midnight tomorrow. NatWest branches at Lakeside and the Bentall Centre, Kingston, will be open tomorrow (until 6pm and 5pm respectively).

n Legal & General: London, 0171-528 6793; Cardiff, 0500 116622. Open in central London and Cardiff today and until midnight tomorrow.

n M&G, 0800 210 200. Closed today but open until midnight tomorrow at its Chelmsford headquarters and at several Holiday Inns around the country. Call for details.

n Perpetual, 0800 028 2712; Collection points around the country today and until noon tomorrow. Application forms can be downloaded from www.perpetual.co.uk.

n Virgin Direct, 0345 900900. Virgin Megastore open in Edinburgh today, all other Megastores open tomorrow. Norwich offices open until midnight on Monday.

Discount brokers

n Chelsea Financial Services 0171-351 6022. Offices at 2/1 Harbour Yard, Chelsea Harbour, London SW10. Open 10am-2pm today and 9am-2pm tomorrow.

n PEP Direct 0800 413186. Offices at St Mark's, Chapel Ash, Wolverhampton open until 8pm tonight.