Lowes Magazine Issue 116

Closing Date: 11th December ISA Transfers: 25th November

The investment is designed to pay an income of 0.75% per quarter year (£75 per £10,000 invested) provided the FTSE CSDI is not more than 30% below the 18 December 2020 closing level on that quarterly observation date (in which case no income would be payable for that quarter). It will mature after 3 years, returning original capital plus a gain of 12% (£1,200 per £10,000 invested) if the index is 5% or more above the 18 December 2020 closing level. If not, it will mature on the next quarterly income observation date that the index is 5% above that level, adding a further 1% (£100 per £10,000 invested) potential gain for each quarter year that passes. The maximum term is ten years and if it has not matured by then and the index is more than 30% lower, invested capital will be reduced by that percentage i.e. if the index falls, does not recover and is half the December 2020 level on 18 December 2030 only £5,000 per £10,000 invested will be returned. Income and Growth Plan What to expect from the 10:10

Linked to the performance of the FTSE CSDI (very closely correlated to the the FTSE 100 - see page 8) Income - 0.75% income every quarter (3% per year max), unless the index has fallen by more than 30% as at quarterly income payment date. And Up to 4% per year growth (1% per quarter year the plan has run, subject to a minimum of 3 years and a maximum of 10) payable, together with return of capital and final income payment, on the first quarterly income observation date (from the 3 rd anniversary) that the index is 5% higher. Maximum duration: 10 years Capital protection barrier is 70% of initial index level, observed only at the end of ten years if the plan hasn’t matured sooner. Counterparty: Morgan Stanley International. Returns of income and capital are dependent upon the bank’s continued solvency. Key dates: Closing Date: 11 th December ISA Transfers: 25 th November Direct Investment with cheque applications: 7 th December SIPP/Pension Investment: Contact us ASAP Based on levels at the time of writing, the market would need to fall to levels not seen since the darkest days of the financial crisis before income would be suspended and would only need to recovery to levels seen in June this year to mature positively.

What to expect?

Worst case scenario besides Morgan Stanley going bust, is if the market falls more than 30% in the first quarter and stays below there for a decade – the investment will pay no income and will mature after 10 years, returning a loss in line with the fall in the index over the term. Best case scenario is it runs for say, five or more years, while interest rates are low and when they start to recover, the market does too and then it matures, paying more than 20% gain, which should more than adequately combat the effective rate of inflation. Likely scenario, although this is not a forecast, is that it runs for between three and five years, paying 3% per annum income and then matures with between 12% and 20% gain. Possible scenario, the market crashes further taking us back to levels not seen since the darkest days of the financial crisis, no income will be paid until it recovers to be above a FTSE 100 equivalent of around 4250*. It recovers further over a number of years, albeit only to levels last seen in June this year, when it matures paying 4% per year it was in force. *Assumes an initial level equivalent to 6000 on FTSE 100.

Worst

Best

Likely

Possible

Note that this is a capital at risk investment.

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