The Morgan Stanley FTSE Growth Optimiser Plan

Transcription

1 The Morgn Stnley FTSE Growth Optimiser Pln Offering choice of two FTSE 100 linked growth plns Choose the growth nd risk profile tht meets your investment needs

2 The Morgn Stnley FTSE 100 Growth Optimiser Pln Providing choice of FTSE 100 linked growth plns to mtch your investment needs Introduction Morgn Stnley hs developed the FTSE Growth Optimiser Pln to both tke dvntge of current mrket conditions nd lso to offer investors choice of two investment plns so tht they cn choose the pln tht most closely mtches their investment needs. Both plns provide for ttrctive growth potentil, dependent on the performnce of the FTSE 100 Index, nd lso hve lower equity risk to cpitl thn stright investment in the Index. Option 1 Mximum Protection 1 times the uncpped growth of the FTSE 100 Index over 6 yers Single erly exit feture to py 135% t the end of yer 3 if the Index rises by 35% or more Cpitl not t risk to the FTSE 100 Index Option 2 Mximum Growth 1.5 times the uncpped growth of the FTSE 100 Index over 6 yers Single erly exit feture to py 152.5% t the end of yer 3 if the Index rises by 35% or more Cpitl only t risk to the FTSE 100 Index if the Index flls by 35% or more over the life of the Pln Pln Overview The Morgn Stnley FTSE Growth Optimiser Pln (the Pln ) is six yer investment which is designed to provide investors with choice of level of prticiption in the growth of the FTSE 100 Index over the six yer term of the Pln. The Pln lso hs n Erly Exit Feture tht provides for the erly return of n investor s initil investment t the end of yer three, subject to certin conditions which re outlined in the Erly Exit Returns section opposite. The Pln provides for two different levels of cpitl protection depending on the Pln option selected. 2

3 Pln Returns Initil Investment Your money will be used to buy securities which it is envisged will be medium term notes, which re debt instruments or bonds issued by finncil institutions, with credit rting of A+ or better by Stndrd & Poor s or the equivlent rting by Moody s Investor Services Limited t the time of purchse. The Pln Mnger will select securities tht re designed to ensure tht the investment objectives set out in this Pln brochure re chieved. Securities will be purchsed by the Pln Mnger on Mrch 19th, 2004 which is the Pln Strt Dte. Any subscription money invested by you in the Pln before this dte will ccrue interest in client bnk ccount t rte of 0.5% below bnk bse rtes (net of 20% deduction to be pid to the Inlnd Revenue s tx on interest on csh held pending ISA investments). Your Initil Investment for the purposes of the Pln will equl the sum of your subscription money plus ny ccrued interest. Your Initil Investment will be rounded down to the nerest Erly Exit Returns If the Erly Exit Index Level is 35%, or more, higher thn the Initil Index Level on the third nniversry of the Pln Strt Dte, the Erly Exit Feture will be triggered. Option 1 Mximum Protection If the Erly Exit Feture is triggered your pln ssets will be worth 135% of your initil investment on 19th Mrch 2007 nd you will be ble to elect to receive n mount equl to 135% of your Initil Investment nd exit from the Pln or elect to continue with the Pln on terms tht will be offered t the time. Any erly exit pyment will be mde no lter thn 3rd April Option 2 Mximum Growth If the Erly Exit Feture is triggered your pln ssets will be worth 152.5% of your initil investment on 19th Mrch 2007 nd you will be ble to elect to receive n mount equl to 152.5% of your Initil Investment nd exit from the Pln or elect to continue with the Pln on terms tht will be offered t the time. Any erly exit pyment will be mde no lter thn 3rd April If the Erly Exit Index Level is less thn 35% higher thn the Initil Index Level, both Plns will continue to Mturity. For both options, if the Erly Exit Feture is triggered you will not prticipte in ny further FTSE 100 growth even if you elect to sty invested in the Pln. The Initil Index Level is the officil closing level of the FTSE 100 Index on the 19th Mrch, The Erly Exit Index Level is the officil closing level of the FTSE 100 Index on the 19th Mrch, Mturity Returns Growth Return Option 1 Mximum Protection Provided the Erly Exit Feture is not triggered, your investment growth t mturity will equl your Initil Investment multiplied by one times the percentge growth in the FTSE 100 Index over the six yer investment term. This is clculted by reference to the percentge chnge between the Initil Index Level nd the Finl Growth Index Level. If the Finl Growth Index Level is below the Initil Index Level growth will be zero. 3

4 Option 2 Mximum Growth Provided the Erly Exit Feture is not triggered, your investment growth t mturity will equl your Initil Investment multiplied by one-nd--hlf times the percentge growth in the FTSE 100 Index over the six yer investment term. This is clculted by reference to the percentge chnge between the Initil Index Level nd the Finl Growth Index Level. If the Finl Growth Index Level is below the Initil Index Level growth will be zero. For both options; The Initil Index Level is the officil closing level of the FTSE 100 Index on the 19th Mrch, The Finl Growth Index Level is the verge of the 12 monthly closing levels of the FTSE 100 Index from 19th April 2009 to 19th Mrch 2010 (12 observtions in totl). Cpitl Return Option 1 Mximum Protection This Option is designed to provide minimum of full repyment of your Initil Investment t mturity. Plese see the Product Risks on pge 6 for more detiled description of how the Pln risks protection is provided. Option 2 Mximum Growth This Option provides for full repyment of your Initil Investment in the following circumstnces; 1. The Erly Exit Feture is triggered. In this scenrio you should receive full repyment of your cpitl plus 52.5% growth. 2. If the Index never flls by 35% or more from its Initil Index Level t ny time over the life of the Pln 3. If the Index flls by 35% or more from its Initil Index Level t ny time over the life of the pln, nd the Finl Cpitl Index Level is higher thn the Initil Index Level. In ll other circumstnces your initil investment will be reduced by 1% for ech 1% tht the Finl Cpitl Index Level is lower thn the Initil Index Level. The Finl Cpitl Index Level is the officil closing level of the FTSE 100 Index on 19th Mrch Full cpitl repyment in ll three scenrios bove is subject to the Product Risks tht re set out on pge 6 nd give more detiled description of how Pln protection is provided. Totl Return Totl Return for the Pln is equl to the sum of the Growth Return plus Cpitl Return for ech option. Totl Return is only clculted to the extent the Erly Exit Feture is not triggered. Plese note tht for option 2, Mximum Growth, it is possible tht the Pln will generte positive Growth Return whilst lso generting Cpitl Return of less thn n investor s Initil Investment. Exmple Initil Investment 10,000 Initil Index Level 4,000 Finl Cpitl Index Level 3,600 Finl Growth Index Level 4,400 Growth Return = 1.5 x 10,000 x Finl Growth Index Level Initil Index Level = 1,500 Initil Index Level Cpitl Return = 10,000 x Finl Cpitl Index Level = 9,000 Initil Index Level Totl Return = 1, ,000 = 10,500 4

5 Potentil Returns The following tbles illustrtes the potentil returns you could ern bsed on n Initil Investment of 10,000. Option 1 Finl Growth Index Level Erly Exit Index Level > 35% Erly Exit Index Level < 35% bove compred to Initil Index bove Initil Index Level Initil Index level Level (% chnge) Erly Exit Return Growth Return Cpitl Return Totl Return -60.0% N/A 0 10,000 10, % N/A 0 10,000 10, % N/A 0 10,000 10, % N/A 0 10,000 10, % N/A 2,000 10,000 12, % 13,500 4,000 10,000 14, % 13,500 6,000 10,000 16, % 13,500 8,000 10,000 18, % 13,500 10,000 10,000 20, % 13,500 12,000 10,000 22,000 Option 2 A) Index hs never fllen by more thn 35% over the life of the Pln Finl Growth Index Level Erly Exit Index Level > 35% Erly Exit Index Level < 35% bove compred to Initil Index bove Initil Index Level Initil Index level Level (% chnge) Erly Exit Return Growth Return Cpitl Return Totl Return -60.0% N/A N/A N/A N/A -40.0% N/A N/A N/A N/A -20.0% N/A 0 10,000 10, % N/A 0 10,000 10, % N/A 3,000 10,000 13, % 15,250 6,000 10,000 16, % 15,250 9,000 10,000 19, % 15,250 12,000 10,000 22, % 15,250 15,000 10,000 25, % 15,250 18,000 10,000 28,000 Option 2 B) Index hs fllen by more thn 35% over the life of the Pln Finl Growth Index Level Erly Exit Index Level > 35% Erly Exit Index Level < 35% bove compred to Initil Index bove Initil Index Level Initil Index level Level (% chnge) Erly Exit Return Growth Return Cpitl Return Totl Return -60.0% N/A 0 4,000 4, % N/A 0 6,000 6, % N/A 0 8,000 8, % N/A 0 10,000 10, % N/A 3,000 10,000 13, % 15,250 6,000 10,000 16, % 15,250 9,000 10,000 19, % 15,250 12,000 10,000 22, % 15,250 15,000 10,000 25, % 15,250 18,000 10,000 28,000 *For the purposes of this nlysis we hve ssumed tht the Finl Growth Index Level is equl to the Finl Cpitl Index Level. 5

6 Product Risks For both Mximum Protection & Mximum Growth Options The Pln hs mturity of six yers nd is intended s medium term investment. If you sell your investment before its mturity dte you my get bck less thn your Initil Investment. Prior to mturity, limited liquidity for the securities will be provided in the secondry mrket. This mens tht it my not lwys be possible to sell the Securities t certin times nd tht the price chieved my be less thn the originl investment. It is nticipted tht MSIL will be the only deler in the securities. Your money is invested in securities issued by finncil institutions with credit rting of A+ or better by Stndrd & Poor s or the equivlent rting by Moody s Investor Services Limited t the time of purchse. These securities re designed to provide the cpitl return for your investment. In the event of these finncil institutions going into liquidtion or filing to comply with the terms of the securities you my lose money nd get bck less thn you invested. It is not gurnteed investment. The returns of the Pln re bsed on the price performnce of the FTSE 100 Index nd does not include ny return from dividend income or prticiption in corporte ctions, s would be the cse if you invested in the FTSE 100 Index directly. If the Erly Exit Feture is triggered you will not prticipte in ny dditionl FTSE 100 Index growth even if you elect to sty invested in the Pln. If the Erly Exit Feture is not triggered the Finl Growth Index Level will not be bsed on single reding of the FTSE 100 Index, but on the verge level of the Index on given set of dtes over the finl twelve months, defined in the section Mturity Returns on pges 3 nd 4. The clcultion of the verge FTSE 100 Index level my result in lower return thn if single reding of the FTSE 100 Index ws tken t the Pln mturity. MSIL does not give investment dvice. If you re in ny doubt bout the suitbility of this investment, you should contct your independent finncil dviser. The levels nd bsis of txtion nd reliefs from txtion cn chnge t ny time. For option 2 only, if the index flls by 35% or more, form the Initil Index Level, t ny time over the life of the Pln nd hs filed to recover t mturity, you my lose some or ll of your cpitl. As such this option is only suitble for investors tht re prepred to lose some or ll of their cpitl. For more extensive description of the Product Risks, see pges 9 nd 10 of the Key Fetures section of this brochure. 6

7 The Morgn Stnley FTSE Growth Optimiser Pln Three wys to Invest 1. ISA s for 2003/04 Invest 3,000 per person into Mini Stocks nd Shres ISA or Invest 7,000 per person into Mxi ISA for 2003/04. Income or growth pyouts mde within n ISA re completely free of ny tx, under current legisltion. However, the tx fee sttus of ISAs is lwys subject to chnges in legisltion. 2. ISA nd PEP trnsfers The Pln ccepts trnsfers of existing Mini stocks nd shres ISAs, Mxi ISAs nd PEPs. Considertion prior to trnsfers should include exit nd ssocited chrges of encshing your existing investments nd the potentil for loss of income or growth whilst the trnsfer is pending. 3. Direct Investments You cn invest directly in the Pln. The Pln is open for SIPP nd SSAS investors. How to invest This brochure lso contins Key Fetures section including Terms & Conditions, ll of which should be red before investing. Min Appliction Form for ISA nd Direct Investment If you re pplying for Direct Investment or n ISA in 2003/04, you should complete sections 1-3 on the front of the form nd section 4 on the bck of the Appliction Form for ISA nd/or Direct Investment. Appliction Form for PEP/ISA Trnsfers If you re pplying for PEP or ISA trnsfer, you should complete sections 1-3 on the front of the form nd section 4 on the bck of the Appliction Form for PEP or ISA trnsfer. Appliction Forms for second pplicnts For second pplicnts there is n dditionl ISA/Direct Investment form. For dditionl pplictions simply photocopy the ppliction forms. Your cheque It is only necessry to send one cheque for the totl mount tht ech individul wishes to invest (e.g. one cheque for 15,000 cn cover n ISA investment of 7,000 nd Direct Investment in shres of 8,000). Seprte pplictions (e.g. from husbnd nd wife) require two cheques. Cheques should be mde pyble to Morgn Stnley FTSE Growth Optimiser Client A/C. If your cheque is from building society, it should reference your nme. (For exmple Morgn Stnley FTSE Growth Optimiser Client A/C Reference A Johnson ) Wht to do with your completed ppliction 1. Check tht ll sections hve been completed s necessry nd tht the ppliction hs been signed 2. Ensure tht you hve selected the correct investment option on your ppliction form. 3. Return the completed ppliction nd your cheque to your finncil dviser, who will be required to complete the pproprite verifiction of identity checks nd sign the ppliction. 4. Your finncil dviser should then send the completed ppliction pckge to Morgn Stnley & Co. Interntionl Limited, Administrtion Office, Growth Optimiser Pln, Floor 8, Fountin House, 2 Queen's Wlk, Reding, RG1 7QF 7

8 Key Dtes Event Applicbility Dtes* Offer Periods: ISAs, Direct Investments Option 1 & 2 12th Jnury 2004 to 5th Mrch 2004 ISA nd PEP Trnsfers Option 1 & 2 12th Jnury 2004 to 20th Februry 2004 FTSE 100 Index observtion dtes: Initil Index Level Option 1 & 2 19th Mrch 2004 Erly Exit Index Level Option 1 & 2 19th Mrch 2007 Finl Growth Index Level Option 1 & 2 Monthly verge of the officil closing levels on the 19th of ech month from April 2009 to Mrch 2010 (12 observtions in totl) Finl Cpitl Index Level Option 2 Only 19th Mrch 2010 Pln Pyments: Erly Exit Pyment Dte Option 1 & 2 3rd April 2007 Mturity Pyment Dte Option 1 & 2 26th Mrch 2010 *In the event tht ny of the bove dtes re not London business dys the relevnt dte will be moved forwrd to become the first business dy immeditely following the dte in question. Key Fetures Section Key Fetures of the Morgn Stnley FTSE Growth Optimiser Pln Investment Options Investment cn be mde in the following wys: Vi Mxi ISA Vi Mini Stocks nd Shres ISA By trnsferring n existing PEP (Generl nd/or Single Compny) or ISA By mking Direct Investment We ve described the Morgn Stnley FTSE Growth Optimiser Pln in these Key Fetures. For your informtion, in respect of PEP nd ISA trnsfers, the current issue of this Pln will be closed to investments on 20th Februry

9 Objectives The objectives of the Morgn Stnley FTSE Growth Optimiser Pln ( the Pln ) re s follows: Option 1 Mximum Protection To provide n opportunity to prticipte in returns linked to one times the growth in the FTSE 100 Index over six yer period. To provide full return of n investors initil investment t mturity of the Pln, or if the Erly Exit Feture is triggered, to provide for erly exit out of the Pln fter three yers if the FTSE 100 Index is 35%, or more, higher thn its initil level. Option 2 Mximum Growth To provide n opportunity to prticipte in returns linked to one-nd--hlf times the growth in the FTSE 100 Index over six yer period. To provide for return of n investors initil investment t mturity of the Pln dependent on the performnce of the FTSE 100 Index, or if the Erly Exit Feture is triggered, to provide for erly exit out of the Pln fter three yers if the FTSE 100 Index is 35%, or more, higher thn its initil level. Both Mximum Protection nd Mximum Growth Options To provide Pln returns it is envisged the Pln will invest in securities known s medium term notes ( Notes ) which re debt instruments or bonds issued by finncil institutions. The Pln Mnger, who is regulted by the FSA, will rrnge for the purchse of the Notes. These Notes re designed to hve the chrcteristics required to mtch the dvertised returns to investors. MSIL my be providing, or my hve provided within the previous twelve months, significnt dvice or investment services in reltion to the investment concerned or relted investment. As soon s prcticble fter 19th Mrch 2010 if the Erly Exit Feture does not trigger, or 19th Mrch 2007 if the Erly Exit Feture does trigger, you will hve the option to either close your Pln, trnsfer it to nother mnger (where relevnt), or to continue your investment on terms tht my be offered t the time. Mking n Investment Subscription is only vilble by wy of lump sum investment. The minimum is 3,000 for Mini Stocks & Shres ISA nd 5,000 for Mxi ISA or Direct Investment. If investing vi Mxi ISA, you must not subscribe to nother ISA (other thn Tess only ISA) in the sme tx yer tht you subscribe to this Mxi ISA. PEP or ISA trnsfers re subject to minimum investment mount of 5,000. Risk Fctors Generl Risk Fctors The Pln hs mturity of six yers nd is intended s medium term investment. If you sell your investment before its mturity dte you my get bck less thn your Initil Investment. Prior to mturity, limited liquidity for the securities will be provided in the secondry mrket. This mens tht it my not lwys be possible to sell the securities t certin times nd tht the price chieved my be less thn the originl investment. Your money is invested in securities issued by finncil institutions with credit rting of A+ or better by Stndrd & Poor's or the equivlent rting by Moody's Investor Services Limited t the time of purchse. These securities will provide the return for your investment. In the event of these finncil institutions going into liquidtion or filing to comply with the terms of the securities, you my lose money nd get bck less thn you invested. It is not gurnteed investment. 9

10 If you hve invested vi n ISA nd subsequently decide to withdrw, it my not be possible to invest in nother ISA for tx yer 2003/2004 if your cncelltion period hs expired. Your circumstnces could chnge, forcing you to withdrw nd relise your investment erly. If this hppens, you my get bck substntilly less thn the mount you originlly invested. The formul under which the return on the Pln is likely to be clculted provides tht in certin circumstnces clcultion of the return my be djusted to tke ccount of mrket disruption events interfering with determintion of the level of the FTSE 100 Index. A relevnt mrket disruption would be suspension or limittion of trding on the London Stock Exchnge of mteril proportion of the shres included in the FTSE 100 Index, which would dely or prevent clcultion of the officil Index level. Should this occur, the return on the Pln will be ffected nd my be more or less thn would otherwise hve been the cse. Pyments scheduled to be mde in respect of the securities in which the Pln will invest your money my be delyed where mrket disruption events occur (s described bove), cusing dely to the vilbility of published index levels for the FTSE 100 Index, nd potentilly therefore delys to pyments. In the event tht ny such pyments re delyed, corresponding djustments will be mde to the scheduled dtes for pyments under the Pln. Pst performnce is not necessrily guide to future performnce nd should not be used to ssess the risks ssocited with this investment. The levels nd bsis of txtion nd reliefs from txtion cn chnge t ny time. The vlue nd vilbility of ny tx relief depends on individul circumstnces. The fvourble tx tretment of ISAs nd PEPs my not be mintined throughout the term of the ISA, nd is subject to chnges in legisltion. Tx ssumptions re bsed on our understnding of current legisltion nd prctice t the time of print nd my be subject to future chnge. The returns of the Pln re bsed on the price performnce of the FTSE 100 Index nd do not include ny return from dividend income or prticiption in corporte ctions, s would be the cse if you invested in the shres comprising the FTSE 100 Index directly. If the Erly Exit Feture is triggered you will not prticipte in ny dditionl FTSE 100 Index growth even if you elect to sty invested in the Pln. If the Erly Exit Feture is not triggered the Finl Growth Index Level will not be bsed on single reding of the FTSE 100 Index, but on the monthly verge level of the Index over the finl twelve months. The clcultion of the verge FTSE 100 Index level my result in lower return thn if single reding of the FTSE 100 Index ws tken t the Pln mturity. Specific Risk Fctors Option 2 Mximum Growth If t ny Index Vlution Dte the FTSE 100 Index is 35%, or more, below the Initil Index Level t ny point in time your cpitl repyment my be reduced by 1% for ech 1% by which the Finl Cpitl Index Level is below the Initil Index Level. For these resons, this option is only suitble if you cn fford n element of risk to your cpitl s the cpitl repyment t mturity my be less thn your originl investment. Full repyment of cpitl is not gurnteed nd you my lose some or ll of your cpitl. 10

11 Frequently Asked Questions Wht is the Morgn Stnley FTSE Growth Optimiser Pln? It is n investment pln, which cn be ccessed in one or more wys: by using your nnul Mxi ISA subscription llownce of up to 7,000, by ISA or PEP trnsfer or s Direct Investment. The Pln follows n investment strtegy designed to ensure tht scheduled pyments re met nd tht the risks of the investment correspond to the risks described bove. The Pln is n investment in qulifying securities, denominted in sterling nd listed on n pproved stock exchnge. You cn trck the performnce of your investment through the Pln price, which is vilble on request from the Pln Mnger. Who is eligible to invest? UK investors ged 18 nd over re eligible to invest in the Pln vi n ISA or by using the Direct Investment option. Investments cn lso be mde through the Direct Investment option on behlf of person under the ge of 18. Wht hppens to my subscription money? Prior to the Pln Strt Dte your subscription money will be pid into client bnk ccount nd your money will be mnged in ccordnce with FSA s client money rules. Interest will ccrue on money in the client bnk ccount t rte equl to UK bnk bse rtes minus 0.5%. Interest will ccrue from the dte the cheque is clered until the Pln Strt Dte. All such interest with respect to this money will be invested into your ISA net of 20% deduction tht is required to be pid to the Inlnd Revenue. Wht is my Initil Investment? For the purposes of the Pln your Initil Investment is equl to ny subscription money you py into the Pln s client bnk ccount plus ny interest ccrued on your subscription money, less ny pplicble deductions (see bove). Your Initil Investment will be rounded down to the nerest Wht hppens on the Pln Strt Dte? At the Pln Strt Dte the Pln Mnger will use the ggregte Initil Investment mount to purchse securities with fetures tht mtch the pyment objectives of the Pln. The Pln Strt Dte is 19th Mrch Wht is the Erly Exit Feture? If the Erly Index Level is 35%, or more, higher thn the Initil Index Level (s defined on pge 3) the Erly Exit Feture will be triggered. If the Erly Exit Feture is triggered you will be ble to elect to receive n mount s set out in the Erly Exit Returns section on pge 3 nd exit from the Pln or elect to continue with the Pln on terms tht will be offered t the time. Wht cn I do if the Erly Exit Feture is triggered? You cn elect either to close the Pln by selling your Pln securities or to continue your investment in the Pln on terms tht will be offered t the time. If you decide to close your Pln the Pln Mnger will invest your proceeds from the disposl of Pln securities into client bnk ccount pending further instructions. Wht return cn I expect? Totl Return Your Totl Return, on 26th Mrch 2010 will be s described in the Brochure on pges 3 nd 4, subject to the Risk Fctors on pges 9 nd 10. Option 1- Mximum Protection Your minimum return should be equl to your Initil Investment. Option 2 Mximum Growth Your minimum return is linked to the performnce of the FTSE 100 Index nd is subject to the Specific Risk fctors set out on pge 10. Full repyment of cpitl is not gurnteed nd you my lose some or ll of your cpitl. Erly Exit Return In the event tht the Erly Exit Feture is triggered you will be ble to sell your Pln securities in order to receive single pyment s follows. Option 1 Mximum Protection The single pyment will be equl to 135% of your initil investment on 3rd April 2007 this mount will be credited to the Pln client bnk ccount. Option 2 Mximum Growth The single pyment will be equl to 152.5% of your initil investment on 3rd April 2007 this mount will be credited to the Pln client bnk ccount. 11

12 Wht is verging? If the Pln runs to the Pln Mturity Dte your finl Growth Return, if ny, will not be clculted bsed on single reding of the FTSE 100 Index, but on the monthly verge level of the Index over the finl twelve months of the Pln. If the closing level of the FTSE 100 Index on the Pln Mturity Dte were to be higher thn the verge level over the finl twelve months of the Pln, this would result in lower return thn if the closing level hd been used. Wht Cpitl Return do I receive? Option 1 Mximum Protection Your mturity proceeds on re expected to be t lest equl to your Initil Investment. Plese see the risk fctors on pges 9 nd 10 for importnt informtion on the nture of the ssets tht provide your cpitl protection for the Pln. Option 2 Mximum Growth This Option provides for full repyment of your Initil Investment in the following circumstnces; 1. The Erly Exit Feture is triggered. In this scenrio you should receive full repyment of your cpitl plus 52.5% growth. 2. If the Index never flls by more thn 35% from its Initil Index Level t ny time over the life of the Pln 3. If the Index does fll by more thn 35% from its Initil Index Level t ny time over the life of the pln, nd the Finl Cpitl Index Level is higher thn the Initil Index Level In ll other circumstnces your initil investment will be reduced by 1% for ech 1% tht the Finl Cpitl Index Level is lower thn the Initil Index Level. The Finl Cpitl Index Level is the officil closing level of the FTSE 100 Index on 19th Mrch Plese see the risk fctors on pges 9 nd 10 for importnt informtion on the nture of the ssets tht provide your cpitl protection for the Pln. Wht is the FTSE 100 Index? The FTSE 100 Index is n index compiled nd clculted by FTSE Interntionl Limited ( FTSE ). The Index is comprised of the 100 lrgest compnies listed on the London Stock Exchnge by mrket cpitlistion. The dily published level of the Index is derived by FTSE from the closing price of Shres in ech of those 100 compnies, weighted ccording to their reltive mrket cpitlistions. Cn I withdrw before the end of the six yer term? Yes. However, should you withdrw t ny time during the six yer investment period, the csh vlue is not gurnteed nd will depend on previling mrket conditions including, but not limited to, interest rtes, demnd for securities in the secondry mrket nd the levels of the FTSE 100 Index to which your investment is linked. As ll chrges re reflected in the terms offered, the vlue of your investment in Pln is likely to be less thn the mount originlly invested in it for substntil prt of the investment period. The investment protection is only vlid if you remin invested for the full six yer investment period, or if the Erly Exit Feture is triggered nd you choose to exit from the Pln fter three yers. Will my return be txed? For n investor who is UK resident individul, ll returns from ISA nd PEP investments re currently free of Income Tx nd Cpitl Gins Tx. If the investments re held within Direct Investment, ll returns in excess of the initil investment either on sle of the Pln or on mturity will be subject to income tx t your highest mrginl rte of tx. Pyments from the Pln will be mde gross of tx nd is your responsibility to declre this income on your tx return. You should seek dvice from your own tx dviser if you hve ny doubts s to your tx sttus. If I m considering PEP or ISA trnsfer, is there nything else I should know? Your existing PEP or ISA must be trnsferred in csh, which mens tht your existing Pln Mnger will sell your investment holdings. Your existing Pln Mnger my chrge you n exit or trnsfer fee. There is the potentil for loss of income or growth if mrkets should rise while your trnsfer remins pending. Plese note tht to ensure the funds re received from your existing Pln Mnger in timely mnner, we hve n erly cut-off dte for PEP nd ISA trnsfers of 20th Februry Wht if I wnt to close or trnsfer my Pln? You my only terminte or trnsfer the Pln in whole by wy of written notifiction. Deling normlly tkes plce t the end of ech month; your investment(s) will be sold t the next prcticble deling dy following the request. We nticipte tht MSIL will be the only deler in the Pln Securities. Pyment will then be mde within seven working dys. Prtil withdrwls will not be permitted. 12

13 How will chrges nd expenses ffect my investment? With the exception of 100 plus VAT chrge in the event tht you subsequently wish to trnsfer your Pln to nother Pln Mnger, there re no explicit initil or ongoing chrges. All other chrges re tken into ccount in setting the terms offered over the investment period nd the returns shown re net of ll chrges nd expenses. The terms offered lso tke into ccount ll the costs of setting up the Pln, dministering it nd conducting the investment mngement of your Pln. How much will the dvice cost? MSIL does not provide dvice. If you hve ny doubts s to the suitbility of this pln, plese consult your finncil dviser. If you require personl finncil dvice you should consult n independent dviser. If you receive dvice from n independent dviser he will give you detils bout the cost. If you re not receiving ny dvice, commission my still be pyble to n independent dviser. Commission is expected to be pid by the Pln Mnger to independent finncil dvisers through which pplictions for the Pln re received. The mount of commission will depend on the mount you invest. The mount will lso be included in your welcome letter. Commission is lredy ccounted for in the terms offered nd does not ffect the return shown. Will you keep me updted? Within 5 dys of receipt of your ppliction by us, we will send you forml cknowledgement s well s informtion on your right to cncel, grnted under the terms of the Pln. If you cncel within the pplicble 14 dy cncelltion period you will entitled to the repyment of the mount you hve invested plus ny ccrued interest, less ny necessry dministrtion or other costs. After the Pln Strt Dte on 19th Mrch 2004, we will send you n opening sttement detiling your holdings within your Pln. At the end of every yer, we will send you n nnul sttement nd vlution. Wht re CAT stndrds nd do they pply to this Pln? These re voluntry stndrds for ISAs introduced by the Government. The stndrds cover levels of chrges, ccess to svings nd fir terms. These re not gurntee of performnce nd do not imply tht n ISA hs been pproved by the Government. It is not considered useful or pproprite to structure this Pln in ccordnce with CAT stndrds. The Pln is not in ny wy sponsored, endorsed, sold or promoted by FTSE Interntionl Limited ( FTSE ) or by the London Stock Exchnge plc (the Exchnge ) or by The Finncil Times Limited ( FT ) nd none of FTSE nor Exchnge nor FT mkes ny wrrnty or representtion whtsoever, expressly or impliedly, either s to the results to be obtined from the use of the Index nd/or the figure t which the sid Index stnds t ny prticulr time on ny prticulr dy or otherwise. The Index is compiled nd clculted by FTSE. However, none of FTSE nor Exchnge nor FT shll be lible (whether in negligence or otherwise) to ny person for ny error in the Index nd none of FTSE nor Exchnge nor FT shll be under ny obligtion to dvise ny person of ny error therein. FTSE ccepts no libility in connection with the trding of ny products on the Index. All copyright in the Index vlues nd constituent list vests in FTSE. Morgn Stnley & Co Interntionl Limited. Hs obtined full license from FTSE to use such copyright for the Pln. FTSE, FT-SE nd Footsie re trdemrks of the Exchnge nd FT nd re used by FTSE under license. Wht hppens to my investment if I die? Upon deth, ssets will then be trnsferred to Direct Investment, which forms prt of your estte for Inheritnce Tx purposes. If relevnt, the PEP or ISA sttus of the investment will then be lost. Once suitble documenttion is received, the investments will be trnsferred to your personl representtives within seven working dys. Your ccount cn then be terminted erly in ccordnce with its terms or held to mturity, t the discretion of your personl representtive. 13

14 Terms nd Conditions 1. Definitions: In these terms the following words hve the following menings: Pln Mnger Morgn Stnley & Co. Interntionl Limited, which is Authorised nd regulted by the Finncil Services Authority ( FSA ). Appliction Form The form tht must be completed to enble your Pln to be opened, substntilly in the form shown t the end of these Terms & Conditions. Pln Strt Dte 19 Mrch ISA Mxi Individul Svings Account. MSIL Morgn Stnley & Co. Interntionl Limited. PEP Personl Equity Pln. Pln ISA, PEP or Direct Investment s held under these Terms & Conditions. Securities The medium term notes to be cquired or entered into by the Pln Mnger in order to provide the Pln returns. Regultions Personl Equity Pln Regultions 1989 nd Individul Svings Account Regultions 1998 s mended from time to time. We, us & our Pln Mnger. You nd your An investor who pplies to open n ISA (or Direct Investment) or in the cse of PEP (or ISA) Trnsfer, n investor who pplies to trnsfer their PEP (or ISA) on these Terms & Conditions. 2. Your Pln: () To open Pln, you must submit to the Pln Mnger fully completed Appliction Form. In the cse of n ISA investment, you must lso provide the initil subscription mount. In the cse of n ISA or PEP trnsfer, we will mnge your Pln upon receipt of the proceeds of your previous Pln from your previous Pln Mnger. The Appliction Form is prt of these terms nd conditions nd if the terms differ, those contined in the Appliction Form will previl. (b) Subject to the Regultions we my open n ISA Pln provisionlly where the informtion which you hve supplied is insufficient. In respect of n ISA, where we open Pln on provisionl bsis you must supply the missing informtion within 30 dys of the ppliction, otherwise the Pln must be voided in ccordnce with Inlnd Revenue requirements. (c) If pplicble you my open more thn one Pln, subject to completion of n Appliction Form for ech Pln. (d) The Pln Mnger reserves the right to reject n ppliction for ny reson. 3. Cncelltion: () You will hve the right to cncel your Pln within 14 dys of receiving from us notice of your right to cncel. (b) If you exercise your right to cncel, but we do not receive your notice to cncel until on or fter the Pln Strt Dte when the investment in the Securities hs been mde, nd the vlue of the Securities hs fllen in tht time, n mount equivlent to the fll in vlue of the Securities will be deducted from the mount of your subscription repid to you. (c) If you exercise your right to cncel the purchse of Securities following PEP or ISA trnsfer, the proceeds will be pid direct to you nd you will irrevocbly lose ny fvourble tx tretment ssocited with PEP or ISA holding Subscriptions: () Subscriptions to the Pln my only be mde with your own csh or by trnsfer of csh from n existing ISA. (b) If you re investing into PEP Pln, investment my only be mde by trnsfer of csh from n existing PEP. (c) Trnsfers of existing PEPs nd ISAs will normlly be rrnged with the existing PEP or ISA mnger. Once the PEP or ISA hs been trnsferred, your PEP or ISA Pln will be subject to the Terms & Conditions set out here. 5. Tretment of Csh held within your Pln: () Csh will be held by us in ccordnce with the Client Money Rules of the FSA in pooled Client Account with bnk (which is not n ssocite of the Pln Mnger). Interest will ccrue on money deposited in the Client Account t rte equl to bnk bse rtes minus 0.5%. (b) Interest ccrued on csh deposits will be credited to your Pln immeditely prior to investment in the Pln Securities, nd will be rounded down to the nerest whole pound. (c) Within n ISA or PEP, csh cn only be held pending n investment nd if held in csh over prolonged period there is risk tht the Inlnd Revenue my void your ISA or PEP. 6. Permitted Investments: () The Pln Mnger will rrnge Pln Securities from one or more finncil institutions with credit rting of 'A+' or better t time of purchse (s mesured by Stndrd & Poor s or the equivlent rting by Moody's Investor Services Limited). In the event of such Securities being unvilble, the Pln Mnger my substitute the Securities for lterntives with similr chrcteristics. (b) In the event of ny issuing institution being unble to meet their finncil obligtions, you my not receive the full return nd you could lose ll, or prt, of your investment. (c) It is not possible to switch between Plns t ny time. (d) The Pln Mnger my ggregte ny trnsction for n investor with one or more trnsctions for other investors, even though this my result in less fvourble price thn if it hd been crried out seprtely. The Pln Mnger will tke ll resonble steps to ensure tht ny ggregted trnsction is crried out on the best terms generlly vilble in the mrket t tht time for trnsctions of similr type nd size. (e) You hve right to inspect copies of contrct notes, vouchers nd entries in the Pln Mnger s book, or computerised records relting to trnsctions crried out for your ccount. These records will be kept for t lest six yers. 7. Pln Returns: Option 1 Mximum Protection In the event the Erly Exit Feture hs not been triggered you will receive pyment on 26th Mrch 2010 equl to your initil investment plus 1.0 times the growth in the FTSE 100 Index clculted under the methodology set out on pges 3 nd 4 of this brochure under Mturity Returns, subject to stted risks. In the event the Erly Exit Feture is triggered your pln ssets will be worth 135% of your initil investment on 19th Mrch 2007 nd you will be ble to elect to receive n mount equl to 135% of your initil Investment nd exit from the Pln or elect to continue with the Pln on terms tht will be offered t the time. Option 2 Mximum Growth In the event the Erly Exit Feture hs not been triggered you will receive growth pyment on 26th Mrch 2010 equl to your initil investment plus 1.5 times the growth in the FTSE 100 Index clculted under the methodology set out on pges 3 nd 4 of this brochure under Mturity Returns, subject to stted risks.

15 This Option provides for full repyment of your Initil Investment in the following circumstnces; 1. The Erly Exit Feture is triggered. In this scenrio you should receive full repyment of your cpitl plus 52.5% growth. 2. If the Index never flls by 35% or more from its Initil Index Level t ny time over the life of the Pln 3. If the Index flls by 35% or more from its Initil Index Level t ny time over the life of the pln, nd the Finl Cpitl Index Level is higher thn the Initil Index Level. In ll other circumstnces your initil investment will be reduced by 1% for ech 1% tht the Finl Cpitl Index Level is lower thn the Initil Index Level. In the event the Erly Exit Feture hs not been triggered you will lso receive cpitl pyment on 26th Mrch 2009 linked to the performnce of the FTSE 100 Index clculted under the methodology set out on pge 4 of this brochure under Cpitl Return, subject to stted risks. In the event the Erly Exit Feture is triggered your pln ssets will be worth 152.5% of your Initil Investment on 19th Mrch 2007 nd you will be ble to elect to receive n mount equl to 152.5% of your Initil Investment nd exit from the Pln or elect to continue with the Pln on terms tht will be offered t the time. For Investors who re resident in the UK for tx purposes the bove pyments mde in respect of Pln which is held s n ISA or PEP will not be subject to either UK Income Tx or UK Cpitl Gins Tx. Any gins or losses on your investment will be disregrded for the purposes of Income Tx or Cpitl Gins Tx. For Investors who re resident in the UK for tx purposes, in respect of Pln which is held s Direct Investment, ll returns in excess of the initil investment t mturity my be lible to Tx. These sttements re bsed on current legisltion, regultions nd prctice, ll of which my chnge. If you hve ny doubts concerning your tx sttus, you should consult your own tx dviser. 8. How Investments re held: Securities will be held in the nme of Keydt Investment Product Nominees Limited, or such other nominee pproved by us, nd will be beneficilly owned by you. We ccept full responsibility for ny loss tht might rise directly s result of ny defult by ny nominee compny in whose nme the Securities re held. Securities cnnot be held by you outside of the Pln. All interests in your Pln will be, nd must t ll times remin, in your beneficil ownership, nd must not be used s security for lon. None of the interests my be lent to or deposited by wy of collterl with ny third prty, nor my you crete ny chrge or security over ny interests. We my not lend ny of your interests to third prty, nor my we borrow ginst its security. 9. Documenttion: () We will cknowledge in writing, where pplicble: (i) your ppliction to open n ISA; (ii) your request to trnsfer PEP or ISA to us; or (iii) your ppliction to open Direct Investment Pln. (b) You will receive n nnul sttement prepred on the bsis of vlutions tken on 19th Mrch ech yer. This will show detils of ll trnsctions effected during the previous twelve months nd includes vlution of your Pln. The sttement will be prepred in ccordnce with the rules of the FSA nd will be issued within 25 business dys of the vlution dte nd will not include ny mesure of comprtive performnce. (c) We my produce consolidted sttement covering where pplicble: (i) ll ISAs tht re held with us; (ii) n investment sttement covering ll PEPs held with us; (iii) n investment sttement covering ll Direct Investments held with us. (d) On request, you re entitled to receive copies of ny informtion issued to holders of Securities in which you invest. We reserve the right to mke resonble chrge for providing these dditionl services. (e) Where certificte or other document evidencing title to permitted investment is issued, it will be held by us or s we my direct. 10.Prtil Withdrwls: No prtil withdrwls re permitted from your Pln. 11.Trnsfers to nother Mnger: () Subject to the Regultions, you hve the right t ny time to trnsfer your ISA to nother ISA Mnger, or s the cse my be, your PEP to nother PEP Mnger. Your investment protection is only vlid if you remin invested for the full six yer investment period. As such, if you trnsfer your ISA or PEP you my not receive trnsfer vlue equl to your initil investment. (b) To effect trnsfer you must submit to us written instruction nd/or letter of cceptnce from your new ISA (or s the cse my be PEP) Mnger. We only effect the trnsfer in csh following the sle of ll Medium Term Notes held by you. It is not possible to trnsfer the Securities within ny of the Plns directly into nother ISA or PEP. (c) In ccordnce with the Regultions, if you wish to trnsfer n ISA for the current yer the trnsfer must be effected in respect of ll the subscriptions mde tht yer. In reltion to ISAs nd PEPs opened in respect of previous yer the trnsfer must be effected in respect of ll holdings held in tht yer s Pln. (d) No prtil trnsfers will be llowed. 12.Termintion: () You my terminte the Pln t ny time by giving written notice to the Pln Mnger tht you wish to terminte your Pln. Following receipt the Pln Mnger will then sell your investments t the next prcticble deling dte. On termintion, the Pln Mnger will ccount to you for the proceeds of investments nd will be entitled to retin ny csh or investments required to settle ny trnsctions lredy initited on your behlf nd ny outstnding fees. You will py to the Pln Mnger ny fees nd trnsction chrges ccrued to the dte of termintion. (b) The Pln my be terminted by the Pln Mnger in the following circumstnces; (i) immeditely on giving written notice to you if, in its opinion, it is impossible to dminister the Pln in ccordnce with the Regultions or you re in brech of the Regultions. (The ISA or PEP Pln will terminte utomticlly if it fils to stisfy the provisions of the Regultions with immedite effect. The Pln Mnger will notify you in writing if, by reson of ny filure to stisfy the provisions of the Regultions n ISA or PEP Pln ceses to qulify s n ISA or PEP); (ii) on one month s written notice if you fil to py ny money due; (iii) on three month s written notice if you re in brech of ny of these Terms & Conditions. In these circumstnces ny ssets of the Pln will be sold nd the proceeds trnsferred to you, subject to our right to retin csh in respect of fees nd trnsction chrges s set out in () bove. 15

16 The Morgn Stnley FTSE TM Growth Optimiser Pln Appliction Form ISA nd/or Direct Investment (continued) Closing Dte 5 Mrch Declrtion & Authority Applicble to Direct Investment Applicnts only Joint holder if pplicble (Direct Investment only): I declre I m 18 yers of ge or over nd tht I m not resident, Signture X nor m I cting on behlf of, resident of the United Sttes; nd tht I will not ssist ny person who is so resident to invest in this pln. Further I gree to inform you immeditely should I become resident of the United Sttes. Dte X Applicble to ll ISA Applicnts I declre tht: Investors should be wre tht the vlue of investments nd the income from them cn fll s well s rise, nd tht pst performnce is not necessrily guide to the future performnce. 1. All subscriptions mde, nd to be mde, belong to me; 2. I m 18 yers of ge or over; 3. If I m pplying for Mini Stocks nd Shres ISA; I hve not subscribed nd will not subscribe to Mxi ISA or nother Mini Stocks nd Shres ISA in the sme yer tht I subscribe to this Mini Stocks nd Shres ISA. If I m pplying for Mxi ISA, I hve not subscribed nd will not subscribe to nother ISA, other thn TESSA-only ISA, in the sme yer tht I subscribe to this ISA; 4. I m resident nd ordinrily resident in the UK for tx purposes, or non-resident but performing duties which by virtue of section 132(4)() of the Income nd Corportion Txes Act 1988 re treted s being performed in the UK, or I m mrried to person who performs such duties nd tht I will immeditely inform Morgn Stnley & Co. Interntionl Limited if I cese to be so resident nd ordinrily resident or to perform such duties, or be mrried to person who performs such duties. For ll Applicnts I uthorise Morgn Stnley & Co. Interntionl Limited: 1. To hold my csh subscription, Direct investments, ISA investments, (s pplicble), interest, dividends nd other rights or proceeds in respect of those investments nd ny csh or other proceeds; 2. To mke on my behlf ny clims to relief from tx in respect of ISA investments; 3. On my request to trnsfer or py to me, s the cse my be, Direct investments, ISA investments, interest, dividends, rights or other proceeds in respect of such investments, ny csh or other proceeds nd; 4. To supply n nnul sttement. Notes: When completed this ppliction form should be returned to your finncil dviser. MONEY LAUNDERING REGULATIONS 1993: Under the regultions, there is legl requirement to prove the identity of people who wish to mke n investment. You my therefore be sked for some evidence of your identity. This will normlly be pssport or similr form of identity check together with proof of ddress from gs bill, electricity bill or similr. Morgn Stnley & Co. Interntionl Limited will store informtion tht we hold bout you for dministrtion nd mrketing. We my contct you bout our services, nd the services of compnies with whom we hve reltionship, in the future. If you would prefer not to receive such informtion plese mrk this box. The interim vlue of the underlying ssets of the Pln do not directly impct the benefits generted. Hence, the periodic sttement shll be issued on n nnul bsis nd not more frequently. Issued by Morgn Stnley & Co. Interntionl Limited, which is uthorised nd regulted by the Finncil Services Authority. Finncil Adviser Detils I hve red nd understood the Morgn Stnley FTSE TM Growth Optimiser Pln contining the Key Fetures nd Terms & Conditions I cknowledge nd gree to the terms under which my investments will be mnged. I understnd tht Morgn Stnley does not provide investment dvice in reltion to the Pln nd confirm tht I either do not require such dvice or hve received dvice on the Pln from n Independent Finncil Adviser. I declre tht this ppliction form hs been completed to the best of my knowledge nd belief. Signture X Money Lundering I confirm tht I hve completed the pproprite verifiction of identity checks nd ttch the Verifiction of Identity Certificte. Either certified copies of the underlying documentry evidence received or certified note of the reference numbers nd other detils of the evidence obtined re enclosed with this certificte. I hve sighted the originl documents nd tht ny requiring signture were pre-signed. Dte X Finncil Adviser Signture:

17 The Morgn Stnley FTSE TM Growth Optimiser Pln Appliction Form ISA or PEP Trnsfer Closing Dte 20 Februry 2004 OFFICE USE ONLY Client ref: Del ref: Checked by Morgn Stnley Quilter Contct This form llows you to mke up to two trnsfers. Should you require further copies of the mndtes below to fcilitte dditionl trnsfers you my photocopy this form. I confirm tht I wish to trnsfer PEP Single Compny PEP Mxi ISA Mini ISA (Plese tick one only) Plese complete in block cpitls 1 Personl Detils Surnme First nme(s) in full Title : (Mr/Mrs/Miss/Ms/Other) Dte of Birth - - Permnent Residentil Address Postcode Telephone E-mil Address Do you hve Ntionl Insurnce (NI) Number? If Yes you must enter it here: (You should be ble to find your NI Number on pyslip, form P45 or P60, letter from the DSS, or pension order book) If you hve never been issued with Ntionl Insurnce Number, plese tick here Plese ensure tht you sign the legl declrtion in Section 4. 2 Investment Choice Option 1 Mximum Protection Option 2 Mximum Growth 3 Existing ISA / PEP trnsfer request mndtes First Mndte Instruction to the Pln Mnger from whom you re trnsferring your PEP/ISA (delete s pproprite) I hereby instruct you to sell investments within my pln immeditely nd trnsfer the csh proceeds, together with ny interest, dividends, rights nd ny other csh within my Pln (less ny mount you re entitled to keep under the terms of the Pln), to Morgn Stnley & Co. Interntionl Limited, Administrtion Office, Floor 8, Fountin House, 2 Queens Wlk, Reding RG1 7QF. Plese trnsfer my Pln once instructions hve been received from Morgn Stnley & Co. Interntionl Limited to do so. After trnsfer, ll dividends nd tx credits due should be mde pyble directly to me. If you re not in position to trnsfer my csh proceeds by 12 Mrch 2004, plese cncel my request to trnsfer nd reinstte my PEP/ISA. Title (Mr/Mrs/Miss/Ms/Other) First nme(s) in full Surnme Address Second Mndte Instruction to the Pln Mnger from whom you re trnsferring your PEP/ISA (delete s pproprite) I hereby instruct you to sell investments within my pln immeditely nd trnsfer the csh proceeds, together with ny interest, dividends, rights nd ny other csh within my Pln (less ny mount you re entitled to keep under the terms of the Pln), to Morgn Stnley & Co. Interntionl Limited, Administrtion Office, Floor 8, Fountin House, 2 Queens Wlk, Reding RG1 7QF. Plese trnsfer my Pln once instructions hve been received from Morgn Stnley & Co. Interntionl Limited to do so. After trnsfer, ll dividends nd tx credits due should be mde pyble directly to me. If you re not in position to trnsfer my csh proceeds by 12 Mrch 2004, plese cncel my request to trnsfer nd reinstte my PEP/ISA. Title (Mr/Mrs/Miss/Ms/Other) First nme(s) in full Surnme Address Telephone Signture Postcode Dte Telephone Signture Postcode Dte This completed ppliction, cheque nd the Verifiction of Identity Certificte should be returned to Morgn Stnley & Co. Interntionl Limited, Administrtion Office, FTSE Growth Optimiser Pln, Floor 8, Fountin House, 2 Queen's Wlk, Reding, RG1 7QF