THE MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 INTELLIGENT INVESTING. Plan Manager: Morgan Stanley & Co International plc

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1 THE MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 INTELLIGENT INVESTING Plan Manager: Morgan Stanley & Co International plc Deposit Taker: Lloyds Bank plc 1150 : PROTECTED DIGITAL U K S PA S S O C I AT I O N.C O. U K

2 The Plan Manager for this Plan is Morgan Stanley & Co. International plc ( MSIP ), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Morgan Stanley & Co. International plc is part of Morgan Stanley, a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. Through our structured investments platform, we leverage Morgan Stanley s world-renowned institutional expertise to bring you competitive, innovative and well thought-out investment opportunities. The Deposit Taker for the Plan is Lloyds Bank plc ( Lloyds ), whose registered office is 25 Gresham Street, London EC2V 7HN. Before the Plan Start Date, any subscription money received will be held by The Royal Bank of Scotland plc ( RBS ), whose registered office is 36 St Andrew Square, Edinburgh, EH2 2YBN. Both Lloyds and RBS are also authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. For more information, please visit our website This document constitutes a financial promotion and is issued and approved by Morgan Stanley & Co. International plc for the purposes of section 21 of the Financial Services and Markets Act 2000 ( FSMA ). Please contact your intermediary for more information on the deposit issued under the Plan. This Plan is not sponsored, endorsed or promoted by Lloyds Bank plc.

3 Contents Plan Glossary 2 Introduction 4 What is the FTSE 100 Index? 5 How is my Plan Return calculated? 6 Scenario analysis 7 How would the Plan have performed in the past? 8 What is a Structured Deposit? 9 What are the risks? 10 Is the Plan right for me? 14 How to invest 16 Frequently asked questions 18 Plan terms and conditions 21 Application Forms 30 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 1

4 Plan Glossary This brochure contains a number of capitalised words or phrases. The table below provides you with a summary of the key terms used throughout the brochure. Capitalised terms not defined below have the respective meanings given to them in the Plan terms and conditions. KEY TERMS Plan: The Morgan Stanley Digital Growth Deposit Plan 6 Initial Investment: The amount of money that you subscribe into the Plan (less any fees that we pay to an intermediary on your behalf, if applicable) Deposit Taker: Lloyds Bank plc, which is part of Lloyds Banking Group. As of 3rd December 2014, Lloyds Bank plc has a credit rating of A by Standard & Poor s and A1 by Moody s Investor Services Limited) Plan Manager: Morgan Stanley & Co International plc Product Type: Structured Deposit Underlying Index: FTSE 100 Index (UK Equity) Investment Term: 6 years Investment Type: Growth Plan Return: A one-off fixed return of 26% will be paid at maturity if the Final Level is at or above the Initial Level. If the Final Level is below the Initial Level, you will receive no return Repayment of Initial Investment at maturity: You will receive the repayment of 100% of your Initial Investment, regardless of how the Underlying Index has performed Tax Treatment: Income Tax Initial Level: The official closing level of the Underlying Index on the Plan Start Date Final Level: The official closing level of the Underlying Index on the Plan End Date Intermediary Charge: The amount of fees that you agree with your intermediary for the advice or execution-only service, as applicable, that they provide to you 2 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

5 IMPORTANT DATES 1 Subscription Period: 5th January 2015 to 13th February 2015, with an early cut off for ISA transfers of 6th February We reserve the right to close the subscription period early Plan Start Date: 27th February 2015 Plan End Date: 1st March 2021 Maturity Date: 15th March In the event that any of the dates mentioned in the table above are not London business days (i.e., days on which commercial banks are open for general business in London, which typically excludes any bank holidays and weekends) or days on which the relevant stock exchanges are not functioning normally, the relevant date will be moved to the first such day immediately following the date in question. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 3

6 Introduction This brochure explains the features of the Morgan Stanley Digital Growth Deposit Plan 6 (the Plan ). You should read and understand this document in full. It will tell you what type of product you are investing in and what potential Plan Return and repayment of your Initial Investment you can expect to receive, as well as the risks of investing and some guidance on whether the Plan is right for you. This document is not intended to replace advice, and we strongly recommend that you speak with an independent financial adviser before deciding to invest. If you do not understand the information contained in this document at any point, please ask your financial adviser or intermediary for further information. PLAN SUMMARY You will receive a fixed Plan Return of 26% of your Initial Investment at maturity (this equates to an A.E.R. of 3.93%) if the Final Level of the FTSE 100 Index is at or above its Initial Level. If the Final Level of the FTSE 100 Index is below its Initial Level you will not receive the Plan Return. The Plan is designed to repay 100% of your Initial Investment at maturity. This means that if the FTSE 100 Index falls over the Investment Term, you will not receive the fixed Plan Return but will be repaid your Initial Investment in full. The Plan has a fixed 6 year Investment Term. You must be prepared to keep your money invested for the full period to achieve the returns described in this brochure. By investing, you are placing money in a structured deposit held by Lloyds Bank plc. Please see page 9 for more information on what this means. You are exposed to the counterparty risk of Lloyds Bank plc and RBS. Both Lloyds Bank plc ( Lloyds ) and the Royal Bank of Scotland ( RBS ) are participants in the Financial Services Compensations Scheme (FSCS). For more information on what counterparty risk means and the FSCS, please see the What are the risks? section in this brochure. 4 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

7 INDEX LEVEL What is the FTSE 100 Index? The FTSE 100 Index was created by the Financial Times and the London Stock Exchange in January 1984 and is a widely used benchmark for the UK stock market. The Index measures the capital growth of the shares of the 100 largest companies by market capitalisation, listed on the London Stock Exchange. Therefore the FTSE 100 Index level does not include any dividend income. The below chart shows the historical performance of the FTSE 100 Index, from January 1984 to December PERFORMANCE OF THE FTSE 100 INDEX JAN 84 JAN 88 JAN 92 JAN 96 JAN 00 JAN 04 JAN 08 JAN 12 DATE FTSE 100 Source: Bloomberg / Morgan Stanley, 3rd December Past performance is not a reliable indicator of future performance. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 5

8 INVESTMENT GROWTH (%) How is my Plan Return calculated? GROWTH RETURN Our Digital Growth Deposit Plan 6 offers you the potential for a fixed Plan Return at maturity, depending on the performance of the FTSE 100 Index from its closing level on the Plan Start Date (the Initial Level ) to its closing level on the Plan End Date (the Final Level ). Illustrative Plan Perfomance at Maturity vs. Underlying Index Performance If the Final Level is at or above the Initial Level, you will receive 0 a fixed return equal to 26% of your Initial Investment. -50 If the Final Level is below the Initial Level, you will not receive the Plan Return INITIAL INVESTMENT REPAYMENT The Plan is designed to repay 100% of your Initial Investment at maturity, regardless of how the FTSE 100 Index has performed. This means that if the FTSE 100 Index falls over the Investment Term, you will not receive the Plan Return but will be repaid your Initial Investment in full. UNDERLYING PERFORMANCE (%) Plan Underlying Index 6 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

9 Scenario analysis How the Plan performs and the Plan Return it provides to you will depend on the performance of the FTSE 100 Index. The table below shows some example Plan Returns and repayment of Initial Investment in a range of scenarios for the FTSE 100 Index. Examples are based on an Initial Investment of 10,000. UNDERLYING INDEX PERFORMANCE (% CHANGE BETWEEN INITIAL LEVEL AND FINAL LEVEL) 2 PLAN RETURN REPAYMENT OF INITIAL INVESTMENT TOTAL RETURN (PLAN RETURN PLUS REPAYMENT OF INITIAL INVESTMENT) EQUIVALENT A.E.R -60% 0 10,000 10,000 0% -50% 0 10,000 10,000 0% -30% 0 10,000 10,000 0% -10% 0 10,000 10,000 0% 0% 2,600 10,000 12, % +10% 2,600 10,000 12, % +20% 2,600 10,000 12, % +30% 2,600 10,000 12, % +50% 2,600 10,000 12, % 2 Index Performance is calculated as the percentage change in the FTSE 100 Index from its closing level on the Plan Start Date to its closing level on the Plan End Date. The performance shown is an example for illustrative purposes only and does not represent a forecast of expected performance; the scenarios shown do not have an equal likelihood of occurrence, and do not represent an exhaustive list of all possible Plan scenarios. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 7

10 FREQUENCY How would the Plan have performed in the past? Morgan Stanley has used historical price information for the FTSE 100 Index to calculate what return the Plan would have generated if it had been launched in the past. This is often referred to as simulated past performance. This simulated past performance is run for each possible weekly Plan Start Date for 15 years up to the 1st December 2008 (which gives us the last full 6 year Term at the time the simulated past performance was run) 3. Across all the historical simulations, investors would have achieved the Plan Return in 62.07% of cases. Investors would also have been repaid their Initial Investment in full in 100% of cases. DISTRIBUTION OF PLAN MATURITIES FROM SIMULATED PAST PERFORMANCE 70% 60% 62.07% 50% 40% 37.93% 30% 20% 10% 0% Capital only Return paid RETURN Source: Bloomberg / Morgan Stanley, 3rd December The figures above refer to simulated past performance. Past performance is not a reliable indicator of future performance and should not be relied upon to make investment decisions. 3 The simulated past performance is run for each Plan Start Date from Wednesday 1st December 1993, and each following Wednesday. If a simulated Plan Start Date fell on a Wednesday which was a non-uk business day (i.e., a bank holiday), the next possible business day would be used as the simulated Plan Start Date. 8 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

11 What is a Structured Deposit? Structured deposits are cash-based deposits with a fixed term and a return linked to the performance of a particular asset (here, the FTSE 100 Index). They can be selected by investors who are willing to forgo a fixed or variable interest return on a conventional cash deposit for a potentially higher return linked to the performance of another asset. Before the Plan Start Date, your Initial Investment will be held in a client money account at RBS. Upon the Plan Start Date, your Initial Investment will be transferred to a structured deposit with Lloyds (the Deposit Taker). Once the Plan matures, your Initial Investment together with any return will be held in the client money account at RBS before being returned to you. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 9

12 What are the risks? COUNTERPARTY RISK There is a risk that Lloyds as the Deposit Taker may become insolvent and therefore not be able to pay any Plan Returns to you at maturity. There is also a risk that RBS becomes insolvent before the Plan Start Date, while holding your Initial Investment, or, once the Plan matures, while holding any amount due to you under the Plan. However, in both these instances, you may, subject to the conditions below, be covered by the FSCS. Both RBS and Lloyds are participants in the FSCS established under the Financial Services and Markets Act The FSCS can pay compensation to depositors if a bank becomes insolvent. If either Lloyds or RBS become insolvent and you suffer a loss as a result, it is possible that you will have a claim against the FSCS. Most depositors, including most individuals and small businesses, are covered by the scheme. How much you can claim depends on what you have invested in and how you have invested. For deposits, you can claim up to 85,000. If you have invested via a joint account, each account holder can make a separate claim (i.e., if both account holders are eligible, the maximum claim would be 170,000, representing 85,000 each). The 85,000 limit relates to the combined amount of the eligible depositor s accounts with the bank, including their share of any joint account, and not to each separate account. It is worth noting that the 85,000 limit is the maximum claim you can make against Lloyds or RBS across all accounts you hold with them, not per individual product. For example, if you had lost 85,000 from one investment product and 85,000 from another, you would only be able to make one claim for 85,000. It is also important to note that the FSCS limit applies across all products you hold from companies within the RBS or Lloyds groups. For example, any products held at NatWest would be included in a claim against RBS. Provided you are eligible, 85,000 is the maximum you can claim to cover your losses only. Before the Plan Start Date and during the Investment Term, the FSCS will cover any money lost from your Initial Investment, but not any positive performance of the Deposit. However, after the Maturity Date, whilst your money is held at RBS before being returned to you, the FSCS cover would include any returns generated by the deposit (up to the 85,000 limit). Please note, however, that the FSCS does not cover returns that you may have expected when investing but which did not ultimately materialise. You should also be aware that although your investment will be recorded and separately identified by the Plan Manager, your entitlement may not be identifiable by separate documents or certificates of title issued by the Plan Manager or the Deposit Taker. Therefore, in the event of default by the Deposit Taker, any claim to the FSCS for the repayment of the amounts held by the Deposit Taker would need to be submitted to the Deposit Taker by the Plan Manager as bare trustee for you. Further information on who is eligible to claim under the FSCS and in what circumstances can be found on the FSCS website at 10 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

13 What happens if the Plan Manager becomes insolvent? When you invest in the Plan, your deposit will be held for you on bare trust in the name of the Plan Manager as bare trustee. This means that if the Plan Manager becomes insolvent, even though it is held in the name of the Plan Manager, the money would still belong to you. Lloyds is entitled to appoint a replacement Plan Manager that would take on the responsibility of the incumbent Plan Manager. How do I assess the counterparty/credit risk associated with this Plan? Credit ratings can be a useful way to compare the default risk associated with different companies. Credit ratings are assigned by independent companies known as ratings agencies and reviewed regularly. As of the date of this publication, Lloyds has a credit rating of A by Standard & Poor s and A1 by Moody s Investor Services Limited. RBS has a credit rating of A- by Standard & Poor s and Baa1 by Moody s Investor Services Limited. MSIP has a credit rating of A by Standard & Poor s and A3 by Moody s Investor Services Limited. According to the most recent Standard & Poor s rating definitions, a company rated A has a strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than companies in higher-rated categories. A company rated BBB has adequate protection parameters, but adverse economic conditions are more likely to weaken their capacity to meet their financial commitments. According to the most recent Moody s rating definitions, issuers rated A are judged to be upper-medium grade and therefore subject to low credit risk. Issuers rated Baa are judged to be medium grade and subject to moderate credit risk. The highest possible credit rating for both Standard & Poor s and Moody s is AAA. Standard & Poor s credit ratings between AAA and BBB and Moody s Investor Services credit ratings between Aaa and Baa3 are considered to be investment grade. INVESTMENT RISK The Plan Return specified in this brochure is dependent on the performance of the Underlying Index. Past performance of the Underlying Index is not a reliable indicator of future performance and should not be relied upon when making investment decisions. There is no certainty that future performance of the Underlying Index will be positive. INDEX DISRUPTION RISK There may occasionally be circumstances that interfere with the calculation of the Underlying Index. For example, the calculation of the Underlying Index may be delayed or prevented if some of the shares that comprise the Index are suspended from trading on the exchange. In such cases, the restated Index level will be used. This may affect the Plan Return. PRODUCT RISKS Plan Returns do not include any returns from dividend income or participation in certain corporate actions, such as rights issues, as would be the case if you invested directly in the shares in the Underlying Index. Accordingly, the return on the Plan may, in some cases, be less than the return from a direct investment in these shares. Also, unlike direct investments in the shares, you are not able to hold the Plan beyond its stated Maturity Date in the expectation of a recovery in the price of the shares. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 11

14 Any returns you receive under the Plan are fixed at the rates specified in this brochure. If the Underlying Index were to perform strongly over the Investment Term, the Plan Return you receive may be less than you would have received from an investment linked directly to the positive performance of the Underlying Index. The Plan Returns are calculated based on the closing levels of the Underlying Index on the Plan Start Date and Plan End Date only. Large changes in the value of the Underlying Index on the specified dates these values are recorded will affect the performance of your Plan, potentially adversely. The Initial Level of the Underlying Index used to calculate the returns available under the Plan will not be known until the Plan Start Date. The level of the Underlying Index on the day you place your subscription is not relevant to the calculation of your returns, and may be significantly different to the level on the Plan Start Date, which is the level the calculation of your returns is based on. INFLATION AND INTEREST RATE RISK The repayment of your Initial Investment and any returns due to you under the Plan will be based on the rates described in this brochure, regardless of any changes in inflation or interest rates. Inflation risk arises as there will be no adjustments to the returns available should interest rates or inflation rates change. Inflation may reduce what you could buy in the future, in terms of purchasing power. CANCELLATION RISK You have the right to cancel your Plan within 14 days of subscribing or from receiving the cancellation form without losing any of your Initial Investment, as long as we receive your cancellation notice before the Plan Start Date. You can exercise your cancellation rights by sending a written notice to the address indicated in condition 11.1 of the Terms and Conditions. Details on how to exercise your cancellation rights will also be sent to you once we receive your completed application. However, if we receive your cancellation notice after the Plan Start Date, the amount you are entitled to receive back may be less than your Initial Investment if the value of the Deposit that makes up your Plan has changed. PLAN CANCELLATION RISK Before the Plan Start Date the Plan Manager can decide to cancel the launch of the Plan. This can be due to any reason, but most commonly if the Plan has not reached a sufficient number of applications or if there are extraordinary market conditions that would make it impossible for the Plan Manager to maintain the economic terms of the Plan. If the Plan Manager exercises this right, you will be returned your Initial Investment in full but you may be unable to find a comparable replacement investment product. RISK OF NON-REPAYMENT OF THE INTERMEDIARY CHARGE UPON CANCELLATION It is also worth noting that, if we have facilitated a payment of the Intermediary Charge to your intermediary on your behalf and any of the above events of cancellation occur, we will not be able to repay to you the Intermediary Charge. You should discuss directly with your intermediary to understand whether or not you are entitled to any refund of the Intermediary Charge and, if you are, you should arrange directly with your intermediary for them to repay such amount directly to you. 12 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

15 EARLY WITHDRAWAL RISK You must be prepared to keep your money invested for the full Investment Term. It may be possible to sell your entire investment from the Plan before maturity. However, the proceeds you receive will depend on many market factors, including, but not limited to, the index level or interest rates. Consequently, if you sell prior to maturity, you may receive less than your Initial Investment. We usually offer the option to sell your Plan back to us every 2 weeks. If you have invested via an ISA and subsequently decide to withdraw, it may not be possible to invest in another ISA of the same type for the same tax year if your 14 days cancellation period has expired. If you have invested via an ISA transfer, any favourable tax treatment associated with that ISA holding will be irrevocably lost unless you are able to find another ISA manager to transfer your investment to. ISA TRANSFER RISK Your existing ISA must be transferred in cash. This means that if you are transferring a Stocks and Shares ISA or Cash ISA into this Plan, your existing ISA manager will need to sell your investment holdings. It is up to you to check whether you forfeit any interest due on that ISA if you transfer, or if you will be charged an exit or transfer fee by your existing manager. There is also the potential for a loss if markets rise while your transfer is being completed. Please also note that there is an earlier deadline for ISA transfers. If your existing ISA manager does not transfer your ISA to us in time, we will not be able to open your Plan, and your original ISA will be reinstated. TAX RISKS The tax treatment of the Plan described in this brochure is based on tax legislation and practice as of the date of publication, as interpreted in good faith by Morgan Stanley. Any changes to taxation that directly or indirectly impact how your Plan is taxed could come into force at any time in the future. Such changes could render the information provided as out-of-date and could have a significant effect on the tax treatment of your investment, which may adversely impact your returns. Moreover, these changes could be applied retrospectively. You should contact your financial adviser and/or seek independent tax advice if you require any advice on your tax position. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 13

16 Is the Plan right for me? It is important that you understand the features of any investment product before you decide whether to invest in it. The considerations set out below might help you to decide whether this Plan meets your investment needs. Please note that Morgan Stanley & Co. International plc does not provide investment advice. If you are in any doubt as to whether the Plan is suitable for you, you should consult your financial adviser. The Plan may be appropriate for you if: You have received financial advice or, if you are investing on an execution-only basis, the appropriateness of this investment for you has been assessed by your execution-only intermediary. You understand how the Plan works. You are able to leave your money invested for the full Investment Term and have access to other savings or investments if needed for emergencies. You want FSCS protection (up to the prescribed limits stated on page 10) if Lloyds or RBS default and you suffer a loss as a result. You understand and accept the risks associated with an investment in the Plan. You accept that you might just get back your Initial Investment at maturity. You accept that you won t know the Initial Level of the shares in the Underlying Index until the Plan Start Date, which is after your investment is made. You understand that the value of the Underlying Index does not include reinvestment of dividends and therefore performance of the Underlying Index will not equal the value of the performance of the constituent shares. You are looking for returns that are linked to the performance of the Underlying Index, but understand any returns are fixed and may be less than the actual Index performance. You are looking for an investment product that will provide a return at maturity only, rather than an investment product that is designed to provide a regular income through the life of the product. You want to protect your investment against negative performance of the FTSE 100 Index. 14 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

17 The Plan is probably not appropriate for you if: You have not received financial advice nor, if you are investing on an execution-only basis, have had appropriateness assessment of this investment for you. You do not understand how the Plan works. You do not understand and/or accept the risks associated with an investment in the Plan. You are not able to leave your money invested for the full Investment Term and/or do not have access to other savings or investments if needed for emergencies. You are not comfortable that you will not receive dividend payments, or any other corporate actions, as you would if you invested directly in the shares that make up the Underlying Index. You cannot accept that you might just get back your Initial Investment only at maturity. You are uncomfortable with not knowing the Initial Level of the shares in the Underlying Index until the Plan Start Date, which is after your investment is made. You do not understand or accept that any returns are fixed, and may be less than the actual performance of the Underlying Index. You are looking for a regular income on your investment. You are willing to put some of your capital at risk in order to receive a potentially higher return. If you are applying for the Plan via an execution-only broker, the broker must assess appropriateness of the Plan for you before you can invest in the Plan. This will assist the broker to determine whether you have the necessary experience and knowledge in order to understand the risks involved in relation to this product. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 15

18 How to invest There are a number of different ways to subscribe to the Plan: Direct Investment. Cash ISA investment for the 2014/15 tax year 4. Transfer of existing ISA investment (Cash or Stocks and Shares). Self-Invested Personal Pensions (SIPPs), Small Self-Administered Schemes (SSASs) and investments from charities, companies and trustees. Subscription is only available by way of lump sum investment. The minimum subscription is 3,000, regardless of which investment option you choose 5. If you are investing via a 2014/15 Cash ISA, there are certain restrictions: You cannot open more than one Cash ISA and one Stocks and Shares ISA in the 2014/15 tax year. The maximum total you can subscribe in 2014/15 ISAs (whether in a Cash ISA, Stocks and Shares ISA or both) is 15,000. If you have not already subscribed for a Cash 2014/15 ISA, you can apply to open a 2014/15 Cash ISA with Morgan Stanley as manager. If you have already subscribed to a Cash ISA for the 2014/15 tax year where Morgan Stanley is the ISA manager, you can top up your ISA account provided your total investment into ISAs for the 2014/15 tax year does not exceed 15,000. For example, if you have already subscribed 5,940 in a Cash ISA with Morgan Stanley you can invest up to 9,060 in this Plan within the same Morgan Stanley Cash ISA (assuming you have not also opened a 2014/15 Stocks and Shares ISA). You cannot use a Stocks and Shares ISA to invest in this Plan. You can apply to transfer an existing Cash or Stocks and Shares ISA into the Plan without losing the tax efficient status of your investment. Transfers from existing 2014/15 ISAs must be made in whole, although transfers from previous years ISAs may be made in full or part. Please check with your existing ISA provider before making a transfer, as there may be restrictions or penalties on transferring your investment. Application Forms for Direct Investments, ISA investments and ISA transfers are available at the back of this brochure. Application Forms for SIPP, SSAS or charity, company and trustee investments are available to download via 4 From 1st July 2014, all ISA accounts became New ISAs in the UK. To find out more about the rules governing New ISAs and how they could affect you, please visit 5 There may be instances where we will accept a subscription for less than 3,000 (for instance, in the case of ISA transfers). Please speak with your intermediary if you think this will apply to your subscription. 16 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

19 INVESTMENT DEADLINES The deadline for submitting applications is 13th February 2015, except for ISA transfers where the deadline is 6th February This is to allow sufficient time for funds to be received from your existing ISA manager. We reserve the right to close the subscription period early, if the Plan is oversubscribed. We also reserve the right to cancel the launch of the Plan before the Plan Start Date for any reason, including insufficient applications being received. In this case, we will return your investment within 14 days of the cancellation and you will incur no product charge. If we have facilitated the payment of any Intermediary Charge, we will not be able to refund you such amount and it may be that you are not entitled to any such refund from your intermediary. You should contact your intermediary directly to discuss whether you are entitled to such refund and make any arrangement for the relevant payment directly with the intermediary. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 17

20 Frequently asked questions Who is eligible to invest in the Plan? Please see the Application Forms for conditions of who can apply. You need to be UK resident aged 18 or over to qualify for an ISA investment. However, investments can be made on behalf of a person under the age of 18 through the Direct Investment option. What charges/expenses will I incur? This will depend on whether you have received investment advice in relation to the Plan. If you have received investment advice or a personal recommendation, you will pay an initial product charge and a separate Intermediary Charge. There are no further initial or ongoing charges to pay. What is the initial product charge? The initial product charge is a one-off charge, retained by the Plan Manager to cover product related costs such as management and marketing fees, as well as to pay for the costs of the administration of the Plan. The initial product charge does not include any Intermediary Charge. The product charge is expected to be up to 3% of your original investment, which is accounted for within the terms of the product. The returns of the Plan are shown net of the product charge in all our communications to you. There are no on-going charges in relation to this Plan. What is the Intermediary 6 Charge/How is my intermediary compensated? If you have received investment advice or a personal recommendation or if you are applying through an executiononly intermediary, you will usually pay an Intermediary Charge to the intermediary through whom your application is made. The amount payable will be agreed by you with your intermediary and may depend on the amount you choose to invest. The Intermediary Charge will be charged separately from (and in addition to) the amount that you invest in the Plan. You may pay the Intermediary Charge directly to your intermediary. Alternatively, depending on the agreement that you have in place with your intermediary, you may request Morgan Stanley to facilitate the payment (i.e., you can pay the Intermediary Charge to us and we will then pay the intermediary on your behalf). Morgan Stanley can only facilitate the payment of an Intermediary Charge relating to investment advice or personal recommendation. Where we are facilitating the payment of an Intermediary Charge to an intermediary on your behalf, we will pay it to your intermediary only upon receiving funds from you, and, generally, within one week of receiving such funds. You will need to instruct us of the amount of this Intermediary Charge on your application form. If you have not received investment advice or a personal recommendation we are unable to facilitate a payment to your intermediary. Can I change my mind once I have subscribed? Yes. You have the right to cancel your Plan within 14 days of the date your subscription is accepted or the date you receive your cancellation form from us, whichever is later. You can exercise this right to cancel by writing to Morgan Stanley & Co. International plc, BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG, provided that such form is received by us before the Plan Start Date. 6 By intermediary we mean either an independent financial adviser or an execution-only broker. 18 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

21 Can the Plan be cancelled before the Plan Start Date? Yes. Before the Plan Start Date the Plan Manager can decide to cancel the launch of the Plan. This can be due to any reason, but most commonly if the Plan has not reached a sufficient number of applications or if there are extraordinary market conditions that would make it impossible for the Plan Manager to maintain the economic terms of the Plan. If the Plan Manager exercises this right, you will be returned your Initial Investment in full, but we will not be able to facilitate any repayment of the Intermediary Charge that has been paid to your intermediary through us. If the Plan Manager cancels the Plan and you have invested via an ISA, this will not affect your ISA allowance for the current tax year. If I change my mind or if the Plan is cancelled, will you refund any Intermediary Charge you paid on my behalf? No. If you cancel your application, or if the Plan Manager cancels the Plan, we will not be able to refund you any Intermediary Charge that has been paid to your intermediary through us. Furthermore, you should discuss with your intermediary whether you are entitled to the repayment of the Intermediary Charge, as this is dependent on the terms agreed with your intermediary and you might not be entitled to any such repayment. If you are entitled to the repayment of the Intermediary Charge you will need to arrange for your intermediary to repay to you directly any such amount. Can I withdraw/transfer before the Maturity Date? Partial withdrawals are not permitted. However you can withdraw/transfer your entire investment amount and close your Plan early. In this case, repayment of your Initial Investment is not guaranteed and you may get back less than you invested. You may only terminate or transfer the Plan by giving us written notice. Your investment will be sold at the next practicable dealing day following receipt of your request (usually the 15th and 27th of each month) and payment will be made within seven working days. If you have invested via an ISA and subsequently decide to withdraw, it may not be possible to invest in another ISA of the same type for the same tax year if your cancellation period has expired. If you have invested via an ISA transfer, any favourable tax treatment associated with that ISA holding will be irrevocably lost unless you are able to find another plan manager to transfer your investment to. Will you keep me updated during the Investment Term? You will receive an initial statement detailing your investment shortly after your application is processed and a semi-annual statement and valuation as of the 28th February and 31st August each year until the Plan Maturity Date. What happens when the Plan matures? We will contact you around six weeks before the Plan Maturity Date outlining the options available to you and to request your confirmation on what you wish to do with the maturity proceeds of your Plan. It is therefore important that you notify us if your address or bank details change. Please refer to section 18 ( Plan Returns ) of the Plan terms & conditions for further information on the maturity process and encashment timelines. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 19

22 How is my investment taxed? All returns in excess of your Initial Investment will be treated as interest for tax purposes. How your investment is taxed depends on your individual circumstances and whether you invest via an ISA or directly into the Plan. Investing via an ISA: ISAs allow UK residents to invest up to the annual ISA limit (please see the How to invest section for details), without incurring either capital gains or income tax. Investing directly into the Plan as an Offshore Investor: Certain Offshore Investors (e.g., Channel Islands or Isle of Man residents) are eligible to receive payments without deduction of tax. Please ensure that you provide a completed R105 form (available via together with your Application Form. Investing directly into the Plan as a UK resident: Any returns paid under the Plan are subject to income tax at your highest marginal rate of tax. We will automatically deduct tax at the basic rate (currently 20%). If you are eligible to receive interest payments without tax deducted, you can complete a R40 form to reclaim the tax that has been deducted at source (available via We are unable to accept R85 forms and therefore cannot make payments to non-isa investors without deducting tax. Company and pension investments: Subject to confirmation of your status, returns will be paid to you without deduction of tax unless required by law. The above information is based on tax legislation and practice as of the date of publication, as interpreted in good faith by Morgan Stanley. Morgan Stanley is not qualified to give legal, tax or accounting advice to its clients and does not purport to do so in this document. Clients are urged to seek the advice of their own professional advisers about the consequences of the proposals contained herein. What happens to my investment if I die? Upon death, where your investment is held under an ISA, the ISA status of your investment will be lost. Your assets will be transferred to a Direct Investment, which forms part of your estate for Inheritance Tax purposes. Once suitable documentation is received, the investments will be transferred to your personal representatives within seven working days. Your account can then be terminated early in accordance with its terms or held to maturity, at the discretion of your personal representative. 20 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6

23 Plan terms and conditions The following Terms and Conditions are issued by Morgan Stanley & Co. International plc. The Terms and Conditions, of which the Application Form is a part (each as amended from time to time), will govern your investment with the Plan Manager. Please read these Terms and Conditions carefully. If there is anything that you do not understand, please speak to your financial adviser. 1. Definitions 1.1 In these terms the following words have the following meanings: Applicable Regulations mean all legislation (including FSMA), statutory instruments and the FCA Rules insofar as they relate to the performance of the various obligations under these Terms and Conditions. Application Form means the form that must be completed to enable your Plan to be opened and which constitutes part of the Terms and Conditions. BNY Mellon means Bank of New York Mellon of 1 Canada Square, London E14 5AL,authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority with registration number Brochure means the Plan Information, the Terms and Conditions and the Application Form. Business, Charities and Pensions Account means a deposit account in the name of the Plan Manager (as your bare trustee) with the Deposit Taker in which the Plan Manager will invest your subscription if you are a corporate, UK- registered charity, or a SIPP or SSAS which is registered with and approved by HMRC, and meets the other conditions set out in these Terms and Conditions and the relevant Application Form. Amounts you receive from a Business, Charities and Pensions Account will be paid without deduction of tax unless required by law. Business, Charities and Pensions Investor means a Plan holder whose Deposit is held by the Deposit Taker in the Business, Charities and Pensions Account. Cash ISA means a cash individual savings account. Deposit means a deposit in the relevant Deposit Account, opened with the Deposit Taker by the Plan Manager acting, in relation to each Trust Account, in its capacity as bare trustee on your behalf. Deposit Account means each of a Business, Charities and Pensions Account, Cash ISA and Non-ISA Account. Deposit Taker means Lloyds Bank plc. Direct Investment means an investment in the Plan outside of a Cash ISA. Early Termination Amount means the amount you will be entitled to receive in the event in which, pursuant to clause 27.1, you decide to terminate/ withdraw your investment in the Plan before the Maturity Date. FCA means the Financial Conduct Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS. FCA Rules mean principles, rules and guidance issued by the FCA from time to time. FSCS means the Financial Services Compensation Scheme. FSMA means the Financial Services and Markets Act HMRC means HM Revenue & Customs. Initial Investment means the amount of money that you subscribe into the Plan, less any fees that we pay to an intermediary on your behalf, if applicable. Maturity Date means the date on which your Deposit Account is due to mature, expected to be the date set out in the Brochure. Non-ISA Account means a deposit account in the name of the Plan Manager (as your bare trustee) with the Deposit Taker, into which the Plan Manager will place your subscription if you are an individual making an investment that is not going to be held in a Cash ISA, including a R105 Account, or if you are a Planholder who is no longer eligible to be a Business, Charities and Pensions Investor and you agree with the Plan Manager for your Deposit to be moved. Amounts you receive from a Non-ISA Account will be paid after deduction of any tax required under applicable law. Offshore Investor means an investor who is not resident in the UK for tax purposes. Plan means an investment held within a Cash ISA or Direct Investment, in either case, as held under these Terms & Conditions. Plan Information means the section of the Brochure which is not the Terms and Conditions and the Application Form. Plan Manager means Morgan Stanley & Co. International plc, 25 Cabot Square, London E14 4QA. Authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority with registration number or such other entity as the Plan Manager may appoint to manage the plan. Plan Start Date has the meaning specified in the Key Terms section of the Plan Information. R105 Account means a deposit account in the name of the Plan Manager (as your bare trustee) with the Deposit Taker, into which the Plan Manager will place your subscription if you are an individual who is not resident in the UK and who has delivered a R105 Form. R105 Form means the form designed for HM Revenues and Customs for Offshore Investors and which is available from forms/r105.pdf/. RBS means the Royal Bank of Scotland plc. Regulations mean the Individual Savings Account Regulations 1998 as amended from time to time. Stocks and Shares ISA means a stocks and shares individual savings account. Trust Account means each of a Business, Charities and Pensions Account, a Cash ISA and a Non-ISA Account. Trust Investor means a Planholder whose Initial Investment is held on trust by the Plan Manager and deposited in a Trust Account. Trust Property means, in respect of an account, all right title and interest, present and future, in and to all amounts standing to the credit of the relevant account, including for the avoidance of doubt all returns generated on the Plan and credited to such account. We, us and our refer to the Plan Manager. You and your refer to an investor who applies to open a Cash ISA or Direct Investment, an investor who applies to top up an existing Cash ISA or an investor who applies to transfer their Cash or Stocks and Shares ISA subject to these Terms & Conditions. MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6 21

24 2. Commencement 2.1 These Terms and Conditions will come into effect when we receive a copy of the Application Form signed by you. 3. Services to be provided 3.1 You appoint us to provide services as: (i) ISA Plan Manager in connection with Deposits held within a Cash ISA; and/or (ii) Plan Manager in connection with Direct Investments (including those from businesses, charities and pensions). 4. Investments 4.1 Under these Terms and Conditions, we provide services in relation to Deposits only. 5. Eligibility 5.1 You are eligible to invest in the Plan if: a) you are an individual investing in a Non-ISA Account and you satisfy the criteria in condition 5.2 below; b) you are an individual investing in a Cash ISA and you satisfy the criteria in condition 5.3 below; c) you are a company and you satisfy the criteria in conditions 5.4 and 5.7 below; d) you are a Pension investor and you satisfy the criteria in conditions 5.5 and 5.7 below; or e) you are a charity and you satisfy the criteria in conditions 5.6 and 5.7 below, and you are able to provide evidence of your eligibility to invest in the Plan. 5.2 To invest in the Plan through a Non-ISA Account, you must be aged 18 years or over and resident in the UK for tax purposes, or, if you are an Offshore Investor, have submitted an R105 Form. 5.3 To invest in a Cash ISA, you must: a) be aged 18 years or over; b) be an individual; i. who is resident in the UK, ii. who, though not resident in the UK, has general earnings from overseas Crown employment subject to UK tax within the meaning given by section 28 of the Income Tax (Earnings and Pensions) Act 2003, or iii. who, though not resident in the UK, is married to or in a civil partnership with a person mentioned in paragraph (ii) above; c) not have subscribed, and must not subscribe, to another Cash ISA in the current tax year in which you are investing; d) not already have subscribed for the maximum ISA allowance for the current tax year in which you are investing; and e) meet any other requirements under the Regulations enabling you to hold a Cash ISA. 5.4 To invest in a Business, Charities and Pensions Account, companies must: a) be duly incorporated, validly existing and resident for tax purposes in the UK or another jurisdiction (to be specified in the Application Form); b) have the necessary corporate power and authority to invest in the Plan; c) have an Application Form which is duly authorised and executed, and d) agree to be bound by these Terms and Conditions as valid and legally binding obligations which are enforceable under English law. 5.5 To invest in a Business, Charities and Pensions Account, a SIPP or SSAS must: a) be a registered pension scheme under the Finance Act 2004 or be a pension scheme for which such registration has been applied; b) be authorised under the rules of its scheme to invest in the Plan and be making the investment for the purposes of the scheme; c) not be in breach of its constitutional documents by investing in the Plan; d) have the necessary delegation and powers to invest in the Plan; e) have an application Form which is duly authorised and executed; and f) agree to be bound by these Terms and Conditions as valid and legally binding obligations which are enforceable under English law. 5.6 To invest in a Business, Charities and Pensions Account, a charity must: a) be a charity which is validly registered with a UK charities regulator; b) have the necessary power and authority to invest in the Plan; c) not be in breach of its constitutional documents by investing in the Plan, and d) have the necessary delegation and powers to invest in the Plan. 5.7 To invest in a Business, Charities and Pensions Account, you must: a) have an Application Form which is duly authorised and executed; b) not be acting as agent, nominee or trustee for any other person, and c) agree to be bound by these Terms and Conditions as valid and legally binding obligations which are enforceable under English law. 5.8 If there is a change in your eligibility to invest in the Plan, your tax status or your circumstances or to any thing you have stated in your Application Form or otherwise under these Terms and Conditions, you must notify the Plan Manager immediately. 5.9 If you are investing in the Plan though a Business, Charities and Pensions Account and you cease to be eligible to invest in the Plan, your tax status changes or we otherwise become aware that you are not or may not be eligible to receive amounts without deduction of tax, we may close your Deposit Account with immediate effect (and you will be paid the Early Termination Amount) or, if you and we agree, we may transfer your Deposit to a Non-ISA Account or other account. Amounts in respect of your Deposit may then be paid to you after deduction of any tax If you are an Offshore Investor, you will be entitled to invest in a R105 Account provided that you fulfil the eligibility criteria relevant for such accounts and have delivered a valid R105 Form If you are an Offshore Investor, you will provide us with a refreshed R105 Form every two years, or upon request by the Plan Manager, whichever is earlier You authorise us to provide your R105 Form to the Deposit Taker. 6. Your Plan 6.1 To open a Plan, you must submit to the Plan Manager a fully completed Application Form. In the case of an Offshore Investor, you must also provide a R105 Form. In the case of a Cash ISA investment for 2014/15 and/or a Direct Investment, you must also provide the initial subscription amount in cash such that it clears in our account before the Plan Start Date. In the case of a ISA transfer, we will manage your Plan upon receipt of the proceeds of your previous Plan from your previous Plan Manager. The Application Form is part of these Terms and Conditions and if the terms differ, those contained in the Application Form will prevail. 6.2 Subject to the Regulations we may provisionally open a Cash ISA where the information which you have supplied is insufficient. In respect of a Cash ISA, where we open a Plan on a provisional basis you must supply the missing information within 30 days of the application, otherwise the Plan must be voided in accordance with HM Revenue & Customs requirements. 6.3 You may open more than one Plan, subject to completion of an Application Form for each Plan. 22 MORGAN STANLEY DIGITAL GROWTH DEPOSIT PLAN 6