Morgan Stanley targets investors unsure of market direction

The Morgan Stanley FTSE Income Accumulator plan will make income payments every three months as long as the FTSE 100 stays within a prescribed range.

The FTSE 100 has to be within 4500 to 9000 index points for a proportion of the quarter for the plan to pay out.

The level of quarterly income is determined by taking weekly observations of the closing level of the FTSE 100 index during the quarter – income accrues for every weekly observation that the FTSE 100 closes within the range, to a maximum of 1.75 per cent per quarter.

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If the index closes outside the range on every weekly observation during the quarter, then no income payment will be made for that quarter.

At maturity, as long as the FTSE 100 index is at or more than 4000 points, investors will receive the repayment of their initial investment in full.

However, if the FTSE is less than 4000 points then capital will be at risk and the repayment of the initial investment will be reduced by the amount the FTSE 100 index has fallen from the plan start date to the plan end date.

Nev Godley, vice president of Morgan Stanley, said: “With interest rates remaining low for the foreseeable future, many investors are still searching for income-generating investments.

“This plan might appeal to income investors who don’t have a firm view on whether the market will go up or down from the current level.”

The product is open for investment and closes on 27 August 2013.

The deadline for Isa transfers is 19 August 2013.