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Critique my Suitability - Mariana 10:10 Income & Growth Plan April 2021 - 10/03/2021

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A copy of our explanation for the latest 10:10 Income & Growth Plan can be accessed below.

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Mariana 10:10 Income & Growth Plan April 2021

This minimum three-year, maximum ten-year investment combines a potential regular income stream of 0.75% per quarter for up to 10 years, with potential capital growth of 1% per quarter the investment was in force, payable in the event of a triggered early maturity. The returns are linked to the performance of the FTSE Custom 100 Synthetic 3.5% Fixed Dividend Index (FTSE CSDI). The FTSE CSDI was specifically designed for structured products and is expected to closely replicate the performance of the FTSE 100 Index. Please see below for further detail.

The terms of the Plan provide protection to the invested capital against all but a severely underperforming stock market over the investment term, or the counterparty’s failure. Whilst the Plan is designed as a maximum ten-year investment, with quarterly income payment observation dates throughout, it will mature early on any of the quarterly observation dates from year three onwards, provided the FTSE CSDI closes at least 5% above the level recorded on 9th April 2021 (the Initial Index Level). Briefly, the Plan is structured to provide the following returns:


The Plan will pay quarterly income of 0.75% (3% per annum) provided that on each quarterly observation date the FTSE CSDI closes at, or above 70% of the Initial Index Level. No income will be paid for quarters in which the Index is below the 70% threshold.

Early maturity and potential gain

Early maturity will occur if on any quarterly observation date from the third anniversary onwards the FTSE CSDI closes at least 5% above the Initial Index Level. In the event that early maturity is triggered the invested capital will be returned in full, in addition to a gain of 1% per quarter year the plan was in force, and the income due for that quarter.

Therefore, if on 9th April 2024 the index closes at or above 105% of its Initial Index Level, the Plan will mature returning the invested capital, plus a gain of 12% which will be in addition to any income already paid plus the final income payment of 0.75% for the last quarter. If the Plan does not mature on this date, it will continue onto the next quarterly observation date. If the FTSE CSDI closes at, or above 105% of its Initial Index Level on the next observation date, the Plan will mature and return the original capital investment in full, in addition to a 13% gain and that quarter’s income payment. Otherwise, the Plan will continue to the next quarterly observation date, through to year ten, adding 1% to the potential gain for each quarter it is in force.

Final maturity

If the Plan reaches its final maturity date, because on each of the previous twenty-nine quarterly observation dates the Index closed below the 105% Reference Level, then the maturity value will be dependent upon the closing level of the FTSE CSDI on 9th April 2031 (the Final Index Level).

If the Final Index Level is at least 5% above the Initial Index Level, then the invested capital should be returned in full, together with the final income payment of 0.75% and a 40% gain (i.e. 1% gain multiplied by forty quarters).

If the Final Index Level is less than 105% of the Initial Index Level, no gain will be achieved; however, investors' capital should still be returned in full, together with the final income payment, unless the Final Index Level is more than 30% below the Initial Index Level. If such a fall does occur, there will be no income due for the final quarter and investors will suffer a reduction to their invested capital of 1% for every 1% the Final Index Level is below the Initial Index Level. For example, if the index finishes 35% lower, only 65% of the original capital will be returned.


The returns outlined above, including the return of capital are dependent upon Morgan Stanley & Co. International, the counterparty to the investment, meeting their contractual obligations on time, as investors will in effect be lending their capital to them.

Morgan Stanley & Co. International has a Standard & Poor’s rating of ‘A+’ indicating that they believe it has a strong capacity to meet financial commitments. Regardless of the perceived strength of a counterparty, it must be appreciated that if Morgan Stanley & Co. International is unable to meet its liabilities or, is declared bankrupt, investors could lose some or all of their capital regardless of the performance of the index.

Under the terms of this Plan, in order for there to be a reduction to the invested capital, it would require Morgan Stanley & Co. International to default, or the Plan’s early maturity feature trigger to be missed on each of the thirty observed quarterly dates and the FTSE CSDI to close on 9th April 2031 at a level more than 30% below its Initial Index Level. In the latter event, the loss to the invested capital would be at the same level as the fall in the index but any income already paid will be unaffected.


Based on current legislation, if the investment is held within an ISA or Pension arrangement the returns will be paid gross and will not be subject to Income Tax or Capital Gains Tax.

Where the investment is held outside of an ISA or Pension arrangement, returns will be paid gross and potentially liable to Savings Income Tax on the income and Capital Gains Tax on the gain.

For gains, where the total gains made by an individual in a tax year exceed the annual capital gains exemption (£12,300 for the 2020/21 tax year) the excess gains will be subject to tax at the prevailing rate, which is currently 10% for basic rate taxpayers and 20% for higher rate taxpayers. It is important to appreciate tax rates and reliefs are subject to change and therefore depend on applicable, future legislation and HMRC practice.

For income, Savings Income Tax under Self-Assessment, will be payable if total, taxable, savings income, from all sources received in a tax year, exceeds the Individual Personal Savings Allowance (£1,000 for a basic rate taxpayer and £500 for a higher rate tax payer for the 2020/2021 tax year). Note that tax rates and reliefs are subject to change.

Commitment and Risk

This investment is designed in such a way that it may have to be held for the full ten years and if it is encashed during the term (other than as the result of the early maturity feature), investors’ capital may not be returned in full, even if the index has risen.

Like most investments, this Plan is only suitable for those who are prepared to expose their capital to a degree of risk and accept the consequences of these risks resulting in the worst outcome. It is important that would-be investors read the Plan literature which gives full details of the contract including details of the risks, to which they should pay particular attention. It is important to appreciate that as the income is dependent upon stock market performance, it is not guaranteed and therefore, should not be relied upon for essential expenditure.

About the FTSE Custom 100 Synthetic 3.5% Fixed Dividend Index (FTSE CSDI)

The FTSE 100 index tracks the performance of the share prices of the 100 largest UK listed companies, but it ignores the value of any dividends that the shares pay. When a bank creates a structured product utilising the FTSE 100 Index as the underlying, they assume a certain level of dividends that will be paid by the 100 companies throughout the term. The historical, annual yield of these dividends over the last twenty years equates to 3.5%. Where the bank make an assumption about the future dividend stream it is reasonable to expect them to use conservative estimates. As a result of the pandemic, forecasts of the FTSE 100 dividend yield indicate a fall from the 2019 level of 4.07% to a predicted 3.24% for 2021 (Bloomberg). However, it could transpire to be less, at least in the short-term and banks are factoring in this reduction together with an allowance for unknowns. As a result, the returns offered by FTSE 100 linked structured products are currently very low.

The FTSE CSDI was created to provide a solution. It aims to closely replicate the performance of the same 100 companies but after including the dividends – the equivalent to the FTSE 100 ‘total return’ index, from which, a constant annual dividend of 3.5% is deducted. The FTSE CSDI index may therefore be expected to perform in a similar way to the FTSE 100 Index although, it would be expected to slightly underperform the latter where the total dividend yield transpires to be less than 3.5%, as is currently observable. The correlation of FTSE CDSI to the FTSE 100 over a 10-year simulated back-test is 98.25%.

By removing the uncertainty of managing future dividends, the issuing banks may face lower costs and risks. The risk, or even the expectation that dividends will be lower than 3.5% is, in turn, accepted by the structured product investor but the acceptance of this, together with the cost saving arising from the issuer not having to make assumptions on the dividends, ultimately leads to greater potential returns for the investor. The net result is that even if the performance of the FTSE CSDI slightly lags that of the FTSE 100 we believe that this should be adequately compensated for in the comparatively higher potential returns offered.

For more information on the FTSE CSDI, please refer to the product literature. A link to the current price of the Index can be accessed via You can monitor your structured products linked to this or any other index through our service. If you have not yet registered account please contact us.

Disclosure of Interests
Lowes has provided input into the concept, development, promotion and distribution of this Plan. The provider’s charges/fees are built into the terms of the investment - Lowes has a commercial interest in the Plan as a result of its involvement in its development and promotion. All Plan returns are stated after allowing for the provider’s charges/fees. Where Lowes is involved in advice on or the intermediation of this investment to retail clients, it will not receive any payment from Mariana for its input but instead, equivalent funds will be donated to UK registered charities at the direction of the Lowes Charity Committee, the annual report for which is available on request. The aim of developing Plans in co-operation with providers, with Lowes input, is that they should be amongst the best available in the market – and, as such, be granted ‘Preferred’ status, on their merits. Lowes has robust systems and controls in place to ensure that it manages any actual or potential conflicts of interests in its activities.
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