The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-584-6837.
Underlyings
For more information about the underlyings, including historical performance information, see the accompanying preliminary terms.
Risk Considerations
The risks set forth below are discussed in more detail in the “Risk Factors” section in the accompanying preliminary terms. Please review those risk factors carefully prior to making an investment decision.
Risks Relating to an Investment in the Securities
●The securities provide a minimum payment at maturity of only 15% of your principal.
●The securities do not provide for the regular payment of interest and may pay no interest over the entire term of the securities.
●The contingent quarterly coupon, if any, is based only on the determination closing levels of the underlyings on the related quarterly observation date at the end of the related interest period.
●Investors will not participate in any appreciation of either of the underlyings.
●The securities are subject to our credit risk, and any actual or anticipated changes to our credit ratings or credit spreads may adversely affect the market value of the securities.
●As a finance subsidiary, MSFL has no independent operations and will have no independent assets.
●The market price will be influenced by many unpredictable factors.
●Reinvestment risk.
●The securities will not be listed on any securities exchange and secondary trading may be limited, and accordingly, you should be willing to hold your securities for the entire 2.75-year term of the securities.
●The rate we are willing to pay for securities of this type, maturity and issuance size is likely to be lower than the rate implied by our secondary market credit spreads and advantageous to us. Both the lower rate and the inclusion of costs associated with issuing, selling, structuring and hedging the securities in the original issue price reduce the economic terms of the securities, cause the estimated value of the securities to be less than the original issue price and will adversely affect secondary market prices.
●The estimated value of the securities is approximately $939.00 per security, or within $35.00 of that estimate, and is determined by reference to our pricing and valuation models, which may differ from those of other dealers and is not a maximum or minimum secondary market price.
●Not equivalent to investing in the underlyings or the stocks composing the NDX Index or the S&P® Regional Banks Select Industry Index®.
●Hedging and trading activity by our affiliates could potentially affect the value of the securities.
●The calculation agent, which is a subsidiary of Morgan Stanley and an affiliate of MSFL, will make determinations with respect to the securities.
●The U.S. federal income tax consequences of an investment in the securities are uncertain.
Risks Relating to the Underlyings
●You are exposed to the price risk of each of the underlyings, with respect to both the contingent quarterly coupons, if any, and the payment at maturity.
●Because the securities are linked to the performance of the worst performing underlying, you are exposed to greater risks of receiving no contingent quarterly coupons and sustaining a significant loss on your investment than if the securities were linked to just one underlying.
●Adjustments to the NDX Index could adversely affect the value of the securities.
●Investing in the securities exposes investors to risks associated with investments in securities with a concentration in the banking sector.
●The antidilution adjustments the calculation agent is required to make do not cover every event that could affect the KRE Shares.
●Adjustments to the KRE Shares or the index tracked by the KRE Shares could adversely affect the value of the securities.
●The performance and market price of the KRE Shares, particularly during periods of market volatility, may not correlate with the performance of the S&P® Regional Banks Select Industry Index®, the performance of the component securities of the S&P® Regional Banks Select Industry Index® or the net asset value per share of the KRE Shares.
Tax Considerations
You should review carefully the discussion in the accompanying preliminary terms under the caption “Additional Information About the Securities–Tax considerations” concerning the U.S. federal income tax consequences of an investment in the securities, and you should consult your tax adviser.