CALCULATION
OF REGISTRATION FEE
Title of Each Class of
Securities Offered
|
|
Maximum
Aggregate
Offering
Price
|
|
Amount
of Registration
Fee
|
Autocallable Securities due 2019
|
|
$1,650,000
|
|
$199.98
|
PROSPECTUS Dated November 16, 2017
PROSPECTUS SUPPLEMENT Dated November 16, 2017
|
Pricing Supplement No. 2,140
to
Registration Statement Nos.
333-221595; 333-221595-01
Dated June 7, 2019
Rule
424(b)(2)
|
$1,650,000
Morgan Stanley Finance LLC
GLOBAL MEDIUM-TERM NOTES, SERIES
A
Senior Notes
Autocallable Securities due December
11, 2019
Based on the Performance of West
Texas Intermediate Light Sweet Crude Oil Futures Contracts
Fully and Unconditionally Guaranteed
by Morgan Stanley
Principal at Risk Securities
The Autocallable Securities due December 11, 2019 Based on
the Performance of West Texas Intermediate Light Sweet Crude Oil Futures Contracts, which we refer to as the securities, are unsecured
obligations of Morgan Stanley Finance LLC (“MSFL”) and are fully and unconditionally guaranteed by Morgan Stanley.
Unlike ordinary debt securities, the securities do not pay interest and do not guarantee the return of any principal at maturity.
If the price of West Texas Intermediate light sweet crude oil futures contracts (“WTI crude oil”), which we refer to
as the underlying commodity, on the review date is at or above the initial commodity price, the securities will be automatically
called for a fixed cash payment of $1,025 per security, which we refer to as the call price.
If the securities are not called
prior to maturity, you will receive at maturity for each security you hold an amount in cash that will vary depending on the final
commodity price, and which may be significantly less than the stated principal amount of the securities and could be zero.
The securities are for investors who are willing to risk their principal and forgo current income in exchange for the possibility
of receiving a call price or payment at maturity greater than the stated principal amount, if the commodity price on the review
date or the final commodity price, as applicable, is at or above the initial commodity price, and, if the securities have not been
called, in exchange for limited protection against loss at maturity, but only if the final commodity price has not declined by
more than 40% from the initial commodity price. The securities are notes issued as part of Morgan Stanley Finance LLC’s Series
A Global Medium-Term Notes program.
All payments are subject to our credit risk. If we default
on our obligations, you could lose some or all of your investment. These securities are not secured obligations and you will not
have any security interest in, or otherwise have any access to, any underlying reference asset or assets.
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•
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The stated principal amount and original issue price of each security is $1,000.
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•
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We will not pay interest on the securities.
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|
•
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If, on the review date, which is September 9, 2019, the commodity price is
at or above
the initial commodity price, the securities will be automatically called on the second business day following the review date for
the call price of $1,025 (corresponding to 102.50% of the stated principal amount).
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|
•
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At maturity, if the securities have not previously been called, you will receive for each
security that you hold an amount of cash equal to:
|
|
º
|
if the final commodity price is
at or above
the initial commodity price: $1,050 (corresponding
to 105.00% of the stated principal amount),
|
|
º
|
if the final commodity price is less than the initial commodity price but is greater than
or equal to $32.394, which means it has
not
declined
by more than 40%
from the initial commodity price: the $1,000
stated principal amount of the securities, or
|
|
º
|
if the final commodity price is less than $32.394, which means it has declined by more than
40% from the initial commodity price: $1,000 + ($1,000 x commodity percent change).
There is no minimum payment at maturity on the securities. Accordingly, you could lose your
entire initial investment in the securities.
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|
•
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The initial commodity price is $53.99, which is the commodity price on June 7, 2019, the day
we priced the securities for initial sale to the public, which we refer to as the pricing date.
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•
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The final commodity price will equal the commodity price on the final determination date.
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•
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The final determination date is December 9, 2019.
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•
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The review date and the final determination date are each subject to postponement for non-trading
days and certain market disruption events.
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•
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The commodity percent change is equal to: (final commodity price – initial commodity
price) / initial commodity price
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•
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Investing in the securities is not equivalent to investing directly in WTI crude oil or in
futures contracts or forward contracts on WTI crude oil.
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•
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The securities will not be listed on any securities exchange.
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•
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The estimated value of the securities on the pricing date is $976.30. See “Summary of
Pricing Supplement” beginning on PS-3
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•
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The CUSIP number for the securities is 61766YDZ1. The ISIN for the securities is US61766YDZ16.
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You should read the more detailed description of the securities
in this pricing supplement. In particular, you should review and understand the descriptions in “Summary of Pricing Supplement”
and “Description of Securities.”
The securities are riskier than ordinary debt securities.
Securities linked to the performance of a single commodity are subject to the volatility and other risks associated with that commodity.
See “Risk Factors” beginning on PS-10.
The Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or determined if this pricing supplement is truthful or complete.
Any representation to the contrary is a criminal offense.
___________________________
PRICE $1,000 PER SECURITY
___________________________
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Price
to public
|
Agent’s
commissions
(1)
|
Proceeds
to us
(2)
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Per security
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$1,000
|
$7.50
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$992.50
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Total
|
$1,650,000
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$12,375
|
$1,637,625
|
|
(1)
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Selected dealers and their financial advisors will
collectively receive from the agent, MS & Co., a fixed sales commission of $7.50 for each security they sell. See “Description
of Securities—Supplemental Information Concerning Plan of Distribution; Conflicts of Interest.” For additional information,
see “Plan of Distribution (Conflicts of Interest)” in the accompanying prospectus supplement.
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(2)
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See “Description of Securities—Use of
Proceeds and Hedging” beginning on PS-26.
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The agent for this offering, Morgan Stanley & Co.
LLC, is an affiliate of MSFL and a wholly-owned subsidiary of Morgan Stanley. See “Description of Securities—Supplemental
Information Concerning Plan of Distribution; Conflicts of Interest” in this pricing supplement.
The securities are not deposits or savings accounts and
are not insured by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality, nor are they
obligations of, or guaranteed by, a bank.
As used in this document, “we,” “us”
and “our” refer to Morgan Stanley or MSFL, or Morgan Stanley and MSFL collectively, as the context requires.
For a description of certain restrictions
on offers, sales and deliveries of the securities and on the distribution of this pricing supplement and the accompanying prospectus
supplement and prospectus relating to the securities, see the section of this pricing supplement called “Description of Securities—Supplemental
Information Concerning Plan of Distribution; Conflicts of Interest.”
No action has been or will be taken
by us, the agent or any dealer that would permit a public offering of the securities or possession or distribution of this pricing
supplement or the accompanying prospectus supplement or prospectus in any jurisdiction, other than the United States, where action
for that purpose is required. Neither this pricing supplement nor the accompanying prospectus supplement and prospectus may be
used for the purpose of an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized
or to any person to whom it is unlawful to make such an offer or solicitation.
In addition to the selling restrictions
set forth in “Plan of Distribution (Conflicts of Interest)” in the accompanying prospectus supplement, the following
selling restrictions also apply to the securities:
The securities have not been and will
not be registered with the Comissão de Valores Mobiliários (The Brazilian Securities Commission). The securities
may not be offered or sold in the Federative Republic of Brazil except in circumstances which do not constitute a public offering
or distribution under Brazilian laws and regulations.
The securities have not been registered
with the Superintendencia de Valores y Seguros in Chile and may not be offered or sold publicly in Chile. No offer, sales or deliveries
of the securities or distribution of this pricing supplement or the accompanying prospectus supplement or prospectus, may be made
in or from Chile except in circumstances which will result in compliance with any applicable Chilean laws and regulations.
The securities have not been registered with the National
Registry of Securities maintained by the Mexican National Banking and Securities Commission and may not be offered or sold publicly
in Mexico. This pricing supplement and the accompanying prospectus supplement and prospectus may not be publicly distributed in
Mexico.
SUMMARY OF PRICING SUPPLEMENT
The following summary describes the
Autocallable Securities due December 11, 2019 Based on the Performance of West Texas Intermediate Light Sweet Crude Oil Futures
Contracts, which we refer to as the securities, in general terms only. You should read the summary together with the more detailed
information that is contained in the rest of this pricing supplement and in the accompanying prospectus and prospectus supplement.
You should carefully consider, among other things, the matters set forth in “Risk Factors.”
The securities are medium-term debt
securities of MSFL and are fully and unconditionally guaranteed by Morgan Stanley. The return on the securities is linked to the
performance of West Texas Intermediate light sweet crude oil futures contracts (“WTI crude oil”), which we refer to
as the underlying commodity. The securities are for investors who are willing to risk their principal and forgo current income
in exchange for the possibility of receiving a call price or payment at maturity greater than the stated principal amount, if the
commodity price on the review date or the final commodity price, as applicable, is at or above the initial commodity price, and,
if the securities have not been called, in exchange for limited protection against loss at maturity, but only if the final commodity
price has not declined by more than 40% from the initial commodity price. The securities do not guarantee the return of any principal
at maturity and all payments on the securities are subject to our credit risk.
The securities are riskier than ordinary
debt securities. Securities linked to the performance of a single commodity are subject to the volatility and other risks associated
with that commodity. See “Risk Factors” beginning on PS-10.
Each security costs $1,000
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We are offering Autocallable Securities due December 11, 2019 Based on the Performance of West Texas Intermediate Light Sweet Crude Oil Futures Contracts, which we refer to as the securities. The stated principal amount and issue price of each security is $1,000.
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The original issue price includes costs associated with issuing,
selling, structuring and hedging the securities, which are borne by you, and, consequently, the estimated value of the securities
on the pricing date is less than $1,000. We estimate that the value of each security on the pricing date is $976.30.
What goes into the estimated value on the pricing date?
In valuing the securities on the pricing date, we take into
account that the securities comprise both a debt component and a performance-based component linked to the underlying commodity.
The estimated value of the securities is determined using our own pricing and valuation models, market inputs and assumptions relating
to the underlying commodity, instruments based on the underlying commodity, volatility and other factors including current and
expected interest rates, as well as an interest rate related to our secondary market credit spread, which is the implied interest
rate at which our conventional fixed rate debt trades in the secondary market.
What determines the economic terms of the securities?
In determining the economic terms of the securities, including
the commodity price that will result in the securities being called on the call date and the call price, we use an internal funding
rate, which is likely to be lower than our secondary market credit spreads and therefore advantageous to us. If the issuing, selling,
structuring and hedging costs borne by you were lower or if the internal funding rate were higher, one or more of the economic
terms of the securities would be more favorable to you.
What is the relationship between the estimated value on the
pricing date and the secondary market price of the securities?
The price at which Morgan Stanley & Co. LLC, which
we refer to as MS & Co., purchases the securities in the secondary market, absent changes in market conditions, including
those related to the underlying commodity, may vary from, and be lower
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than, the estimated value on the pricing date, because the secondary
market price takes into account our secondary market credit spread as well as the bid-offer spread that MS & Co. would charge
in a secondary market transaction of this type and other factors.
MS & Co. may, but is not obligated to, make a market in
the securities and, if it once chooses to make a market, may cease doing so at any time.
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The securities do not guarantee repayment of any principal at maturity; no interest
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Unlike ordinary debt securities, the securities do not pay interest and do not guarantee the repayment of any of the principal at maturity. If the securities have not been called prior to maturity and the final commodity price has declined by more than 40% from the initial commodity price, you will be fully exposed to the negative performance of the underlying commodity, and you will lose 1% of your principal amount for every 1% decline in the final commodity price from the initial commodity price. For example, if the final commodity price declines by 50% from the initial commodity price, you will lose 50% of your principal.
There is no minimum payment at maturity on the securities. Accordingly, you could lose your entire initial investment in the securities.
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The securities will be automatically called if the commodity price on the review date is at or above the initial commodity price
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If the commodity price on the review date, which is September 9, 2019, is at or above the initial commodity price, the securities will be automatically called for the call price on the second business day following the review date, which we refer to as a call date. The call price will be an amount of cash equal to $1,025 per security (corresponding to 102.50% of the stated principal amount).
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The review date is subject to postponement for non-trading days and certain market disruption events as described under “Description of Securities—Review Date.”
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If the securities are not automatically called prior to maturity, the payment at maturity will vary depending on the final commodity price
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At maturity, if the securities have not previously been called,
you will receive for each $1,000 stated principal amount of securities that you hold an amount of cash that will vary depending
on the final commodity price, and will be equal to:
• if the final commodity
price is
at or above
the initial commodity price: $1,050 (corresponding to 105.00% of the stated principal amount),
• if the final commodity
price is less than the initial commodity price but is greater than or equal to $32.394, which means it has
not
declined
by more than 40%
from the initial commodity price: the $1,000 stated principal amount of the securities, or
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• if the final commodity
price is less than $32.394, which means it has declined
by more than 40%
from the initial commodity price:
$1,000 + ($1,000 x commodity percent
change)
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where,
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commodity percent change
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=
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final
commodity price – initial commodity price
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initial commodity price
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initial commodity price
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=
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$53.99, which is the commodity price on June 7, 2019, the day we priced the securities for initial sale to the public, which we refer to as the pricing date.
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final commodity price
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=
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the commodity price on the final determination date
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final determination date
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=
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December 9, 2019, subject to postponement for non-trading days and certain market disruption events as described under “Description of Securities—Final Determination Date”
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commodity price
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=
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on any trading day, the official settlement price per barrel of WTI crude oil on the NYMEX Division, or its successor, of the New York Mercantile Exchange, Inc. (the “NYMEX Division”) of the first nearby month futures contract, stated in U.S. dollars, as made public by the NYMEX Division on such date;
provided
that if such date falls on the last trading day of such futures contract (all pursuant to the rules of the NYMEX Division), then the second nearby month futures contract on such date.
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If the final commodity price declines by
more than 40% from the initial commodity price, you will be fully exposed to the decline in the final commodity price from the
initial commodity price. There is no minimum payment at maturity on the securities. Accordingly, you could lose your entire initial
investment in the securities.
All payments on the securities upon an automatic
early call or at maturity are subject to our credit risk.
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Beginning on PS-9, we have provided examples titled “Hypothetical Payouts on the Securities upon Automatic Call or at Maturity,” which explain in more detail the possible payouts on the securities on the call date and at maturity assuming a variety of hypothetical commodity prices for the review date and hypothetical final commodity prices, as applicable. The hypothetical examples do not show every situation that can occur.
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You can review the historical prices of the underlying commodity in the section of this pricing supplement called “Description of Securities—Historical Information” starting on PS-24.
You cannot predict the future price of the underlying commodity based on its historical prices.
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Investing in the securities is not equivalent to investing directly in WTI crude oil or in futures contracts or forward contracts on WTI crude oil.
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The appreciation potential of the securities is limited by the fixed returns specified for the call date and at maturity and by the automatic early call feature
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The appreciation potential of the securities is limited to the fixed return specified for the review date and at maturity, regardless of any greater price performance of the underlying commodity, which could be significant. In addition, the automatic early call feature may limit the term of your investment to as short as three months. If the securities are called prior to maturity, you may not be able to reinvest at comparable terms or returns.
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Investing in the securities is not equivalent to
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Investing in the securities is not equivalent to investing directly in WTI crude oil or in futures contracts or in forward contracts on WTI crude oil. By purchasing the
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investing directly in WTI crude oil or in futures contracts or forward contracts on WTI crude oil
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securities, you do not purchase any entitlement to WTI crude oil or futures contracts or forward contracts on WTI crude oil. Further, by purchasing the securities, you are assuming our credit risk and not that of any counter-party to futures contracts or forward contracts on the underlying commodity.
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Concentrated investment in WTI crude oil futures contracts
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All payments on the securities are linked exclusively to the price of WTI crude oil futures contracts and not to a diverse basket of commodities or a broad-based commodity index. Therefore, the securities carry greater risk and may be more volatile than a security linked to the prices of multiple commodities or a broad-based commodity index.
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Postponement of maturity date
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If, due to a market disruption event or otherwise, the final determination date is postponed so that it falls less than two business days prior to the scheduled maturity date, the maturity date will be the second business day following the final determination date as postponed. See “Description of Securities—Maturity Date.”
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Morgan Stanley Capital Group Inc. will be the calculation agent
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We have appointed our affiliate, Morgan Stanley Capital Group Inc., which we refer to as MSCG, to act as calculation agent for The Bank of New York Mellon, a New York banking corporation, the trustee for our senior notes. As calculation agent, MSCG has determined the initial commodity price, will determine the commodity price on the review date, the final commodity price, whether the commodity price on the review date is at or above the initial commodity price and therefore whether the securities will be called following such review date and whether a market disruption event has occurred, and, if the securities are not called prior to maturity, will calculate the amount of cash, if any, you will receive at maturity.
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Morgan Stanley & Co. LLC will be the agent; conflicts of interest
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The agent for the offering of the securities, MS & Co., a wholly owned subsidiary of Morgan Stanley and an affiliate of MSFL, will conduct this offering in compliance with the requirements of FINRA Rule 5121 of the Financial Industry Regulatory Authority, Inc., which is commonly referred to as FINRA, regarding a FINRA member firm’s distribution of the securities of an affiliate and related conflicts of interest. MS & Co. or any of our other affiliates may not make sales in this offering to any discretionary account. See “Description of Securities—Supplemental Information Concerning Plan of Distribution; Conflicts of Interest.”
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Where you can find more information on the securities
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The securities are unsecured debt securities issued as part of our Series A medium-term note program. You can find a general description of our Series A medium-term note program in the accompanying prospectus supplement dated November 16, 2017 and prospectus dated November 16, 2017. We describe the basic features of this type of security in the section of the prospectus supplement called “Description of Notes—Notes Linked to Commodity Prices, Single Securities, Baskets of Securities or Indices” and in the section of the prospectus called “Description of Debt Securities—Fixed Rate Debt Securities.”
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For a detailed description of the terms of the securities, you should read the section of this pricing supplement called “Description of Securities.” You should also read about some of the risks involved in investing in the securities in the section of this pricing supplement called “Risk Factors.” The tax and accounting treatment of investments in commodity-linked securities such as the securities may differ from that of investments in ordinary debt securities. See the section of this pricing supplement called “Description of Securities—United States Federal Taxation.” We urge you to consult with your investment, legal, tax, accounting and other advisers with regard to any proposed or actual investment in the securities.
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How to reach us
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Morgan Stanley Wealth Management clients may contact their local Morgan Stanley branch office or Morgan Stanley’s principal executive offices at 1585 Broadway, New York, New York 10036 (telephone number (866) 477-4776). All other clients may contact their local brokerage representative. Third-party distributors may contact Morgan Stanley Structured Investment Sales at (800) 233-1087.
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HOW THE SECURITIES WORK
The following diagrams illustrate the potential
outcomes for the securities depending on the commodity price on the review date and the final commodity price, as applicable.
Diagram #1:
Automatic Early Call
(September 2019)
Diagram #2:
Payment at Maturity
if No Automatic Early Call Occurs
HYPOTHETICAL PAYOUTS ON THE SECURITIES
UPON AUTOMATIC CALL OR AT MATURITY
The following examples illustrate the payout on the securities
for a range of commodity prices for the review date and a range of final commodity prices, as applicable, and are being provided
for illustrative purposes only. These examples are based on the following terms:
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•
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Hypothetical Initial Commodity Price: $50
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•
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Call Price: $1,025 if the securities are automatically called immediately after the September 9, 2019 review date
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•
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Payment at Maturity if the final commodity price is at or above the initial commodity price: $1,050
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•
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Stated Principal Amount (per security): $1,000
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The actual Initial Commodity Price is set forth on the cover
page of this document.
• In Example 1, the commodity price on the review date
is at or above the initial commodity price. Because the commodity price on the review date is at or above the initial commodity
price, the securities are automatically called following the review date. In each of Examples 2, 3 and 4, the commodity price on
the review date is lower than the initial commodity price, and, consequently, the securities are not automatically called prior
to, and remain outstanding until, maturity.
Review Date
|
Example 1
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Example 2
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Example 3
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Example 4
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Hypothetical Commodity Price
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Payout
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Hypothetical Commodity Price
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Payout
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Hypothetical Commodity Price
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Payout
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Hypothetical Commodity Price
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Payout
|
Review Date
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$65
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$1,025
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$35
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—
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$45
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—
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$45
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—
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Final Determination Date
|
—
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—
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$65
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$1,050
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$41
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$1,000
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$27.50
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$550
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Total Payout:
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$1,025 immediately after the review date
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$1,050 at maturity
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$1,000 at maturity
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$550 at maturity
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• In Example 2, the final commodity price is $65, which
is higher than the hypothetical initial commodity price of $50 and represents a 30% increase in the initial commodity price. The
payment at maturity equals $1,050 per security, representing a 5.00% return on your investment. The return on your investment would
be less than the 30% return you would receive on a comparable investment linked to the simple return on the underlying commodity.
• In Example 3, the final commodity price is $41, which
is lower than the hypothetical initial commodity price of $50 and represents a 18% decline from the initial commodity price. Because
the final commodity price has not declined by more than 40% from the initial commodity price, the payment at maturity equals the
Stated Principal Amount of $1,000 per security.
• In Example 4, the final commodity price is $27.50,
which represents a 45% decline from the initial commodity price. Because the final commodity price has declined by more than 40%
from the initial commodity price, investors are exposed to that decline on a 1 to 1 basis and will receive a payment at maturity
that represents a 45% loss of their principal, calculated as follows:
$1,000 + ($1,000 x commodity percent change) = $1,000 + ($1,000
x –45%) = $550