September 2019
Preliminary Terms No. 2,485
Registration Statement Nos.
333-221595; 333-221595-01
Dated August 30, 2019
Filed pursuant to Rule 433
Morgan
Stanley Finance LLC
Structured
Investments
Opportunities in International Equities
Equity-Linked Partial Principal at Risk Securities
due October 5, 2022
Based on the Performance of the EURO STOXX 50®
Index
Fully and Unconditionally Guaranteed by Morgan
Stanley
Equity-Linked
Partial Principal at Risk Securities, 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. The securities will pay no interest,
provide for a minimum payment amount of only 95% of principal at maturity and have the terms described in the accompanying product
supplement, index supplement and prospectus, as supplemented and modified by this document. At maturity, if the underlying index
has appreciated in value, investors will receive the stated principal amount of their investment plus 115% to 125% (to be determined
on the pricing date) of the appreciation of the underlying index from the initial index value to the final index value. However,
if at maturity the underlying index has depreciated in value, investors will lose 1% for every 1% decline of the final index value
from the initial index value, subject to the minimum payment amount. Investors may lose up to 5% of the stated principal
amount of the securities. The securities are for investors who are concerned about principal risk, but seek an
equity index-based return, and who are willing to risk 5% of their principal and to forgo current income in exchange for the repayment
of at least 95% of the principal at maturity and the opportunity to earn a return reflecting 115% to 125% (to be determined on
the pricing date) of the appreciation of the underlying index from the initial index value to the final index value. The securities
are securities issued as part of MSFL’s Series A Global Medium-Term Notes program.
All
payments on the securities, including the payment of the minimum payment amount at maturity, 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.
SUMMARY TERMS
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Issuer:
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Morgan Stanley Finance LLC
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Guarantor:
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Morgan Stanley
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Issue price:
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$1,000 per security (see “Commissions and issue price” below)
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Stated principal amount:
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$1,000 per security
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Aggregate principal amount:
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$
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Pricing date:
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September 30, 2019
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Original issue date:
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October 3, 2019 (3 business days after the pricing date)
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Maturity date:
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October 5, 2022
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Interest:
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None
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Underlying index:
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EURO STOXX 50® Index
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Payment at maturity:
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If the final index value is greater than the initial index
value:
$1,000 + supplemental redemption amount
If the final index value is
less than or equal to the initial index value:
$1,000
x (final index value / initial index value), subject to the minimum payment amount
Under these circumstances, the payment at maturity will
be less than the stated principal amount of $1,000 per security by an amount that is proportionate to the percentage decline of
the underlying index. However, under no circumstances will the payment due at maturity be less than the minimum payment
amount of $950 per security.
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Supplemental redemption amount:
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(i) $1,000 times (ii) the index percent change times (iii) the participation rate
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Minimum payment amount:
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$950 per security (95% of the stated principal amount)
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Participation rate:
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115% to 125%. The actual participation rate will be determined on the pricing date.
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Index percent change:
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(final index value – initial index value) / initial index value
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Initial index value:
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, which is the index closing value on the pricing date
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Final index value:
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The index closing value on the determination date
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Determination date:
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September 30, 2022, subject to postponement for non-index business days and certain market disruption events
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CUSIP / ISIN:
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61769HTM7 / US61769HTM78
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Listing:
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The securities will not be listed on any securities exchange.
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Agent:
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Morgan Stanley & Co. LLC (“MS & Co.”), an affiliate of MSFL and a wholly owned subsidiary of Morgan Stanley. See “Supplemental information regarding plan of distribution; conflicts of interest.”
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Estimated value on the pricing date:
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Approximately $975.10 per security, or within $30.00 of that estimate. See “Investment Summary” beginning on page 2.
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Commissions and issue price:
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Price to public(1)
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Agent’s commissions and fees(2)
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Proceeds to us(3)
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Per security
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$1,000
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$
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$
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Total
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$
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$
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$
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(1)
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The securities will be sold only to investors purchasing
the securities in fee-based advisory accounts.
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(2)
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MS & Co. expects to sell all of the securities
that it purchases from us to an unaffiliated dealer at a price of $ per security, for further sale to certain fee-based
advisory accounts at the price to public of $1,000 per security. MS & Co. will not receive a sales commission with respect
to the securities. See “Supplemental information regarding plan of distribution; conflicts of interest.” For additional
information, see “Plan of Distribution (Conflicts of Interest)” in the accompanying product supplement.
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(3)
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See “Use of proceeds and hedging” on page
14.
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The securities involve risks not associated with an investment
in ordinary debt securities. See “Risk Factors” beginning on page 6.
The Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or determined if this document or the accompanying product supplement,
index supplement and prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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.
You should read this document together with the related product
supplement, index supplement and prospectus, each of which can be accessed via the hyperlinks below. Please also see
“Additional Terms of the Securities” and “Additional Information About the Securities” at the end of this
document.
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.
Product Supplement for Equity-Linked Partial Principal at Risk Securities dated November 16, 2017
Morgan Stanley Finance LLC
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Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
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Investment Summary
Equity-Linked Partial Principal at Risk Securities
The Equity-Linked Partial Principal at Risk Securities due October
5, 2022 Based on the Performance of the EURO STOXX 50® Index (the “securities”) provide investors with
an opportunity to receive a return reflecting 115% to 125% (to be determined on the pricing date) of the positive performance of
the underlying index while maintaining 1:1 downside exposure to any depreciation of the underlying index, subject to the minimum
payment amount at maturity of $950 per security.
If the final index value is greater than the initial index
value, the securities will pay the stated principal amount of $1,000 plus a supplemental redemption amount. The supplemental
redemption amount provides 115% to 125% (to be determined on the pricing date) upside participation (e.g., if the underlying index
appreciates 10% from the initial index value to the final index value, the investor receives 100% of principal plus 11.5% to 12.5%
at maturity) in the performance of the underlying index. If the final index value is equal to or less than the
initial index value, the payment at maturity per security will be equal to or less than the $1,000 principal amount of securities
by an amount proportionate to the decline in the underlying index as of the determination date, subject to the minimum payment
amount of $950 per security. The securities do not pay interest, and all payments on the securities, including the payment
of the minimum payment amount at maturity, are subject to our credit risk.
Maturity:
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Approximately 3 years
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Minimum payment amount:
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$950 per security (95% of the stated principal amount). You could lose up to 5% of the stated principal amount of the securities.
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Participation rate:
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115% to 125%. The actual participation rate will be determined on the pricing date.
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Interest:
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None
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Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
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The original issue price of each security is $1,000. This
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 will be less than $1,000. We estimate that the value of each
security on the pricing date will be approximately $975.10, or within $30.00 of that estimate. Our estimate of the value
of the securities as determined on the pricing date will be set forth in the final pricing supplement.
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 index. The
estimated value of the securities is determined using our own pricing and valuation models, market inputs and assumptions relating
to the underlying index, instruments based on the underlying index, 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 minimum payment amount and the participation rate, 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 MS & Co. purchases the securities in the
secondary market, absent changes in market conditions, including those related to the underlying index, may vary from, and be lower
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. However, because the costs associated with issuing, selling, structuring and hedging the securities are not
fully deducted upon issuance, for a period of up to 6 months following the issue date, to the extent that MS & Co. may buy
or sell the securities in the secondary market, absent changes in market conditions, including those related to the underlying
index, and to our secondary market credit spreads, it would do so based on values higher than the estimated value. We
expect that those higher values will also be reflected in your brokerage account statements.
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.
Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
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Key Investment Rationale
The securities offer 115% to 125% participation in the positive
performance of the underlying index, while providing for a minimum repayment of 95% of the stated principal amount if the securities
are held to maturity, in exchange for forgoing current income and interest. The actual participation rate will be determined
on the pricing date. All payments on the securities, including the payment of the minimum payment amount at maturity,
are subject to our credit risk.
Minimum Payment Amount of 95% of Principal at Maturity
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The securities provide for the minimum payment amount of 95% of principal if held to maturity.
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Upside Scenario
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The underlying index appreciates, and the securities return par plus 115% to 125% upside participation in the appreciation of the underlying index. The actual participation rate will be determined on the pricing date.
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Downside Scenario
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The underlying index depreciates, and the securities redeem for less than the $1,000 stated principal amount by an amount proportionate to the decline in the value of the underlying index, subject to the minimum payment amount of $950 per security (95% of the stated principal amount).
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Morgan Stanley Finance LLC
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Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
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How the Securities Work
Payoff Diagram
The payoff diagram below illustrates the
payment at maturity on the securities, based on the following terms:
Stated principal amount:
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$1,000 per security
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Hypothetical participation rate:
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120% (the midpoint of the specified range)
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Minimum payment amount
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$950 per security (95% of the stated principal amount)
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Payoff Diagram
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How it works
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§
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Upside Scenario. If
the final index value is greater than the initial index value, investors would receive the $1,000 stated principal amount
plus 120% participation in the appreciation of the underlying index.
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|
o
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If the underlying index appreciates 10%, investors would receive a 12% return, or $1,120 per security.
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§
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Par or Downside Scenario. If
the final index value is less than or equal to the initial index value, investors would receive an amount less than or equal
to the $1,000 stated principal amount, based on a 1% loss of principal for each 1% decline in the underlying index over the term
of the securities, subject to the minimum payment amount of $950 per security.
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|
o
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If the underlying index depreciates 1.50% from the initial index value to the final index value, investors would lose 1.50%
of their principal and receive only $985 per security at maturity, or 98.50% of the stated principal amount.
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|
o
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If the underlying index depreciates 50% from the initial index value to the final index value, investors would receive the
minimum payment amount of $950 per security at maturity, or 95% of the stated principal amount.
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Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
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Risk Factors
The following is a list of certain key risk factors for investors
in the securities. For further discussion of these and other risks, you should read the section entitled “Risk
Factors” in the accompanying product supplement, index supplement and prospectus. We also urge you to consult
with your investment, legal, tax, accounting and other advisers in connection with your investment in the securities.
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§
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The securities do not pay interest and provide for a minimum payment amount of only 95% of principal. The
terms of the securities differ from those of ordinary debt securities in that the securities do not pay interest and provide for
a minimum payment amount of only 95% of principal at maturity. If the underlying index has depreciated over the term
of the securities, the payout at maturity will be an amount in cash that is less than the $1,000 stated principal amount of each
security by an amount proportionate to the decrease in the value of the underlying index, subject to the minimum payment amount
of $950 per security (95% of the stated principal amount). You could lose up to 5% of your investment in the securities.
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§
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The market price of the securities will be influenced by many unpredictable factors. Several
factors, many of which are beyond our control, will influence the value of the securities in the secondary market and the price
at which MS & Co. may be willing to purchase or sell the securities in the secondary market, including the value of the underlying
index at any time, the volatility (frequency and magnitude of changes in value) of the underlying index, dividend rate on the stocks
underlying the index, interest and yield rates in the market, time remaining until the
securities mature, geopolitical conditions and economic, financial, political, regulatory
or judicial events that affect the underlying index or equities markets generally and which may affect the final index value of
the underlying index and any actual or anticipated changes in our credit ratings or credit spreads. The value of the underlying
index may be, and has recently been, volatile, and we can give you no assurance that the volatility will lessen. You may receive
less, and possibly significantly less, than the stated principal amount per security if you try to sell your securities prior to
maturity.
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§
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There are risks associated with investments in securities linked to the value of foreign equity securities. The
securities are linked to the value of foreign equity securities. Investments in securities linked to the value of foreign
equity securities involve risks associated with the securities markets in those countries, including risks of volatility in those
markets, governmental intervention in those markets and cross-shareholdings in companies in certain countries. Also,
there is generally less publicly available information about foreign companies than about U.S. companies that are subject to the
reporting requirements of the United States Securities and Exchange Commission, and foreign companies are subject to accounting,
auditing and financial reporting standards and requirements different from those applicable to U.S. reporting companies. The
prices of securities issued in foreign markets may be affected by political, economic, financial and social factors in those countries,
or global regions, including changes in government, economic and fiscal policies and currency exchange laws. Local securities
markets may trade a small number of securities and may be unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of holdings difficult or impossible at times. Moreover, the economies in such countries may
differ favorably or unfavorably from the economy in the United States in such respects as growth of gross national product, rate
of inflation, capital reinvestment, resources, self-sufficiency and balance of payment positions
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§
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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. You are dependent on our ability to pay all amounts due
on the securities at maturity and therefore you are subject to our credit risk. If we default on our obligations under
the securities, your investment would be at risk and you could lose some or all of your investment. As a result, the
market value of the securities prior to maturity will be affected by changes in the market’s view of our creditworthiness. Any
actual or anticipated decline in our credit ratings or increase in the credit spreads charged by the market for taking our credit
risk is likely to adversely affect the market value of the securities.
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Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
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§
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As a finance subsidiary, MSFL has no independent operations and will have no independent assets. As a finance
subsidiary, MSFL has no independent operations beyond the issuance and administration of its securities and will have no independent
assets available for distributions to holders of MSFL securities if they make claims in respect of such securities in a bankruptcy,
resolution or similar proceeding. Accordingly, any recoveries by such holders will be limited to those available under
the related guarantee by Morgan Stanley and that guarantee will rank pari passu with all other unsecured, unsubordinated
obligations of Morgan Stanley. Holders will have recourse only to a single claim against Morgan Stanley and its assets under the
guarantee. Holders of securities issued by MSFL should accordingly assume that in any such proceedings they would not have any
priority over and should be treated pari passu with the claims of other unsecured, unsubordinated creditors of Morgan Stanley,
including holders of Morgan Stanley-issued securities.
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§
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The amount payable on the securities is not linked to the value of the underlying index at any time other than the determination
date. The final index value will be based on the index closing value on the determination date, subject to postponement
for non-index business days and certain market disruption events. Even if the value of the underlying index appreciates
prior to the determination date but then drops by the determination date to be equal to or below the initial index value, the payment
at maturity will be less, and may be significantly less, than it would have been had the payment at maturity been linked to the
value of the underlying index prior to such drop. Although the actual value of the underlying index on the stated maturity
date or at other times during the term of the securities may be higher than the final index value, the payment at maturity will
be based solely on the index closing value on the determination date.
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§
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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. Assuming no change in market conditions or any other relevant factors, the prices, if any,
at which dealers, including MS & Co., may be willing to purchase the securities in secondary market transactions will likely
be significantly lower than the original issue price, because secondary market prices will exclude the issuing, selling, structuring
and hedging-related costs that are included in the original issue price and borne by you and because the secondary market prices
will reflect our secondary market credit spreads and the bid-offer spread that any dealer would charge in a secondary market transaction
of this type as well as other factors.
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The inclusion of the costs of issuing,
selling, structuring and hedging the securities in the original issue price and the lower rate we are willing to pay as issuer
make the economic terms of the securities less favorable to you than they otherwise would be.
However, because the costs associated
with issuing, selling, structuring and hedging the securities are not fully deducted upon issuance, for a period of up to 6 months
following the issue date, to the extent that MS & Co. may buy or sell the securities in the secondary market, absent changes
in market conditions, including those related to the underlying index, and to our secondary market credit spreads, it would do
so based on values higher than the estimated value, and we expect that those higher values will also be reflected in your brokerage
account statements.
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§
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You cannot predict the future performance of the underlying index based on its historical performance. The
value of the underlying index may be, and has recently been, volatile, and we can give you no assurance that the volatility will
lessen. You cannot predict the future performance of the EURO STOXX 50® Index based on its historical performance. See
“EURO STOXX 50® Index Overview” below.
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§
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The estimated value of the securities 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. These pricing and valuation models
are proprietary and rely in part on subjective views of certain market inputs and certain assumptions about future events, which
may prove to be incorrect. As a result, because there is no market-standard way to value these types of securities,
our models may yield a higher estimated value of the securities than those generated by others, including other dealers in the
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Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
market, if they attempted to value
the securities. In addition, the estimated value on the pricing date does not represent a minimum or maximum price at
which dealers, including MS & Co., would be willing to purchase your securities in the secondary market (if any exists) at
any time. The value of your securities at any time after the date of this pricing supplement will vary based on many factors that
cannot be predicted with accuracy, including our creditworthiness and changes in market conditions. See also “The
market price of the securities will be influenced by many unpredictable factors” above.
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§
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Adjustments to the underlying index could adversely affect the value of the securities. The publisher of
the underlying index can add, delete or substitute the stocks underlying the underlying index, and can make other methodological
changes required by certain events relating to the underlying stocks, such as stock dividends, stock splits, spin-offs, rights
offerings and extraordinary dividends, that could change the value of the underlying index. Any of these actions could
adversely affect the value of the securities. The publisher of the underlying index may also discontinue or suspend
calculation or publication of the underlying index at any time. In these circumstances, MS & Co., as the calculation
agent, will have the sole discretion to substitute a successor index that is comparable to the discontinued index. MS
& Co. could have an economic interest that is different than that of investors in the securities insofar as, for example, MS
& Co. is permitted to consider indices that are calculated and published by MS & Co. or any of its affiliates. If
MS & Co. determines that there is no appropriate successor index on the determination date, the final index value will be an
amount calculated based on the prices of the stocks underlying the discontinued index at the time of such discontinuance, without
rebalancing or substitution, computed by MS & Co, as calculation agent, in accordance with the formula for calculating the
index closing value last in effect prior to discontinuance of the index.
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§
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Investing in the securities is not equivalent to investing in the underlying index. Investing in the securities
is not equivalent to investing in the underlying index or its component stocks. Investors in the securities will not
have voting rights or rights to receive dividends or other distributions or any other rights with respect to stocks that constitute
the underlying index.
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§
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The securities will not be listed on any securities exchange and secondary trading may be limited. The securities
will not be listed on any securities exchange. Therefore, there may be little or no secondary market for the securities. 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. When it does make a market, it will generally do so for transactions
of routine secondary market size at prices based on its estimate of the current value of the securities, taking into account its
bid/offer spread, our credit spreads, market volatility, the notional size of the proposed sale, the cost of unwinding any related
hedging positions, the time remaining to maturity and the likelihood that it will be able to resell the securities. Even
if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the securities easily. Because
we do not expect that other broker-dealers will participate significantly in the secondary market for the securities, the price
at which you may be able to trade your securities is likely to depend on the price, if any, at which MS & Co. is willing to
transact. If, at any time, MS & Co. were to cease making a market in the securities, it is likely that there would
be no secondary market for the securities. Accordingly, you should be willing to hold your securities to maturity.
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§
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The calculation agent, which is a subsidiary of Morgan Stanley and an affiliate of MSFL, will make determinations with respect
to the securities. As calculation agent, MS & Co. will determine the initial index value and the final index
value, and will calculate the amount of cash you will receive at maturity. Moreover, certain determinations made by
MS & Co., in its capacity as calculation agent, may require it to exercise discretion and make subjective judgments, such as
with respect to the occurrence or non-occurrence of market disruption events and the selection of a successor index or calculation
of the index closing value in the event of a discontinuance of the underlying index or a market
disruption event, may adversely affect the payout to you at maturity. For further information regarding these
types of determinations, see “Description of Equity-Linked Partial Principal at Risk Securities —Supplemental Redemption
Amount,” “—Calculation Agent and Calculations,” “—Alternate Exchange Calculation in the Case
of an Event of Default” and “—Discontinuance of Any Underlying Index; Alteration of Method of Calculation”
in the accompanying product supplement. In addition, MS & Co. has determined the estimated value of the securities
on the pricing date.
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§
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Hedging and trading activity by our affiliates could potentially adversely affect the value of the securities. One
or more of our affiliates and/or third-party dealers expect to carry out hedging activities
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Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
related to the securities (and to
other instruments linked to the underlying index or its component stocks), including trading in the stocks that constitute the
underlying index as well as in other instruments related to the underlying index. As a result, these entities may be
unwinding or adjusting hedge positions during the term of the securities, and the hedging strategy may involve greater and more
frequent dynamic adjustments to the hedge as the determination date approaches. MS & Co. and some of our affiliates also trade
the stocks that constitute the underlying index and other financial instruments related to the underlying index on a regular basis
as part of their general broker-dealer and other businesses. Any of these hedging or trading activities on or prior
to the pricing date could potentially increase the initial index value, and, therefore, the value at or above which the underlying
index must close on the determination date so that investors do not suffer a loss on their initial investment in the securities. Additionally,
such hedging or trading activities during the term of the securities, including on the determination date, could adversely affect
the value of the underlying index on the determination date, and, accordingly, the amount of cash an investor will receive at maturity.
Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
EURO STOXX 50®
Index Overview
The EURO STOXX 50® Index was created by STOXX
Limited, which is owned by Deutsche Börse AG and SIX Group AG. Publication of the EURO STOXX 50® Index began
on February 26, 1998, based on an initial index value of 1,000 at December 31, 1991. The EURO STOXX 50® Index is
composed of 50 component stocks of market sector leaders from within the STOXX 600 Supersector Indices, which includes stocks selected
from the Eurozone. The component stocks have a high degree of liquidity and represent the largest companies across all market sectors.
For additional information about the EURO STOXX 50® Index, see the information set forth under “EURO STOXX
50® Index” in the accompanying index supplement.
Information
as of market close on August 29, 2019:
Bloomberg Ticker Symbol:
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SX5E
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Current Index Value:
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3,411.33
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52 Weeks Ago:
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3,456.13
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52 Week High (on 7/4/2019):
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3,544.15
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52 Week Low (on 12/27/2018):
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2,937.36
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The following
graph sets forth the daily closing values of the underlying index for the period from January 1, 2008 through August 29, 2019. The
related table sets forth the published high and low closing values, as well as end-of-quarter closing values, of the underlying
index for each quarter in the same period. The closing value of the underlying index on August 29, 2019 was 3,411.33. We
obtained the information in the table and graph below from Bloomberg Financial Markets, without independent verification. The
underlying index has at times experienced periods of high volatility, and you should not take the historical values of the underlying
index as an indication of its future performance.
EURO STOXX 50®
Index Historical Performance
Daily Closing Values
January 1, 2008 to August
29, 2019
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Morgan Stanley Finance LLC
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Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
EURO STOXX 50® Index
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High
|
Low
|
Period End
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2008
|
|
|
|
First Quarter
|
4,339.23
|
3,431.82
|
3,628.06
|
Second Quarter
|
3,882.28
|
3,340.27
|
3,352.81
|
Third Quarter
|
3,445.66
|
3,000.83
|
3,038.20
|
Fourth Quarter
|
3,113.82
|
2,165.91
|
2,447.62
|
2009
|
|
|
|
First Quarter
|
2,578.43
|
1,809.98
|
2,071.13
|
Second Quarter
|
2,537.35
|
2,097.57
|
2,401.69
|
Third Quarter
|
2,899.12
|
2,281.47
|
2,872.63
|
Fourth Quarter
|
2,992.08
|
2,712.30
|
2,964.96
|
2010
|
|
|
|
First Quarter
|
3,017.85
|
2,631.64
|
2,931.16
|
Second Quarter
|
3,012.65
|
2,488.50
|
2,573.32
|
Third Quarter
|
2,827.27
|
2,507.83
|
2,747.90
|
Fourth Quarter
|
2,890.64
|
2,650.99
|
2,792.82
|
2011
|
|
|
|
First Quarter
|
3,068.00
|
2,721.24
|
2,910.91
|
Second Quarter
|
3,011.25
|
2,715.88
|
2,848.53
|
Third Quarter
|
2,875.67
|
1,995.01
|
2,179.66
|
Fourth Quarter
|
2,476.92
|
2,090.25
|
2,316.55
|
2012
|
|
|
|
First Quarter
|
2,608.42
|
2,286.45
|
2,477.28
|
Second Quarter
|
2,501.18
|
2,068.66
|
2,264.72
|
Third Quarter
|
2,594.56
|
2,151.54
|
2,454.26
|
Fourth Quarter
|
2,659.95
|
2,427.32
|
2,635.93
|
2013
|
|
|
|
First Quarter
|
2,749.27
|
2,570.52
|
2,624.02
|
Second Quarter
|
2,835.87
|
2,511.83
|
2,602.59
|
Third Quarter
|
2,936.20
|
2,570.76
|
2,893.15
|
Fourth Quarter
|
3,111.37
|
2,902.12
|
3,109.00
|
2014
|
|
|
|
First Quarter
|
3,172.43
|
2,962.49
|
3,161.60
|
Second Quarter
|
3,314.80
|
3,091.52
|
3,228.24
|
Third Quarter
|
3,289.75
|
3,006.83
|
3,225.93
|
Fourth Quarter
|
3,277.38
|
2,874.65
|
3,146.43
|
2015
|
|
|
|
First Quarter
|
3,731.35
|
3,007.91
|
3,697.38
|
Second Quarter
|
3,828.78
|
3,424.30
|
3,424.30
|
Third Quarter
|
3,686.58
|
3,019.34
|
3,100.67
|
Fourth Quarter
|
3,506.45
|
3,069.05
|
3,267.52
|
2016
|
|
|
|
First Quarter
|
3,178.01
|
2,680.35
|
3,004.93
|
Second Quarter
|
3,151.69
|
2,697.44
|
2,864.74
|
Third Quarter
|
3,091.66
|
2,761.37
|
3,002.24
|
Fourth Quarter
|
3,290.52
|
2,954.53
|
3,290.52
|
2017
|
|
|
|
First Quarter
|
3,500.93
|
3,230.68
|
3,500.93
|
Second Quarter
|
3,658.79
|
3,409.78
|
3,441.88
|
Third Quarter
|
3,594.85
|
3,388.22
|
3,594.85
|
Fourth Quarter
|
3,697.40
|
3,503.96
|
3,503.96
|
2018
|
|
|
|
First Quarter
|
3,672.29
|
3,278.72
|
3,361.50
|
Second Quarter
|
3,592.18
|
3,340.35
|
3,395.60
|
Third Quarter
|
3,527.18
|
3,293.36
|
3,399.20
|
Fourth Quarter
|
3,414.16
|
2,937.36
|
3,001.42
|
2019
|
|
|
|
First Quarter
|
3,409.00
|
2,954.66
|
3,351.71
|
Second Quarter
|
3,514.62
|
3,280.43
|
3,473.69
|
Third Quarter (through August 29, 2019)
|
3,544.15
|
3,282.78
|
3,411.33
|
|
|
|
|
“EURO STOXX 50®” and “STOXX®”
are registered trademarks of STOXX Limited. For more information, see “EURO STOXX 50® Index” in the
accompanying index supplement.
Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
Additional Terms of the Securities
Please read this information in conjunction
with the summary terms on the front cover of this document.
If the terms described herein are inconsistent with those described in the accompanying product supplement, index supplement or prospectus, the terms described herein shall control.
|
Underlying index publisher:
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STOXX Limited, or any successor thereof
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Denominations:
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$1,000 per security and integral multiples thereof
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Call right:
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The securities are not callable prior to the maturity date.
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Postponement of maturity date:
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If the determination date is postponed so that it falls less than two business days prior to the scheduled maturity date, the maturity date of the securities will be postponed to the second business day following the determination date as postponed.
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Trustee:
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The Bank of New York Mellon
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Calculation agent:
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MS & Co.
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Issuer notice to registered security holders, the trustee and the depositary:
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In the event that the maturity date is postponed due to postponement
of the determination date, the issuer shall give notice of such postponement and, once it has been determined, of the date to which
the maturity date has been rescheduled (i) to each registered holder of the securities by mailing notice of such postponement by
first class mail, postage prepaid, to such registered holder’s last address as it shall appear upon the registry books, (ii)
to the trustee by facsimile, confirmed by mailing such notice to the trustee by first class mail, postage prepaid, at its New York
office and (iii) to The Depository Trust Company (the “depositary”) by telephone or facsimile, confirmed by mailing
such notice to the depositary by first class mail, postage prepaid. Any notice that is mailed to a registered holder
of the securities in the manner herein provided shall be conclusively presumed to have been duly given to such registered holder,
whether or not such registered holder receives the notice. The issuer shall give such notice as promptly as possible,
and in no case later than (i) with respect to notice of postponement of the maturity date, the business day immediately preceding
the scheduled maturity date, and (ii) with respect to notice of the date to which the maturity date has been rescheduled, the business
day immediately following the actual determination date as postponed.
The issuer shall, or shall cause the calculation agent to, (i)
provide written notice to the trustee at its New York office, on which notice the trustee may conclusively rely, and to the depositary
of the payment at maturity on or prior to 10:30 a.m. (New York City time) on the business day preceding the maturity date and (ii)
deliver the aggregate cash amount due with respect to the securities to the trustee for delivery to the depositary, as holder of
the securities, on the maturity date.
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Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
Additional Information About the Securities
Minimum ticketing size:
|
$1,000 / 1 security
|
Tax considerations:
|
In the opinion of our counsel, Davis Polk & Wardwell LLP,
the securities should be treated as “contingent payment debt instruments” for U.S. federal income tax purposes, as
described in the section of the accompanying product supplement called “United States Federal Taxation—Tax Consequences
to U.S. Holders.” Under this treatment, if you are a U.S. taxable investor, you generally will be subject to annual income
tax based on the “comparable yield” (as defined in the accompanying product supplement) of the securities, adjusted
upward or downward to reflect the difference, if any, between the actual and projected amount of the payments on the securities. The
comparable yield will be determined on the pricing date and may be significantly higher or lower than the comparable yield if the
securities were priced on the date hereof. The comparable yield and the projected payment schedule (or information about
how to obtain them) will be provided in the final pricing supplement. In addition, any gain recognized by U.S. taxable
investors on the sale or exchange, or at maturity, of the securities generally will be treated as ordinary income.
You should read the discussion under “United States Federal
Taxation” in the accompanying product supplement concerning the U.S. federal income tax consequences of an investment in
the securities.
The comparable yield and the projected payment schedule will
not be provided for any purpose other than the determination of U.S. Holders’ accruals of interest income and adjustments
thereto in respect of the securities for U.S. federal income tax purposes, and we make no representation regarding the actual amount
of the payments that will be made on the securities.
If you are a non-U.S. investor, please also read the section
of the accompanying product supplement called “United States Federal Taxation—Tax Consequences to Non-U.S. Holders.”
As discussed in the accompanying product supplement, Section
871(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury regulations promulgated thereunder
(“Section 871(m)”) generally impose a 30% (or a lower applicable treaty rate) withholding tax on dividend equivalents
paid or deemed paid to Non-U.S. Holders with respect to certain financial instruments linked to U.S. equities or indices that include
U.S. equities (each, an “Underlying Security”). Subject to certain exceptions, Section 871(m) generally
applies to securities that substantially replicate the economic performance of one or more Underlying Securities, as determined
based on tests set forth in the applicable Treasury regulations (a “Specified Security”). However, pursuant
to an Internal Revenue Service (“IRS”) notice, Section 871(m) will not apply to securities issued before January 1,
2021 that do not have a delta of one with respect to any Underlying Security. Based on the terms of the securities and
current market conditions, we expect that the securities will not have a delta of one with respect to any Underlying Security on
the pricing date. However, we will provide an updated determination in the final pricing supplement. Assuming that the securities
do not have a delta of one with respect to any Underlying Security, our counsel is of the opinion that the securities should not
be Specified Securities and, therefore, should not be subject to Section 871(m). Our determination is not binding on the IRS, and
the IRS may disagree with this determination. Section 871(m) is complex and its application may depend on your particular circumstances,
including whether you enter into other transactions with respect to an Underlying Security. If withholding is required,
we will not be required to pay any additional amounts with respect to the amounts so withheld. You should consult your tax
adviser regarding the potential application of Section 871(m) to the securities.
In addition, as discussed in the accompanying product supplement,
withholding rules commonly referred to as “FATCA” apply to certain financial instruments (including the securities)
with respect to payments of amounts treated as interest and to any payment of gross proceeds of a disposition (including retirement)
of such an instrument. However, recently proposed regulations (the preamble to which specifies that taxpayers are permitted to
rely on them pending finalization) eliminate the withholding requirement on payments of gross proceeds of a taxable disposition
(other than amounts treated as interest or other “FDAP income,” as defined in the accompanying product supplement).
You should consult your tax adviser regarding all aspects
of the U.S. federal income tax consequences of an investment in the securities, as well as any tax consequences arising under the
laws of any state, local or non-U.S. taxing jurisdiction. Moreover, neither this document nor the accompanying product
supplement addresses the consequences to taxpayers subject to special tax accounting rules under Section 451(b) of the Code.
The discussion in the preceding paragraphs under “Tax
considerations” and the discussion contained in the section entitled “United States Federal Taxation” in the
|
Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
|
accompanying product supplement, insofar as they purport to describe provisions of U.S. federal income tax laws or legal conclusions with respect thereto, constitute the full opinion of Davis Polk & Wardwell LLP regarding the material U.S. federal tax consequences of an investment in the securities.
|
Use of proceeds and hedging:
|
The proceeds from the sale of the securities will be used by
us for general corporate purposes. We will receive, in aggregate, $1,000 per security issued, because, when we enter
into hedging transactions in order to meet our obligations under the securities, our hedging counterparty will reimburse the cost
of the agent’s commissions. The costs of the securities borne by you and described on page 2 above comprise the
agent’s commissions and the cost of issuing, structuring and hedging the securities.
On or prior to the pricing date, we expect to hedge our anticipated
exposure in connection with the securities by entering into hedging transactions with our affiliates and/or third-party dealers. We
expect our hedging counterparties to take positions in the stocks constituting the underlying index, in futures and/or options
contracts on the underlying index or the component stocks of the underlying index listed on major securities markets, or positions
in any other available securities or instruments that they may wish to use in connection with such hedging. Such purchase
activity could increase the value of the underlying index on the pricing date, and, therefore, the value at or above which the
underlying index must close on the determination date so that investors do not suffer a loss on their initial investment in the
securities. In addition, through our affiliates, we are likely to modify our hedge position throughout the term of the
securities, including on the determination date, by purchasing and selling the stocks constituting the underlying index, futures
or options contracts on the underlying index or its component stocks listed on major securities markets or positions in any other
available securities or instruments that we may wish to use in connection with such hedging activities. As a result,
these entities may be unwinding or adjusting hedge positions during the term of the securities, and the hedging strategy may involve
greater and more frequent dynamic adjustments to the hedge as the determination date approaches. We cannot give any assurance that
our hedging activities will not affect the value of the underlying index, and, therefore, adversely affect the value of the securities
or the payment you will receive at maturity. For further information on our use of proceeds and hedging, see “Use
of Proceeds and Hedging” in the accompanying product supplement.
|
Benefit plan investor considerations:
|
Each fiduciary of a pension, profit-sharing or other employee
benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (a “Plan”),
should consider the fiduciary standards of ERISA in the context of the Plan’s particular circumstances before authorizing
an investment in the securities. Accordingly, among other factors, the fiduciary should consider whether the investment
would satisfy the prudence and diversification requirements of ERISA and would be consistent with the documents and instruments
governing the Plan.
In addition, we and certain of our affiliates, including MS &
Co., may each be considered a “party in interest” within the meaning of ERISA, or a “disqualified person”
within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”), with respect to many Plans, as well
as many individual retirement accounts and Keogh plans (such accounts and plans, together with other plans, accounts and arrangements
subject to Section 4975 of the Code, also “Plans”). ERISA Section 406 and Code Section 4975 generally prohibit
transactions between Plans and parties in interest or disqualified persons. Prohibited transactions within the meaning
of ERISA or the Code would likely arise, for example, if the securities are acquired by or with the assets of a Plan with respect
to which MS & Co. or any of its affiliates is a service provider or other party in interest, unless the securities are acquired
pursuant to an exemption from the “prohibited transaction” rules. A violation of these “prohibited
transaction” rules could result in an excise tax or other liabilities under ERISA and/or Section 4975 of the Code for those
persons, unless exemptive relief is available under an applicable statutory or administrative exemption.
The U.S. Department of Labor has issued five prohibited transaction
class exemptions (“PTCEs”) that may provide exemptive relief for direct or indirect prohibited transactions resulting
from the purchase or holding of the securities. Those class exemptions are PTCE 96-23 (for certain transactions determined
by in-house asset managers), PTCE 95-60 (for certain transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for certain transactions involving insurance company
separate accounts) and PTCE 84-14 (for certain transactions determined by independent qualified professional asset managers). In
addition, ERISA Section 408(b)(17) and Section 4975(d)(20) of the Code provide an exemption for the purchase and sale of securities
and the related lending transactions, provided that neither the issuer of the securities nor any of its affiliates has or exercises
any discretionary authority or control or renders any investment advice with respect to the assets of the Plan involved in the
transaction and provided further that the Plan pays no more, and receives no less, than “adequate
|
Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
|
consideration” in connection with the transaction (the
so-called “service provider” exemption). There can be no assurance that any of these class or statutory
exemptions will be available with respect to transactions involving the securities.
Because we may be considered a party in interest with respect
to many Plans, the securities may not be purchased, held or disposed of by any Plan, any entity whose underlying assets include
“plan assets” by reason of any Plan’s investment in the entity (a “Plan Asset Entity”) or any person
investing “plan assets” of any Plan, unless such purchase, holding or disposition is eligible for exemptive relief,
including relief available under PTCEs 96-23, 95-60, 91-38, 90-1, 84-14 or the service provider exemption or such purchase, holding
or disposition is otherwise not prohibited. Any purchaser, including any fiduciary purchasing on behalf of a Plan, transferee
or holder of the securities will be deemed to have represented, in its corporate and its fiduciary capacity, by its purchase and
holding of the securities that either (a) it is not a Plan or a Plan Asset Entity and is not purchasing such securities on behalf
of or with “plan assets” of any Plan or with any assets of a governmental, non-U.S. or church plan that is subject
to any federal, state, local or non-U.S. law that is substantially similar to the provisions of Section 406 of ERISA or Section
4975 of the Code (“Similar Law”) or (b) its purchase, holding and disposition of these securities will not constitute
or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or violate any Similar
Law.
Due to the complexity of these rules and the penalties that may
be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries or other
persons considering purchasing the securities on behalf of or with “plan assets” of any Plan consult with their counsel
regarding the availability of exemptive relief.
The securities are contractual financial instruments. The
financial exposure provided by the securities is not a substitute or proxy for, and is not intended as a substitute or proxy for,
individualized investment management or advice for the benefit of any purchaser or holder of the securities. The securities
have not been designed and will not be administered in a manner intended to reflect the individualized needs and objectives of
any purchaser or holder of the securities.
Each purchaser or holder of any securities acknowledges and agrees
that:
(i)
the purchaser or holder or its fiduciary has made and
shall make all investment decisions for the purchaser or holder and the purchaser or holder has not relied and shall not rely in
any way upon us or our affiliates to act as a fiduciary or adviser of the purchaser or holder with respect to (A) the design and
terms of the securities, (B) the purchaser or holder’s investment in the securities, or (C) the exercise of or failure to
exercise any rights we have under or with respect to the securities;
(ii)
we and our affiliates have acted
and will act solely for our own account in connection with (A) all transactions relating to the securities and (B) all hedging
transactions in connection with our obligations under the securities;
(iii)
any and all assets and positions
relating to hedging transactions by us or our affiliates are assets and positions of those entities and are not assets and positions
held for the benefit of the purchaser or holder;
(iv)
our interests are adverse to
the interests of the purchaser or holder; and
(v)
neither we nor any of our affiliates
is a fiduciary or adviser of the purchaser or holder in connection with any such assets, positions or transactions, and any information
that we or any of our affiliates may provide is not intended to be impartial investment advice.
Each purchaser and holder of the securities has exclusive responsibility
for ensuring that its purchase, holding and disposition of the securities do not violate the prohibited transaction rules of ERISA
or the Code or any Similar Law. The sale of any securities to any Plan or plan subject to Similar Law is in no respect
a representation by us or any of our affiliates or representatives that such an investment meets all relevant legal requirements
with respect to investments by plans generally or any particular plan, or that such an investment is appropriate for plans generally
or any particular plan. In this regard, neither this discussion nor anything provided in this document is or is intended to be
investment advice directed at any potential Plan purchaser or at Plan purchasers generally and such purchasers of the securities
should consult and rely on their own counsel and advisers as to whether an investment in the securities is suitable.
However, individual retirement accounts, individual retirement
annuities and Keogh plans, as well as employee benefit plans that permit participants to direct the investment of their accounts,
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Morgan Stanley Finance LLC
|
Equity-Linked Partial Principal at Risk Securities due October 5, 2022
Based on the Performance of the EURO STOXX 50® Index
|
|
will not be permitted to purchase or hold the securities if the account, plan or annuity is for the benefit of an employee of Morgan Stanley, Morgan Stanley Wealth Management or a family member and the employee receives any compensation (such as, for example, an addition to bonus) based on the purchase of the securities by the account, plan or annuity.
|
Additional considerations:
|
Client accounts over which Morgan Stanley, Morgan Stanley Wealth Management or any of their respective subsidiaries have investment discretion are not permitted to purchase the securities, either directly or indirectly.
|
Supplemental information regarding plan of distribution; conflicts of interest:
|
MS & Co. expects to sell all of the securities that it purchases
from us to an unaffiliated dealer at a price of $ per security, for further sale to certain fee-based advisory accounts
at the price to public of $1,000 per security. MS & Co. will not receive a sales commission with respect to the securities.
MS & Co. is an affiliate of MSFL and a wholly owned subsidiary
of Morgan Stanley, and it and other affiliates of ours expect to make a profit by selling, structuring and, when applicable, hedging
the securities. When MS & Co. prices this offering of securities, it will determine the economic terms of the securities,
including the participation rate, such that for each security the estimated value on the pricing date will be no lower than the
minimum level described in “Investment Summary” on page 2.
MS & Co. 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 “Plan
of Distribution (Conflicts of Interest)” and “Use of Proceeds and Hedging” in the accompanying product supplement.
|
Where you can find more information:
|
Morgan Stanley and MSFL have filed a registration statement (including
a prospectus, as supplemented by the product supplement for Equity-Linked Securities and the index supplement) with the Securities
and Exchange Commission, or SEC, for the offering to which this communication relates. You should read the prospectus
in that registration statement, the product supplement for Equity-Linked Partial Principal at Risk Securities, the index supplement
and any other documents relating to this offering that Morgan Stanley and MSFL have filed with the SEC for more complete information
Morgan Stanley, MSFL and this offering. You may get these documents without cost by visiting EDGAR on the SEC web site
at.www.sec.gov. Alternatively, Morgan Stanley, MSFL, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus, the product supplement for Equity-Linked Partial Principal
at Risk Securities and the index supplement if you so request by calling toll-free 800-584-6837.
You may access these documents on the SEC web site at www.sec.gov
as follows:
Product Supplement for Equity-Linked Partial Principal at Risk Securities dated November 16, 2017
Index Supplement dated November 16, 2017
Prospectus dated November 16, 2017
Terms used but not defined in this document are defined in the
product supplement for Equity-Linked Partial Principal at Risk Securities, in the index supplement or in the prospectus.
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