September
2019
Preliminary
Terms No. 2,492
Registration
Statement Nos. 333-221595; 333-221595-01
Dated
September 3, 2019
Filed
pursuant to Rule 433
Morgan
Stanley Finance LLC
Structured Investments
Opportunities in U.S. and International Equities
Equity-Linked Partial Principal at Risk Securities
due October 3, 2024
Fully and Unconditionally Guaranteed by Morgan
Stanley
Based on the Performance of an Equally Weighted
Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
The 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 basket of two indices has appreciated in value,
investors will receive the stated principal amount of $1,000 plus a supplemental redemption amount, if any, based on the closing
value of the basket on the determination date. However, if at maturity the basket has depreciated in value, investors will lose
1% for every 1% decline of the final basket closing value from the initial basket value, subject to the minimum payment amount.
Investors may lose up to 5% of the stated principal amount of the securities. These long-dated securities are for investors
who are concerned about principal risk, but seek a return based on a basket of equity indices, 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 principal at maturity plus the
potential to receive a supplemental redemption amount, if any. The securities are notes 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 3, 2024
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Interest:
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None
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Basket:
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Basket component*
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Ticker symbol*
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Basket component weighting
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Initial index value
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Multiplier
|
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S&P 500® Index (the “SPX Index”)
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SPX
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50%
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|
|
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EURO STOXX 50® Index (the “SX5E Index”)
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SX5E
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50%
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|
|
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* Ticker symbols are being
provided for reference purposes only. We refer to the SPX Index and the SX5E Index, collectively, as the underlying
indices.
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Payment at maturity:
|
The payment due at maturity
per $1,000 stated principal amount will equal:
· If
the final basket closing value is greater than the initial basket value:
$1,000 + supplemental
redemption amount, if any.
· If
the final basket closing value is less than or equal to the initial basket value:
$1,000
x (final basket closing value / initial basket 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 basket. 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 basket percent
change times (iii) the participation rate, provided that the supplemental redemption amount will not be less
than $0.
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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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At least 105%. The actual participation
rate will be determined on the pricing date.
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Maximum payment at maturity:
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None
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Basket percent change:
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(final basket closing value – initial basket
value) / initial basket value
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Listing:
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The securities will not be listed on any securities
exchange.
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Terms continued on the following page
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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:
|
Approximately $966.00 per security, or within
$30.00 of that estimate. See “Investment Summary” on page 3.
|
Commissions and issue price:
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Price
to public
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Agent’s
commissions and fees(1)
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Proceeds
to us(2)
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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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Selected dealers and
their financial advisors will collectively receive from the agent, MS & Co., a fixed sales commission of $ for each security
they sell. 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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(2)
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See “Use of proceeds
and hedging” on page 17.
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The securities
involve risks not associated with an investment in ordinary debt securities. See “Risk Factors” beginning on page
7.
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 bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency, 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
Index Supplement dated November 16, 2017 Prospectus dated November 16, 2017
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
Terms continued from previous page:
|
Initial basket value:
|
The initial basket value will equal 100, which
is equal to the sum of the products of (i) the initial index value of each basket component, as set forth under “Basket—Initial
index value” above, and (ii) the multiplier for such basket component, as set forth under “Basket—Multiplier”
above, each as determined on the pricing date.
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Final basket closing value:
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The basket closing value on the determination date
|
Determination date:
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September 30, 2024, subject to postponement for non-index
business days and certain market disruption events
|
Basket closing value:
|
On any date, the sum of the products of (i) the closing value
of each basket component on such date, and (ii) the multiplier for such basket component.
|
Multiplier:
|
The multiplier for each basket component will be set on the
pricing date so that each basket component will represent its applicable basket component weighting in the predetermined initial
basket value of 100. Each multiplier will remain constant for the term of the securities.
|
CUSIP:
|
61769HTU9
|
ISIN:
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US61769HTU94
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
Investment Summary
Equity-Linked Partial Principal at Risk Securities
The Equity-Linked Partial Principal at Risk Securities due October
3, 2024 Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX
50® (the “securities”) offer the potential for a supplemental redemption amount at maturity based on
the closing value of a basket of two indices on the determination date while maintaining 1:1 downside exposure to any depreciation
of the basket, subject to the minimum payment amount at maturity of $950 per security.
At maturity, if the final basket closing value is greater
than the initial basket value, the securities will pay the stated principal amount of $1,000 plus a supplemental redemption
amount. The supplemental redemption amount provides at least 105% (to be determined on the pricing date) upside participation (e.g.,
if the basket appreciates 10% from the initial basket value to the final basket closing value, the investor receives 105% of principal
plus 10.5% at maturity) in the performance of the basket. If the final basket closing value is equal to or less than the
initial basket value, the payment at maturity per security will be equal to or less than the $1,000 principal amount by an amount
proportionate to the decline in the basket 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:
|
5 years
|
Minimum payment amount:
|
$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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At least 105%. 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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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 $966.00, 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 indices. The estimated
value of the securities is determined using our own pricing and valuation models, market inputs and assumptions relating to the
underlying indices, instruments based on the underlying indices, 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 indices, may vary from, and be
lower than, the estimated value on the pricing
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
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
indices, 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 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
Key Investment Rationale
The securities offer investors exposure to the performance of
an equally weighted basket composed of the S&P 500® Index and the EURO STOXX 50® 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. They are for investors who are concerned about principal risk, but seek a return based on
a basket of equity indices, 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 principal at maturity plus the potential to receive a supplemental redemption amount, if any.
Minimum
Payment Amount of 95% of Principal at Maturity
|
The securities provide for the minimum payment amount of 95% of principal if held to maturity, subject to our creditworthiness.
|
Upside
Scenario
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The basket closing value on the determination date is greater than the initial basket value of 100, and, at maturity, the securities pay the stated principal amount of $1,000 plus at least 105% of the positive percent change from the initial basket value to the final basket closing value. The actual participation rate will be determined on the pricing date. There is no limitation on the appreciation potential.
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Downside
Scenario
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The final basket closing value is less than the initial basket value, and, at maturity, the securities redeem for less than the $1,000 stated principal amount by an amount proportionate to the decline in the value of the basket, subject to the minimum payment amount of $950 per security (95% of the stated principal amount).
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
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:
|
$1,000 per security
|
Hypothetical participation rate:
|
105%
|
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 basket closing value is greater than the initial
basket value, investors would receive the $1,000 stated principal amount plus 105% participation in the appreciation of the basket.
|
|
o
|
If the basket appreciates 10%, investors would receive a 10.5% return, or $1,105 per security.
|
|
§
|
Par or Downside Scenario. If the final basket closing value is less than or equal
to the initial basket 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 basket over the term of the securities, subject to the minimum payment amount
of $950 per security.
|
|
o
|
If the basket depreciates 1.50% from the initial basket value to the final basket closing 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.
|
|
o
|
If the basket depreciates 50% from the initial basket value to the final basket closing value, investors would receive the
minimum payment amount of $950 per security at maturity, or 95% of the stated principal amount.
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
Risk Factors
The following is a non-exhaustive 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. You should
also consult with your investment, legal, tax, accounting and other advisers in connection with your investment in the securities.
|
§
|
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 basket 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 basket, 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.
|
|
§
|
Changes in the values of the basket components may offset each other. Movements in the levels of the basket components
may not correlate with each other. At a time when the level of one basket component increases, the level of the other basket component
may decline in value. Therefore, in calculating the payment at maturity, increases in the level of one basket component may be
moderated, or wholly offset, by declines in the level of the other basket component.
|
|
§
|
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 values of the basket
components at any time, the volatility (frequency and magnitude of changes in value) of the underlying indices, dividend rate on
the stocks underlying the underlying indices, 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
indices or equities markets generally and which may affect the closing values of the underlying indices on the determination date
and the actual or anticipated changes in our credit ratings or credit spreads. Generally, the longer the time remaining
to maturity, the more the market price of the securities will be affected by the other factors described above. The
values of the underlying indices may be, and have recently been, volatile, and we can give you no assurance that the volatility
will lessen. See “Historical Information” below. 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.
|
|
§
|
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
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
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.
|
§
|
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.
|
|
§
|
The amount payable on the securities is not linked to the value of the underlying indices at any time other than the determination
date. The amount payable on the securities will be based on the basket 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 basket appreciates prior
to the determination date but then drops by the determination date, 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 basket prior to such drop. Although the
actual value of the basket on the stated maturity date or at other times during the term of the securities may be higher than the
final basket closing value, the payment at maturity will be based solely on the final basket closing value.
|
|
§
|
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.
|
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 indices, 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.
|
§
|
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 market, if they attempted to value
the
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
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 document 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.
|
§
|
Adjustments to the basket components could adversely affect the value of the securities. The index publisher of a basket
component can add, delete or substitute the stocks underlying basket component, and can make other methodological changes that
could change the value of such basket component. Any of these actions could adversely affect the value of the securities. In addition
the index publisher of a basket component may discontinue or suspend calculation or publication of such basket component 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 basket component and 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 index closing value on the determination date will be an amount based on
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.
|
|
§
|
Investing in the securities is not equivalent to investing in the basket components;
you have no shareholder or other rights in the basket components and are exposed to our credit risk. Investing in the securities
is not equivalent to investing in the basket components. As an investor in the securities, you will not have voting rights or the
right to receive dividends or other distributions or any other rights with respect to the component stocks of either basket component.
Furthermore, investing in the securities is not equivalent to investing in the basket components or their component stocks. In
addition, you are subject to our credit risk.
|
|
§
|
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. Since other broker-dealers may not 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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|
§
|
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 multiplier for each basket
component, the final basket closing value and the basket percent change, 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 basket closing value in the event of a discontinuance of any basket
component or a market disruption event with respect to any basket component. These potentially subjective determinations may 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.
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
|
§
|
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 related to the securities (and to other
instruments linked to the underlying indices or their component stocks), including trading in the component stocks of the underlying
indices and in other instruments related to the underlying indices. 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. Some of our affiliates also trade the component stocks of the underlying indices
and other financial instruments related to the underlying indices 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 values, and, therefore, could increase the values at or above which the underlying indices 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 closing values of
the underlying indices 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 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
Basket Overview
S&P 500®
Index
The S&P 500® Index, which is calculated,
maintained and published by Standard & Poor’s Financial Services LLC (“S&P”), consists of 500 component
stocks selected to provide a performance benchmark for the U.S. equity markets. The calculation of the S&P 500® Index
is based on the relative value of the float adjusted aggregate market capitalization of the 500 component companies as of a particular
time as compared to the aggregate average market capitalization of 500 similar companies during the base period of the years 1941
through 1943. For additional information about the S&P 500® Index, see the information set forth under
“S&P 500® Index” in the accompanying index supplement.
“Standard & Poor’s®,”
“S&P®,” “S&P 500®,” “Standard & Poor’s 500”
and “500” are trademarks of Standard and Poor’s Financial Services LLC. See “S&P
500® Index” in the accompanying index supplement.
EURO STOXX 50®
Index
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.
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
Information as of market close on August 30, 2019:
Basket Component Information as of August 30, 2019
|
|
Ticker Symbol
|
Current Basket Component Closing Value
|
52 Weeks Ago
|
52 Week High
|
52 Week Low
|
S&P 500® Index
|
SPX
|
2,926.46
|
2,901.13
|
3,025.86 (on 7/26/2019)
|
2,351.10 (on 12/24/2018)
|
EURO STOXX 50® Index
|
SX5E
|
3,426.76
|
3,430.99
|
3,544.15 (on 7/4/2019)
|
2,937.36 (on 12/27/2018)
|
The following graph is calculated based on an initial basket
value of 100 on January 1, 2014 (assuming that each basket component is weighted as described in “Basket” on the cover
page) and illustrates the effect of the offset and/or correlation among the basket components during such period. The graph does
not take into account the terms of the securities, nor does it attempt to show in any way your expected return on an investment
in the securities. The historical performance of the basket should not be taken as an indication of its future performance.
Basket Historical Performance
January 1, 2014 to August
30, 2019
|
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
Historical Information
The following tables set forth the published high and low closing
values as well as end-of-quarter closing values for each of the basket components for each quarter in the period from January 1,
2014 through August 30, 2019. The closing values on August 30, 2019 were (i) in the case of the SPX Index, 2,926.46, and (ii) in
the case of the SX5E Index, 3,426.76. The related graphs set forth the daily closing values for each of the basket components in
the same period. We obtained the information in the tables and graphs below from Bloomberg Financial Markets, without independent
verification. The historical information of the basket components should not be taken as an indication of their future performance,
and no assurance can be given as to the basket closing value on the determination date.
S&P 500® Index
|
High
|
Low
|
Period End
|
2014
|
|
|
|
First Quarter
|
1,878.04
|
1,741.89
|
1,872.34
|
Second Quarter
|
1,962.87
|
1,815.69
|
1,960.23
|
Third Quarter
|
2,011.36
|
1,909.57
|
1,972.29
|
Fourth Quarter
|
2,090.57
|
1,862.49
|
2,058.90
|
2015
|
|
|
|
First Quarter
|
2,117.39
|
1,992.67
|
2,067.89
|
Second Quarter
|
2,130.82
|
2,057.64
|
2,063.11
|
Third Quarter
|
2,128.28
|
1,867.61
|
1,920.03
|
Fourth Quarter
|
2,109.79
|
1,923.82
|
2,043.94
|
2016
|
|
|
|
First Quarter
|
2,063.95
|
1,829.08
|
2,059.74
|
Second Quarter
|
2,119.12
|
2,000.54
|
2,098.86
|
Third Quarter
|
2,190.15
|
2,088.55
|
2,168.27
|
Fourth Quarter
|
2,271.72
|
2,085.18
|
2,238.83
|
2017
|
|
|
|
First Quarter
|
2,395.96
|
2,257.83
|
2,362.72
|
Second Quarter
|
2,453.46
|
2,328.95
|
2,423.41
|
Third Quarter
|
2,519.36
|
2,409.75
|
2,519.36
|
Fourth Quarter
|
2,690.16
|
2,529.12
|
2,673.61
|
2018
|
|
|
|
First Quarter
|
2,872.87
|
2,581.00
|
2,640.87
|
Second Quarter
|
2,786.85
|
2,581.88
|
2,718.37
|
Third Quarter
|
2,930.75
|
2,713.22
|
2,913.98
|
Fourth Quarter
|
2,925.51
|
2,351.10
|
2,506.85
|
2019
|
|
|
|
First Quarter
|
2,854.88
|
2,447.89
|
2,834.40
|
Second Quarter
|
2,954.18
|
2,744.45
|
2,941.76
|
Third Quarter (through August 30, 2019)
|
3,025.86
|
2,840.60
|
2,926.46
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
S&P 500®
Index
Daily Index Closing Values
January 1, 2014 to August
30, 2019
|
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
EURO STOXX 50® Index
|
High
|
Low
|
Period End
|
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
|
3,267.52
|
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 30, 2019)
|
3,544.15
|
3,282.78
|
3,426.76
|
EURO STOXX 50®
Index
Daily Index Closing Values
January 1, 2014 to August
30, 2019
|
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and 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.
Additional Terms:
|
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:
|
With
respect to the SPX Index, S&P Dow Jones Indices LLC, or any successor thereof
With
respect to the SX5E Index, STOXX Limited or any successor thereof
|
Denominations:
|
$1,000
per security and integral multiples thereof
|
Call
right:
|
The
securities are not callable prior to the maturity date.
|
Postponement
of maturity date:
|
If
the determination date for any basket component is postponed so that it falls less than two business days prior to the scheduled
maturity date, the maturity date will be postponed to the second business day following the final determination date as postponed,
by which date the basket percent change will have been determined.
|
Trustee:
|
The
Bank of New York Mellon
|
Calculation
agent:
|
MS
& Co.
|
Issuer
notice to registered security holders, the trustee and the depositary:
|
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.
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
Additional Provisions:
|
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
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
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
|
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 3 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 indices,
in futures and/or options contracts on the underlying indices or the component stocks of the underlying indices 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 initial index values, and, therefore, the values at or above which the
underlying indices 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 indices, futures or options
contracts on the underlying indices or their 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 values of the underlying indices, 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 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
|
Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
|
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, 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
|
Selected dealers, which may include our affiliates, and their financial advisors will collectively receive from the agent a fixed sales commission of $ for each security they sell.
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Morgan Stanley Finance LLC
Equity-Linked Partial Principal at Risk Securities due October 3, 2024
Based on the Performance of an Equally Weighted Basket Composed of the S&P 500® Index and the EURO STOXX 50® Index
distribution; conflicts of interest:
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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 3.
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.
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Where you can find more information:
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Morgan Stanley and MSFL have filed a registration statement (including
a prospectus, as supplemented by the product supplement for Equity-Linked Partial Principal at Risk 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 about 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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