Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp)
October 02 2019 - 6:03AM
Edgar (US Regulatory)
Morgan
Stanley
|
Free Writing Prospectus to Preliminary Terms No.
2,638
Registration Statement Nos. 333-221595; 333-221595-01
Dated October 1, 2019; Filed pursuant to Rule
433
|
3-Year Worst-of NDX, INDU and RTY Jump Securities with Auto-Callable
Feature
This document provides a summary of the terms of the notes.
Investors must carefully review the accompanying preliminary terms referenced below, product supplement, index supplement and prospectus,
and the “Risk Considerations” on the following page, prior to making an investment decision.
Terms
|
Issuing
entity:
|
Morgan
Stanley Finance LLC
|
Guarantor:
|
Morgan
Stanley
|
Underlyings:
|
NASDAQ-100
Index® (“NDX”), Dow Jones Industrial AverageSM (“INDU”) and Russell 2000®
Index (“RTY”)
|
Early
redemption:
|
Determination
dates:
|
Call
threshold level:
|
Call
premium:
|
1st:
April 30, 2020
|
100%
of the initial index value for each underlying
|
7.375%
to 8.375%
|
2nd:
October 30, 2020
|
14.75%
to 16.750%
|
3rd:
April 30, 2021
|
22.125%
to 25.125%
|
4th:
October 29, 2021
|
29.500%
to 33.500%
|
5th:
April 29, 2022
|
36.875%
to 41.875%
|
Downside
threshold level:
|
70%
of the initial index value for each underlying
|
Pricing
date:
|
October
31, 2019
|
Final
determination date:
|
October
31, 2022
|
Maturity
date:
|
November
3, 2022
|
CUSIP:
|
61769HYV1
|
Preliminary
Terms:
|
https://www.sec.gov/Archives/edgar/data/895421/
000095010319013335/dp113808_fwp-ps2638.htm
|
1All payments are subject
to our credit risk
|
Hypothetical Examples
Early
Redemption1
|
Date
|
Change
in Worst Performing Underlying
|
Payment
(per security)
|
1st
Determination Date
|
-20%
|
--
|
2nd
Determination Date
|
+20%
|
$1,157.50*
|
The
securities are automatically redeemed on the second early redemption date. Investors will receive a payment of
$1,157.50 per security on the related early redemption date.
|
*Assumes the midpoint of the
call premium range
Hypothetical Payout at Maturity1
|
Assuming
that one or more of the underlyings close below the respective call threshold level(s) on each of the semi-annual determination
dates, and, consequently, the securities are not automatically redeemed prior to, and remain outstanding until, maturity:
|
Change
in Worst Performing Underlying
|
Payment
(per security)
|
+30%
|
$1,472.50*
|
+20%
|
$1,472.50*
|
+10%
|
$1,472.50*
|
0%
|
$1,472.50*
|
-10%
|
$1,000.00
|
-20%
|
$1,000.00
|
-30%
|
$1,000.00
|
-31%
|
$690.00
|
-40%
|
$600.00
|
-50%
|
$500.00
|
-70%
|
$300.00
|
-90%
|
$100.00
|
*Assumes
a call return of 15.75% per annum
|
The
issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates.
Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with
the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR
on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will
arrange to send you the prospectus if you request it by calling toll-free 1-800-584-6837.
Underlying Indices
For more information about the underlying indices, including
historical performance information, see the accompanying preliminary terms.
Risk Considerations
The risks set forth below are discussed
in more detail in the “Risk Factors” section in the accompanying preliminary terms. Please review those risk factors
carefully prior to making an investment decision.
|
·
|
The
securities do not pay interest or guarantee the return of any principal.
|
|
·
|
The
appreciation potential of the securities is limited by the fixed early redemption payment
or payment at maturity specified for each determination date.
|
|
·
|
You
are exposed to the price risk of each underlying index.
|
|
·
|
The
market price will be influenced by many unpredictable factors.
|
|
·
|
The
securities are subject to our credit risk, and any actual or anticipated changes to our
credit ratings or credit spreads may adversely affect the market value of the securities.
|
|
·
|
As
a finance subsidiary, MSFL has no independent operations and will have no independent
assets.
|
|
·
|
The
estimated value of the securities is approximately $973.00 per security, or within $22.50
of that estimate, and is determined by reference to our pricing and valuation models,
which may differ from those of other dealers and is not a maximum or minimum secondary
market price.
|
|
·
|
The
securities are linked to the Russell 2000® Index and are subject to risks
associated with small-capitalization companies.
|
|
·
|
As
a finance subsidiary, MSFL has no independent operations and will have no independent
assets.
|
|
·
|
Not
equivalent to investing in the underlying indices.
|
|
·
|
The
securities will not be listed on any securities exchange and secondary trading may be
limited, and accordingly, you should be willing to hold your securities for the entire
3-year term of the securities.
|
|
·
|
If
the securities are redeemed prior to maturity, you will receive no further payments on
the securities and may be forced to invest in a lower interest rate environment and may
not be able to reinvest at comparable terms or returns.
|
|
·
|
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.
|
|
·
|
Hedging
and trading activity by our affiliates could potentially adversely affect the value of
the securities.
|
|
·
|
The
calculation agent, which is a subsidiary of Morgan Stanley and an affiliate of MSFL,
will make determinations with respect to the securities.
|
|
·
|
The
U.S. federal income tax consequences of an investment in the securities are uncertain.
|
Tax Considerations
You should review carefully the discussion in the accompanying
preliminary terms under the caption “Additional Information About the Securities– Tax considerations” concerning
the U.S. federal income tax consequences of an investment in the securities, and you should consult your tax adviser.
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