April 2019
Preliminary Terms No. 1,854
Registration Statement Nos.
333-221595; 333-221595-01
Dated April 17, 2019
Filed pursuant to Rule 433
M
organ
S
tanley
F
inance
LLC
Structured
Investments
Opportunities
in U.S. Equities
Trigger
PLUS Based on the Value of the Russell 2000
®
Index due April 22, 2024
Fully
and Unconditionally Guaranteed by Morgan Stanley
Trigger
Performance Leveraged Upside Securities
SM
Principal
at Risk Securities
The Trigger PLUS are unsecured obligations of Morgan Stanley
Finance LLC (“MSFL”) and are fully and unconditionally guaranteed by Morgan Stanley. The Trigger PLUS will pay no interest,
do not guarantee any return of principal at maturity and have the terms described in the accompanying product supplement for PLUS,
index supplement and prospectus, as supplemented or 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 leveraged upside performance of the underlying
index, subject to the maximum payment at maturity. If the underlying index has
depreciated
in value but the final index
value is greater than or equal to the trigger level, investors will receive the stated principal amount of their investment. However,
if the underlying index has
depreciated
in value so that the final index value is less than the trigger level, investors
will lose a significant portion or all of their investment, resulting in a 1% loss for every 1% decline in the index value from
the initial index value to the final index value. Under these circumstances, the payment at maturity will be less than 70% of the
stated principal amount and could be zero. Accordingly, you may lose your entire investment. These long-dated Trigger PLUS are
for investors who seek an equity index-based return and who are willing to risk their principal and forgo current income and upside
above the maximum payment at maturity in exchange for the upside leverage feature and the limited protection against loss but only
if the final index value is greater than or equal to the trigger level.
Investors may lose their entire initial investment in
the Trigger PLUS
. The Trigger PLUS are notes issued as part of MSFL’s Series A Global Medium-Term Notes program.
All payments are subject to our credit risk. If we default
on our obligations, you could lose some or all of your investment. These Trigger PLUS 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:
|
Morgan Stanley Finance LLC
|
Guarantor:
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Morgan Stanley
|
Maturity date:
|
April 22, 2024
|
Underlying index:
|
Russell 2000
®
Index
|
Aggregate principal amount:
|
$
|
Payment at maturity:
|
If the final index value is
greater than
the initial index
value:
$1,000 + leveraged upside payment
In no event will the payment at maturity exceed the maximum
payment at maturity.
If the final index value is
less than or equal to
the
initial index value but is
greater than or equal to
the trigger level:
$1,000
If the final index value is
less than
the trigger level:
$1,000 × index performance factor
Under these circumstances, the payment at maturity
will be less than the stated principal amount of $1,000 and will represent a loss of more than 30%, and possibly all, of your
investment
.
|
Leveraged upside payment:
|
$1,000 × leverage factor × index percent increase
|
Leverage factor:
|
175%
|
Maximum payment at maturity:
|
$1,565 per Trigger PLUS (156.50% of the stated principal amount)
|
Index percent increase:
|
(final index value – initial index value) / initial index value
|
Index performance factor:
|
final index value / initial index value
|
Initial index value:
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, which is the index closing value on the pricing date
|
Final index value:
|
The index closing value on the valuation date
|
Trigger level:
|
, which is 70% of the initial index value
|
Valuation date:
|
April 18, 2024, subject to adjustment for non-index business days and certain market disruption events
|
Stated principal amount:
|
$1,000 per Trigger PLUS
|
Issue price:
|
$1,000 per Trigger PLUS (see “Commissions and issue price” below)
|
Pricing date:
|
April 18, 2019
|
Original issue date:
|
April 23, 2019 (3 business days after the pricing date)
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CUSIP / ISIN:
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61768D6P5 / US61768D6P57
|
Listing:
|
The Trigger PLUS will not be listed on any securities exchange.
|
Agent:
|
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.”
|
Estimated value on the pricing date:
|
Approximately $946.90 per Trigger PLUS, or within $20.00 of that estimate. See “Investment Summary” beginning on page 2.
|
Commissions and issue price:
|
Price to public
|
Agent’s commissions
(1)
|
Proceeds to us
(2)
|
Per Trigger PLUS
|
$1,000
|
$30
|
$970
|
Total
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$
|
$
|
$
|
|
(1)
|
Selected
dealers and their financial advisors will collectively receive from the agent, Morgan
Stanley & Co. LLC, a fixed sales commission of $30.00 for each Trigger PLUS they
sell. In addition, selected dealers and their financial advisors will receive a structuring
fee of $4.00 for each Trigger PLUS. 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
for PLUS.
|
|
(2)
|
See
“Use of proceeds and hedging” on page 15.
|
The Trigger PLUS 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 Trigger PLUS 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 Trigger PLUS” and “Additional Information About the Trigger PLUS” at
the end of this document.
References to “we,” “us”
and “our” refer to Morgan Stanley or MSFL, or Morgan Stanley and MSFL collectively, as the context requires.
Product Supplement for PLUS dated November 16, 2017
Index Supplement dated November 16, 2017
Prospectus dated November 16, 2017
Morgan Stanley
Finance LLC
Trigger
PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at
Risk Securities
Investment Summary
Trigger Performance Leveraged Upside Securities
Principal at Risk Securities
The Trigger PLUS Based on the Value of the Russell 2000
®
Index due April 22, 2024 (the “Trigger PLUS”) can be used:
|
§
|
As an alternative to direct exposure to the underlying index that enhances returns for any positive performance of the underlying
index, subject to the maximum payment at maturity
|
|
§
|
To enhance returns and potentially outperform the underlying index in a moderately bullish scenario
|
|
§
|
To provide limited protection against a loss of principal in the event of a decline of the underlying index as of the valuation
date but only if the final index value
is greater than or equal to
the trigger level
|
Maturity:
|
Approximately 5 years
|
Leverage factor:
|
175%
|
Maximum payment at maturity:
|
$1,565 per Trigger PLUS (156.50% of the stated principal amount)
|
Trigger level:
|
70% of the initial index value
|
Minimum payment at maturity:
|
None. You could lose your entire initial investment in the Trigger PLUS.
|
Interest:
|
None
|
The original issue price of each Trigger PLUS
is $1,000. This price includes costs associated with issuing, selling, structuring and hedging the Trigger PLUS, which are borne
by you, and, consequently, the estimated value of the Trigger PLUS on the pricing date will be less than $1,000. We estimate that
the value of each Trigger PLUS on the pricing date will be approximately $946.90, or within $20.00 of that estimate. Our estimate
of the value of the Trigger PLUS 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 Trigger PLUS on the pricing
date, we take into account that the Trigger PLUS comprise both a debt component and a performance-based component linked to the
underlying index. The estimated value of the Trigger PLUS 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 Trigger PLUS?
In determining the economic terms of the Trigger
PLUS, including the leverage factor, the maximum payment at maturity and the trigger level, 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
Trigger PLUS 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 Trigger PLUS?
The price at which MS & Co. purchases the
Trigger PLUS 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
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
the Trigger PLUS 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 Trigger
PLUS 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 Trigger PLUS, and, if it once chooses to make a market, may cease doing so at any time.
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
Key Investment Rationale
Trigger PLUS offer leveraged exposure to positive performance
of the underlying index, subject to the maximum payment at maturity. In exchange for the leverage feature, investors are exposed
to the risk of loss of a significant portion or all of their investment due to the trigger feature. At maturity, an investor will
receive an amount in cash based upon the closing value of the underlying index on the valuation date, subject to the maximum payment
at maturity. The Trigger PLUS are unsecured obligations of ours, and all payments on the Trigger PLUS are subject to our credit
risk.
Investors may lose their entire initial investment in the Trigger PLUS.
Leveraged Performance
|
The Trigger PLUS offer investors an opportunity to capture enhanced returns relative to a direct investment in the underlying index, subject to the maximum payment at maturity.
|
Trigger Feature
|
At maturity, even if the underlying index has declined over the term of the Trigger PLUS, you will receive your stated principal amount but only if the final index value is
greater than or equal to
the trigger level.
|
Upside Scenario
|
The final index value is greater than the initial index value, and, at maturity, the Trigger PLUS redeem for the stated principal amount of $1,000
plus
175% of the increase in the value of the underlying index, subject to the maximum payment at maturity of $1,565 per Trigger PLUS (156.50% of the stated principal amount).
|
Par Scenario
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The final index value is less than or equal to the initial index value but is greater than or equal to the trigger level. In this case, you receive the stated principal amount of $1,000 at maturity even though the underlying index has depreciated.
|
Downside Scenario
|
The final index value is less than the trigger level. In this case, the Trigger PLUS redeem for at least 30% less than the stated principal amount, and this decrease will be by an amount proportionate to the full decline in the value of the underlying index from the initial index value to the final index value.
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
How the Trigger PLUS Work
Payoff Diagram
The payoff diagram below illustrates the payment at maturity
on the Trigger PLUS based on the following terms:
Stated principal amount:
|
$1,000 per Trigger PLUS
|
Leverage factor:
|
175%
|
Trigger level:
|
70% of the initial index value
|
Maximum payment at maturity:
|
$1,565 per Trigger PLUS (156.50% of the stated principal amount)
|
Trigger PLUS Payoff Diagram
|
|
How it works
|
§
|
Upside Scenario:
If the final index value is greater
than the initial index value, investors will receive the $1,000 stated principal amount plus 175% of the appreciation of the underlying
index from the initial index value to the final index value, subject to the maximum payment at maturity. Under the terms of the
Trigger PLUS, an investor will realize the maximum payment at maturity of $1,565 per Trigger PLUS (156.50% of the stated principal
amount) at a final index value of approximately 132.29% of the initial index value.
|
|
§
|
If the underlying index appreciates 5%, investors will receive an 8.75% return, or $1,087.50
per Trigger PLUS.
|
|
§
|
If the underlying index appreciates 70%, the investor would receive only the maximum payment
at maturity of $1,565 per Trigger PLUS, or 156.50% of the stated principal amount.
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
|
§
|
Par Scenario:
If the final index value is less than
or equal to the initial index value but is greater than or equal to the trigger level, investors will receive the $1,000 stated
principal amount.
|
|
§
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If the underlying index depreciates 10%, investors will receive the $1,000 stated principal amount.
|
|
§
|
Downside Scenario:
If the final index value is less
than the trigger level, investors will receive an amount significantly less than the $1,000 stated principal amount, based on a
1% loss of principal for each 1% decline in the underlying index.
|
|
§
|
If the underlying index depreciates 80%, investors will lose 80% of their principal and receive
only $200 per Trigger PLUS at maturity, or 20% of the stated principal amount.
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
Risk Factors
The following is a non-exhaustive list of certain key risk
factors for investors in the Trigger PLUS. For further discussion of these and other risks, you should read the section entitled
“Risk Factors” in the accompanying product supplement for PLUS, index supplement and prospectus. You should also consult
with your investment, legal, tax, accounting and other advisers in connection with your investment in the Trigger PLUS.
|
§
|
The Trigger PLUS do not pay interest or guarantee return of any
principal.
The terms of the Trigger PLUS differ from those of ordinary debt securities in that the Trigger PLUS do not
pay interest or guarantee payment of any principal at maturity. If the final index value is less than the trigger level (which
is 70% of the initial index value), the payout at maturity will be an amount in cash that is at least 30% less than the $1,000
stated principal amount of each Trigger PLUS, and this decrease will be by an amount proportionate to the full decrease in the
value of the underlying index. There is no minimum payment at maturity on the Trigger PLUS, and you could lose your entire investment.
|
|
§
|
The appreciation potential of the Trigger PLUS is limited by the maximum payment at maturity.
The appreciation potential
of the Trigger PLUS is limited by the maximum payment at maturity of $1,565 per Trigger PLUS, or 156.50% of the stated principal
amount. Although the leverage factor provides 175% exposure to any increase in the final index value over the initial index value,
because the payment at maturity will be limited to 156.50% of the stated principal amount for the Trigger PLUS, any increase in
the final index value over the initial index value by more than approximately 32.29% of the initial index value will not further
increase the return on the Trigger PLUS.
|
|
§
|
The market price will be influenced by many unpredictable factors.
Several factors, many of which are beyond our control, will influence the value of the Trigger PLUS in the secondary market and
the price at which MS & Co. may be willing to purchase or sell the Trigger PLUS in the secondary market, including: the value,
volatility (frequency and magnitude of changes in value) and dividend yield of the underlying index, interest and yield rates,
time remaining to maturity, geopolitical conditions and economic, financial, political and 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. Generally, the longer the time remaining to maturity, the
more the market price of the Trigger PLUS will be affected by the other factors described above. 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. See “Russell 2000
®
Index Overview” below. You may receive less, and possibly significantly less, than the stated principal amount per Trigger
PLUS if you try to sell your Trigger PLUS prior to maturity.
|
|
§
|
The
Trigger
PLUS 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
Trigger
PLUS.
You are dependent on our ability to pay all amounts due on the Trigger PLUS at maturity and therefore you are subject
to our credit risk. If we default on our obligations under the Trigger PLUS, your investment would be at risk and you could lose
some or all of your investment. As a result, the market value of the Trigger PLUS 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 Trigger PLUS.
|
|
§
|
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
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
treated
pari passu
with the claims of other unsecured, unsubordinated creditors of Morgan Stanley, including holders of Morgan
Stanley-issued securities.
|
§
|
The Trigger PLUS are linked to the Russell 2000
®
Index and are subject to risks associated with small-capitalization companies.
As the Russell 2000
®
Index is
one of the underlying indices, and the Russell 2000
®
Index consists of stocks issued by companies with relatively
small market capitalization, the Trigger PLUS are linked to the value of small-capitalization companies. These companies often
have greater stock price volatility, lower trading volume and less liquidity than large-capitalization companies and therefore
the Russell 2000
®
Index may be more volatile than indices that consist of stocks issued by large-capitalization
companies. Stock prices of small-capitalization companies are also more vulnerable than those of large-capitalization companies
to adverse business and economic developments, and the stocks of small-capitalization companies may be thinly traded. In addition,
small capitalization companies are typically less well-established and less stable financially than large-capitalization companies
and may depend on a small number of key personnel, making them more vulnerable to loss of personnel. Such companies tend to have
smaller revenues, less diverse product lines, smaller shares of their product or service markets, fewer financial resources and
less competitive strengths than large-capitalization companies and are more susceptible to adverse developments related to their
products.
|
|
§
|
The amount payable on the Trigger PLUS is not linked to the value of the underlying index at any time other than the valuation
date.
The final index value will be the index closing value on the valuation date, subject to adjustment for non-index business
days and certain market disruption events. Even if the value of the underlying index appreciates prior to the valuation date but
then drops by the valuation date, the payment at maturity may 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 Trigger PLUS may be higher than the final index value,
the payment at maturity will be based solely on the index closing value on the valuation date.
|
|
§
|
Investing in the Trigger PLUS is not equivalent to investing in
the underlying index.
Investing in the Trigger PLUS is not equivalent to investing in the
underlying index or its component stocks. As an investor in the Trigger PLUS, you 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.
|
|
§
|
Adjustments to the underlying index could adversely affect the value
of the Trigger PLUS.
The underlying index publisher may add, delete or substitute the stocks constituting the underlying
index or make other methodological changes that could change the value of the underlying index. The underlying index publisher
may discontinue or suspend calculation or publication of the underlying index at any time. In these circumstances, the calculation
agent will have the sole discretion to substitute a successor index that is comparable to the discontinued underlying index and
is not precluded from considering indices that are calculated and published by the calculation agent or any of its affiliates.
If the calculation agent determines that there is
no appropriate successor index, the payment at maturity on the Trigger PLUS will be an amount based on the closing prices at maturity
of the securities composing the underlying index at the time of such discontinuance, without rebalancing or substitution, computed
by the calculation agent in accordance with the formula for calculating the underlying index last in effect prior to discontinuance
of the underlying index.
|
|
§
|
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 Trigger PLUS in the original issue price reduce the economic terms of the Trigger
PLUS, cause the estimated value of the Trigger PLUS 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 Trigger PLUS 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.
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
The inclusion of the costs of issuing,
selling, structuring and hedging the Trigger PLUS in the original issue price and the lower rate we are willing to pay as issuer
make the economic terms of the Trigger PLUS less favorable to you than they otherwise would be.
However, because the costs associated
with issuing, selling, structuring and hedging the Trigger PLUS 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 Trigger PLUS 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.
|
§
|
The estimated value of the Trigger PLUS 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 Trigger PLUS than those generated by others, including other dealers in the market, if they
attempted to value the Trigger PLUS. 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 Trigger PLUS in the secondary market (if any
exists) at any time. The value of your Trigger PLUS 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 will be influenced by many unpredictable factors” above.
|
|
§
|
The Trigger PLUS will not be listed on any securities exchange and secondary trading may be limited.
The Trigger PLUS
will not be listed on any securities exchange. Therefore, there may be little or no secondary market for the Trigger PLUS. MS &
Co. may, but is not obligated to, make a market in the Trigger PLUS 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 Trigger PLUS, 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 Trigger PLUS. Even if there is a secondary market, it may not provide
enough liquidity to allow you to trade or sell the Trigger PLUS easily. Since other broker-dealers may not participate significantly
in the secondary market for the Trigger PLUS, the price at which you may be able to trade your Trigger PLUS 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 Trigger PLUS, it is likely that there would be no secondary market for the Trigger PLUS. Accordingly, you should be willing
to hold your Trigger PLUS 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 Trigger PLUS.
As calculation agent, MS & Co. will determine the initial index value, the trigger level and the final
index value, including whether the underlying index has decreased to below the trigger level, and will calculate the amount of
cash, if any, 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 final index value in the event of a market
disruption event or discontinuance of the underlying index. These potentially subjective determinations may adversely affect the
payout to you at maturity, if any. For further information regarding these types of determinations, see “Description of PLUS—Postponement
of Valuation Date(s)” and “—Calculation Agent and Calculations” and related definitions in the accompanying
product supplement. In addition, MS & Co. has determined the estimated value of the Trigger PLUS on the pricing date.
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|
§
|
Hedging and trading activity by our affiliates could potentially adversely affect the value of the Trigger PLUS.
One
or more of our affiliates and/or third-party dealers expect to carry out hedging activities related to the Trigger PLUS (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 Trigger PLUS, and the hedging strategy may involve greater and more frequent
dynamic adjustments to the hedge as the valuation date approaches. MS & Co. and some
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
of our other 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, could increase the trigger level, which is the
level at or above which the underlying index must close on the valuation date so that investors do not suffer a significant loss
on their initial investment in the Trigger PLUS. Additionally, such hedging or trading activities during the term of the Trigger
PLUS, including on the valuation date, could potentially affect whether the value of the underlying index on the valuation date
is at or below the trigger level, and, therefore, whether an investor would receive significantly less than the stated principal
amount of the Trigger PLUS at maturity.
|
§
|
The U.S. federal income tax consequences of an investment in the Trigger PLUS are uncertain.
Please read the discussion
under “Additional Information—Tax considerations” in this document and the discussion under “United States
Federal Taxation” in the accompanying product supplement for PLUS (together, the “Tax Disclosure Sections”) concerning
the U.S. federal income tax consequences of an investment in the Trigger PLUS. If the Internal Revenue Service (the “IRS”)
were successful in asserting an alternative treatment, the timing and character of income on the Trigger PLUS might differ significantly
from the tax treatment described in the Tax Disclosure Sections. For example, under one possible treatment, the IRS could seek
to recharacterize the Trigger PLUS as debt instruments. In that event, U.S. Holders would be required to accrue into income original
issue discount on the Trigger PLUS every year at a “comparable yield” determined at the time of issuance and recognize
all income and gain in respect of the Trigger PLUS as ordinary income. Additionally, as discussed under “United States Federal
Taxation—FATCA” in the accompanying product supplement for PLUS, the withholding rules commonly referred to as “FATCA”
would apply to the Trigger PLUS if they were recharacterized as debt instruments. 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. The risk that financial instruments providing for buffers, triggers or similar
downside protection features, such as the Trigger PLUS, would be recharacterized as debt is greater than the risk of recharacterization
for comparable financial instruments that do not have such features. We do not plan to request a ruling from the IRS regarding
the tax treatment of the Trigger PLUS, and the IRS or a court may not agree with the tax treatment described in the Tax Disclosure
Sections.
|
In 2007, the U.S. Treasury Department
and the IRS released a notice requesting comments on the U.S. federal income tax treatment of “prepaid forward contracts”
and similar instruments. The notice focuses in particular on whether to require holders of these instruments to accrue income over
the term of their investment. It also asks for comments on a number of related topics, including the character of income or loss
with respect to these instruments; whether short-term instruments should be subject to any such accrual regime; the relevance of
factors such as the exchange-traded status of the instruments and the nature of the underlying property to which the instruments
are linked; the degree, if any, to which income (including any mandated accruals) realized by non-U.S. investors should be subject
to withholding tax; and whether these instruments are or should be subject to the “constructive ownership” rule, which
very generally can operate to recharacterize certain long-term capital gain as ordinary income and impose an interest charge. While
the notice requests comments on appropriate transition rules and effective dates, any Treasury regulations or other guidance promulgated
after consideration of these issues could materially and adversely affect the tax consequences of an investment in the Trigger
PLUS, possibly with retroactive effect. Both U.S. and Non-U.S. Holders should consult their tax advisers regarding the U.S. federal
income tax consequences of an investment in the Trigger PLUS, including possible alternative treatments, the issues presented by
this notice and any tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
Russell 2000
®
Index Overview
The Russell 2000
®
Index is an index calculated,
published and disseminated by FTSE Russell, and measures the composite price performance of stocks of 2,000 companies incorporated
in the U.S. and its territories. All 2,000 stocks are traded on a major U.S. exchange and are the 2,000 smallest securities that
form the Russell 3000
®
Index. The Russell 3000
®
Index is composed of the 3,000 largest U.S. companies
as determined by market capitalization and represents approximately 98% of the U.S. equity market. The Russell 2000
®
Index consists of the smallest 2,000 companies included in the Russell 3000
®
Index and represents a small portion
of the total market capitalization of the Russell 3000
®
Index. The Russell 2000
®
Index is designed
to track the performance of the small capitalization segment of the U.S. equity market. For additional information about the Russell
2000
®
Index, see the information set forth under “Russell 2000
®
Index” in the accompanying
index supplement.
Information as of market close on April 12,
2019:
Bloomberg Ticker Symbol:
|
RTY
|
Current Index Value:
|
1,584.802
|
52 Weeks Ago:
|
1,557.326
|
52 Week High (on 8/31/2018):
|
1,740.753
|
52 Week Low (on 12/24/2018):
|
1,266.925
|
The following graph sets forth the daily closing
values of the underlying index for the period from January 1, 2014 through April 12, 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 April 12, 2019 was 1,584.802. 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.
Underlying
Index Historical Performance – Daily Index Closing Values
January 1,
2014 to April 12, 2019
|
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
Russell 2000
®
Index
|
High
|
Low
|
Period End
|
2014
|
|
|
|
First Quarter
|
1,208.651
|
1,093.594
|
1,173.038
|
Second Quarter
|
1,192.960
|
1,095.986
|
1,192.960
|
Third Quarter
|
1,208.150
|
1,101.676
|
1,101.676
|
Fourth Quarter
|
1,219.109
|
1,049.303
|
1,204.696
|
2015
|
|
|
|
First Quarter
|
1,266.373
|
1,154.709
|
1,252.772
|
Second Quarter
|
1,295.799
|
1,215.417
|
1,253.947
|
Third Quarter
|
1,273.328
|
1,083.907
|
1,100.688
|
Fourth Quarter
|
1,204.159
|
1,097.552
|
1,135.889
|
2016
|
|
|
|
First Quarter
|
1,114.028
|
953.715
|
1,114.028
|
Second Quarter
|
1,188.954
|
1,089.646
|
1,151.923
|
Third Quarter
|
1,263.438
|
1,139.453
|
1,251.646
|
Fourth Quarter
|
1,388.073
|
1,156.885
|
1,357.130
|
2017
|
|
|
|
First Quarter
|
1,413.635
|
1,345.598
|
1,385.920
|
Second Quarter
|
1,425.985
|
1,345.244
|
1,415.359
|
Third Quarter
|
1,490.861
|
1,356.905
|
1,490.861
|
Fourth Quarter
|
1,548.926
|
1,464.095
|
1,535.511
|
2018
|
|
|
|
First Quarter
|
1,610.706
|
1,463.793
|
1,529.427
|
Second Quarter
|
1,706.985
|
1,492.531
|
1,643.069
|
Third Quarter
|
1,740.753
|
1,653.132
|
1,696.571
|
Fourth Quarter
|
1,672.992
|
1,266.925
|
1,348.559
|
2019
|
|
|
|
First Quarter
|
1,590.062
|
1,330.831
|
1,539.739
|
Second Quarter (through April 12, 2019)
|
1,584.802
|
1,553.325
|
1,584.802
|
The “Russell 2000
®
Index” is a trademark
of FTSE Russell. For more information, see “Russell 2000
®
Index” in the accompanying index supplement.
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
Additional Terms of the Trigger PLUS
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:
|
FTSE Russell or any successor thereof
|
Denominations:
|
$1,000 per Trigger PLUS and integral multiples thereof
|
Interest:
|
None
|
Index
closing value:
|
The index closing value on any index business day shall be determined by the calculation agent and shall equal the closing value of the underlying index or any successor index reported by Bloomberg Financial Services, or any successor reporting service the calculation agent may select, on such index business day. In certain circumstances, the index closing value for the underlying index will be based on the alternate calculation of the underlying index as described under “Discontinuance of Any Underlying Index or Basket Index; Alteration of Method of Calculation” in the accompanying product supplement. The closing value of the underlying index reported by Bloomberg Financial Services may be lower or higher than the official closing value of the underlying index published by the underlying index publisher.
|
Bull
market or bear market PLUS:
|
Bull market PLUS
|
Postponement
of maturity date:
|
If the scheduled valuation date is not an index business day or if a market disruption event occurs on that day so that the valuation date as postponed falls less than two business days prior to the scheduled maturity date, the maturity date of the Trigger PLUS will be postponed to the second business day following that valuation date as postponed.
|
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 valuation 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 Trigger PLUS 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 Trigger
PLUS 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 valuation date.
The issuer shall, or shall cause the calculation agent
to, (i) provide written notice to the trustee, on which notice the trustee may conclusively rely, and to the depositary of the
amount of cash to be delivered, if any, with respect to each stated principal amount of the Trigger PLUS, 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, if
any, with respect to the Trigger PLUS to the trustee for delivery to the depositary, as holder of the Trigger PLUS, on the maturity
date.
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
Additional Information About the Trigger PLUS
Additional
Information:
|
|
Minimum
ticketing size:
|
$1,000 / 1 Trigger PLUS
|
Tax considerations:
|
Although there is uncertainty regarding the U.S. federal income tax consequences of an investment in the
Trigger PLUS
due to the lack of governing authority, in the opinion of our counsel, Davis Polk & Wardwell LLP, under current law, and based on current market conditions, a
Trigger PLUS
should be treated as a single financial contract that is an “open transaction” for U.S. federal income tax purposes. However, because our counsel’s opinion is based in part on market conditions as of the date of this document, it is subject to confirmation on the pricing date.
|
|
|
|
Assuming this treatment of the
Trigger PLUS
is respected and subject to the discussion in “United States Federal Taxation” in the accompanying product supplement for PLUS, the following U.S. federal income tax consequences should result based on current law:
|
|
|
|
§
A U.S. Holder should not be required to recognize taxable income over the term of the
Trigger PLUS
prior to settlement, other than pursuant to a sale or exchange.
|
|
|
|
§
Upon sale, exchange or settlement of the
Trigger PLUS
, a U.S. Holder should recognize gain or loss equal to the difference between the amount realized and the U.S. Holder’s tax basis in the
Trigger PLUS
. Such gain or loss should be long-term capital gain or loss if the investor has held the Trigger PLUS for more than one year, and short-term capital gain or loss otherwise.
|
|
|
|
In 2007,
the U.S. Treasury Department and the Internal Revenue Service (the “IRS”) released a notice requesting comments on
the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. The notice focuses in
particular on whether to require holders of these instruments to accrue income over the term of their investment. It also asks
for comments on a number of related topics, including the character of income or loss with respect to these instruments; whether
short-term instruments should be subject to any such accrual regime; the relevance of factors such as the exchange-traded status
of the instruments and the nature of the underlying property to which the instruments are linked; the degree, if any, to which
income (including any mandated accruals) realized by non-U.S. investors should be subject to withholding tax; and whether these
instruments are or should be subject to the “constructive ownership” rule, which very generally can operate to recharacterize
certain long-term capital gain as ordinary income and impose an interest charge. While the notice requests comments on appropriate
transition rules and effective dates, any Treasury regulations or other guidance promulgated after consideration of these issues
could materially and adversely affect the tax consequences of an investment in the Trigger PLUS, possibly with retroactive effect.
As discussed
in the accompanying product supplement for PLUS, Section 871(m) of the Internal Revenue Code of 1986, as amended, 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 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 Trigger PLUS and current market conditions, we expect that the Trigger
PLUS 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 Trigger PLUS do not have a delta of one with respect to any Underlying
Security, our counsel is of the opinion that the Trigger PLUS 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
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
|
application
of Section 871(m) to the Trigger PLUS.
Both U.S.
and non-U.S. investors considering an investment in the Trigger PLUS should read the discussion under “Risk Factors”
in this document and the discussion under “United States Federal Taxation” in the accompanying product supplement for
PLUS and consult their tax advisers regarding all aspects of the U.S. federal income tax consequences of an investment in the Trigger
PLUS, including possible alternative treatments, the issues presented by the aforementioned notice and any tax consequences arising
under the laws of any state, local or non-U.S. taxing jurisdiction.
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 for PLUS, 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 Trigger PLUS.
|
Use
of proceeds and hedging:
|
The proceeds from the sale of the Trigger PLUS will be used by
us for general corporate purposes. We will receive, in aggregate, $1,000 per Trigger PLUS issued, because, when we enter into hedging
transactions in order to meet our obligations under the Trigger PLUS, our hedging counterparty will reimburse the cost of the agent’s
commissions. The costs of the Trigger PLUS borne by you and described beginning on page 2 above comprise the agent’s commissions
and the cost of issuing, structuring and hedging the Trigger PLUS.
On or prior to the pricing date, we will hedge our anticipated
exposure in connection with the Trigger PLUS by entering into hedging transactions with our affiliates and/or third-party dealers.
We expect our hedging counterparties to take positions in stocks of the underlying index, futures or options contracts on the
underlying index or any other securities or instruments they may wish to use in connection with such hedging. Such purchase activity
could potentially increase the initial index value, and, therefore, could increase the trigger level, which is the level at or
above which the underlying index must close on the valuation date so that investors do not suffer a significant loss on their
initial investment in the Trigger PLUS. In addition, through our affiliates, we are likely to modify our hedge position throughout
the term of the Trigger PLUS, including on the valuation 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 Trigger PLUS, and the hedging strategy may
involve greater and more frequent dynamic adjustments to the hedge as the valuation 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
Trigger PLUS or the payment you will receive at maturity, if any. For further information on our use of proceeds and hedging,
see “Use of Proceeds and Hedging” in the accompanying product supplement for PLUS.
|
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 Trigger PLUS. 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 Section 4975 of the Code 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 Trigger PLUS 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 Trigger PLUS 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
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
|
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 Trigger PLUS. 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 Trigger PLUS.
Because we may be considered a party in interest with respect
to many Plans, the Trigger PLUS 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 Trigger PLUS will be deemed to have represented, in its corporate and its fiduciary capacity, by its purchase and
holding of the Trigger PLUS that either (a) it is not a Plan or a Plan Asset Entity and is not purchasing such Trigger PLUS 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 Trigger PLUS 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 Trigger PLUS on behalf of or with “plan assets” of any Plan consult with their counsel
regarding the availability of exemptive relief.
The Trigger PLUS are contractual financial instruments. The financial
exposure provided by the Trigger PLUS 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 Trigger PLUS. The Trigger PLUS 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 Trigger PLUS.
Each purchaser or holder of any Trigger PLUS 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 Trigger PLUS, (B) the purchaser or holder’s investment in the Trigger
PLUS, or (C) the exercise of or failure to exercise any rights we have under or with respect to the Trigger PLUS;
(ii)
we
and our affiliates have acted and will act solely for our own account in connection with (A) all transactions relating to the Trigger
PLUS and (B) all hedging transactions in connection with our obligations under the Trigger PLUS;
(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;
|
Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
|
(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 Trigger PLUS has exclusive responsibility
for ensuring that its purchase, holding and disposition of the Trigger PLUS do not violate the prohibited transaction rules of
ERISA or the Code or any Similar Law. The sale of any Trigger PLUS 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 these Trigger
PLUS should consult and rely on their own counsel and advisers as to whether an investment in these Trigger PLUS 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 Trigger PLUS if the account, plan or annuity is for the benefit of an
employee of Morgan Stanley or 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 Trigger PLUS 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 Trigger PLUS, either directly or indirectly.
|
Supplemental
information regarding plan of distribution; conflicts of interest:
|
Selected dealers, which may include our affiliates, and their
financial advisors will collectively receive from the agent a fixed sales commission of $30.00 for each Trigger PLUS they sell.
In addition, selected dealers and their financial advisors will receive a structuring fee of $4.00 for each Trigger PLUS.
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 Trigger PLUS. When MS & Co. prices this offering of Trigger PLUS, it will determine the economic terms of the Trigger PLUS
such that for each Trigger PLUS the estimated value on the pricing date will be no lower than the minimum level described in “Investment
Summary” beginning 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
for PLUS.
|
Contact:
|
Morgan Stanley Wealth Management clients may contact their local Morgan Stanley branch office or Morgan Stanley’s principal executive offices at 1585 Broadway, New York, New York 10036 (telephone number (866) 477-4776). All other clients may contact their local brokerage representative. Third-party distributors may contact Morgan Stanley Structured Investment Sales at (800) 233-1087.
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Morgan Stanley Finance LLC
Trigger PLUS Based on the Value of the Russell 2000
®
Index due
April 22, 2024
Trigger Performance Leveraged Upside Securities
SM
Principal at Risk Securities
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 PLUS 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 PLUS, 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
or MSFL will arrange to send you the product supplement for PLUS, index supplement and prospectus 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 PLUS 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 PLUS, in the index supplement or in the prospectus.
“Performance Leveraged Upside Securities
SM
”
and “PLUS
SM
” are our service marks.
|
Morgan Stanley Depository Shares Representing 1/1000TH Preferred Series 1 Fixed TO Floating Non (Cum) (NYSE:MSPI)
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Morgan Stanley Depository Shares Representing 1/1000TH Preferred Series 1 Fixed TO Floating Non (Cum) (NYSE:MSPI)
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