The information in this preliminary pricing supplement
is not complete and may be changed. We may not deliver these notes until a final pricing supplement is delivered. This
preliminary pricing supplement and the accompanying prospectus, product supplement and index supplement do not constitute an offer
to sell these notes and we are not soliciting an offer to buy these notes in any state where the offer or sale is not permitted.
Subject to Completion,
Preliminary Pricing Supplement dated October 16, 2020
PROSPECTUS Dated November 16, 2017
|
Pricing Supplement No. 5,069 to
|
PRODUCT SUPPLEMENT Dated November 16, 2017
|
Registration Statement Nos. 333-221595; 333-221595-01
|
INDEX SUPPLEMENT Dated November 16, 2017
|
Dated , 2020
|
|
Rule 424(b)(2)
|
|
|
Morgan Stanley Finance LLC
STRUCTURED INVESTMENTS
Opportunities in International Equities
$
Leveraged Buffered MSCI EAFE® Index-Linked
Notes due
Fully and Unconditionally Guaranteed by Morgan Stanley
Principal at Risk Securities
The notes are unsecured obligations of Morgan Stanley Finance
LLC (“MSFL”) and are fully and unconditionally guaranteed by Morgan Stanley. The notes will not bear interest. The
amount that you will be paid on your notes on the stated maturity date (expected to be the second scheduled business day after
the determination date) is based on the performance of the MSCI EAFE® Index as measured from the trade date to and
including the determination date (expected to be between 14 and 16 months after the trade date). If the final underlier
level on the determination date is greater than the initial underlier level (set on the trade date and may be higher or lower than
the actual closing level of the underlier on the trade date), the return on your notes will be positive, subject to the maximum
settlement amount (expected to be between $1,106.92 and $1,125.76 for each $1,000 face amount of your notes). If the
underlier declines by up to 10.00% from the initial underlier level, you will receive the face amount of your notes. However,
if the underlier declines by more than 10.00% from the initial underlier level, the return on your notes will be negative. You
could lose your entire investment in the notes. The notes 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 notes 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.
To determine your payment at maturity, we will calculate the
underlier return, which is the percentage increase or decrease in the final underlier level from the initial underlier level. On
the stated maturity date, for each $1,000 face amount of your notes, you will receive an amount in cash equal to:
|
●
|
if the underlier return is positive (the final underlier level is greater than the initial underlier level),
the sum of (i) $1,000 plus (ii) the product of (a) $1,000 times (b) 120% times (c) the underlier
return, subject to the maximum settlement amount;
|
|
●
|
if the underlier return is zero or negative but not below -10.00% (the final underlier level is equal
to or less than the initial underlier level but not by more than 10.00%), $1,000; or
|
|
●
|
if the underlier return is negative and is below -10.00% (the final underlier level is less than the initial
underlier level by more than 10.00%), the sum of (i) $1,000 plus (ii) the product of (a) approximately 1.1111
times (b) the sum of the underlier return plus 10.00% times (c) $1,000.
|
Under these circumstances, you will lose some or all
of your investment.
You should read the additional disclosure herein so that you
may better understand the terms and risks of your investment.
The estimated value on the trade date will be approximately
$989.10 per note, or within $15.00 of that estimate. See “Estimated Value” on page 2.
|
Price
to public
|
Agent’s
commissions(1)
|
Proceeds
to us(2)
|
Per note
|
$1,000
|
$0
|
$1,000
|
Total
|
$
|
$
|
$
|
(1) Morgan Stanley & Co. LLC (“MS & Co.”)
will sell all of the notes that it purchases from us to an unaffiliated dealer at the original issue price of 100.00%, or $1,000
per face amount of notes. Such dealer will sell the notes to investors at the same price without a discount or commission. Investors
that purchase and hold the notes in fee-based accounts may be charged fees based on the amount of assets held in those accounts,
including the notes. For more information, see “Summary Information—Supplemental information regarding plan of distribution;
conflicts of interest.”
(2) See “Additional Information About the Notes—Use
of proceeds and hedging” beginning on page 20.
The notes involve risks not associated with an investment
in ordinary debt securities. See “Risk Factors” beginning on page 10.
The Securities and Exchange Commission and state securities
regulators have not approved or disapproved these notes, 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 notes 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
“Terms” on page 3 and “Additional Information About the Notes” on page 20.
MORGAN STANLEY
About Your Prospectus
The notes are notes issued as part of MSFL’s Series A Global
Medium-Term Notes program. This prospectus includes this preliminary pricing supplement and the accompanying documents listed below. This
preliminary pricing supplement constitutes a supplement to the documents listed below and should be read in conjunction with such
documents:
The information in this preliminary pricing supplement supersedes
any conflicting information in the documents listed above. In addition, some of the terms or features described in the listed documents
may not apply to your notes.
ESTIMATED VALUE
The Original Issue Price of each note is $1,000. This price includes
costs associated with issuing, selling, structuring and hedging the notes, which are borne by you, and, consequently, the estimated
value of the notes on the Trade Date will be less than $1,000. We estimate that the value of each note on the Trade Date will be
approximately $989.10, or within $15.00 of that estimate. Our estimate of the value of the notes as determined on the Trade Date
will be set forth in the final pricing supplement.
What goes into the estimated value on the Trade Date?
In valuing the notes on the Trade Date, we take into account
that the notes comprise both a debt component and a performance-based component linked to the Underlier. The estimated value of
the notes is determined using our own pricing and valuation models, market inputs and assumptions relating to the Underlier, instruments
based on the Underlier, 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 notes?
In determining the economic terms of the notes, including the
Upside Participation Rate, the Cap Level, the Maximum Settlement Amount and the Buffer Amount, 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 notes would be more favorable to you.
What is the relationship between the estimated value on the
Trade Date and the secondary market price of the notes?
The price at which MS & Co. purchases the notes in the secondary
market, absent changes in market conditions, including those related to the Underlier, may vary from, and be lower than, the estimated
value on the Trade 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 notes are not fully deducted upon issuance, for a period
of up to 3 months following the issue date, to the extent that MS & Co. may buy or sell the notes in the secondary market,
absent changes in market conditions, including those related to the Underlier, 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
notes, and, if it once chooses to make a market, may cease doing so at any time.
SUMMARY INFORMATION
The Leveraged Buffered MSCI EAFE® Index-Linked
Notes, which we refer to as the notes, are unsecured obligations of MSFL and are fully and unconditionally guaranteed by Morgan
Stanley. The notes will pay no interest, do not guarantee any return of principal at maturity and have the terms described
in the accompanying product supplement, index supplement and prospectus, as supplemented or modified by this document. The
notes are notes issued as part of MSFL’s Series A Global Medium-Term Notes program.
References to “we,” “us,” and “our”
refer to Morgan Stanley or MSFL, or Morgan Stanley and MSFL collectively, as the context requires.
|
Terms
Capitalized terms used but not defined herein have the meanings
assigned to them in the accompanying product supplement and prospectus. All references to “Buffer Rate,” “Cash
Settlement Amount,” “Closing Level,” “Determination Date,” “Face Amount,” “Final
Underlier Level,” “Initial Underlier Level,” “Maximum Settlement Amount,” “Original Issue Price,”
“Stated Maturity Date,” “Trade Date,” “Underlier,” “Underlier Return” and “Upside
Participation Rate” herein shall be deemed to refer to “downside factor,” “payment at maturity,”
“index closing value,” “valuation date,” “stated principal amount,” “final index value,”
“initial index value,” “maximum payment at maturity,” “issue price,” “maturity date,”
“pricing date,” “underlying index,” “index return” and “leverage factor,” respectively,
as used in the accompanying product supplement.
If the terms described herein are inconsistent with those described
in the accompanying product supplement or prospectus, the terms described herein shall control.
Issuer: Morgan Stanley Finance LLC
Guarantor: Morgan Stanley
Underlier: MSCI EAFE® Index
Underlier Publisher: MSCI Inc. or any successor thereof
Notes: The accompanying product supplement refers to the
notes as the “PLUS.”
Specified currency: U.S. dollars (“$”)
Face Amount: Each note will have a Face Amount of $1,000;
$ in the aggregate for all the notes; the aggregate Face Amount of notes may be
increased if the Issuer, at its sole option, decides to sell an additional amount of the notes on a date subsequent to the date
hereof.
Denominations: $1,000 and integral multiples thereof
Cash Settlement Amount (on the Stated Maturity Date): For
each $1,000 Face Amount of notes, we will pay you on the Stated Maturity Date an amount in cash equal to:
|
·
|
if the Final Underlier Level is greater than or equal to
the Cap Level, the Maximum Settlement Amount;
|
|
·
|
if the Final Underlier Level is greater than the Initial Underlier
Level but less than the Cap Level, the sum of (i) $1,000 plus (ii) the product of (a) $1,000 times
(b) the Upside Participation Rate times (c) the Underlier Return;
|
|
·
|
if the Final Underlier Level is equal to or less than
the Initial Underlier Level but greater than or equal to the Buffer Level, $1,000; or
|
|
·
|
if the Final Underlier Level is less than the Buffer Level,
the sum of (i) $1,000 plus (ii) the product of (a) $1,000 times (b) the Buffer
Rate times (c) the sum of the Underlier Return and the Buffer Amount.
|
You will lose some or all of your investment at
maturity if the Final Underlier Level is less than the Buffer Level. Any payment of the Cash Settlement Amount is subject
to the credit of the Issuer.
Initial Underlier Level: To be determined on the Trade
Date. The Initial Underlier Level may be higher or lower than the actual Closing Level of the Underlier on the Trade Date; provided
that the Initial Underlier Level will not be higher than the highest level of the Underlier on the Trade Date.
Final Underlier Level: The Closing Level of the Underlier
on the Determination Date, except in the limited circumstances described under “Description of PLUS—Postponement of
Valuation Date(s)” on page S-44 of the accompanying product supplement, and subject to adjustment as provided under “Description
of PLUS—Discontinuance of Any Underlying Index or Basket Index; Alteration of Method of Calculation” on page S-47 of
the accompanying product supplement.
Underlier Return: The quotient of (i) the
Final Underlier Level minus the Initial Underlier Level divided by (ii) the Initial Underlier Level, expressed as
a percentage
Upside Participation Rate: 120%
Cap Level (to be set on the Trade Date): Expected to be
between 108.91% and 110.48% of the Initial Underlier Level
Maximum Settlement Amount (to be set on the Trade Date):
Expected to be between $1,106.92 and $1,125.76 for each $1,000 Face Amount of notes
Buffer Level: 90.00% of the Initial Underlier Level
Buffer Amount: 10.00%
Buffer Rate: The quotient of the Initial Underlier
Level divided by the Buffer Level, which equals approximately 111.11%
Trade Date:
Original Issue Date (Settlement Date) (to be set on the Trade
Date): Expected to be the fifth scheduled Business Day following the Trade Date
Determination Date (to be set on the Trade Date): Expected
to be between 14 and 16 months after the Trade Date, subject to postponement as described in the accompanying product supplement
on page S-44 under “Description of PLUS—Postponement of Valuation Date(s).”
Stated Maturity Date (to be set on the Trade Date): Expected
to be the second scheduled Business Day following the Determination Date, subject to postponement as described below. The
Stated Maturity Date is a pricing term and will be determined by us on the Trade Date.
Postponement of Stated Maturity Date: If the scheduled
Determination Date is not a Trading Day or if a market disruption event occurs on that day so that the Determination Date as postponed
falls less than two Business Days prior to the scheduled Stated Maturity Date, the Stated Maturity Date of the notes will be postponed
to the second Business Day following that Determination Date as postponed.
Closing Level: See “Description of PLUS—Some
Definitions—index closing value” on page S-37 of the accompanying product supplement. Notwithstanding the definition
of “index closing value” on page S-37 of the accompanying product supplement, Closing Level means, with respect to
the Underlier, on any Trading Day, the closing level of the Underlier reported by Bloomberg Financial Services, or any successor
reporting service the Calculation Agent may select, on such Trading Day, as determined by the Calculation Agent.
Business Day: As described under “Description of
PLUS—Some Definitions—business day” on page S-36 of the accompanying product supplement
Trading Day: The accompanying product supplement refers
to a Trading Day as an “index business day.” Notwithstanding the definition of “index business day” on
page S-37 of the accompanying product supplement, Trading Day means a day on which the Underlier is calculated and published by
the Underlier Publisher, regardless of whether one or more of the principal securities markets for the stocks composing the Underlier
are closed on that day.
Market disruption event: The following replaces in its
entirety the section entitled “Description of PLUS—Some Definitions—market disruption event” on page S-37
of the accompanying product supplement:
“Market disruption event” means, with respect to
the Underlier:
(i) the occurrence or existence of:
|
(a)
|
a suspension, absence or material limitation of trading of securities then constituting 20 percent or more, by weight, of the
Underlier (or the successor index) on the relevant exchanges for such securities for more than two hours of trading or during the
one-half hour period preceding the close of the principal trading session on such relevant exchange, or
|
|
(b)
|
a breakdown or failure in the price and trade reporting systems of any relevant exchange as a result of which the reported
trading prices for securities then constituting 20 percent or more, by weight, of the Underlier (or the successor index), or futures
or options contracts, if available, relating to the Underlier (or the successor index) or the securities then constituting 20 percent
or more, by weight, of the Underlier during the last one-half hour preceding the close of the principal trading session on such
relevant exchange are materially inaccurate, or
|
|
(c)
|
the suspension, material limitation or absence of trading on any major U.S. securities market for trading in futures or options
contracts or exchange-traded funds related to the Underlier (or the successor index), or in futures or options contracts, if available,
relating to securities then constituting 20 percent or more, by weight, of the Underlier (or the successor index) for more than
two hours of trading or during the one-half hour period preceding the close of the principal trading session on such market,
|
in each case as determined by the calculation agent in its sole
discretion; and
(ii) a determination by the calculation agent in its sole discretion
that any event described in clause (i) above materially interfered with our ability or the ability of any of our affiliates to
unwind or adjust all or a material portion of the hedge position with respect to the notes.
For the purpose of determining whether a market disruption event
exists at any time, if trading in a security included in the Underlier is suspended, absent or materially limited at that time,
then the relevant percentage contribution of that security to the value of the Underlier shall be based on a comparison of (x)
the portion of the value of the Underlier attributable to that security relative to (y) the overall value of the Underlier, in
each case immediately before that suspension or limitation.
For the purpose of determining whether a market disruption event
has occurred: (1) a limitation on the hours or number of days of trading will not constitute a market disruption event if it results
from an announced change in the regular business hours of the relevant exchange or market, (2) a decision to permanently discontinue
trading in the relevant futures or options contract or exchange-traded fund will not constitute a market disruption event, (3)
a suspension of trading in futures or options contracts or exchange-traded funds on the Underlier, or futures or options contracts,
if available, relating to securities then constituting 20 percent or more, by weight, of the Underlier, by the primary securities
market trading in such contracts or funds by reason of (a) a price change exceeding limits set by such securities exchange or market,
(b) an imbalance of orders relating to such contracts or funds, or (c) a disparity in bid and ask quotes relating to such contracts
or funds will constitute a suspension, absence or material limitation of trading in futures or options contracts or exchange-traded
funds related to the Underlier and (4) a “suspension, absence or material limitation of trading” on any relevant exchange
or on the primary market on which futures or options contracts or exchange-traded funds related to the Underlier are traded will
not include any time when such securities market is itself closed for trading under ordinary circumstances.
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 Stated 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 Stated Maturity Date
has been rescheduled (i) to each registered holder of the notes 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 notes 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 Stated Maturity Date, the Business Day immediately
preceding the scheduled Stated Maturity Date and (ii) with respect to notice of the date to which the Stated Maturity Date has
been rescheduled, the Business Day immediately following the actual Determination Date for determining the Final Underlier Level.
The Issuer shall, or shall cause the Calculation Agent to, (i)
provide written notice to the Trustee and to the depositary of the amount of cash, if any, to be delivered with respect to each
Face Amount of notes, on or prior to 10:30 a.m. (New York City time) on the Business Day preceding the Stated Maturity Date, and
(ii) deliver the aggregate cash amount due with respect to the notes, if any, to the Trustee for delivery to the depositary, as
holder of the notes, on the Stated Maturity Date.
CUSIP no.: 61771ECT3
ISIN: US61771ECT38
HYPOTHETICAL EXAMPLES
The following table and
chart are provided for purposes of illustration only. They should not be taken as an indication or prediction of future
investment results and are intended merely to illustrate the impact that the various hypothetical Closing Levels of the Underlier
on the Determination Date could have on the Cash Settlement Amount.
The examples below are
based on a range of Final Underlier Levels that are entirely hypothetical; no one can predict what the level of the Underlier will
be on any day during the term of the notes, and no one can predict what the Final Underlier Level will be on the Determination
Date. The Underlier has at times experienced periods of high volatility — meaning that the level of the Underlier
has changed considerably in relatively short periods — and its performance cannot be predicted for any future period.
The information in the
following examples reflects hypothetical rates of return on the notes assuming that they are purchased on the Original Issue Date
at the Face Amount and held to the Stated Maturity Date. The value of the notes at any time after the Trade Date will
vary based on many economic and market factors, including interest rates, the volatility of the Underlier, our creditworthiness
and changes in market conditions, and cannot be predicted with accuracy. Any sale prior to the Stated Maturity Date
could result in a substantial loss to you.
Key Terms and Assumptions
|
|
Face Amount:
|
$1,000
|
Upside Participation Rate:
|
120.00%
|
Hypothetical Cap Level:
|
108.910% of the Initial Underlier Level
|
Hypothetical Maximum Settlement Amount:
|
$1,106.92 per $1,000 Face Amount of notes (110.692% of the Face Amount)
|
Minimum Cash Settlement Amount:
|
None
|
Buffer Level:
|
90.00% of the Initial Underlier Level
|
Buffer Rate:
|
Approximately 111.11%
|
Buffer Amount:
|
10.00%
|
·
Neither a market disruption event nor a
non-Trading Day occurs on the Determination Date.
·
No discontinuation of the Underlier or
alteration of the method by which the Underlier is calculated.
·
Notes purchased on the Original Issue Date
at the Face Amount and held to the Stated Maturity Date.
|
Moreover, we have not yet set the Initial Underlier Level that
will serve as the baseline for determining the Underlier Return and the amount that we will pay on the notes, if any, at maturity. We
will not do so until the Trade Date. As a result, the actual Initial Underlier Level may differ substantially from the
level of the Underlier at any time prior to the Trade Date.
For these reasons,
the actual performance of the Underlier over the term of the notes, as well as the Cash Settlement Amount, if any, may bear little
relation to the hypothetical examples shown below or to the historical levels of the Underlier shown elsewhere in this document. For
information about the historical levels of the Underlier during recent periods, see “The Underlier” below.
The levels in the left column of the table below represent hypothetical
Final Underlier Levels and are expressed as percentages of the Initial Underlier Level. The amounts in the right column
represent the hypothetical Cash Settlement Amount, based on the corresponding hypothetical Final Underlier Level (expressed as
a percentage of the Initial Underlier Level), and are expressed as percentages of the Face Amount of notes (rounded to the nearest
one-thousandth of a percent). Thus, a hypothetical Cash Settlement Amount of 100% means that the value of the cash payment
that we would deliver for each $1,000 Face Amount of notes on the Stated Maturity Date would equal 100% of the Face Amount of notes,
based on the corresponding hypothetical Final Underlier Level (expressed as a percentage of the
Initial Underlier Level) and the assumptions noted above. The
numbers appearing in the table and chart below may have been rounded for ease of analysis.
Hypothetical Final Underlier Level
|
Hypothetical Cash Settlement Amount
|
(as Percentage of Initial Underlier Level)
|
(as Percentage of Face Amount)
|
200.000%
|
110.692%
|
175.000%
|
110.692%
|
150.000%
|
110.692%
|
125.000%
|
110.692%
|
120.000%
|
110.692%
|
115.000%
|
110.692%
|
110.000%
|
110.692%
|
108.910%
|
110.692%
|
105.000%
|
106.000%
|
100.000%
|
100.000%
|
95.000%
|
100.000%
|
90.000%
|
100.000%
|
80.000%
|
88.889%
|
75.000%
|
83.333%
|
50.000%
|
55.556%
|
25.000%
|
27.778%
|
0.000%
|
0.000%
|
If, for example, the Final Underlier Level were determined to
be 25.000% of the Initial Underlier Level, the Cash Settlement Amount would be approximately 27.778% of the Face Amount of notes,
as shown in the table above. As a result, if you purchased your notes on the Original Issue Date at the Face Amount and held them
to the Stated Maturity Date, you would lose approximately 72.222% of your investment. If you purchased your notes at a premium
to the Face Amount, you would lose a correspondingly higher percentage of your investment.
If the Final Underlier Level were determined to be 150.000% of
the Initial Underlier Level, the Cash Settlement Amount would be capped at the Maximum Settlement Amount (expressed as a percentage
of the Face Amount), or 110.692% of each $1,000 Face Amount of notes, as shown in the table above. As a result, if you
purchased the notes on the Original Issue Date at the Face Amount and held them to the Stated Maturity Date, you would not benefit
from any increase in the Final Underlier Level above the Hypothetical Cap Level of 108.910% of the Initial Underlier Level.
Payoff Diagram
The following chart shows a graphical illustration of the hypothetical
Cash Settlement Amount (expressed as a percentage of the Face Amount of notes), if the Final Underlier Level (expressed as a percentage
of the Initial Underlier Level) were any of the hypothetical levels shown on the horizontal axis. The chart shows that any hypothetical
Final Underlier Level (expressed as a percentage of the Initial Underlier Level) of less than the Buffer Level of 90.00% (the section
left of the 90.00% marker on the horizontal axis) would result in a hypothetical Cash Settlement Amount of less than 100% of the
Face Amount of notes (the section below the 100% marker on the vertical axis), and, accordingly, in a loss of principal to the
holder of the notes. The chart also shows that any hypothetical Final Underlier Level (expressed as a percentage of the Initial
Underlier Level) of greater than 108.910% (the section right of the Hypothetical Cap Level of 108.910% marker on the horizontal
axis) would result in a capped return on your investment and a Cash Settlement Amount equal to the Maximum Settlement Amount.
Hypothetical Payoff Diagram
|
|
RISK FACTORS
The following is a non-exhaustive list of certain key risk factors for investors in the notes. For further discussion of these and other risks, you should read the section entitled “Risk Factors” in the accompanying product supplement and prospectus. We also urge you to consult your investment, legal, tax, accounting and other advisers in connection with your investment in the notes.
|
The Notes Do Not Pay Interest Or Guarantee The Return Of Any Of Your Principal
The terms of the notes differ from those of ordinary debt securities
in that the notes do not pay interest and do not guarantee any return of principal at maturity. If the Final Underlier
Level has declined by an amount greater than the Buffer Amount of 10.00% from the Initial Underlier Level, you will receive for
each note that you hold a Cash Settlement Amount that is less than the Face Amount of each note by an amount proportionate to the
decline in the level of the Underlier below 90.00% of the Initial Underlier Level times the Buffer Rate of approximately 111.11%. As
there is no minimum Cash Settlement Amount on the notes, you could lose your entire initial investment.
Also, the market price of your notes prior to the Stated Maturity
Date may be significantly lower than the purchase price you pay for your notes. Consequently, if you sell your notes
before the Stated Maturity Date, you may receive significantly less than the amount of your investment in the notes.
The Appreciation Potential Of The Notes Is Limited By The Maximum Settlement Amount
The appreciation potential of the notes is limited by the Maximum
Settlement Amount of $1,106.92 to $1,125.76 per note, or 110.692% to 112.576% of the Face Amount. The actual Maximum
Settlement Amount will be determined on the Trade Date. Although the Upside Participation Rate provides 120% exposure
to any increase in the Final Underlier Level over the Initial Underlier Level, because the Cash Settlement Amount will be limited
to 110.692% to 112.576% of the Face Amount for the notes, any increase in the Final Underlier Level over the Initial Underlier
Level by more than 8.91% to 10.48% of the Initial Underlier Level will not further increase the return on the notes.
The Stated Maturity Date Of The Notes Is A Pricing Term And Will Be Determined By Us On The Trade Date
We will not fix the Stated Maturity Date until the Trade Date,
and so you will not know the exact term or the Determination Date of the notes at the time that you make your investment decision. The
term could be as short as approximately 1 year and 2 months, and as long as approximately 1 year and 4 months. You should
be willing to hold your notes for up to approximately 1 year and 4 months, and the Stated Maturity Date selected by us could have
an impact on the value of the notes. For example, if the Underlier appreciates, a note with a shorter term will result
in a higher annualized return based on that appreciation than a note with a longer term. In addition, the Underlier
may be lower on the actual Determination Date and the Cash Settlement Amount may be lower than if the Determination Date and Stated
Maturity Date had been set differently in the two-month range.
There Are Risks Associated With Investments In Notes Linked To The Value Of Foreign Equity Securities
The notes 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 Level Of The Underlier Is Subject To Currency Exchange Risk
Because the level of the Underlier is based on the U.S. dollar
value of its constituent stocks, holders of the notes will be exposed to currency exchange rate risk with respect to each of the
currencies in which such component securities trade. Exchange rate movements for a particular currency are volatile
and are the result of numerous factors including the supply of, and the demand for, those currencies, as well as relevant government
policy, intervention or actions, but are also influenced significantly from time to time by political or economic developments,
and by macroeconomic factors and speculative actions related to the relevant region. An investor’s net exposure
will depend on the extent to which the currencies of the component securities strengthen or weaken against the U.S. dollar and
the relative weight of each currency. If, taking into account such weighting, the dollar strengthens against the currencies
of the component securities of the Underlier, the level of the Underlier will be adversely affected and the Cash Settlement Amount
may be reduced.
Of particular importance to potential currency exchange risk
are:
|
·
|
existing and expected rates of inflation;
|
|
·
|
existing and expected interest rate levels;
|
|
·
|
the balance of payments; and
|
|
·
|
the extent of governmental surpluses or deficits in the countries represented
in the MSCI EAFE® Index and the United States.
|
All of these factors are in turn sensitive to the monetary, fiscal
and trade policies pursued by the governments of various countries represented in the Underlier, the United States and other countries
important to international trade and finance.
If You Purchase Your Notes At A Premium To The Face Amount, The Return On Your Investment Will Be Lower Than The Return On Notes
Purchased At The Face Amount, And The Impact Of Certain Key Terms Of The Notes Will Be Negatively Affected
The Cash Settlement Amount will not be adjusted based on the
issue price you pay for the notes. If you purchase notes at a price that differs from the Face Amount of notes, then
the return on your investment in such notes held to the Stated Maturity Date will differ from, and may be substantially less than,
the return on notes purchased at the Face Amount. If you purchase your notes at a premium to the Face Amount and hold
them to the Stated Maturity Date, the return on your investment in the notes will be lower than it would have been had you purchased
the notes at the Face Amount or at a discount to the Face Amount. In addition, the impact of the Buffer Level and the
Cap Level on the return on your investment will depend upon the price you pay for your notes relative to the Face Amount. For
example, if you purchase your notes at a premium to the Face Amount, the Cap Level will reduce your potential percentage return
on the notes to a greater extent than would have been the case for notes purchased at the Face Amount or at a discount to the Face
Amount. Similarly, the Buffer Level will provide less protection of the investment amount for notes purchased at a premium
to the Face Amount than for notes purchased at the Face Amount or a discount to the Face Amount.
The Underlier
Reflects The Price Return Of The Stocks Composing The Underlier, Not A Total Return
The return on the notes is based on the performance of the Underlier,
which reflects the changes in the market prices of the stocks composing the Underlier. It is not, however, linked to
a “total return” version of the Underlier, which, in addition to reflecting those price returns, would also reflect
all dividends and other distributions paid on the stocks composing the Underlier. The return on the notes will not include
such a total return feature.
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 notes in the secondary market and the price at which MS & Co. may be willing to purchase or sell the notes
in the secondary market, including: the level of the Underlier, volatility (frequency and magnitude of changes in value) of the
Underlier and dividend yield of the Underlier, interest and yield rates, time remaining to maturity, geopolitical conditions and
economic, financial, political and regulatory or judicial events that affect the Underlier or equities markets generally and which
may affect the Final Underlier Level of the Underlier and any actual or anticipated changes in our credit ratings or credit spreads. The
level of the Underlier may be, and has been, volatile, and we can give you no assurance that the volatility will lessen. See
“The Underlier” below. You may receive less, and possibly significantly less, than the Face Amount per note
if you try to sell your notes prior to maturity.
The Notes 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 Notes
You are dependent on our ability to pay all amounts due on the
notes at maturity, and therefore you are subject to our credit risk. If we default on our obligations under the notes,
your investment would be at risk and you could lose some or all of your investment. As a result, the market value of
the notes 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 notes.
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
the notes if they make claims in respect of such notes 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 the notes should
accordingly assume that in any such proceedings they could 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 Notes Is Not Linked To The Level Of The Underlier At Any Time Other Than The Determination Date
The Final Underlier Level will be based on the Closing Level
on the Determination Date, subject to adjustment for non-Trading Days and certain market disruption events. Even if
the level of the Underlier appreciates prior to the Determination Date but then drops by the Determination Date, the Cash Settlement
Amount may be less, and may be significantly less, than it would have been had the Cash Settlement Amount been linked to the level
of the Underlier prior to such drop. Although the actual level of the Underlier on the Stated Maturity Date or at other
times during the term of the notes may be higher than the Final Underlier Level, the Cash Settlement Amount will be based solely
on the Closing Level on the Determination Date.
Investing In The Notes Is Not Equivalent To Investing In The Underlier
Investing in the notes is not equivalent to investing in the
Underlier or its component stocks. Investors in the notes will not have voting rights or rights to receive dividends
or other distributions or any other rights with respect to stocks that constitute the Underlier.
Adjustments To The Underlier Could Adversely Affect The Value Of The Notes
The publisher of the Underlier may add, delete or substitute
the stocks constituting the Underlier or make other methodological changes that could change the level of the Underlier. The
publisher of the Underlier may discontinue or suspend calculation or publication of the Underlier 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
Underlier and is permitted to consider 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 Cash Settlement Amount on
the notes will be an amount based on the closing prices at maturity of the securities composing the Underlier at the time of such
discontinuance, without rebalancing or substitution, computed by the calculation agent in accordance with the formula for calculating
the Underlier last in effect prior to discontinuance of the Underlier.
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 Notes In The Original Issue Price Reduce The Economic Terms Of The Notes, Cause
The Estimated Value Of The Notes 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 notes 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 notes, including a fee payable by our affiliate MS & Co. for the use of the electronic platform of SIMON Markets
LLC, which is a broker-dealer affiliated with Goldman Sachs & Co. LLC, a dealer participating in the distribution of the notes,
in the Original Issue Price and the lower rate we are willing to pay as issuer make the economic terms of the notes less favorable
to you than they otherwise would be.
However, because the costs associated with issuing, selling,
structuring and hedging the notes are not fully deducted upon issuance, for a period of up to 3 months following the issue date,
to the extent that MS & Co. may buy or sell the notes in the secondary market, absent changes in market conditions, including
those related to the Underlier, 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 Notes 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 notes than those generated by others, including other dealers in the market, if they attempted to value the notes. In
addition, the estimated value on the Trade Date does not represent a minimum or maximum price at which dealers, including MS &
Co., would be willing to purchase your notes in the secondary market (if any exists) at any time. The value of your
notes at any time after the date hereof 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 Notes Will Not Be Listed On Any Securities Exchange And Secondary Trading May Be Limited
The notes will not be listed on any securities exchange. Therefore,
there may be little or no secondary market for the notes. MS & Co. may, but is not obligated to, make a market in the notes
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 notes, 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 notes. Even
if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the notes easily. Since
other broker-dealers may not participate significantly in the secondary market for the notes, the price at which you may be able
to trade your notes 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 notes, it is likely that there would be no secondary market for the notes. Accordingly, you should be willing to
hold your notes to maturity.
The Calculation Agent, Which Is A Subsidiary Of Morgan Stanley And An Affiliate Of MSFL, Will Make Determinations With Respect
To The Notes
As calculation agent, MS & Co. will determine the Initial
Underlier Level and the Final Underlier Level and will calculate the Cash Settlement Amount you receive at maturity, if any. 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 Underlier Level in the event of a market disruption event or discontinuance of the
Underlier. These potentially subjective determinations may adversely affect the Cash Settlement Amount 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” in the accompanying product supplement. In
addition, MS & Co. has determined the estimated value of the notes on the Trade Date.
Hedging And Trading Activity By Our Affiliates Could Potentially Adversely Affect The Value Of The Notes
One or more of our affiliates and/or third-party dealers expect
to carry out hedging activities related to the notes (and possibly to other instruments linked to the Underlier or its component
stocks), including trading in the stocks that constitute the Underlier as well as in other instruments related to the Underlier. As
a result, these entities may be unwinding or adjusting hedge positions during the term of the notes, 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 stocks that constitute the Underlier and other financial instruments related to the Underlier 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 Trade Date could potentially increase the Initial Underlier Level, and, therefore, could increase the level at or
above which the Underlier must close on the Determination Date so that investors do not suffer a loss on their initial investment
in the notes. Additionally, such hedging or trading activities during the term of the notes, including on the Determination
Date, could adversely affect the level of the Underlier on the Determination Date, and, accordingly, the Cash Settlement Amount
an investor will receive at maturity, if any. Furthermore, if the dealer from which you purchase notes is to conduct
trading and hedging activities for us in connection with the notes, that dealer may profit in connection with such trading and
hedging activities and such profit, if any, will be in addition to the compensation that the dealer receives for the sale of the
notes to you. You should be aware that the potential to earn a profit in connection with hedging activities may create
a further incentive for the dealer to sell the notes to you, in addition to the compensation they would receive for the sale of
the notes.
We May Sell An Additional Aggregate Face Amount Of Notes At A Different Issue Price
At our sole option, we may decide to sell an additional aggregate
Face Amount of notes subsequent to the date hereof. The issue price of the notes in the subsequent sale may differ substantially
(higher or lower) from the issue price you paid as provided on the cover of this document.
Past Performance is No Guide to Future Performance
The actual performance of the Underlier over the term of the
notes, as well as the amount payable at maturity, may bear little relation to the historical Closing Levels of the Underlier or
to the hypothetical return examples set forth herein. We cannot predict the future performance of the Underlier.
The U.S. Federal Income Tax Consequences Of An Investment In The Notes Are Uncertain
Please
read the discussion under “Tax Considerations” in this document and the discussion under “United States Federal
Taxation” in the accompanying product supplement (together, the “Tax Disclosure Sections”) concerning the U.S.
federal income tax consequences of an investment in the notes. If the Internal Revenue Service (the “IRS”)
were successful in asserting an alternative treatment, the timing and character of income on the notes 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 notes as debt instruments. In that event, U.S. Holders would be required to accrue into income original
issue
discount on the notes every year at a “comparable yield” determined at the time of issuance and recognize all income
and gain in respect of the notes as ordinary income. Additionally, as discussed under “United States Federal Taxation—FATCA”
in the accompanying product supplement, the withholding rules commonly referred to as “FATCA” would apply to the notes
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 (other than amounts treated as “FDAP income,” as defined in the accompanying product supplement
). The risk that financial instruments providing for buffers, triggers or similar downside protection features, such
as the notes, 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 notes,
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 notes, 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
notes, 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.
THE UNDERLIER
The MSCI EAFE® Index is a stock index calculated,
published and disseminated by MSCI Inc. (“MSCI”). The Underlier is a free float-adjusted market capitalization index
that is designed to measure the equity market performance of developed markets, excluding the United States and Canada, and it
consists of the following 21 developed market countries: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong,
Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United
Kingdom. For additional information about the MSCI EAFE® Index, see the information set forth under “MSCI
International Equity Indices—MSCI EAFE® Index” and “—MSCI Global Investable Market Indices
Methodology” in the accompanying index supplement.
In addition, information about the Underlier may be obtained
from other sources including, but not limited to, the Underlier Publisher’s website (including information regarding (i)
the Underlier’s sector weightings and (ii) the Underlier’s country weightings). We are not incorporating by reference
into this document the website or any material it includes. Neither the issuer nor the agent makes any representation that such
publicly available information regarding the Underlier is accurate or complete.
Information as of market close on October 15, 2020:
Bloomberg Ticker Symbol:
|
MXEA
|
Current Index Value:
|
1,870.46
|
52 Weeks Ago:
|
1,910.94
|
52 Week High (on 1/17/2020):
|
2,057.74
|
52 Week Low (on 3/23/2020):
|
1,354.30
|
The following graph sets forth the daily Closing Levels of the
Underlier for each quarter in the period from January 1, 2015 through October 15, 2020. The Closing Level of the Underlier on October
15, 2020 was 1,870.46. We obtained the information in the graph below from Bloomberg Financial Markets without independent verification.
The Closing Level of the MSCI EAFE® Index reported by Bloomberg Financial Services may be lower or higher than the
official closing level of the MSCI EAFE® Index published by MSCI. The Underlier has at times experienced periods
of high volatility. The actual performance of the Underlier over the term of the notes, as well as the amount payable at maturity,
may bear little relation to the historical Closing Levels of the Underlier or to the hypothetical return examples set forth herein.
We cannot predict the future performance of the Underlier. You should not take the historical levels of the Underlier as an indication
of its future performance, and no assurance can be given as to the Closing Level of the Underlier on the Determination Date.
MSCI EAFE® Index
Daily Underlier Closing Values
January 1, 2015 to October 15, 2020
|
|
The “MSCI EAFE® Index” is a trademark
of MSCI. For more information, see “MSCI International Equity Indices” in the accompanying index supplement.
|
TAX CONSIDERATIONS
Although there is uncertainty
regarding the U.S. federal income tax consequences of an investment in the notes 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 note 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 notes is respected and subject to the discussion in “United States Federal Taxation” in the accompanying product
supplement, 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 notes prior to settlement, other than pursuant to a sale or exchange.
|
|
§
|
Upon sale, exchange or settlement of the
notes, 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 notes. Such gain or loss should be long-term capital gain or loss if the investor has held the notes
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 notes, possibly with retroactive
effect.
As discussed
in the accompanying product supplement, 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, 2023 that do not have a delta of
one with respect to any Underlying Security. Based on the terms of the notes and current market conditions, we expect
that the notes 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 notes do not have a delta of one with respect to any
Underlying Security, our counsel is of the opinion that the notes 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 notes.
Both U.S.
and non-U.S. investors considering an investment in the notes should read the discussion under “Risk Factors” in this
document and the discussion under “United States Federal Taxation” in the accompanying product supplement and consult
their tax advisers regarding all aspects of the U.S. federal income tax consequences of an investment in the notes, 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, 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 notes.
ADDITIONAL INFORMATION ABOUT THE NOTES
No interest or dividends: The notes will not pay interest
or dividends.
No listing: The notes will not be listed on any securities
exchange.
No redemption: The notes will not be subject to any redemption
right.
Purchase at amount other than Face Amount: The amount
we will pay you on the Stated Maturity Date for your notes will not be adjusted based on the issue price you pay for your notes,
so if you acquire notes at a premium (or discount) to the Face Amount and hold them to the Stated Maturity Date, it could affect
your investment in a number of ways. The return on your investment in such notes will be lower (or higher) than it would have been
had you purchased the notes at the Face Amount. Also, the Buffer Level would not offer the same measure of protection
to your investment as would be the case if you had purchased the notes at the Face Amount. Additionally, the Cap Level would be
triggered at a lower (or higher) percentage return than indicated below, relative to your initial investment. See “Risk
Factors—If You Purchase Your Notes At A Premium To The Face Amount, The Return On Your Investment Will Be Lower Than The
Return On Notes Purchased At The Face Amount, And The Impact Of Certain Key Terms Of The Notes Will Be Negatively Affected”
beginning on page 11 of this document.
Use of proceeds and hedging: The proceeds from the sale
of the notes will be used by us for general corporate purposes. We will receive, in aggregate, $1,000 per note issued. The
costs of the notes borne by you and described on page 2 comprise the cost of issuing, structuring and hedging the notes.
On or prior to the Trade Date, we will hedge our anticipated
exposure in connection with the notes, 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 Underlier, futures and options contracts on the Underlier,
and any component stocks of the Underlier 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 level
of the Underlier on the Trade Date, and therefore increase the level at or above which the Underlier must close on the Determination
Date so that investors do not suffer a loss on their initial investment in the notes. In addition, through our affiliates,
we are likely to modify our hedge position throughout the term of the notes, including on the Determination Date, by purchasing
and selling the stocks constituting the Underlier, futures or options contracts on the Underlier 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 notes, 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 level of the Underlier,
and, therefore, adversely affect the value of the notes 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.
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 notes. 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 notes 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 notes 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 notes. 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 notes 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 notes.
Because we may be considered a party in interest with respect
to many Plans, the notes 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 notes will be deemed to have represented, in its corporate and its fiduciary capacity, by its purchase and holding of the
notes that either (a) it is not a Plan or a Plan Asset Entity and is not purchasing such notes 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 notes 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 notes on behalf of or with “plan assets” of any Plan consult with their counsel
regarding the availability of exemptive relief.
The notes are contractual financial instruments. The
financial exposure provided by the notes 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 notes. The notes 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 notes.
Each purchaser or holder of any notes 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 notes, (B) the purchaser or holder’s investment in
the notes, or (C) the exercise of or failure to exercise any rights we have under or with respect to the notes;
|
|
(ii)
|
we and our affiliates have acted and will act solely for our own account in connection with (A) all transactions relating to
the notes and (B) all hedging transactions in connection with our obligations under the notes;
|
|
(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 notes has exclusive responsibility
for ensuring that its purchase, holding and disposition of the notes do not violate the prohibited transaction rules of ERISA or
the Code or any Similar Law. The sale of any notes 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 preliminary pricing supplement is or is intended to
be investment advice directed at any potential Plan purchaser or at Plan purchasers generally and such purchasers of these notes
should consult and rely on their own counsel and advisers as to whether an investment in these notes 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 notes 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 notes 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 notes, either directly or indirectly.
Supplemental information regarding plan of distribution; conflicts
of interest: MS & Co., acting as our agent, will sell all of the notes that it purchases from us to an unaffiliated dealer
at the original issue price of 100.00%, or $1,000 per Face Amount of notes. Such dealer will sell the notes to investors at the
same price without a discount or commission. MS & Co., the agent for this offering, is our affiliate. Because MS & Co.
is both our affiliate and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”), the underwriting
arrangements for this offering must comply with the requirements of FINRA Rule 5121 regarding a FINRA member firm’s distribution
of the securities of an affiliate and related conflicts of interest. In accordance with FINRA Rule 5121, MS & Co. may not make
sales in offerings of the notes to any of its discretionary accounts without the prior written approval of the customer.
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 notes. When MS & Co. prices this offering of notes, it will determine the economic terms of the notes, including
the Cap Level and the Maximum Settlement Amount, such that for each note the estimated value on the Trade Date will be no lower
than the minimum level described in “Estimated Value” 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 notes 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.
Settlement: We expect to deliver the notes against payment
for the notes on the Original Issue Date, which will be the fifth scheduled Business Day following the Trade Date. Under
Rule 15c6-1 of the Securities Exchange Act of 1934, as amended, trades in the secondary market generally are required to settle
in two Business Days, unless the parties to a trade expressly agree otherwise. Accordingly, if the Original Issue Date
is more than two Business Days after the Trade Date, purchasers who wish to transact in the notes more than two Business Days prior
to the Original Issue Date will be required to specify alternative settlement arrangements to prevent a failed settlement.
WHERE YOU CAN FIND MORE INFORMATION
MSFL and Morgan Stanley have filed a registration statement (including
a prospectus, as supplemented by the product supplement 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, the index supplement and any other documents relating to this offering that MSFL and Morgan Stanley have
filed with the SEC for more complete information about MSFL, Morgan Stanley and this offering. You may get these documents
without cost by visiting EDGAR on the SEC web site at.www.sec.gov. Alternatively, MSFL and/or Morgan Stanley will arrange
to send you the product supplement, 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:
Prospectus dated November 16, 2017
Product
Supplement dated November 16, 2017
Index
Supplement dated November 16, 2017
Terms used but not defined in this document are defined in the
product supplement, in the index supplement or in the prospectus.
Morgan Stanley (NYSE:MS)
Historical Stock Chart
From Sep 2024 to Oct 2024
Morgan Stanley (NYSE:MS)
Historical Stock Chart
From Oct 2023 to Oct 2024