CALCULATION
OF REGISTRATION FEE
Title
of Each Class of Securities Offered
|
|
Maximum
Aggregate Offering Price
|
|
Amount
of Registration Fee
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Dual Directional Trigger Performance Leveraged
Upside Securities due 2025
|
|
$383,000
|
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$41.79
|
October 2020
Pricing Supplement No. 5,018
Registration Statement Nos. 333-221595;
333-221595-01
Dated October 23, 2020
Filed pursuant to Rule 424(b)(2)
Morgan
Stanley Finance LLC
Structured Investments
Opportunities in U.S. Equities
Dual Directional Trigger PLUS Based on the Performance
of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Fully and Unconditionally Guaranteed by Morgan
Stanley
Principal at Risk Securities
The Dual Directional Trigger PLUS, or “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 Dow Jones Industrial AverageSM, which we refer to as 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. If the underlying index has depreciated in value but by no more than 20%, investors will receive the stated principal
amount of their investment plus an unleveraged positive return equal to the absolute value of the percentage decline, which will
effectively be limited to a positive 20% return. However, if the underlying index has depreciated in value by more than
20%, investors will be negatively exposed to the full amount of the percentage decline in the underlying index and will lose 1%
of the stated principal amount for every 1% of decline, without any buffer. The Trigger PLUS are for investors who seek an equity
index-based return and who are willing to risk their principal and forgo current income in exchange for the upside participation
and absolute return features that in each case apply to a limited range of performance of the underlying index. Investors may
lose their entire initial investment in the Trigger PLUS. These long-dated Trigger PLUS are notes issued as part of MSFL’s
Series A Global Medium-Term Notes program. See “Additional Terms of the Trigger PLUS—Additional Terms—Certain
defined terms” for additional information about certain defined terms that are used in this document and the accompanying
product supplement.
The Trigger PLUS differ from the PLUS described in the accompanying
product supplement for PLUS in that the Trigger PLUS offer the potential for a positive return at maturity if the underlying index
depreciates by up to 20%. The Trigger PLUS are not the Buffered PLUS described in the accompanying product supplement for PLUS.
Unlike the Buffered PLUS, the Trigger PLUS do not provide any protection if the underlying index depreciates by more than 20%.
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.
FINAL TERMS
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Issuer:
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Morgan Stanley Finance LLC
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Guarantor:
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Morgan Stanley
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Maturity date:
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October 28, 2025
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Determination date:
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October 23, 2025, subject to postponement for non-index business days and certain market disruption events
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Underlying index:
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Dow Jones Industrial AverageSM
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Aggregate principal amount:
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$383,000
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Payment at maturity:
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If the final level is greater than the
initial level:
$1,000 + leveraged upside payment
If the final level is less than or equal to the initial
level but is greater than or equal to the principal barrier:
$1,000 + ($1,000 × absolute
return)
In this scenario, you will receive a 1% positive
return on the Trigger PLUS for each 1% negative return on the underlying index. In no event will this amount exceed the stated
principal amount plus $200.
If the final level is less than the principal barrier:
$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 20%, and possibly all, of your
investment.
|
Leveraged upside payment:
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$1,000 × upside participation × index percent change
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Upside participation:
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105%
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Index percent change:
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(final level – initial level) / initial level
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Absolute return:
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The absolute value of the index percent change. For example, a –5% index percent change will result in a +5% absolute return.
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Index performance factor:
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final level / initial level
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Initial level:
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28,335.57, which is the index closing value on the trade date
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Final level:
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The index closing value on the determination date
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Principal barrier:
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22,668.456, which is 80% of the initial level
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Stated principal amount / Issue price:
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$1,000 per Trigger PLUS (see “Commissions and issue price” below)
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Trade date:
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October 23, 2020
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Settlement date:
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October 28, 2020 (3 business days after the trade date)
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CUSIP / ISIN:
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61771EBF4 / US61771EBF43
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Listing:
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The Trigger PLUS will not be listed on any securities exchange.
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Agent:
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Morgan Stanley & Co. LLC (“MS & Co.”), a wholly owned subsidiary of Morgan Stanley and an affiliate of MSFL. See “Supplemental information regarding plan of distribution; conflicts of interest.”
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Estimated value on the trade date:
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$941.50 per Trigger PLUS. See “Investment Summary” on page 2.
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Commissions and issue price:
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Price to public
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Agent’s commissions(1)
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Proceeds to us(2)
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Per Trigger PLUS
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$1,000
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$0
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$1,000
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Total
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$383,000
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$0
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$383,000
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(1)
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Selected dealers and their financial advisors will receive
a structuring fee of up to $4 and a distribution fee of $5 for each Trigger PLUS from the agent or its affiliates. MS & Co.,
the agent, will not receive a sales commission in connection with the 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)
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See “Use of proceeds and hedging” on page
14.
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The Trigger PLUS involve risks not associated with an investment
in ordinary debt securities. See “Risk Factors” beginning on page 6.
The Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or determined if this document or the accompanying product supplement,
index supplement and prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The 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
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Investment Summary
Trigger Performance Leveraged Upside Securities
Principal at Risk Securities
The Dual Directional Trigger PLUS Based on the Performance of
the Dow Jones Industrial AverageSM due October 28, 2025 (the “Trigger PLUS”) can be used:
|
§
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As an alternative to direct exposure to the underlying index that enhances returns for any positive
performance of the underlying index.
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§
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To obtain an unleveraged positive return for a limited range of negative performance of the underlying
index.
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§
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To enhance returns and potentially outperform the underlying index in a bullish or moderately
bearish scenario.
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Maturity:
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5 years
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Upside participation:
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105% (applicable only if the final level is greater than the initial level)
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Minimum payment at maturity:
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None. Investors may lose their entire initial investment in the Trigger PLUS.
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Principal barrier:
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80% of the initial level
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Coupon:
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None
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Listing:
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The Trigger PLUS will not be listed on any securities exchange
|
|
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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 trade date is less than $1,000. We estimate that the
value of each Trigger PLUS on the trade date is $941.50.
What goes into the estimated value on the trade date?
In valuing the Trigger PLUS on the trade 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 upside participation and the principal barrier, 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
trade 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 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 Trigger
PLUS are not fully deducted upon issuance, for a period of up to 6 months following the settlement 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
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Key Investment Rationale
The Trigger PLUS offer the potential for a positive return at
maturity based on the absolute value of a limited range of percentage changes of the underlying index. 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. If the underlying index has depreciated in value but by no more than 20%, investors
will receive the stated principal amount of their investment plus an unleveraged positive return equal to the absolute value of
the percentage decline, which will effectively be limited to a positive 20% return. However, if the underlying index has depreciated
in value by more than 20%, investors will be negatively exposed to the full amount of the percentage decline in the underlying
index and will lose 1% of the stated principal amount for every 1% of decline, without any buffer. Investors may lose their
entire initial investment in the Trigger PLUS. All payments on the Trigger PLUS are subject to our credit risk.
Leveraged Upside Performance
|
The Trigger PLUS offer investors an opportunity to capture enhanced returns relative to a direct investment in the underlying index.
|
Absolute Return Feature
|
The Trigger PLUS enable investors to obtain an unleveraged positive return if the final level is less than or equal to the initial level but is greater than or equal to the principal barrier.
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Upside Scenario if the Underlying Index Appreciates
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The final level is greater than the initial level, and, at maturity, you receive a full return of principal as well as 105% of the increase in the value of the underlying index. For example, if the final level is 10% greater than the initial level, the Trigger PLUS will provide a total return of 10.50% at maturity.
|
Absolute Return Scenario
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The final level is less than or equal to the initial level but is greater than or equal to the principal barrier, which is 80% of the initial level. In this case, you receive a 1% positive return on the Trigger PLUS for each 1% negative return on the underlying index. For example, if the final level is 10% less than the initial level, the Trigger PLUS will provide a total positive return of 10% at maturity. The maximum return you may receive in this scenario is a positive 20% return at maturity.
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Downside Scenario
|
The final level is less than the principal barrier. In this case, the Trigger PLUS redeem for at least 20% 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 over the term of the Trigger PLUS. Under these circumstances, the payment at maturity will be less than 80% of the stated principal amount per Trigger PLUS. For example, if the final level is 75% less than the initial level, the Trigger PLUS will be redeemed at maturity for a loss of 75% of principal at $250, or 25% of the stated principal amount. There is no minimum payment at maturity on the Trigger PLUS, and you could lose your entire investment.
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
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
|
Upside participation:
|
105%
|
Principal barrier:
|
80% of the initial level
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Minimum payment at maturity:
|
None
|
Trigger PLUS Payoff Diagram
|
|
See the next page for a description of how the Trigger PLUS work.
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
How it works
|
§
|
Upside Scenario if the Underlying Index Appreciates. If the final level is greater
than the initial level, the investor would receive the $1,000 stated principal amount plus 105% of the appreciation of the
underlying index over the term of the Trigger PLUS.
|
|
§
|
If the underlying index appreciates 10%, the investor would receive a 10.50% return, or $1,105 per Trigger PLUS.
|
|
§
|
Absolute Return Scenario. If the final level is less than or equal to the initial
level and is greater than or equal to the principal barrier of 80% of the initial level, the investor would receive a 1% positive
return on the Trigger PLUS for each 1% negative return on the underlying index.
|
|
§
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If the underlying index depreciates 10%, the investor would receive a 10% return, or $1,100 per Trigger PLUS.
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|
§
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The maximum return you may receive in this scenario is a positive 20% return at maturity.
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|
§
|
Downside Scenario. If the final level is less than the principal barrier of 80%
of the initial level, the investor would receive an amount less than the $1,000 stated principal amount, based on a 1% loss of
principal for each 1% decline in the underlying index. Under these circumstances, the payment at maturity will be less than 80%
of the stated principal amount per Trigger PLUS. There is no minimum payment at maturity on the Trigger PLUS.
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|
§
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If the underlying index depreciates 75%, the investor would lose 75% of the investor’s principal and receive only $250
per Trigger PLUS at maturity, or 25% of the stated principal amount.
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
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. We also urge you to
consult your investment, legal, tax, accounting and other advisers in connection with your investment in the Trigger PLUS.
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§
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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 the payment of any principal amount
at maturity. If the final level is less than the principal barrier (which is 80% of the initial level), the absolute return feature
will no longer be available and the payout at maturity will be an amount in cash that is at least 20% less than the $1,000 stated
principal amount of each Trigger PLUS, and this decrease will be by an amount proportionate to the full amount of the decline in
the value of the underlying index over the term of the Trigger PLUS, without any buffer. There is no minimum payment at maturity
on the Trigger PLUS, and, accordingly, you could lose your entire initial investment in the Trigger PLUS.
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§
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The market price of the Trigger PLUS 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 (including
whether the value is below the principal barrier), volatility (frequency and magnitude of changes in value) and dividend yield
of the underlying index, interest and yield rates in the market, time remaining until
the Trigger PLUS mature, geopolitical conditions and economic, financial, political, regulatory or judicial events that affect
the underlying index or equities markets generally and which may affect the final level 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 level of the underlying index may
be, and has recently been, volatile, and we can give you no assurance that the volatility will lessen. See “Dow Jones Industrial
AverageSM 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.
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§
|
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.
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§
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As a finance subsidiary, MSFL has no independent operations and will have no independent assets. As a finance subsidiary,
MSFL has no independent operations beyond the issuance and administration of its securities and will have no independent assets
available for distributions to holders of MSFL securities if they make claims in respect of such securities in a bankruptcy, resolution
or similar proceeding. Accordingly, any recoveries by such holders will be limited to those available under the related guarantee
by Morgan Stanley and that guarantee will rank pari passu with all other unsecured, unsubordinated obligations of Morgan
Stanley. Holders will have recourse only to a single claim against Morgan Stanley and its assets under the guarantee. Holders of
securities issued by MSFL should accordingly assume that in any such proceedings they would not have any priority over and should
be treated pari passu with the claims of other unsecured, unsubordinated creditors of Morgan Stanley, including holders
of Morgan Stanley-issued securities.
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§
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The amount payable on the Trigger PLUS is not linked to the value of the underlying index at any time other than the determination
date. The final level will be based on the index closing value on the determination date, subject to postponement for non-index
business days and certain market disruption events. Even if the value of the underlying index appreciates prior to the determination
date but then drops by the determination date, the payment at maturity may be less, and may be significantly less, than it would
have been had the payment at maturity been
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
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 level, the payment at maturity will be based solely on the index closing
value on the determination date.
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§
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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. Investors in the Trigger PLUS
will not have voting rights or rights to receive dividends or other distributions or any other rights with respect to the stocks
that constitute the underlying index.
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§
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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 will be permitted to consider indices that are calculated and published by the calculation agent or any of its
affiliates.
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§
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The rate we are willing to pay for securities of this type, maturity and issuance size is likely to be lower than the rate
implied by our secondary market credit spreads and advantageous to us. Both the lower rate and the inclusion of costs associated
with issuing, selling, structuring and hedging the 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.
|
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 settlement 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 trade 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 of the Trigger PLUS will be influenced by many unpredictable factors” above.
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|
§
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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
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
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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§
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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 level, the principal barrier and the final
level, including whether the value of the underlying index has decreased to below the principal barrier, and will calculate the
amount of cash 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 level 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),” “—Alternate Exchange Calculation in case of an Event of Default” and “—Calculation
Agent and Calculations” in the accompanying product supplement. In addition, MS & Co. has determined the estimated value
of the Trigger PLUS on the trade date.
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§
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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 determination date approaches. Some of our affiliates also trade the stocks that constitute
the underlying index and other financial instruments related to the underlying index on a regular basis as part of their general
broker-dealer and other businesses. Any of these hedging or trading activities on or prior to the trade date could potentially
increase the initial level, and, therefore, could increase the principal barrier, which is the value at or above which the underlying
index must close on the determination 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 determination
date, could adversely affect the value of the underlying index on the determination date, and, accordingly, the amount of cash
an investor will receive at maturity, if any.
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§
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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 (other than amounts treated as “FDAP income,” as defined in the
accompanying product supplement for PLUS). 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
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
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
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Dow Jones Industrial AverageSM Overview
The Dow Jones Industrial AverageSM is a price-weighted
index composed of 30 common stocks that is published by S&P Dow Jones Indices LLC, the marketing name and a licensed trademark
of CME Group Inc., as representative of the broad market of U.S. industry. For additional information about the Dow Jones Industrial
AverageSM, see the information set forth under “Dow Jones Industrial AverageSM” in the accompanying
index supplement.
Information as of market close on October 23, 2020:
Bloomberg Ticker Symbol:
|
INDU
|
Current Index Value:
|
28,335.57
|
52 Weeks Ago:
|
26,833.95
|
52 Week High (on 2/12/2020):
|
29,551.42
|
52 Week Low (on 3/23/2020):
|
18,591.93
|
|
|
The following graph sets forth the daily index closing values
of the underlying index for each quarter in the period from January 1, 2015 through October 23, 2020. 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 index closing value of the underlying index on October 23, 2020 was 28,335.57. 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. You should not take the historical values of the underlying index as an indication of its
future performance, and no assurance can be given as to the index closing value of the underlying index on the determination date.
Dow Jones Industrial
AverageSM
Daily Index Closing
Values
January 1, 2015 to October
23, 2020
|
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Dow Jones Industrial AverageSM
|
High
|
Low
|
Period End
|
2015
|
|
|
|
First Quarter
|
18,288.63
|
17,164.95
|
17,776.12
|
Second Quarter
|
18,312.39
|
17,596.35
|
17,619.51
|
Third Quarter
|
18,120.25
|
15,666.44
|
16,284.70
|
Fourth Quarter
|
17,918.15
|
16,272.01
|
17,425.03
|
2016
|
|
|
|
First Quarter
|
17,716.66
|
15,660.18
|
17,685.09
|
Second Quarter
|
18,096.27
|
17,140.24
|
17,929.99
|
Third Quarter
|
18,636.05
|
17,840.62
|
18,308.15
|
Fourth Quarter
|
19,974.62
|
17,888.28
|
19,762.60
|
2017
|
|
|
|
First Quarter
|
21,115.55
|
19,732.40
|
20,663.22
|
Second Quarter
|
21,528.99
|
20,404.49
|
21,349.63
|
Third Quarter
|
22,412.59
|
21,320.04
|
22,405.09
|
Fourth Quarter
|
24,837.51
|
22,557.60
|
24,719.22
|
2018
|
|
|
|
First Quarter
|
26,616.71
|
23,533.20
|
24,103.11
|
Second Quarter
|
25,322.31
|
23,644.19
|
24,271.41
|
Third Quarter
|
26,743.50
|
24,174.82
|
26,458.31
|
Fourth Quarter
|
26,828.39
|
21,792.20
|
23,327.46
|
2019
|
|
|
|
First Quarter
|
26,091.95
|
22,686.22
|
25,928.68
|
Second Quarter
|
26,753.17
|
24,815.04
|
26,599.96
|
Third Quarter
|
27,359.16
|
25,479.42
|
26,916.83
|
Fourth Quarter
|
28,645.26
|
26,078.62
|
28,538.44
|
2020
|
|
|
|
First Quarter
|
29,551.42
|
18,591.93
|
21,917.16
|
Second Quarter
|
27,572.44
|
20,943.51
|
25,812.88
|
Third Quarter
|
29,100.50
|
25,706.09
|
27,781.70
|
Fourth Quarter (through October 23, 2020)
|
28,837.52
|
27,682.81
|
28,335.57
|
|
|
|
|
“Dow Jones,” “Dow Jones Industrial Average,”
“Dow Jones Indexes” and “DJIA” are service marks of Dow Jones Trademark Holdings LLC. For more information,
see “Dow Jones Industrial AverageSM” in the accompanying index supplement.
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
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:
|
S&P Dow Jones Indices LLC or any successor thereof
|
Postponement of maturity date:
|
If, due to a market disruption event or otherwise, the determination date is postponed so that it falls less than two business days prior to the scheduled maturity date, the maturity date will be postponed to the second business day following the determination date as postponed.
|
Denominations:
|
$1,000 per Trigger PLUS and integral multiples thereof
|
Trustee:
|
The Bank of New York Mellon
|
Calculation agent:
|
MS & Co.
|
Certain defined terms:
|
The accompanying product supplement refers to:
· The
trade date as the “pricing date.”
· The
settlement date as the “original issue date.”
· The
determination date as the “valuation date.”
· The
initial level as the “initial index value.”
· The
final level as the “final index value.”
· The
upside participation as the “upside leverage factor.”
· The
principal barrier as the “trigger level.”
|
Issuer notice to registered security holders, the trustee and the depositary:
|
In the event that the maturity date is postponed due to postponement
of the determination date, the issuer shall give notice of such postponement and, once it has been determined, of the date to which
the maturity date has been rescheduled (i) to each registered holder of the 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 determination date for determining the final level.
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 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, to the trustee for delivery to the depositary,
as holder of the Trigger PLUS, on the maturity date.
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
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.
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, 2023 that do not have a delta of one with
respect to any Underlying Security. Based on our determination 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 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 &
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
|
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 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 trade 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, in futures and/or options contracts on the underlying
index or any component stocks of the underlying index listed on major securities markets, or in any other securities or instruments
that they may wish to use in connection with such hedging. Such purchase activity could potentially increase the value of the underlying
index on the trade date, and, therefore, could increase the principal barrier, which is the value at or above which the underlying
index must close on the determination 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 determination date, by purchasing and selling the stocks constituting the underlying index, futures or options
contracts on the underlying index or its component stocks listed on major securities markets or positions in any other available
securities or instruments that we may wish to use in connection with such hedging activities. As a result, these entities may be
unwinding or adjusting hedge positions during the term of the Trigger PLUS, and the hedging strategy may involve greater and more
frequent dynamic adjustments to the hedge as the determination date approaches. We cannot give any assurance that our hedging activities
will not affect the value of the underlying index, and, therefore, adversely affect the value of the 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 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
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
|
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;
(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
|
Selected dealers and their financial advisors will receive a structuring fee of up to $4 and a distribution fee of $5 for each Trigger PLUS from the agent or its affiliates. MS & Co. will not receive a sales
|
Morgan Stanley Finance LLC
Dual Directional Trigger PLUS Based on the Performance of the Dow Jones Industrial AverageSM due October 28, 2025
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
regarding plan of distribution; conflicts of interest:
|
commission in connection with the 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.
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.
|
Validity of the Trigger PLUS:
|
In the opinion of Davis Polk & Wardwell LLP, as special counsel to MSFL and Morgan Stanley, when the Trigger PLUS offered by this pricing supplement have been executed and issued by MSFL, authenticated by the trustee pursuant to the MSFL Senior Debt Indenture (as defined in the accompanying prospectus) and delivered against payment as contemplated herein, such Trigger PLUS will be valid and binding obligations of MSFL and the related guarantee will be a valid and binding obligation of Morgan Stanley, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability (including, without limitation, concepts of good faith, fair dealing and the lack of bad faith), provided that such counsel expresses no opinion as to (i) the effect of fraudulent conveyance, fraudulent transfer or similar provision of applicable law on the conclusions expressed above and (ii) any provision of the MSFL Senior Debt Indenture that purports to avoid the effect of fraudulent conveyance, fraudulent transfer or similar provision of applicable law by limiting the amount of Morgan Stanley’s obligation under the related guarantee. This opinion is given as of the date hereof and is limited to the laws of the State of New York, the General Corporation Law of the State of Delaware and the Delaware Limited Liability Company Act. In addition, this opinion is subject to customary assumptions about the trustee’s authorization, execution and delivery of the MSFL Senior Debt Indenture and its authentication of the Trigger PLUS and the validity, binding nature and enforceability of the MSFL Senior Debt Indenture with respect to the trustee, all as stated in the letter of such counsel dated November 16, 2017, which is Exhibit 5-a to the Registration Statement on Form S-3 filed by Morgan Stanley on November 16, 2017.
|
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 SecuritiesSM”
and “PLUSSM” are our service marks.
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