We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
Morgan Stanley | NYSE:MS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.68 | 1.81% | 94.33 | 94.42 | 93.28 | 93.34 | 5,043,460 | 01:00:00 |
The information in this pricing supplement is not complete and may be changed. We may not deliver these securities until a final pricing supplement is delivered. This pricing supplement and the accompanying prospectus and prospectus supplement do not constitute an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
|
PROSPECTUS Dated November 19, 2014
|
Pricing Supplement No. 299 to
|
PROSPECTUS SUPPLEMENT Dated November 19, 2014
|
Registration Statement No. 333-200365
|
Dated May , 2015
|
|
Rule 424(b)(2)
|
·
|
We will not pay interest on the securities.
|
·
|
At maturity, you will receive an amount of cash per security based on the final index value, which is the closing value of the index on the valuation date, as follows:
|
º
|
If the final index value is greater than the initial index value, you will receive for each $10 stated principal amount of securities that you hold a payment at maturity equal to $10 plus the product of $10 and the index percent increase.
|
º
|
If the final index value is less than or equal to the initial index value, you will receive for each $10 stated principal amount of securities that you hold a payment at maturity equal to $10 × index performance factor. If the final index value is less than the initial index value, the payment at maturity will be less than the stated principal amount of $10 and will represent a loss of some, and possibly all, of your investment.
|
·
|
The index percent increase will be a fraction, the numerator of which will be the final index value minus the initial index value and the denominator of which will be the initial index value.
|
·
|
The index performance factor will be a fraction equal to the final index value divided by the initial index value.
|
·
|
The initial index value will equal the index closing value on May 15, 2015, which is the day we price the securities for initial sale to the public, which we refer to as the pricing date.
|
·
|
The final index value will equal the index closing value on the valuation date.
|
·
|
The valuation date will be November 15, 2018, subject to postponement for non-index business days.
|
·
|
Investing in the securities is not equivalent to investing in the index or its component stocks.
|
·
|
The securities will not be listed on any securities exchange.
|
·
|
The estimated value of the securities on the pricing date is approximately $9.473 per security, or within $0.225 of that estimate. See “Summary of Pricing Supplement” beginning on PS-3.
|
·
|
The CUSIP number for the securities is 61765G135. The ISIN for the securities is US61765G1351.
|
Price to
Public
|
Agent’s
Commissions and Fees
|
Proceeds to
Issuer(3)
|
|
Per security
|
$10
|
$0.25(1)
|
|
$0.05(2)
|
$9.70
|
||
Total
|
$
|
$
|
$
|
(1)
|
Selected dealers, including Morgan Stanley Wealth Management (an affiliate of the Agent), and their financial advisors will collectively receive from the Agent, Morgan Stanley & Co. LLC, a fixed sales commission of $0.25 for each security they sell. See “Description of the Securities—Supplemental Information Concerning Plan of Distribution; Conflicts of Interest” in this pricing supplement. For additional information, see “Plan of Distribution (Conflicts of Interest)” in the accompanying prospectus supplement.
|
(2)
|
Reflects a structuring fee payable to Morgan Stanley Wealth Management by the agent or its affiliates of $0.05 for each security.
|
(3)
|
See “Description of Securities—Use of Proceeds and Hedging” beginning on PS-29.
|
Each security costs $10
|
We, Morgan Stanley, are offering the Participation Securities Based on the Value of the Morgan Stanley SmartInvest Equity Index (Price Return) due November 20, 2018, which we refer to as the securities. The stated principal amount and original issue price of each security is $10.
|
The original issue price includes costs associated with issuing, selling, structuring and hedging the securities, which are borne by you, and, consequently, the estimated value of the securities on the pricing date will be less than $10. We estimate that the value of each security on the pricing date will be approximately $9.473, or within $0.225 of that estimate. Our estimate of the value of the securities as determined on the pricing date will be set forth in the final pricing supplement.
What goes into the estimated value on the pricing date?
In valuing the securities on the pricing date, we take into account that the securities comprise both a debt component and a performance-based component linked to the index. The estimated value of the securities is determined using our own pricing and valuation models, market inputs and assumptions relating to the index, instruments based on the 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 securities?
In determining the economic terms of the securities, we use an internal funding rate which is likely to be lower than our secondary market credit spreads and therefore advantageous to us. If the issuing, selling, structuring and hedging costs borne by you were lower or if the internal funding rate were higher, one or more of the economic terms of the securities would be more favorable to you.
What is the relationship between the estimated value on the pricing date and the secondary market price of the securities?
The price at which Morgan Stanley & Co. LLC, which we refer to as MS & Co., purchases the securities in the secondary market, absent changes in market conditions, including those related to the index, may vary from, and be lower than, the estimated value on the pricing date, because the secondary market price takes into account our secondary market credit spread as well as the bid-offer spread that
|
MS & Co. would charge in a secondary market transaction of this type and other factors. However, because the costs associated with issuing, selling, structuring and hedging the securities are not fully deducted upon issuance, for a period of up to 6 months following the issue date, to the extent that MS & Co. may buy or sell the securities in the secondary market, absent changes in market conditions, including those related to the 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 securities, and, if it once chooses to make a market, may cease doing so at any time.
|
|
The securities do not guarantee the return of any principal at maturity; no interest
|
Unlike ordinary debt securities, the securities do not pay interest and do not guarantee the return of any principal at maturity. At maturity, you will receive for each $10 stated principal amount of securities that you hold an amount in cash that will vary depending on the closing value of the index on the valuation date, and this amount may be significantly less than the stated principal amount of the securities and could be zero. If the index declines as of the valuation date to below the initial index value, for every 1% decline in the index, you will lose an amount equal to 1% of the principal amount of your securities. There is no minimum payment at maturity on the securities. Accordingly, you could lose your entire initial investment in the securities.
|
Payment at maturity depends on the final index value
|
At maturity, you will receive for each $10 stated principal amount of securities that you hold an amount in cash that will vary depending upon the closing value of the index on the valuation date, determined as follows:
|
If the final index value is greater than the initial index value, you will receive for each $10 stated principal amount of securities that you hold a payment at maturity equal to:
|
|
$10 + $10 × the index percent increase
where,
|
index percent increase =
|
final index value – initial index value
|
||
initial index value
|
final index value =
|
The closing value of the index on November 15, 2018, which we refer to as the valuation date, subject to postponement for non-index business days
|
||
initial index value =
|
The closing value of the index on May 15, 2015, which we refer to as the pricing date
|
· If the final index value is less than or equal to the initial index value, you will receive for each $10 stated principal amount of securities that you hold a payment at maturity equal to:
|
|
$10 × (index performance factor)
|
where,
|
index performance factor
|
=
|
final index value
|
initial index value
|
If the final index value is less than the initial index value, the payment at maturity will be less than the stated principal amount of $10 and will represent a loss of some, and possibly all, of your investment. There is no minimum payment at maturity on the securities. Accordingly, you could lose your entire initial investment in the securities.
|
|
All payments on the securities are subject to the credit risk of Morgan Stanley.
|
|
Beginning on PS-8, in the section titled “Hypothetical Payout on the Securities at Maturity,” we have provided a graph illustrating the payout on the securities at maturity over a range of hypothetical closing values of the index on the valuation date. The examples do not show every situation that can occur.
|
|
You can review the historical values of the index in the section of this pricing supplement called “Description of the Securities—Hypothetical Retrospective and Historical Information” starting on PS-27. You cannot predict the future performance of the index based on its historical performance.
|
|
Investing in the securities is not equivalent to investing in the index or its component stocks.
|
|
The Morgan Stanley SmartInvest Equity Index (Price Return)
|
The Morgan Stanley SmartInvest Equity Index (Price Return) is a quantitative, rules-based, long-only equity index developed by Morgan Stanley. The index aims to invest, at any one time, in 40 stocks included in the S&P 500® Index that are among the more concentrated reported positions held by hedge funds, based on analyzing their publicly available stock selections, as disclosed by the hedge funds on their filed Forms 13F. The index is calculated, published and rebalanced by Standard & Poor’s Financial Services LLC as index publisher and index calculation agent. The index is not a replication of, nor an alternative to, hedge funds. The index is not a hedge fund and not linked to any hedge fund or group of hedge funds.
Section 13(f) of the Securities Exchange Act of 1934 requires certain institutional investment managers to report their holdings of certain exchange-traded securities to the Securities and Exchange Commission on Form 13F. Form 13F requires disclosure of, among other things, issuer names; description of the class of security (e.g. common stock, put/call option, class A shares, debt); number of securities owned; and fair market value of securities managed. Filers do not disclose any short positions or the rationale for the investment on Form 13F.
The inception date for the index was March 5, 2007. Any performance data prior to the inception date for the index has been calculated retrospectively, based on simulated historical performance. Back-testing and other statistical analyses provided herein use simulated analysis and hypothetical circumstances to estimate how the index may have performed between March 5, 2002 and March 5, 2007, prior to its actual existence. See “Risk Factors—The securities are linked to the Morgan Stanley SmartInvest Equity Index (Price Return) and are subject to risks associated with the index—Index performance data – retrospective index calculation” and “Hypothetical Retrospective and Historical Information.”
|
Please see “The Index” below for more information about the index. Any investment linked to the index involves risks, please see the risks relating to the index described under “The securities are linked to the Morgan Stanley SmartInvest Equity Index (Price Return) and are subject to risks associated with the index” below.
|
|
Morgan Stanley & Co. LLC will be the calculation agent
|
We have appointed our affiliate, Morgan Stanley & Co. LLC, which we refer to as MS & Co., to act as calculation agent for The Bank of New York Mellon, a New York banking corporation, the trustee for senior notes. As calculation agent, MS & Co. will determine the initial index value, the final index value, the index percent increase or the index performance factor, as applicable, and the payment that you will receive at maturity, if any.
|
Morgan Stanley & Co. LLC will be the Agent; conflicts of interest
|
The Agent for the offering of the securities, MS & Co., our wholly-owned subsidiary, 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 “Description of the Securities—Supplemental Information Concerning Plan of Distribution; Conflicts of Interest” starting on PS-29.
|
You may revoke your offer to purchase the securities prior to our acceptance
|
We are using this pricing supplement to solicit from you an offer to purchase the securities. You may revoke your offer to purchase the securities at any time prior to the time at which we accept such offer by notifying the relevant agent. We reserve the right to change the terms of, or reject any offer to purchase, the securities prior to their issuance. In the event of any material changes to the terms of the securities, we will notify you.
|
Where you can find more information on the securities
|
The securities are unsecured debt securities issued as part of our Series F medium-term note program. You can find a general description of our Series F medium-term note program in the accompanying prospectus supplement dated November 19, 2014 and the prospectus dated November 19, 2014. We describe the basic features of this type of debt security in the sections of the prospectus supplement called “Description of Notes—Notes Linked to Commodity Prices, Single Securities, Baskets of Securities or Indices” and in the section of the prospectus called “Description of Debt Securities—Fixed Rate Debt Securities.”
|
Because this is a summary, it does not contain all of the information that may be important to you. For a detailed description of the terms of the securities, you should read the “Description of the Securities” section in this pricing supplement. You should also read about some of the risks involved in investing in the securities in the section called “Risk Factors.” The tax and accounting treatment of investments in equity-linked securities such as these may differ from that of investments in ordinary debt securities or common stock. See the section of this pricing supplement called “Description of the Securities—United States Federal Taxation.” We urge you to consult with your investment, legal, tax, accounting and other advisers with regard to any proposed or actual investment in the securities.
|
|
How to reach us
|
Morgan Stanley Wealth Management clients may contact their local Morgan Stanley branch office or our principal executive offices at 1585 Broadway, New York, New
|
York 10036 (telephone number (866) 477-4776). All other clients may contact their local brokerage representative. Third-party distributors may contact Morgan Stanley Structured Investment Sales at (800) 233-1087.
|
Stated principal amount:
|
$10 per security
|
|
·
|
Upside Scenario. If the final index value is greater than the initial index value, investors will receive at maturity the $10 stated principal amount plus 100% of the appreciation of the index over the term of the securities.
|
|
·
|
Par Scenario. If the final index value is equal to the initial index value, investors will receive the stated principal amount of $10 per security.
|
|
·
|
Downside Scenario. If the final index value is less than the initial index value, investors will receive an amount that is less than the stated principal amount by an amount that is proportionate to the full percentage decrease of the index from the initial index value to the final index value. There is no minimum payment at maturity on the securities. Accordingly, you could lose your entire initial investment in the securities.
|
|
o
|
For example, if the index depreciates 40%, investors would lose 40% of their principal and receive only $6 per security at maturity, or 60% of the stated principal amount.
|
The securities do not pay interest or guarantee any return of principal
|
The terms of the securities differ from those of ordinary debt securities in that we will not pay you any interest and do not guarantee to pay you any of the principal amount of the securities at maturity. At maturity, you will receive for each $10 stated principal amount of securities that you hold an amount in cash based upon the closing value of the index on the valuation date. If the final index value is less than the initial index value, you will receive an amount in cash that is less than the stated principal amount of each security, and this decrease will be by an amount that is proportionate to the full percentage decrease of the index from the initial index value to the final index value. There is no minimum payment at maturity. Accordingly, you could lose your entire investment in the securities. See “Hypothetical Payout on the Securities at Maturity” on PS-8.
|
The market price of the securities will be influenced by many unpredictable factors
|
Several factors, many of which are beyond our control, will influence the value of the securities in the secondary market and the price at which MS & Co. may be willing to purchase or sell the securities in the secondary market, including:
|
· the value of the index at any time,
|
|
· the volatility (frequency and magnitude of changes in value) of the index,
|
|
· dividend rates on the securities underlying the index,
|
|
· interest and yield rates in the market,
|
|
· geopolitical conditions and economic, financial, political, regulatory or judicial events that affect the securities markets generally or the component stocks of the index and which may affect the value of the index,
|
|
· the time remaining until the maturity of the securities,
|
|
· the composition of the index and changes in the constituent stocks of the index, and
|
|
· any actual or anticipated changes in our credit ratings or credit spreads.
|
|
Some or all of these factors will influence the price you will receive if you sell your securities prior to maturity. For example, you may have to sell your securities at a substantial discount from the stated principal amount if at the time of sale the value of the index is near or below the initial index value.
|
|
You cannot predict the future performance of the index based on its historical performance. There can be no assurance that you will not suffer a loss on your initial investment in the securities.
|
|
The securities are linked to the Morgan Stanley SmartInvest Equity Index (Price Return) and are subject to risks associated
|
The index is not a hedge fund and not the same as investing in a hedge fund or a group of hedge funds: Hedge fund investors and corporate buyers are numerous and they use extremely varied approaches to investing. The index does not track hedge funds and does not constitute a hedge fund replication strategy. The SmartInvest Screens rank and identify securities in the S&P 500® Index that are, or have been, held by hedge funds in concentrated reported positions for inclusion in the index.
|
with the index
|
However, the SmartInvest Screens do not attempt to, and cannot in any way, replicate investing in any hedge fund or group of hedge funds. As a consequence, investing in the index and the returns you might obtain, are not at all equivalent to an investment in a hedge fund or similar fund. Morgan Stanley may advise hedge funds on strategies and metrics that are not used to determine the index. Even if Morgan Stanley determines that hedge funds using other strategies or metrics are successful, it will not revise the index methodology.
The index uses information disclosed on certain Forms 13F filed by hedge fund managers, which are filed only quarterly. Hedge fund managers are not required to disclose all of their holdings of securities on such form and are not required to state the rationale for the investment. The index seeks to invest in stocks based on the publicly available filings on Form 13F by hedge fund managers. Filers of Form 13F are not required to disclose all of their holdings of securities on such form and are not required to state the rationale for the investment. For example, filers need only disclose certain securities, sometimes referred to as “Section 13(f) securities,” a list of which is published by the SEC. In addition, filers do not disclose any short positions on Form 13F, nor are such positions subtracted from long positions in the same security. As a result, the holdings of securities disclosed on any hedge fund manager’s Form 13F will likely not reflect the actual holdings of securities by that hedge fund manager or the reasoning for the holdings reported. Consequently, the strategy does not take into account all of the positions that might be held by hedge fund managers. In addition, filers do not disclose the rationale for any investment, and so reported investments could be part of a broader strategy and may not reflect a judgment on the intrinsic value of investing in the reported security.
Forms 13F are required to be filed within 45 days of the end of each calendar quarter. As a result, the index uses information reported quarterly on a 45 day trailing basis and may acquire or track a stock that hedge fund managers are no longer holding.
Only institutional investment managers that exercise investment discretion over $100 million or more in Section 13(f) securities must file Form 13F. The index will not take into account any stock selections of any investment manager that does not satisfy this criteria and is therefore not required to file Form 13F.
The index is a proprietary and rules-based index that may not yield future positive performance: The Morgan Stanley SmartInvest Index is quantitative and rules-based and may not yield future positive performance. It follows a rules-based proprietary strategy that operates on the basis of pre-determined rules. There can be no assurances that the methodology will yield positive performance in future economic conditions and past performance of the index (actual or simulated) is not an indication of future performance. The index uses a pre-defined stock selection process that differs from an actively managed strategy in that the component stocks will change only if required by the selection criteria and only at each quarterly rebalancing. The index methodology is fixed and will not change over time even if the index underperforms the benchmark indices. Accordingly, the index is not actively managed by Morgan Stanley or its affiliates and will not adjust to changing business, financial, geopolitical or other conditions.
No guarantee of positive performance; the index invests in only 40 stocks at any one time and is therefore exposed to more concentrated market risks of a smaller number of underlying companies as compared to the S&P 500® Index: There is no guarantee that the index will have positive performance or will outperform benchmark indices. In addition, an investment linked to the index, such as the securities, will not be the same as an investment in the constituents of that index.
|
Past performance (actual or simulated) is not indicative of future performance. There are only 40 stocks in the index at any one time and any sector diversification does not eliminate the exposure to the downside risk of each individual asset. Prospective investors should be aware that the index performance is not only related to the composition of assets, but also related to the application of the strategy and rules that determine the selection of certain underlying securities from time to time. The parameters deployed by the rules influence index performance. Prospective investors should note that certain specifications of the index including, but not limited to, underlying security selection criteria and rebalancing window are pre-determined parameters.
As the “Pre-filter Universe” is determined by reference to the stocks in the “Eligible Universe” held by the least number of hedge funds, the index aims to invest in stocks that are among the more concentrated reported positions held by hedge funds and does not aim to track stocks held by large numbers of hedge funds.
In addition, the index invests in only 40 stocks at any one time. As a result of investing in a smaller number of stocks compared to benchmark indices such as the S&P 500® Index, the index has historically often been more volatile than benchmark indices. It has also tended to have larger maximum yearly drawdowns than the S&P 500® Index.
Moreover, as the index invests in fewer companies than are tracked by the S&P 500® Index, the index is exposed to more concentrated market risks of a smaller number of underlying companies as compared to the S&P 500® Index.
Index performance data – retrospective index calculation: The index has been retrospectively calculated by the index calculation agent on a hypothetical basis for the period from March 5, 2002 to March 5, 2007, using the same methodology as described herein. The retrospective calculation of the index is purely hypothetical and may not be an accurate or meaningful comparison. The actual performance of the index may vary significantly from the results obtained from back-testing. Unlike an actual performance record, simulated results are achieved by means of the retroactive application of a back-tested model itself designed with the benefit of hindsight and knowledge of factors that may have possibly affected its performance. All prospective investors should be aware that a retrospective calculation means that no actual investment which allowed a tracking of the performance of the index existed at any time during the period of the retrospective calculation and that as a result the comparison is purely hypothetical. The methodology and the strategy used for the calculation and retrospective calculation of the index have been developed with the advantage of hindsight. In reality, it is not possible to invest with the advantage of hindsight and therefore this performance comparison is purely theoretical. In addition, results obtained from back-testing include hypothetical results that do not reflect the reinvestment of dividends and other earnings or the deduction of any expenses that an investor in any product, the return of which is linked to the performance of the index, would have paid or actually paid and do not account for all financial risks that may affect the actual performance of any such investment.
Lack of diversification: The index is derived from a subset of stocks based on the index’s filters and the subset at times may be focused exclusively on one geographic region or may be more concentrated in specific industry sectors or categories. The index typically includes fewer stocks than benchmark equity indices and has no geographical or sector concentration limits. As a result, the index is likely to be less diversified than comparable benchmark indices.
|
Changes to Form 13F requirements may result in the index sponsor ceasing publication of the index: It is possible that the requirements related to the filing of Forms 13F (such as the required content or timing for filing) may change in the future, or the requirement to make such filings could be abolished completely. In this case, the index sponsor will cease publication of the index.
|
|
If the index is discontinued and no successor index is available, Morgan Stanley will accelerate the securities
|
If Morgan Stanley & Co. International plc (“MSIP”), as the index sponsor, instructs the index publisher to discontinue publication of the index, or if publication of the index is otherwise discontinued, and the calculation agent determines in its sole discretion that no successor index is available, the securities will be accelerated. The amount due upon such acceleration (the “index discontinuance acceleration amount”) will be determined by the calculation agent on the date of such acceleration, in good faith and in a commercially reasonable manner, and will equal its estimate of the value of the securities, if any, determined by reference to the calculation agent’s pricing models, inputs, assumptions about future market conditions including, without limitation, the volatility of the index and its components and current and expected interest rates. See “Description of the Securities—Discontinuance of the Index” below.
|
No obligation to make adjustments to the index based on Morgan Stanley research reports
|
Morgan Stanley may also issue research reports on securities that are, or may become, constituents of the index. These reports are entirely independent of the calculation agent’s obligations hereunder. Morgan Stanley will not make any adjustments to the index to reflect any change in outlook by Morgan Stanley research reports.
|
The securities are subject to the credit risk of Morgan Stanley, and any actual or anticipated changes to its credit ratings or credit spreads may adversely affect the market value of the securities
|
You are dependent on Morgan Stanley’s ability to pay all amounts due on the securities at maturity and therefore you are subject to the credit risk of Morgan Stanley. If Morgan Stanley defaults on its obligations under the securities, your investment would be at risk and you could lose some or all of your investment. As a result, the market value of the securities prior to maturity will be affected by changes in the market’s view of Morgan Stanley’s creditworthiness. Any actual or anticipated decline in Morgan Stanley’s credit ratings or increase in the credit spreads charged by the market for taking Morgan Stanley credit risk is likely to adversely affect the market value of the securities.
|
The amount payable on the securities is not linked to the value of the index at any time other than the valuation date
|
The final index value will be the index closing value on the valuation date, subject to adjustment for non-index business days. Even if the value of the index appreciates prior to the valuation date but then drops by the valuation date to below the initial index value, the payment at maturity will be less, and may be significantly less, than it would have been had the payment at maturity been linked to the value of the index prior to such drop. Although the actual value of the index on the stated maturity date or at other times during the term of the securities may be higher than the final index value, the payment at maturity will be based solely on the index closing value on the valuation date.
|
The securities will not be listed on any securities exchange and secondary trading may be limited
|
The securities will not be listed on any securities exchange. Therefore, there may be little or no secondary market for the securities. MS & Co. may, but is not obligated to, make a market in the securities and, if it once chooses to make a market, may cease doing so at any time. When it does make a market, it will generally do so for transactions of routine secondary market size at prices based on its estimate of the current value of the securities, taking into account its bid/offer spread, our credit spreads, market volatility, the notional size of the proposed sale, the cost of unwinding any related hedging positions, the time remaining to maturity and the likelihood that it will be able to resell the securities. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the securities easily. Since other broker-dealers may not participate significantly in the
|
secondary market for the securities, the price at which you may be able to trade your securities is likely to depend on the price, if any, at which MS & Co. is willing to transact. If, at any time, MS & Co. were to cease making a market in the securities, it is likely that there would be no secondary market for the securities. Accordingly, you should be willing to hold your securities to maturity.
|
|
The rate we are willing to pay for securities of this type, maturity and issuance size is likely to be lower than the rate implied by our secondary market credit spreads and advantageous to us. Both the lower rate and the inclusion of costs associated with issuing, selling, structuring and hedging the securities in the original issue price reduce the economic terms of the securities, cause the estimated value of the securities to be less than the original issue price and will adversely affect secondary market prices
|
Assuming no change in market conditions or any other relevant factors, the prices, if any, at which dealers, including MS & Co., may be willing to purchase the securities in secondary market transactions will likely be significantly lower than the original issue price, because secondary market prices will exclude the issuing, selling, structuring and hedging-related costs that are included in the original issue price and borne by you and because the secondary market prices will reflect our secondary market credit spreads and the bid-offer spread that any dealer would charge in a secondary market transaction of this type as well as other factors.
The inclusion of the costs of issuing, selling, structuring and hedging the securities in the original issue price and the lower rate we are willing to pay as issuer make the economic terms of the securities less favorable to you than they otherwise would be.
However, because the costs associated with issuing, selling, structuring and hedging the securities are not fully deducted upon issuance, for a period of up to 6 months following the issue date, to the extent that MS & Co. may buy or sell the securities in the secondary market, absent changes in market conditions, including those related to the 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 securities is determined by reference to our pricing and valuation models, which may differ from those of other dealers and is not a maximum or minimum secondary market price
|
These pricing and valuation models are proprietary and rely in part on subjective views of certain market inputs and certain assumptions about future events, which may prove to be incorrect. As a result, because there is no market-standard way to value these types of securities, our models may yield a higher estimated value of the securities than those generated by others, including other dealers in the market, if they attempted to value the securities. In addition, the estimated value on the pricing date does not represent a minimum or maximum price at which dealers, including MS & Co., would be willing to purchase your notes in the secondary market (if any exists) at any time. The value of your securities at any time after the date of this pricing supplement will vary based on many factors that cannot be predicted with accuracy, including our creditworthiness and changes in market conditions. See also “The market price of the securities will be influenced by many unpredictable factors” above.
|
Investing in the securities is not equivalent to investing in the index or in any hedge fund or group of hedge funds
|
Investing in the securities is not equivalent to investing in the index or its component stocks. Investors in the securities will not have voting rights or rights to receive dividends or other distributions or any other rights with respect to stocks that constitute the index. The index is not a replication of, nor an alternative to, hedge funds. The index is not a hedge fund and not linked to any hedge fund or group of hedge funds.
|
Adjustments to the index could adversely affect the value of the securities
|
Standard & Poor’s Financial Services LLC is responsible for calculating and maintaining the index. MSIP, as index sponsor, can add, delete or substitute the stocks underlying the index, and can make other methodological changes required by certain events relating to the underlying stocks, such as stock dividends, stock splits, spin-offs, rights offerings and extraordinary dividends, that could change the value of the index. In addition, the index sponsor has the right to determine that a change
|
to the rules is required or desirable, and may revise or withdraw the rules at any time if it has a valid reason for doing so. The right to change the rules includes, but is not limited to, the following: in order to optimize the index methodology in accordance with the objectives of the index, to address an error, ambiguity or omission, to take into account any prevailing regulatory or judicial requirements or developments, to reflect any new industry guidance or to proportionately reflect other legitimate cost increases or reductions associated with providing the index. Any of these actions could adversely affect the value of the securities.
The index sponsor shall have the right to instruct the index publisher to cease compiling, calculating and publishing values of the index, if, at any time, the index sponsor determines that the index no longer meets or will not be capable of meeting the criteria established by the index sponsor or otherwise determines that the index shall no longer be calculated. In these circumstances, MS & Co., as the calculation agent of the securities, will have the sole discretion to substitute a successor index that is comparable to the discontinued index. MS & Co. could have an economic interest that is different than that of investors in the securities insofar as, for example, MS & Co. is permitted to consider indices that are calculated and published by MS & Co. or any of its affiliates. If MS & Co. determines that there is no appropriate successor index, the securities will be accelerated. See “If the index is discontinued and no successor index is available, Morgan Stanley will accelerate the securities” above.
|
|
MS & Co. and MSIP, subsidiaries of the issuer, are the calculation agent and index sponsor, respectively, and will make determinations with respect to the securities
|
As calculation agent, MS & Co. will determine the initial index value, the final index value, the index percent increase or the index performance factor, as applicable, and the payment that you will 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 the selection of a successor index or the calculation of the index discontinuance acceleration amount in the event of a discontinuance of the 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 the Securities—Calculation Agent,” “—Alternate Exchange Calculation in Case of an Event of Default,” “—Discontinuance of the Index” and related definitions. In addition, MS & Co. has determined the estimated value of the securities on the pricing date.
MSIP, as index sponsor, retains the final discretion as to the manner in which the index is calculated and constructed. The index sponsor may change the methodology of the index or instruct the index publisher to discontinue the publication of the index without prior notice and such changes or discontinuance may affect the value of the index.
See “Description of the Securities—Discontinuance of the Index” below.
|
Hedging and trading activity by our subsidiaries could potentially adversely affect the value of the securities
|
One or more of our subsidiaries and/or third-party dealers expect to carry out hedging activities related to the securities (and to other instruments linked to the index or its component stocks), including trading in the stocks that constitute the index as well as in other instruments related to the index. Some of our subsidiaries also trade the stocks that constitute the index and other financial instruments related to the index on a regular basis as part of their general broker-dealer and other businesses. Any of these hedging or trading activities on or prior to the pricing date could potentially increase the initial index value, and, therefore, the value at or above which the index must close on the valuation date so that you do not suffer a loss on your initial investment in the securities. Additionally, such hedging or trading
|
activities during the term of the securities, including on the valuation date, could adversely affect the value of the index on the valuation date, and, accordingly, the amount of cash an investor will receive at maturity, if any.
|
|
The U.S. federal income tax consequences of an investment in the securities are uncertain
|
Please note that the discussions in this pricing supplement concerning the U.S. federal income tax consequences of an investment in the securities supersede the discussions contained in the accompanying prospectus supplement.
Subject to the discussion under “United States Federal Taxation” in this pricing supplement, although there is uncertainty regarding the U.S. federal income tax consequences of an investment in the securities due to the lack of governing authority, in the opinion of our counsel, Davis Polk & Wardwell LLP (“our counsel”), under current law, and based on current market conditions, each security should be treated as a single financial contract that is an “open transaction” for U.S. federal income tax purposes. If the Internal Revenue Service (the “IRS”) were successful in asserting an alternative treatment for the securities, the timing and character of income on the securities might differ significantly from the tax treatment described herein. For example, under one possible treatment, the IRS could seek to recharacterize the securities as debt instruments. In that event, U.S. Holders would be required to accrue into income original issue discount on the securities every year at a “comparable yield” determined at the time of issuance and recognize all income and gain in respect of the securities as ordinary income. We do not plan to request a ruling from the IRS regarding the tax treatment of the securities, and the IRS or a court may not agree with the tax treatment described herein.
Even if the tax treatment of the securities described above were respected, it is possible that the IRS could assert that a “deemed” taxable exchange has occurred in the event of a change in the methodology by which the index is calculated, a change in the components of the index or any other circumstance resulting in a material change to the index. If the IRS were successful in asserting that a taxable exchange has occurred, a U.S. Holder could be required to recognize gain or loss (subject to the possible application of the wash sale rules) with respect to the securities.
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 issued after consideration of these issues could materially and adversely affect the tax consequences of an investment in the securities, possibly with retroactive effect.
Both U.S. and Non-U.S. Holders should read carefully the discussion under “United States Federal Taxation” in this pricing supplement and consult their tax advisers regarding all aspects of the U.S. federal tax consequences of an investment in the securities, 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.
|
Aggregate Principal Amount
|
$
|
Pricing Date
|
May 15, 2015
|
Original Issue Date (Settlement Date)
|
May 20, 2015 (3 Business Days after the Pricing Date)
|
Maturity Date
|
November 20, 2018, subject to extension as described in the following paragraph.
|
Issue Price
|
100% ($10 per Security)
|
Stated Principal Amount
|
$10 per Security
|
Denominations
|
$10 and integral multiples thereof
|
CUSIP Number
|
61765G135
|
ISIN
|
US61765G1351
|
Interest Rate
|
None
|
Specified Currency
|
U.S. dollars
|
Payment at Maturity
|
At maturity, upon delivery of the Securities to the Trustee, we will pay with respect to the $10 Stated Principal Amount of each Security an amount in cash, as determined by the Calculation Agent, equal to:
|
Index Percent Increase
|
A fraction, as determined by the Calculation Agent, the numerator of which is the Final Index Value minus the Initial Index Value and the denominator of which is the Initial Index Value, as described by the following formula:
|
Index Percent Increase
|
=
|
Final Index Value – Initial Index Value
|
Initial Index Value
|
Index Performance Factor
|
A fraction, as determined by the Calculation Agent, the numerator of which is the Final Index Value and the denominator of which is the Initial Index Value, as described by the following formula:
|
Index Performance Factor
|
=
|
Final Index Value
|
Initial Index Value
|
Initial Index Value
|
, which is the Index Closing Value on the Pricing Date.
|
Final Index Value
|
The Index Closing Value on the Valuation Date, as determined by the Calculation Agent.
|
Index Closing Value
|
The Index Closing Value on any Index Business Day will be determined by the Calculation Agent and will equal the official closing value of the Index, or any Successor Index (as defined under “—Discontinuance of the Index” below), published at the regular official weekday close of trading on that Index Business Day by the Index Publisher. In certain circumstances, the Index Closing Value will be based on the alternate calculation of the Index described under “—Discontinuance of the Index.”
|
Index Publisher
|
Standard & Poor’s Financial Services LLC or any successor thereto
|
Index Sponsor
|
Morgan Stanley & Co. International plc
|
Valuation Date
|
November 15, 2018, subject to postponement for non-Index Business Days as described in the following paragraph.
|
Business Day
|
Any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in The City of New York.
|
Index Business Day
|
A day, as determined by the Calculation Agent, on which (i) trading is generally conducted on each of the Relevant Exchange(s) for the Index, other than a day on which trading on such exchange(s) is scheduled to close prior to the time of the posting of its regular final weekday closing price and (ii) the Index Closing Value is published by the Index Publisher.
|
Relevant Exchange
|
The primary exchange(s) or market(s) of trading for (i) any security then included in the Index, or any Successor Index, and (ii) any futures or options contracts related to the Index or to any security then included in the Index.
|
Certificated Security
|
Book Entry. The Securities will be issued in the form of one or more fully registered global securities which will be deposited with, or on behalf of, DTC and will be registered in the name of a nominee of DTC. DTC’s nominee will be the only registered holder of the Securities. Your beneficial interest in the Securities will be evidenced solely by entries on the books of the Securities intermediary acting on your behalf as a direct or indirect participant in DTC. In this pricing supplement, all references to actions taken by “you” or to be taken by “you” refer to actions taken or to be taken by DTC and its participants acting on your behalf, and all references to payments or notices to you will mean payments or notices to DTC, as the registered holder of the Securities, for distribution to participants in accordance with DTC’s procedures. For more information regarding DTC and book-entry securities, please read “Forms of Securities—The Depositary” and “Forms of Securities—Global Securities—Registered Global Securities” in the accompanying prospectus.
|
Senior Security or Subordinated Security
|
Senior
|
Trustee
|
The Bank of New York Mellon, a New York banking corporation
|
Agent
|
Morgan Stanley & Co. LLC (“MS & Co.”)
|
Calculation Agent
|
MS & Co. and its successors
|
in Case of an Event of Default
|
If an Event of Default with respect to the Securities shall have occurred and be continuing, the amount declared due and payable upon any acceleration of the Securities (the “Acceleration Amount”) will be an amount, determined by the Calculation Agent in its sole discretion, that is equal to the cost of having a Qualified Financial Institution, of the kind and selected as described below, expressly assume all our payment and other obligations with respect to the Securities as of that day and as if no default or acceleration had occurred, or to undertake other obligations providing substantially equivalent economic value to you with respect to the Securities. That cost will equal:
|
|
•
|
the lowest amount that a Qualified Financial Institution would charge to effect this assumption or undertaking, plus
|
|
•
|
the reasonable expenses, including reasonable attorneys’ fees, incurred by the holders of the Securities in preparing any documentation necessary for this assumption or undertaking.
|
|
•
|
no quotation of the kind referred to above is obtained, or
|
|
•
|
every quotation of that kind obtained is objected to within five Business Days after the due date as described above.
|
|
•
|
A-2 or higher by Standard & Poor’s Ratings Services or any successor, or any other comparable rating then used by that rating agency, or
|
|
•
|
P-2 or higher by Moody’s Investors Service or any successor, or any other comparable rating then used by that rating agency.
|
The Index
|
The Morgan Stanley SmartInvest Equity Index (Price Return) (the “Index”) is a quantitative, rules-based, long-only equity index developed by Morgan Stanley. The Index aims to invest, at any one time, in 40 stocks included in the S&P 500® Index that are among the more concentrated reported positions held by hedge funds, based on analyzing their publicly available stock selections, as disclosed by the hedge funds on their filed Forms 13F. The Index is calculated, published and rebalanced by Standard & Poor’s Financial Services LLC as index publisher and index calculation agent. The inception date for the Index was March 5, 2007. The Index is not a replication of, nor an alternative to, hedge funds. The Index is not a hedge fund and not linked to any hedge fund or group of hedge funds.
|
|
·
|
The security must be a constituent of the S&P 500® Index.
|
|
·
|
Ownership information for the security must be available through Form 13F filings.
|
|
·
|
The issuer of the security must have a market capitalization that exceeds $2 billion times (the closing level of the S&P 500® Index on the prior Trading Day divided by its closing level on December 29, 2006). This adjusts $2 billion for then-current market size as compared to 2006.
|
|
·
|
the number of hedge funds that own the security. Ownership by a smaller number of hedge funds is ranked higher than ownership by a larger number of hedge funds; and
|
|
·
|
the number of filers of Form 13F that have entirely sold down their position in the security between such filers’ prior Form 13F filings and the latest available Form 13F filings for such filers.
|
and Historical Information
|
The following table sets forth the published high and low Index Closing Values, as well as end-of-quarter Index Closing Values, of the Index for each quarter in the period from January 1, 2010 through May 4, 2015. The Index Closing Value on May 4, 2015 was 5,283.92. The graph following the table sets forth the historical performance of the Index for the period from January 1, 2010 through May 4, 2015. We obtained the information in the table below from Bloomberg Financial Markets, without independent verification.
|
Morgan Stanley SmartInvest Equity Index (Price Return)
|
High
|
Low
|
Period End
|
2010
|
|||
First Quarter
|
2,318.83
|
2,023.85
|
2,303.38
|
Second Quarter
|
2,443.64
|
2,056.17
|
2,056.17
|
Third Quarter
|
2,369.79
|
2,034.07
|
2,359.77
|
Fourth Quarter
|
2,698.18
|
2,349.28
|
2,685.67
|
2011
|
|||
First Quarter
|
2,896.18
|
2,658.44
|
2,878.94
|
Second Quarter
|
2,971.17
|
2,732.64
|
2,902.07
|
Third Quarter
|
2,962.60
|
2,358.16
|
2,466.04
|
Fourth Quarter
|
2,917.63
|
2,384.19
|
2,861.58
|
2012
|
|||
First Quarter
|
3,321.73
|
2,897.54
|
3,278.87
|
Second Quarter
|
3,306.75
|
2,957.70
|
3,137.07
|
Third Quarter
|
3,327.09
|
2,992.98
|
3,277.11
|
Fourth Quarter
|
3,504.00
|
3,234.95
|
3,464.99
|
2013
|
|||
First Quarter
|
3,884.97
|
3,542.50
|
3,884.97
|
Second Quarter
|
4,134.73
|
3,769.20
|
4,030.21
|
Third Quarter
|
4,409.26
|
4,037.05
|
4,313.88
|
Fourth Quarter
|
4,666.21
|
4,247.76
|
4,666.21
|
2014
|
|||
First Quarter
|
5,020.22
|
4,487.45
|
4,971.18
|
Second Quarter
|
5,184.43
|
4,758.03
|
5,184.43
|
Third Quarter
|
5,225.34
|
4,905.22
|
5,056.82
|
Fourth Quarter
|
5,274.34
|
4,639.08
|
5,132.58
|
2015
|
|||
First Quarter
|
5,350.66
|
4,909.61
|
5,308.67
|
Second Quarter (through May 4, 2015)
|
5,314.72
|
5,196.94
|
5,283.92
|
Historical Performance of the Morgan Stanley SmartInvest Equity Index (Price Return)
Daily Closing Values
January 1, 2010 through May 4, 2015
|
Index Returns1
|
|||||||||||||||
Annualized 3/5/2002–5/4/2015
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
|
Returns
|
13.5%
|
-11.1%
|
49.3%
|
28.5%
|
20.4%
|
16.5%
|
-1.3%
|
-38.3%
|
46.9%
|
25.4%
|
6.5%
|
21.1%
|
34.7%
|
10.0%
|
2.9%
|
1 Data range from March 5, 2002 to May 4, 2015. SmartInvest Index simulated return data from March 5, 2002 to March 5, 2007, actual returns thereafter.
|
Use of Proceeds and Hedging
|
The proceeds we receive from the sale of the Securities will be used for general corporate purposes. We will receive, in aggregate, $10 per Security issued, because, when we enter into hedging transactions in order to meet our obligations under the Securities, our hedging counterparty will reimburse the cost of the Agent’s commissions. The costs of the Securities borne by you and described beginning on PS-3 above comprise the Agent’s commissions and the cost of issuing, structuring and hedging the Securities. See also “Use of Proceeds” in the accompanying prospectus.
|
Plan of Distribution; Conflicts of Interest
|
Under the terms and subject to the conditions contained in the U.S. distribution agreement referred to in the prospectus supplement under “Plan of Distribution (Conflicts of Interest),” the Agent, acting as principal for its own account, has agreed to
|
Benefit Plan Investor Considerations
|
Each fiduciary of a pension, profit-sharing or other employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which we refer to as a “plan,” should consider the fiduciary standards of ERISA in the context of the plan’s particular circumstances before authorizing an investment in these securities. Accordingly, among other factors, the fiduciary should consider whether the investment would satisfy the prudence and diversification requirements of ERISA and would be consistent with the documents and instruments governing the plan.
|
United States Federal Taxation
|
Prospective investors should note that the discussion under the section called “United States Federal Taxation” in the accompanying prospectus supplement does not apply to the Securities issued under this pricing supplement and is superseded by the following discussion.
|
|
·
|
purchase the Securities at their “issue price,” which will equal the first price at which a substantial amount of the Securities is sold to the public (not including bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers); and
|
|
·
|
hold the Securities as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”).
|
|
·
|
certain financial institutions;
|
|
·
|
insurance companies;
|
|
·
|
certain dealers and traders in securities or commodities;
|
|
·
|
investors holding the Securities as part of a “straddle,” wash sale, conversion transaction, integrated transaction or constructive sale transaction;
|
|
·
|
U.S. Holders (as defined below) whose functional currency is not the U.S. dollar;
|
|
·
|
partnerships or other entities classified as partnerships for U.S. federal income tax purposes;
|
|
·
|
regulated investment companies;
|
|
·
|
real estate investment trusts;
|
|
·
|
tax-exempt entities, including “individual retirement accounts” or “Roth IRAs” as defined in Section 408 or 408A of the Code, respectively; or
|
|
·
|
persons subject to the alternative minimum tax.
|
|
·
|
a citizen or individual resident of the United States;
|
|
·
|
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia; or
|
|
·
|
an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
|
|
·
|
an individual who is classified as a nonresident alien;
|
|
·
|
a foreign corporation; or
|
|
·
|
a foreign estate or trust.
|
|
·
|
a holder who is an individual present in the United States for 183 days or more in the taxable year of disposition and who is not otherwise a resident of the United States for U.S. federal income tax purposes;
|
|
·
|
certain former citizens or residents of the United States; or
|
|
·
|
a holder for whom income or gain in respect of the Securities is effectively connected with the conduct of a trade or business in the United States.
|
|
·
|
the Non-U.S. Holder does not own, directly or by attribution, ten percent or more of the total combined voting power of all classes of our stock entitled to vote;
|
|
·
|
the Non-U.S. Holder is not a controlled foreign corporation related, directly or indirectly, to us through stock ownership;
|
|
·
|
the Non-U.S. Holder is not a bank receiving interest under Section 881(c)(3)(A) of the Code, and
|
|
·
|
the certification requirement described below has been satisfied with respect to the beneficial owner.
|
1 Year Morgan Stanley Chart |
1 Month Morgan Stanley Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions