Contingent Income Auto-Callable Securities due February 13, 2025, with 3-Month Initial Non-Call Period
All Payments on the Securities Based on the Worst Performing of the Energy Select Sector SPDR® Fund, the Industrial Select Sector SPDR® Fund and the Consumer Staples Select Sector SPDR® Fund
Fully and Unconditionally Guaranteed by Morgan Stanley
Principal at Risk Securities
The securities offered are unsecured obligations of Morgan Stanley Finance LLC (“MSFL”) and are fully and unconditionally guaranteed by Morgan Stanley. The securities have the terms described in the accompanying product supplement, index supplement and prospectus, as supplemented or modified by this document. The securities do not guarantee the repayment of principal and do not provide for the regular payment of interest. Instead, the securities will pay a contingent monthly coupon but only if the determination closing price of each of the Energy Select Sector SPDR® Fund, the Industrial Select Sector SPDR® Fund and the Consumer Staples Select Sector SPDR® Fund, which we refer to as the underlying shares, is at or above 70% of its respective initial share price, which we refer to as the downside threshold level, on the related observation date. If, however, the determination closing price of any of the underlying shares is less than its respective downside threshold level on any observation date, we will pay no interest for the related monthly period. In addition, the securities will be automatically redeemed if the determination closing price of each of the underlying shares is greater than or equal to 100% of its respective initial share price, which we refer to as the respective call threshold level, on any monthly redemption determination date (beginning approximately three months after the original issue date) for the early redemption payment equal to the sum of the stated principal amount plus the related contingent monthly coupon. No further payments will be made on the securities once they have been redeemed. At maturity, if the securities have not previously been redeemed and the final share price of each of the underlying shares is greater than or equal to its respective downside threshold level, the payment at maturity will be the sum of the stated principal amount and the related contingent monthly coupon. However, if the final share price of any of the underlying shares is less than its respective downside threshold level, investors will be exposed to the decline in the worst performing underlying shares on a 1-to-1 basis, and will receive a payment at maturity that is less than 70% of the stated principal amount of the securities and could be zero. Accordingly, investors in the securities must be willing to accept the risk of losing their entire initial investment and also the risk of not receiving any contingent monthly coupons throughout the 2-year term of the securities. The securities are for investors who are willing to risk their principal and seek an opportunity to earn interest at a potentially above-market rate in exchange for the risk of receiving no monthly interest over the entire 2-year term and in exchange for the possibility of an automatic early redemption prior to maturity. Because the payment of contingent monthly coupons is based on the worst performing of the underlying shares, the fact that the securities are linked to three underlying shares does not provide any asset diversification benefits and instead means that a decline in the price of any of the underlying shares below the relevant downside threshold level will result in no contingent monthly coupons, even if the other underlying shares close at or above their respective downside threshold levels. Because all payments on the securities are based on the worst performing of the underlying shares, a decline beyond the respective downside threshold level of any of the underlying shares will result in no contingent monthly coupon payments and a significant loss of your investment, even if the other underlying shares have appreciated or have not declined as much. Investors will not participate in any appreciation of any of the underlying shares. The securities are notes issued as part of MSFL’s Series A Global Medium-Term Notes program.
All payments are subject to our credit risk. If we default on our obligations, you could lose some or all of your investment. These securities 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.
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SUMMARY 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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Underlying shares:
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Energy Select Sector SPDR® Fund (the “XLE Shares”), Industrial Select Sector SPDR® Fund (the “XLI Shares”) and Consumer Staples Select Sector SPDR® Fund (the “XLP Shares”)
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Aggregate principal amount:
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$
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Stated principal amount:
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$1,000 per security
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Issue price:
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$1,000 per security
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Pricing date:
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February 9, 2023
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Original issue date:
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February 14, 2023 (3 business days after the pricing date)
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Maturity date:
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February 13, 2025
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Early redemption:
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The securities are not subject to automatic early redemption until approximately three months after the original issue date. Following this 3-month initial non-call period, if, on any redemption determination date, beginning on May 9, 2023, the determination closing price of each of the underlying shares is greater than or equal to its respective call threshold level, the securities will be automatically redeemed for an early redemption payment on the related early redemption date. No further payments will be made on the securities once they have been redeemed.
The securities will not be redeemed early on any early redemption date if the determination closing price of any of the underlying shares is below respective call threshold level on the related redemption determination date.
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Early redemption payment:
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The early redemption payment will be an amount equal to (i) the stated principal amount for each security you hold plus (ii) the contingent monthly coupon with respect to the related observation date.
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Determination closing price:
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With respect to each of the underlying shares, the closing price of such underlying shares on any redemption determination date or observation date (other than the final observation date), times the adjustment factor on such redemption determination date or observation date, as applicable
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Redemption determination dates:
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Beginning after three months, monthly, on May 9, 2023, June 9, 2023, July 10, 2023, August 9, 2023, September 11, 2023, October 9, 2023, November 9, 2023, December 11, 2023, January 9, 2024, February 9, 2024, March 11, 2024, April 9, 2024, May 9, 2024, June 10, 2024, July 9, 2024, August 9, 2024, September 9, 2024, October 9, 2024, November 11, 2024, December 9, 2024 and January 9, 2025, subject to postponement for non-trading days and certain market disruption events.
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Early redemption dates:
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Beginning after three months, monthly, on May 12, 2023, June 14, 2023, July 13, 2023, August 14, 2023, September 14, 2023, October 12, 2023, November 14, 2023, December 14, 2023, January 12, 2024, February 14, 2024, March 14, 2024, April 12, 2024, May 14, 2024, June 13, 2024, July 12, 2024, August 14, 2024, September 12, 2024, October 15, 2024, November 14, 2024, December 12, 2024 and January 14, 2025; provided that if any such day is not a business day, that early redemption payment, if payable, will be made on the next succeeding business day and no adjustment will be made to any early redemption payment made on that succeeding business day.
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Contingent monthly coupon:
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A contingent monthly coupon at an annual rate of 15.40% (corresponding to approximately $12.833 per month per security) will be paid on the securities on each coupon payment date but only if the determination closing price of each of the underlying shares is at or above its respective downside threshold level on the related observation date.
If, on any observation date, the determination closing price of any of the underlying shares is less than its respective downside threshold level, no contingent monthly coupon will be paid with respect to that observation date. It is possible that one or more of the underlying shares will remain below their respective downside threshold levels for extended periods of time or even throughout the entire 2-year term of the securities so that you will receive few or no contingent monthly coupons.
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Downside threshold level:
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With respect to the XLE Shares, $ , which is equal to 70% of its initial share price
With respect to the XLI Shares, $ , which is equal to 70% of its initial share price
With respect to the XLP Shares, $ , which is equal to 70% of its initial share price
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Call threshold level
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With respect to the XLE Shares, $ , which is equal to 100% of its initial share price
With respect to the XLI Shares, $ , which is equal to 100% of its initial share price
With respect to the XLP Shares, $ , which is equal to 100% of its initial share price
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Payment at maturity:
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If the securities are not redeemed prior to maturity, investors will receive a payment at maturity determined as follows:
●If the final share price of each of the underlying shares is greater than or equal to its respective downside threshold level: (i) the stated principal amount plus (ii) the contingent monthly coupon with respect to the final observation date
●If the final share price of any of the underlying shares is less than its respective downside threshold level: (i) the stated principal amount multiplied by (ii) the share performance factor of the worst performing underlying shares
Under these circumstances, the payment at maturity will be significantly less than the stated principal amount of $1,000, and will represent a loss of more than 30%, and possibly all, of your investment.
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Terms continued on the following page
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Agent:
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Morgan Stanley & Co. LLC (“MS & Co.”), an affiliate of MSFL and a wholly owned subsidiary of Morgan Stanley. See “Supplemental information regarding plan of distribution; conflicts of interest.”
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Estimated value on the pricing date:
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Approximately $986.80 per security, or within $25.00 of that estimate. See “Investment Summary” beginning on page 3.
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Commissions and issue price:
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Price to public(1)
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Agent’s commissions and fees(2)
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Proceeds to us(3)
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Per security
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$1,000
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$
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$
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Total
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$
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$
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$
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(1)The securities will be sold only to investors purchasing the securities in fee-based advisory accounts.
(2)MS & Co. expects to sell all of the securities that it purchases from us to an unaffiliated dealer at a price of $ per security, for further sale to certain fee-based advisory accounts at the price to public of $1,000 per security. MS & Co. will not receive a sales commission with respect to the securities. 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 auto-callable securities.
(3)See “Use of proceeds and hedging” on page 34.
The securities involve risks not associated with an investment in ordinary debt securities. See “Risk Factors” beginning on page 12.
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 securities 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 Securities” and “Additional Information About the Securities” at the end of this document.
As used in this document, “we,” “us” and “our” refer to Morgan Stanley or MSFL, or Morgan Stanley and MSFL collectively, as the context requires.
Product Supplement for Auto-Callable Securities dated November 16, 2020 Index Supplement dated November 16, 2020
Prospectus dated November 16, 2020