Risk Factors
This section describes the
material risks relating to the securities.
For further discussion of these and other risks, you should read
the section entitled “Risk Factors” in the accompanying product
supplement, index supplement and prospectus. We also urge you to
consult with your investment, legal, tax, accounting and other
advisers in connection with your investment in the
securities.
Risks Relating to an
Investment in the Securities
■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 the securities do not pay
interest or guarantee payment of any of the principal amount at
maturity. At maturity, you will receive for each $1,000 stated
principal amount of securities that you hold an amount in cash
based upon the final index value. If the final index value is less
than the downside threshold level, you will receive an amount in
cash that is significantly less than the $1,000 stated principal
amount of each security by an amount proportionate to the full
decline in the value of the underlying index from the initial index
value to the final index value, and you will lose a significant
portion or all of your investment. There is no minimum payment at
maturity on the securities, and, accordingly, you could lose your
entire investment. See “How the Trigger Jump Securities Work”
above.
■The
appreciation potential is fixed and limited.
Where the final index value is
greater than or equal to the downside threshold level, the
appreciation potential of the securities is limited to the upside
payment of $450 per security (45% of the stated principal amount),
even if the final index value is significantly greater than the
initial index value.
■The
market price of the securities may 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 underlying index at any time (including in relation to
the downside threshold
level),
■the
volatility (frequency and magnitude of changes in value) of the
underlying
index,
■dividend
rates on the securities underlying the underlying
index,
■interest
and yield rates in the
market,
■geopolitical
conditions and economic, financial, political, regulatory or
judicial events that affect the component stocks of the underlying
index or securities markets generally and which may affect the
value of the underlying
index,
■the
time remaining until the maturity of the
securities,
■the
composition of the underlying index and changes in the constituent
stocks of the underlying 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 underlying index is
at or below the initial index value and especially if it is near or
below the downside threshold
level.
You cannot predict the future performance
of the underlying index based on its historical performance. If the
final index value is less than the downside threshold level, you
will be exposed on a 1-to-1 basis to the full decline in the final
index value from the initial index value. There can be no assurance
that the final index value will be greater than or equal to the
downside threshold level so that you will receive at maturity an
amount that is greater than the $1,000 stated principal amount for
each security you hold, or that you will not lose a significant
portion or all of your
investment.