Callable
Contingent Income Securities
due April 3, 2025
Payments on the Securities
Based on the Worst Performing of the NASDAQ-100
Index®,
the Russell 2000®
Index and the Dow Jones
Industrial AverageSM
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 prospectus 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 quarterly
coupon
but only if
the index closing value of
each of the
NASDAQ-100
Index®,
the Russell 2000®
Index and the Dow Jones
Industrial AverageSM
on the related observation date
is
at or above
70% of its respective initial
index value, which we refer to as the respective
coupon barrier level. If the index closing value
of any underlying
index is less than the coupon barrier level for
such index on any observation date, we will pay no coupon for the
related quarterly period. In addition, beginning on October 5,
2023,
we will redeem the securities
on any quarterly redemption date, for a redemption payment equal to the sum
of the stated principal amount
plus
any contingent quarterly coupon otherwise due with respect to the
related observation date, if and only if the output of a risk
neutral valuation model on a business day that is at least 2 but no
more than 5 business days prior to such redemption date, based on
the inputs indicated under “Call feature” below, indicates that
redeeming on such date is economically rational for us as compared
to not redeeming on such date. An early redemption of the
securities will not automatically occur based on the performance of
the underlying indices. At maturity, if the securities have not
been previously redeemed and if the final index value
of
each
underlying index is greater than or equal to 70% of the respective
initial index value, which we refer to as the downside threshold
level, the payment at maturity will be the stated principal amount
and the related contingent quarterly coupon. If, however, the final
index value of
any underlying index is less than its downside
threshold level, investors will be exposed to the decline in the
worst performing underlying index 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 based on the performance of any
underlying index and also the risk of not receiving any quarterly
coupons during the entire 2-year term of the
securities. Because payments on the securities are
based on the worst performing of the underlying indices, a decline
beyond the respective coupon barrier level and/or respective
downside threshold level, as applicable, of
any underlying index will result in few or no
contingent quarterly coupons and/or a significant loss of your
investment, as applicable, even if the other underlying indices
have appreciated or have not declined as much. Investors will not
participate in any appreciation in any underlying index. 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
quarterly interest if
any underlying
index closes below the coupon barrier level for
such index on the observation dates, and the risk of an early
redemption of the securities based on the output of a risk neutral
valuation model.
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
indices:
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NASDAQ-100 Index®
(the “NDX Index”), Russell
2000®
Index (the “RTY Index”) and Dow Jones
Industrial AverageSM
(the “INDU Index”)
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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 (see “Commissions and
issue price” below)
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Pricing
date:
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March 31, 2023
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Original issue
date:
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April 5, 2023 (3 business days after the
pricing date)
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Maturity
date:
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April 3, 2025
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Call
feature:
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Beginning on October 5, 2023, an early
redemption, in whole but not in part, will occur on a redemption
date if and only if the output of a risk neutral valuation model on
a business day that is at least 2 but no more than 5 business days
prior to such redemption date, as selected by the calculation agent
(the “determination date”), taking as input: (i) prevailing
reference market levels, volatilities and correlations, as
applicable and in each case as of the determination date and (ii)
Morgan Stanley’s credit spreads as of the pricing date, indicates
that redeeming on such date is economically rational for us as
compared to not redeeming on such date. If we call the securities,
we will give you notice at least 2 business days before the call
date specified in the notice. No further payments will be made on
the securities once they have been redeemed.
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Contingent quarterly
coupon:
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If, on any observation date, the index
closing value of
each underlying
index is
greater than or equal
to its respective coupon barrier level, we
will pay a contingent quarterly coupon at an annual rate of at
least 11.20% (corresponding to approximately $28.00 per quarter per
security) on the related contingent coupon payment
date. The actual contingent quarterly coupon
rate will be determined on the pricing date.
If, on any observation date, the closing
value
of any underlying
index is
less than
the coupon barrier level for such index,
no contingent quarterly coupon will be paid with respect to that
observation date.
It is possible that one or
more underlying indices will remain below the respective coupon
barrier level(s) for extended periods of time or even throughout
the entire term of the securities so that you will receive few or
no contingent quarterly coupons.
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Payment at
maturity:
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If the securities have not previously been
redeemed, investors will receive on the maturity date a payment at
maturity determined as follows:
If the final index value of
each
underlying index is
greater than or equal
to its respective downside threshold level:
the stated principal amount and the contingent quarterly coupon
with respect to the final observation date.
If the final index value of
any underlying index is
less than
its respective downside threshold level:
(i) the stated principal amount
multiplied by
(ii) the index performance factor of the
worst performing underlying index. Under these circumstances, the
payment at maturity will be less than 70% of the stated principal
amount of the securities and could be zero.
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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 $968.50 per security, or
within $25.00 of that estimate. See “Investment Overview” beginning
on page 3.
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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 security
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$1,000
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$17.50
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$982.50
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Total
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$
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$
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$
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(1)Selected
dealers and their financial advisors will collectively receive from
the agent, MS & Co., a fixed sales commission of $17.50 for
each security they sell. See “Supplemental information regarding
plan of distribution; conflicts of interest.” For additional
information, see “Plan of Distribution (Conflicts of Interest)” in
the accompanying prospectus supplement.
(2)See
“Use of proceeds and hedging” on page 32.
The securities involve risks
not associated with an investment in ordinary debt securities. See
“Risk Factors” beginning on page 11.
The Securities and Exchange
Commission and state securities regulators have not approved or
disapproved these securities, or determined if this document or the
accompanying prospectus 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 prospectus 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.
References to “we,” “us” and
“our” refer to Morgan Stanley or MSFL, or Morgan Stanley and MSFL
collectively, as the context requires.
Prospectus Supplement
dated November
16, 2020
Index Supplement
dated November
16, 2020
Prospectus dated
November 16,
2020