Form 424B2 MORGAN STANLEY
■The Securities are subject to our credit risk, and any actual or anticipated change in our credit ratings or credit spreads may adversely affect the market value of the Securities. You are dependent on our ability to pay all amounts owing on the Securities at maturity or on any Coupon payment date, and you are therefore subject to our credit risk. The securities are not guaranteed by any other entity. If we default in our obligations under the Securities, your investment would be at risk and you could lose some or all of your investment. Therefore, the market value of the Securities prior to maturity will be affected by changes in the market’s view of our creditworthiness. Any actual or anticipated decrease in our credit ratings or increase in credit spreads charged by the market to take our credit risk could have an adverse effect on the market value of the securities.
■As a financial subsidiary, MSFL has no independent activities and will not have independent assets. As a financial subsidiary, MSFL has no independent activity beyond the issuance and administration of its securities and will have no independent assets available for distribution to holders of MSFL securities if they make any claims regarding these securities in the context of bankruptcy, resolution or similar proceedings. Accordingly, any recovery by such holders will be limited to those available under the related Morgan Stanley guarantee and such guarantee will rank pari passu with all other unsecured and unsubordinated obligations of Morgan Stanley. Holders will have only one claim against Morgan Stanley and its collateral assets. The holders of securities issued by MSFL must therefore assume that, in such a procedure, they would have no priority over and should be treated. pari passu with the claims of other unsecured and unsubordinated creditors of Morgan Stanley, including holders of securities issued by Morgan Stanley.
■Not equivalent to investing in the underlying indices. Investing in securities is not the same as investing in an underlying index or in the stocks comprising an underlying index. Investors in the Securities will not participate in any positive performance of an Underlying Index and will not have any voting rights or the right to receive dividends or other distributions or any other rights in respect of the equities which constitute an index. underlying.
■The securities will not be listed on any stock exchange and secondary trading may be limited. Therefore, you should be prepared to hold your securities for the entire 1.5 year term of the securities.. The securities will not be listed on any stock exchange. Therefore, there may be little or no secondary market for the securities. MS & Co. may, but is not obligated to, create a market in the securities and, if it once chooses to create a market, may cease to do so at any time. When making a market, it will usually do so for routine secondary market-sized transactions 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 the related hedging positions, the time remaining to maturity and the likelihood that it will be able to resell the titles. Even though there is a secondary market, it may not provide enough liquidity for you to trade or sell the securities easily. Since other brokers may not participate meaningfully in the secondary market for securities, the price at which you can trade your securities will likely depend on the price, if any, at which MS & Co. is prepared to trade. . If at any time MS & Co. were to cease to have a market for the securities, it is likely that there would be no secondary market for the securities. Therefore, you should be prepared to hold your securities until they mature.
■The rate we are prepared to pay for securities of this type, maturity and issue 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 the costs associated with the issuance, sale, structuring and hedging of the securities in the initial issue price reduce the economic conditions of the securities, causing the estimated value of the securities is lower than the initial issue price and negatively affect secondary market prices. Assuming that market conditions or any other relevant factor do not change, the prices, if any, at which brokers, including MS & Co., may be willing to purchase the securities in secondary market transactions will likely be significantly lower than the initial issue price, because the secondary market prices will exclude the costs of issue, sale, structuring and hedging which are included in the initial issue price and borne by you and because secondary market prices will reflect our secondary market credit spreads and the long spread the dealer would charge in a secondary market transaction of this type and other factors.
The inclusion of the costs of issuing, selling, structuring and hedging the securities in the initial issue price and the lower rate that we are willing to pay as the issuer makes the economic conditions of the securities less favorable for you than they would otherwise.
However, given that the costs associated with the issue, sale, structuring and hedging of securities are not fully deducted at the time of issue, for a period of up to 6 months following the date issue, to the extent that MS & Co. may buy or sell the securities on the secondary market, in the absence of changes in market conditions, including those related to the underlying indices,