Callable Fixed Income Buffered Securities due July 29, 2027
Based on the Worst Performing of the Russell 2000® Index and the Nasdaq-100® Technology Sector IndexSM
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 provide a minimum payment at maturity of only 15% of the stated principal amount and offer the opportunity for investors to earn a fixed quarterly coupon at an annual rate of at least 7.70% (to be determined on the pricing date). In addition, beginning on October 31, 2024, we will redeem the securities on any quarterly redemption date for a redemption payment equal to the sum of the stated principal amount plus the related quarterly coupon, 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 previously been redeemed and if the final index value of each underlying index has appreciated, has remained unchanged or has declined by an amount less than or equal to the buffer amount of 15%, the payment at maturity will be, in addition to the final quarterly coupon, the stated principal amount. If, however, the final index value of either underlying index has declined from its initial index value by an amount greater than the buffer amount of 15%, the payment at maturity will be, in addition to the final quarterly coupon, the stated principal amount multiplied by the index performance factor of the worst performing underlying index plus $150. In this scenario, investors will lose 1% for every 1% decline of the worst performing underlying index beyond the specified buffer amount, subject to the minimum payment at maturity of 15% of the stated principal amount. Accordingly, investors in the securities must be willing to accept the risk of losing up to 85% of the stated principal amount if either underlying index declines by an amount greater than the buffer amount. Because the payment at maturity is based on the worst performing of the underlying indices, a decline of more than 15% by either underlying index will result in a loss of your investment even if the other underlying index has appreciated or has not declined as much. Investors will not participate in any appreciation in either underlying index. The securities are for investors who are willing to risk their principal based on the worst performing of the underlying indices and who seek an opportunity to earn interest at a potentially above-market rate and the limited protection provided by the buffer feature in exchange for 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.
The Nasdaq-100® Technology Sector IndexSM measures the performance of companies in the Nasdaq-100 Index® that are classified as technology according to the Industry Classification Benchmark. For more information about the Nasdaq-100 Index®, see the information set forth under “Nasdaq-100 Index®” in the accompanying index supplement. For more information about the Nasdaq-100® Technology Sector IndexSM, see “Annex A — Nasdaq-100® Technology Sector IndexSM” beginning on page 31.
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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Russell 2000® Index (the “RTY Index”) and Nasdaq-100® Technology Sector IndexSM (the “NDXT 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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July 26, 2024
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Original issue date:
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July 31, 2024 (3 business days after the pricing date)
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Maturity date:
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July 29, 2027
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Call feature:
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Beginning on October 31, 2024, 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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Quarterly coupon:
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Unless the securities have been previously redeemed, a fixed coupon at an annual rate of at least 7.70% (corresponding to approximately $19.25 per quarter per security, to be determined on the pricing date) will be paid on each coupon payment date.
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Payment at maturity:
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If the securities have not previously been redeemed prior to maturity, the payment at maturity will be, in addition to the final quarterly coupon, as follows:
If the final index value of each underlying index is greater than or equal to 85% of its respective initial index value, meaning that neither underlying index has decreased by an amount greater than the buffer amount of 15% from its respective initial index value:
the stated principal amount.
If the final index value of either underlying index is less than 85% of its respective initial index value, meaning that either underlying index has decreased by an amount greater than the buffer amount of 15% from its respective initial index value:
($1,000 × index performance factor of the worst performing underlying index) + $150
Under these circumstances, the payment at maturity will be less than the stated principal amount of $1,000. However, under no circumstances will the payment at maturity be less than $150 per security.
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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 $985.30 per security, or within $30.00 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(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 prospectus supplement.
(3)See “Use of proceeds and hedging” on page 29.
The securities involve risks not associated with an investment in ordinary debt securities. See “Risk Factors” beginning on page 10.
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. When you read the accompanying prospectus supplement and index supplement, please note that all references in such supplements to the prospectus dated November 16, 2023, or to any sections therein, should refer instead to the accompanying prospectus dated April 12, 2024 or to the corresponding sections of such prospectus, as applicable. 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, 2023 Index Supplement dated November 16, 2023 Prospectus dated April 12, 2024