Morgan Stanley Launches S&P 500-Linked Notes with 118% Upside Potential
Morgan Stanley Finance has announced Market-Linked Notes due August 1, 2030, tied to the S&P 500® Futures Excess Return Index (SPXFP).
Rhea-AI Filing Summary
Morgan Stanley Finance has announced Market-Linked Notes due August 1, 2030, tied to the S&P 500® Futures Excess Return Index (SPXFP). Key features include:
- Participation rate of 113% to 118% in the index's positive performance
- Principal protection against negative index performance
- Estimated value of $935.50 per note (±$55.00)
- 5-year term from July 28, 2025 to August 1, 2030
The notes offer asymmetric returns: investors receive 113-118% participation in positive index performance while maintaining full principal protection if the index declines. Notable risks include credit risk of Morgan Stanley, no interim interest payments, and limited secondary market liquidity. The notes' pricing reflects Morgan Stanley's hedging costs and credit spreads, resulting in an estimated value below the issue price.
Positive
- Offers 113-118% participation rate in S&P 500 Futures Excess Return Index upside potential
- Provides principal protection with $1,000 minimum payment at maturity regardless of index performance
- Morgan Stanley's guarantee adds credit support to the notes
Negative
- Estimated value of $935.50 per note represents a 6.45% discount to the issue price, indicating significant embedded costs
- No interest payments over the 5-year term of the notes
- Limited secondary market liquidity as notes won't be listed on any exchange
- Notes only track index performance at maturity, ignoring any interim gains
- Exposure to futures market risks including potential contango effects that could reduce returns
FAQ
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What is the maturity date and participation rate for MS's SPXFP Market-Linked Notes?
What is the estimated value per note for MS's new Market-Linked Notes (CUSIP: 61778NAF8)?
What is the minimum guaranteed payment at maturity for MS's SPXFP Market-Linked Notes?
What are the key risks of investing in Morgan Stanley's (MS) SPXFP Market-Linked Notes?
What is the maximum potential return for MS's Market-Linked Notes based on the example scenarios?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Free Writing Prospectus to Preliminary Pricing Supplement No. 9,040
Registration Statement Nos. 333-275587; 333-275587-01
Dated July 1, 2025; Filed pursuant to Rule 433
Morgan Stanley
SPXFP Market-Linked Notes due August 1, 2030
This document provides a summary of the terms of the notes. Investors must carefully review the accompanying preliminary pricing supplement referenced below, product supplement, index supplement and prospectus, and the “Risk Considerations” on the following page, prior to making an investment decision.
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Terms |
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Issuer: |
Morgan Stanley Finance LLC |
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Guarantor: |
Morgan Stanley |
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Underlier: |
S&P 500® Futures Excess Return Index (SPXFP) |
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Participation rate: |
113% to 118% |
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Pricing date: |
July 28, 2025 |
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Observation date: |
July 29, 2030 |
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Maturity date: |
August 1, 2030 |
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CUSIP: |
61778NAF8 |
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Estimated value: |
$935.50 per note, or within $55.00 of that estimate |
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Preliminary pricing supplement: |
https://www.sec.gov/Archives/edgar/data/895421/000183988225034259/ms9040_424b2-18596.htm |
1All payments are subject to our credit risk
Hypothetical Payment at Maturity1
The payoff diagram and table below illustrate the payment at maturity for a range of hypothetical performances of the underlier over the term of the notes.
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% Change in Closing Level of the Underlier |
Payment at Maturity per Note |
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+60.00% |
$1,678.00* |
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+40.00% |
$1,452.00* |
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+20.00% |
$1,226.00* |
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0.00% |
$1,000.00 |
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-20.00% |
$1,000.00 |
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-40.00% |
$1,000.00 |
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-60.00% |
$1,000.00 |
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-80.00% |
$1,000.00 |
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-100.00% |
$1,000.00 |
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*Assumes a participation rate of 113% |
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The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-584-6837.
Underlier(s)
For more information about the underlier(s), including historical performance information, see the accompanying preliminary pricing supplement.
Risk Considerations
The risks set forth below are discussed in more detail in the “Risk Factors” section in the accompanying preliminary pricing supplement. Please review those risk factors carefully prior to making an investment decision.
Risks Relating to an Investment in the Notes
●The notes may not pay more than the stated principal amount at maturity.
●The notes do not pay interest.
●The amount payable on the notes is not linked to the value of the underlier at any time other than the observation date.
●The market price of the notes may be influenced by many unpredictable factors.
●The notes are subject to our credit risk, and any actual or anticipated changes to our credit ratings or credit spreads may adversely affect the market value of the notes.
●As a finance subsidiary, MSFL has no independent operations and will have no independent assets.
●The rate we are willing to pay for securities of this type, maturity and issuance 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 costs associated with issuing, selling, structuring and hedging the notes in the original issue price reduce the economic terms of the notes, cause the estimated value of the notes to be less than the original issue price and will adversely affect secondary market prices.
●The estimated value of the notes is determined by reference to our pricing and valuation models, which may differ from those of other dealers and is not a maximum or minimum secondary market price.
●The notes will not be listed on any securities exchange and secondary trading may be limited.
●As discussed in more detail in the accompanying product supplement, investing in the notes is not equivalent to investing in the underlier(s).
●You may be required to recognize taxable income on the notes prior to maturity.
Risks Relating to the Underlier(s)
●Because your return on the notes will depend upon the performance of the underlier(s), the notes are subject to the following risk(s), as discussed in more detail in the accompanying product supplement.
oHigher future prices of a futures contract to which the underlier is linked relative to its current prices may adversely affect the value of the underlier and the value of the notes.
oSuspensions or disruptions of market trading in futures markets could adversely affect the value of the notes.
oLegal and regulatory changes could adversely affect the return on and value of the notes.
●Adjustments to the S&P 500® Futures Excess Return Index could adversely affect the value of the notes.
Risks Relating to Conflicts of Interest
●The calculation agent, which is a subsidiary of Morgan Stanley and an affiliate of MSFL, will make determinations with respect to the notes.
●Hedging and trading activity by our affiliates could potentially adversely affect the value of the notes.
Tax Considerations
You should review carefully the discussion in the accompanying preliminary pricing supplement under the caption “Additional Information About the Notes–United States federal income tax considerations” concerning the U.S. federal income tax consequences of an investment in the notes, and you should consult your tax adviser.