Morgan Stanley SEC Filings

Morgan Stanley Finance LLC has filed a prospectus supplement for Market-Linked Notes due June 23, 2028, based on the performance of the BlackRock Adaptive U.S. Equity 5% Index. The notes, fully guaranteed by Morgan Stanley, offer the following key features:

• Principal amount of $1,000 per note with estimated value of $956.90
• 230.75% participation rate in the index's positive performance
• Principal protection if the index declines
• No periodic interest payments

At maturity, investors receive the principal amount plus 230.75% of any positive index performance. If the index declines, investors receive only the principal amount. Key risks include credit risk of Morgan Stanley, limited secondary market liquidity, and returns dependent solely on the observation date's closing level. The notes are unsecured obligations and not FDIC insured.

Morgan Stanley Finance LLC is offering Fixed Income Buffered Auto-Callable Securities due 1 July 2030 linked to the S&P® U.S. Equity Momentum 40% VT 4% Decrement Index. Each $1,000 note pays a fixed 7.10% annual coupon (accruing monthly) until the earlier of automatic redemption or maturity.

Automatic early redemption: Beginning with the first determination date on 26 June 2026 and monthly thereafter, if the index closes at or above 100 % of the initial level (the call threshold), the note is redeemed at par plus the current coupon. Once called, no further payments accrue.

Principal repayment at maturity: • If not called and the final index level is ≥ 85 % of the initial level (15 % buffer), investors receive par plus the final coupon. • If the final level is < 85 %, repayment equals par × (index performance + 15 %), subject to a minimum of 15 % of par. Investors therefore bear a dollar-for-dollar loss beyond the 15 % buffer and could lose up to 85 % of principal.

Key structural points:

• Issuer/Guarantor: Morgan Stanley Finance LLC, fully and unconditionally guaranteed by Morgan Stanley; payments are unsecured and subject to Morgan Stanley credit risk.
• Issue price: $1,000; estimated value on pricing date: ≈ $919 (± $40) due to embedded costs and MS’s internal funding rate.
• Liquidity: Notes will not be listed; secondary market making, if any, will be by MS & Co. and may reflect significant bid-offer spreads.
• Investor profile: Seeks enhanced fixed coupon and limited downside buffer, is willing to forgo index upside and accept significant principal risk and issuer credit exposure.

Morgan Stanley Finance LLC is offering unsecured, unlisted Market-Linked Securities that mature on 23 June 2028 and are fully and unconditionally guaranteed by Morgan Stanley. The notes are linked to the lowest-performing of Apple (AAPL), Eli Lilly (LLY) and Amazon (AMZN) common stock.

Key mechanics

• Issue price: $1,000; estimated value: $948.40 (reflects structuring & hedging costs).
• Automatic call: If on 23 June 2026 the lowest-performing stock closes ≥ its starting price, the note is redeemed for $1,510 (51% premium); no further upside thereafter.
• Maturity payoff (if not called)
  • Upside: 200% participation on any positive performance of the lowest-performing stock.
  • Contingent absolute return: If the worst stock is ≤ start but ≥ 70% of start, investors receive face plus a positive return equal to the stock’s decline (capped at 30%).
  • Downside: If the worst stock ends < 70% of start, investors lose 1% of principal for each 1% decline; loss can exceed 30% and reach 100%.

Risk & cost highlights

• No periodic interest; principal at risk; payments depend solely on the worst-performing stock.
• Credit exposure to MSFL/Morgan Stanley; note is unsecured and not FDIC-insured.
• Secondary market likely illiquid; not exchange-listed.
• Up-front selling commission up to 2.475%; proceeds to issuer $975.25 per $1,000.

These securities suit investors seeking enhanced upside and a 51% early-call premium, willing to accept credit risk, market concentration in three large-cap equities, and the possibility of significant or total principal loss.

Offering overview: Morgan Stanley Finance LLC is issuing $1,000-denominated, three-year Market-Linked Securities – Auto-Callable with Contingent Coupon and Contingent Downside Principal at Risk that reference the lowest performing of Meta Platforms (META), Goldman Sachs (GS) and Exxon Mobil (XOM). The notes are senior, unsecured obligations of MSFL and are fully and unconditionally guaranteed by Morgan Stanley.

Income mechanics: Investors are eligible for a 20.00% p.a. contingent coupon (≈ 5.00% quarterly) only if, on each quarterly calculation day, all three stocks close at or above 70 % of their respective starting prices (the “coupon threshold”). Missing the threshold for any stock in any quarter results in zero coupon for that period; coupons do not accrue.

Auto-call feature: Beginning in December 2025 (after a six-month non-call period), the notes are automatically redeemed at par plus the applicable coupon if, on any calculation day (other than the final one), each stock closes at or above its initial level. Early redemption shortens reinvestment risk but also caps the maximum return at the paid coupons.

Principal repayment scenarios at maturity (23 Jun 2028):

• If the notes have not been called and every stock finishes ≥ 70 % of its start price (“downside threshold”), holders receive 100 % of principal plus the final coupon.
• If any stock closes <70 % of its start price, principal is reduced on a 1-for-1 basis with the worst performer, exposing investors to losses greater than 30 % and up to 100 %.

Key initial reference levels: META $697.23 (CT/DST $488.061); GS $624.64 (CT/DST $437.248); XOM $114.00 (CT/DST $79.80).

Pricing economics: Issue price $1,000; estimated value $964 (3.6 % discount reflects structuring and hedging costs and MS internal funding rate). Selling concessions up to $23.25 per note; additional dealer allowances up to $2.

Risk considerations: 1) Principal at risk—any single-name drawdown >30 % on final observation erodes principal dollar-for-dollar. 2) Coupon uncertainty—three underlyings increase the probability of missing thresholds; investors may receive no income over the entire term. 3) Credit risk—payments rely on Morgan Stanley’s ability to perform. 4) Liquidity—no listing; secondary market, if any, likely at a significant discount, especially within the first three months when dealer bid is higher than model value but still below par. 5) No upside participation—positive performance above par is capped at received coupons. 6) Tax complexity—treated as a contingent-income contract; IRS could view differently, creating adverse consequences; 30 % withholding on coupons for non-US holders.

Investor profile: Suitable only for investors who 1) can tolerate equity-like downside and issuer credit risk, 2) are comfortable with potentially limited liquidity, 3) desire high contingent income and a 30 % buffer in exchange for foregoing dividends and unlimited upside, and 4) understand multi-asset auto-call mechanics.