Morgan Stanley Finance LLC Introduces Callable Contingent Income Securities with Principal Risk Exposure

Callable Contingent Income Securities Overview

These securities are unsecured obligations of Morgan Stanley Finance LLC, fully guaranteed by Morgan Stanley. They do not assure principal repayment or regular interest payments. Instead, they offer a contingent coupon dependent on the performance of the linked indices. Designed for investors willing to risk losing part or all of their principal in exchange for potentially higher interest payments, these securities present a distinctive risk-return profile.

The securities’ returns are tied to three major indices: the Nasdaq-100 Technology Sector Index, the Russell 2000 Index, and the S&P 500 Index. The lowest-performing index determines the investment’s return, meaning that a decline in any index may negatively impact overall returns despite positive performance in others.

Contingent Coupon Structure Details

The contingent coupon is set at an annual rate of 13.50%, payable only if each underlying index’s closing level meets or exceeds its coupon barrier level on the observation date. Should any index fall below its coupon barrier, no interest will be paid for that period. This emphasizes the necessity for investors to closely monitor index performance.

Consequently, investors may receive no coupon payments during the entire term if the indices underperform, highlighting the importance of understanding the risks associated with the contingent coupon feature.

Redemption Terms and Conditions

Morgan Stanley Finance LLC retains the right to call (redeem) the securities on specified dates, beginning October 27, 2026, with subsequent monthly redemption opportunities. Redemption decisions are based on a risk-neutral valuation model that must demonstrate economic rationality for early redemption.

Early redemption does not guarantee principal return, and no further payments will be made post-redemption. This feature introduces additional complexity and potential impact on overall investment returns.

Risks Associated with the Securities

These Callable Contingent Income Securities carry risks uncommon to standard debt instruments. The primary risk is principal loss if, at maturity, any underlying index falls below its downside threshold. Investors lose 1% of principal for every 1% decline in the worst-performing index.

As unsecured obligations, the securities lack collateral backing, increasing credit risk. A default by Morgan Stanley could result in partial or total loss of invested capital.

Investor Suitability and Considerations

These securities suit investors comfortable with principal risk and variable coupon payments, seeking higher yields by accepting the performance risks of the underlying indices. Prospective investors should carefully evaluate their risk tolerance and investment objectives prior to investing.

Additionally, sales are limited to investors purchasing through fee-based advisory accounts, potentially restricting access for some market participants.

Market Conditions and Performance Monitoring

The securities’ performance is closely linked to market dynamics affecting the Nasdaq-100 Technology Sector Index, Russell 2000 Index, and S&P 500 Index. Investors must regularly monitor these indices, as fluctuations directly influence returns.

Market volatility, economic factors, and sector-specific developments can impact index performance, making it essential for investors to stay informed on relevant market trends and economic indicators.

Final Terms and Conditions

Issued under Morgan Stanley Finance LLC’s Series A Global Medium-Term Notes program, each security carries a stated principal of $1,000. The total issuance amounts to $1,264,000. Both pricing and original issue dates are July 22, 2026, with maturity on January 25, 2029.

The estimated value at pricing is $982.40 per security, reflecting market conditions at issuance and subject to change over the term.

Conclusion on Investment Suitability

Callable Contingent Income Securities offer a distinctive opportunity for investors targeting higher returns while accepting substantial risks, including principal loss and variable coupon payments. These securities are not appropriate for all investors and require thorough assessment of individual risk tolerance and investment goals.

Prospective investors should perform detailed due diligence and consider consulting financial advisors to fully understand the complexities and risks before investing.