Morgan Stanley Finance Unveils $1.187 Million Auto-Callable Notes Tied to Nasdaq-100, Russell 2000, and Regional Banking ETF

Three-Index Linked Security Structure

These complex structured notes link returns to three reference assets: Nasdaq-100 Index, Russell 2000 Index, and State Street SPDR S&P Regional Banking ETF. They are unsecured obligations of Morgan Stanley Finance LLC with Morgan Stanley’s full guarantee. The structure exposes investors to the worst-performing underlier among the three, meaning a significant decline in any single asset negatively impacts returns despite favorable or less severe declines in others.

Each security has a stated principal of $1,000 and was issued at par. However, the estimated value on the July 16, 2026 pricing date was $955.80, reflecting embedded derivatives and contingent payment features. The total principal issued corresponds to 1,187 securities.

Contingent Coupon and Memory Feature

The notes pay an 8.50% annual contingent coupon only if each underlier closes at or above its coupon barrier on observation dates. If any underlier closes below its coupon barrier, no interest is paid for that period. A "memory" feature allows unpaid coupons to accumulate and be paid later if all underliers meet coupon barriers on subsequent dates, without additional interest accrual on unpaid amounts.

Automatic Early Redemption Terms

Automatic early redemption occurs if all three underliers close at or above their call threshold levels on redemption determination dates. Call thresholds equal 100% of initial levels: 29,025.77 for Nasdaq-100, 2,974.567 for Russell 2000, and $77.92 for the Regional Banking ETF.

First redemption determination is January 19, 2027, with the first early redemption date on January 22, 2027. Redemption dates continue quarterly through April 16, 2029. Early redemption pays principal plus contingent coupons accrued and any unpaid coupons.

Principal-at-Risk and Downside Thresholds

These principal-at-risk securities do not guarantee principal at maturity. If not redeemed early, and all underliers finish at or above downside thresholds, investors receive full principal plus applicable coupons. If any underlier finishes below its downside threshold, investors incur a proportional principal loss based on the worst-performing asset’s decline, potentially losing their entire investment.

Investors bear significant credit and market risk, including the possibility of total principal loss. No participation in underlier appreciation is provided if early redemption does not occur. Payments depend on Morgan Stanley and Morgan Stanley Finance LLC creditworthiness, with potential losses if either defaults.

Pricing, Commissions, and Distribution

Priced July 16, 2026, and issued July 21, 2026, at $1,000 per security, the offering totaled $1,187,000. Morgan Stanley & Co. LLC acted as distribution agent. Dealers and advisors received $30 per security in sales commissions, totaling $35,610. Net proceeds to the issuer were $970 per security, or $1,151,390 total.

These notes are part of Morgan Stanley Finance LLC’s Series A Global Medium-Term Notes program under a registration statement. The pricing discount reflects embedded optionality and contingent features. Morgan Stanley & Co. LLC’s dual role as agent and subsidiary of the guarantor presents potential conflicts of interest.

Regulatory Approvals and Suitability

The Securities and Exchange Commission and state regulators have not approved or disapproved these securities or verified the completeness of offering documents. They are not bank deposits, savings accounts, or FDIC insured, despite Morgan Stanley’s guarantee.

These securities suit investors seeking potentially above-market interest in exchange for risking significant or total principal loss and possible absence of coupons during the term. Investors do not benefit from underlier appreciation and must accept total loss risk.

Reference Indexes and Fund Details

The underliers represent diverse equity market segments: Nasdaq-100 (large-cap tech and growth stocks, initial level 29,025.77), Russell 2000 (small- and mid-cap U.S. equities, initial level 2,974.567), and State Street SPDR S&P Regional Banking ETF (regional banking sector exposure, initial level $77.92). The worst-performing underlier determines investment outcome.

Coupon barrier and downside threshold levels are detailed in product and index supplements, not disclosed in the filing.

Timeline and Maturity

The notes have a three-year term from July 21, 2026, to July 19, 2029, with the final observation date on July 16, 2029, subject to market disruptions. Quarterly observation and redemption dates start January 19, 2027, through April 16, 2029, offering multiple early redemption opportunities.

Coupon payment dates align with redemption determination dates, establishing regular intervals for coupon and redemption assessments, with early exit possible about six months post-issuance.

Investment Risks and Lack of Diversification

The filing highlights risks beyond typical debt securities. Linking multiple underliers does not diversify risk; instead, a decline in any underlier below coupon barrier or downside threshold adversely affects returns. Investors have no direct claim on underlying assets, and all payments depend on Morgan Stanley and Morgan Stanley Finance LLC creditworthiness. These unsecured obligations rank as general creditors in default scenarios.