Morgan Stanley Introduces Auto-Callable Buffered Jump Securities Maturing in 2031

Overview of the Buffered Jump Securities

These Buffered Jump Securities are unsecured obligations issued by Morgan Stanley Finance LLC and fully guaranteed by Morgan Stanley. Unlike traditional debt instruments, they do not pay periodic interest. Instead, returns depend on the performance of two underlying indices: the Russell 2000ae Index and the S&P 500ae Futures Excess Return Index.

Investors will earn a fixed positive return at maturity if both indices meet or exceed their call threshold levels. If the securities are not auto-redeemed before maturity, the payout will be based on the performance of the worst-performing index, which may result in principal loss.

Investment Structure and Early Redemption Feature

The securities include an automatic early redemption clause. Should the closing levels of both indices reach or surpass their respective call threshold levels on any determination date, early redemption will be triggered. This feature enables investors to potentially receive increasing payments throughout the term.

The initial determination date is August 4, 2027. If either index fails to meet the call threshold on this date, the securities will continue until maturity.

Principal Risk and Payment Terms

These securities carry principal at risk status, meaning investors face the possibility of losing a significant portion of their initial investment. Losses occur if the final level of either index falls below its buffer level, calculated at a rate of 1% loss for every 1% decline beyond the buffer.

The buffer is set at 90% of the initial level for both indices, indicating that substantial market downturns could negatively impact returns. Understanding this risk is critical when considering this investment.

Potential Returns and Maturity Payouts

At maturity, if both indices meet their call threshold levels, investors could receive $1,700 per security. If one index falls short but remains above its buffer, the payout will be the stated principal of $1,000. However, if both indices decline below their buffers, payments will be reduced, potentially causing significant losses.

The minimum maturity payment is 10% of the stated principal, providing some protection against total loss but still representing considerable risk.

Market Context and Investor Guidance

Given current market volatility, the buffer feature may appeal to investors seeking partial downside protection. However, the absence of regular interest payments means investors should weigh the trade-offs carefully.

Since returns depend on the Russell 2000ae Index and the S&P 500ae Futures Excess Return Index, investors should monitor relevant market trends and economic indicators throughout the investment period.

Distribution and Pricing Information

These securities will be available exclusively through fee-based advisory accounts at an issue price of $1,000 per security. Morgan Stanley & Co. LLC, an affiliate of Morgan Stanley Finance LLC, will serve as the agent for this offering.

Notably, Morgan Stanley & Co. will not receive sales commissions on this issuance, highlighting a distribution approach focused on aligning investor interests with index performance.

Investment Risks

Investors should recognize that Buffered Jump Securities carry risks uncommon to standard debt instruments. The main risk arises from the underlying indices’ performance, which can cause substantial losses if either index falls below its buffer level.

As unsecured obligations, these securities do not grant claims on underlying assets, increasing potential loss risk, especially in volatile markets. Thorough risk assessment is essential before investing.

Summary of Morgan Stanley’s New Structured Product

Morgan Stanley’s launch of Buffered Jump Securities with an auto-callable feature offers investors a chance for enhanced returns while accepting principal risk. The product’s structure, including early redemption and buffer features, necessitates careful investor evaluation.

Market participants will closely watch the underlying indices’ performance, which will ultimately determine the investment’s success. Prospective investors should review all terms and disclosures thoroughly before committing.