Morgan Stanley Launches $11.5 Million Callable Contingent Income Securities Tied to Nasdaq-100, Russell 2000, and VanEck Semiconductor ETF

Product Structure and Investor Risk Considerations

These securities are structured investment products designed for investors seeking above-market income in exchange for principal risk exposure. Morgan Stanley Finance LLC, fully and unconditionally guaranteed by Morgan Stanley, issued these notes under its Series A Global Medium-Term Notes program. The securities do not assure principal repayment or regular interest payments; instead, they feature a contingent coupon mechanism with strict payment conditions. Each security has a principal amount of $1,000, with a total issuance of $11.534 million representing 11,534 securities sold at par.

The structure targets investors willing to accept significant downside risk for the potential 20.30% annual contingent coupon. Investors must accept the risk of complete loss of principal based on the performance of any single underlier. Because the securities are linked to the worst-performing asset among three market indexes and an ETF, diversification does not mitigate risk but increases the potential triggers for negative outcomes. Investors receive no upside participation regardless of underlying asset appreciation.

Contingent Coupon Payment Terms

The contingent coupon pays an annual rate of 20.30% only if the closing level of each underlier meets or exceeds its coupon barrier on the observation date. If any underlier closes below its coupon barrier on an observation date, no interest is paid for that period. This all-or-nothing payment structure means a decline in any one of the three assets below its barrier eliminates coupon payments for that period, irrespective of the other underliers’ performance. Observation and coupon payment dates are outlined in the supplemental offering documents.

This contingent coupon differs from traditional fixed-income securities, which typically pay regular interest regardless of market conditions. The elevated 20.30% rate compensates for the high likelihood of missed coupon payments during volatile periods. Coupon payments occur only when all three underliers simultaneously meet their coupon barrier thresholds, a challenging condition amid market fluctuations. Specific coupon barrier levels were not disclosed in the pricing supplement.

Principal Risk and Maturity Provisions

If not redeemed early, and if the final levels of all underliers equal or exceed their downside thresholds at maturity, investors receive the full principal plus any final contingent coupon. However, if any underlier’s final level falls below its downside threshold, investors incur a principal loss proportional to the percentage decline of the worst-performing asset. This exposes investors to dollar-for-dollar principal loss tied to the poorest performing of the three assets, potentially resulting in a total loss of principal under severe market declines.

The maturity date is July 20, 2029, with a final observation date of July 17, 2029, subject to postponement for market disruptions or non-trading days. The securities’ value depends on the worst-performing underlier, meaning losses reflect the single weakest asset regardless of the others’ performance. For example, a 40% drop in the VanEck Semiconductor ETF while the other indexes remain stable would result in a 40% principal loss at maturity. Specific downside thresholds were not disclosed.

Early Redemption and Callable Features

Morgan Stanley may redeem the securities early on any redemption date starting January 22, 2027, if a risk-neutral valuation model indicates it is economically favorable. This determination occurs between three business days before and on the observation date prior to the redemption date, factoring in market levels, volatilities, correlations, and Morgan Stanley’s credit spreads as of pricing. If called, investors receive principal plus any due contingent coupon but forfeit potential future upside. Early redemption depends solely on Morgan Stanley’s valuation model and economic interests, not on underlier performance. Redemption dates occur monthly through June 22, 2029.

Underlying Assets and Index Exposure

The securities are linked to the Nasdaq-100 Index (NDX), Russell 2000 Index (RTY), and VanEck Semiconductor ETF (SMH). The Nasdaq-100 includes the largest 100 nonfinancial NASDAQ-listed companies, mainly technology and growth firms. The Russell 2000 tracks small-cap U.S. stocks, offering exposure to a different market segment. The VanEck Semiconductor ETF focuses on semiconductor companies within the technology sector. Despite exposure to multiple benchmarks, investors bear the risk of the worst-performing asset among these three, with no diversification benefits. Historical volatility, correlations, or performance data were not provided.

The strike and pricing date were July 17, 2026, with an original issue date of July 22, 2026. Linking the securities to the worst-performing underlier means a decline in any single asset can negatively impact returns even if others perform well. The pricing supplement clarifies that multiple underliers increase risk triggers rather than diversify them.

Pricing, Fees, and Estimated Fair Value

The securities were issued at $1,000 each, totaling $11.534 million. Morgan Stanley & Co. LLC acted as agent, earning $7.50 per security in commissions and fees, totaling $86,505, resulting in net proceeds of $992.50 per security or $11.447 million aggregate. Sales are limited to fee-based advisory accounts, restricting distribution to a specific investor segment.

The estimated value on the pricing date was $980.30 per security, reflecting a discount of approximately $19.70 from the issue price due to the contingent income and principal risk features. Morgan Stanley & Co. planned to sell the securities to an unaffiliated dealer at $992.50 per security for resale at $1,000 to fee-based advisory clients, maintaining wholesale and retail pricing tiers.

Credit Risk and Guarantee Details

All payments depend on Morgan Stanley’s creditworthiness. The securities are unsecured obligations of Morgan Stanley Finance LLC, fully and unconditionally guaranteed by Morgan Stanley. Investors have no security interest in the underlying assets. The guarantee covers both principal and contingent coupon payments. These securities are not FDIC insured and are not deposits or savings accounts. Investors rely solely on Morgan Stanley’s ability to meet obligations. In case of default or insolvency, these securities rank as unsecured claims alongside other creditors. Morgan Stanley’s credit spreads at pricing are factored into the early redemption valuation model. Any credit deterioration post-issuance could reduce market value even if underlying indexes remain stable.

Risks and Suitability Considerations

These securities carry risks beyond those of conventional debt, including potential loss of principal, no coupon payments during some or all periods, and early redemption risk based on Morgan Stanley’s valuation model. Investors do not participate in underlying asset appreciation and accept limited upside (contingent coupon) against unlimited downside risk. They must tolerate volatility across three market benchmarks.

Intended for investors seeking above-market interest with principal risk, the securities’ return depends on all three underliers meeting coupon barriers throughout the term or until early redemption. Market declines in semiconductor stocks, small-cap equities, or large-cap nonfinancial companies could trigger coupon forfeiture or principal loss. The pricing supplement does not disclose historical default rates, loss scenarios, or sensitivity analyses.

Registration and Regulatory Information

The securities are registered under Registration Statement Nos. 333-293641 and 333-293641-01. The pricing supplement filed on July 17, 2026, complies with SEC Rule 424(b)(2). Accompanying documents include a product supplement, index supplement, tax supplement, and prospectus all dated April 8, 2026, collectively detailing full terms and conditions.

The SEC and state regulators have not approved or disapproved the securities nor verified the completeness or accuracy of the pricing supplement. The offering complies with U.S. securities laws applicable to structured products. Investors should review all offering documents carefully before investing, as the pricing supplement reflects current terms without implying regulatory endorsement of suitability or risk.