June2023
PreliminaryTerms No. 9,241
RegistrationStatement Nos. 333-250103; 333-250103-01
DatedMay 25, 2023
Filedpursuant to Rule 433
Morgan Stanley Finance LLC
Fixed Rate Callable Notes due 2033
Fully and UnconditionallyGuaranteed by Morgan Stanley
As further described below, we, MorganStanley Finance LLC (“MSFL”), will redeem the notes in accordance with the risk neutral valuation model determination notedherein. Any redemption payment will be at a redemption price equal to 100% of the principal amount to be redeemed, plus accruedand unpaid interest thereon to but excluding the redemption date. Subject to the call feature, interest will accrue and bepayable on the notes, in arrears, at the interest rate and frequency specified below.
All payments are subject to our creditrisk. If we default on our obligations, you could lose some or all of your investment. These securities are notsecured obligations and you will not have any security interest in, or otherwise have any access to, any underlying reference asset orassets.
| SUMMARY TERMS |
| Issuer: | Morgan Stanley Finance LLC |
| Guarantor: | Morgan Stanley |
| Aggregate principal amount: | $ . May be increased prior to the original issue date but we are not required to do so. |
| Issue price: | $1,000 per note |
| Stated principal amount: | $1,000 per note |
| Pricing date: | June , 2023 |
| Original issue date: | June 9, 2023 ( business days after the pricing date) |
| Maturity date: | June 9, 2033 |
| Interest accrual date: | June 9, 2023 |
| Payment at maturity: | The payment at maturity per note will be the stated principal amount plus accrued and unpaid interest |
| Interest rate: | From and including | To but excluding | Interest rate (per annum) |
| | Original issue date | Maturity date | 5.350% |
| Interest payment period: | Semi-annual |
| Interest payment period end dates: | Unadjusted |
| Interest payment dates: | The 9th calendar day of each June and December, beginning on the initial interest payment date; provided that if any such day is not a business day, that interest payment will be made on the next succeeding business day and no adjustment will be made to any interest payment made on that succeeding business day. |
| Initial interest payment date: | December 9, 2023 |
| Day-count convention: | 30/360 (Bond Basis) |
| Call feature: | An early redemption, in whole but not in part, will occur on a redemption date if and only if the output of a risk neutral valuation model on the calendar day that is 13 calendar months prior to such redemption date, subject to adjustment as described below (the “determination date”), taking as input: (i) prevailing reference market levels, volatilities and correlations, as applicable and in each case as of the determination date and (ii) Morgan Stanley’s credit spreads as of the pricing date(s), indicates that redeeming on such date is economically rational for us as compared to not redeeming on such date. If any scheduled determination date falls on a day that is not a business day, it will be postponed to the following business day. Any redemption payment will be at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest thereon to but excluding the redemption date. If we call the notes, we will give you notice at least 5 business days before the call date specified in the notice. No further payments will be made on the redeemed notes once they have been redeemed. See “The Notes.” |
| Redemption percentage at redemption date: | 100% per note redeemed |
| Frequency of redemption dates: | Annual |
| Redemption date(s): | The 9th calendar day of each June, beginning on the initial redemption date |
| Initial redemption date: | June 9, 2025 |
| Specified currency: | U.S. dollars |
| No listing: | The notes will not be listed on any securities exchange. |
| Denominations: | $1,000 / $1,000 |
| CUSIP: | 61766YPE5 |
| ISIN: | US61766YPE58 |
| Book-entry or certificated note: | Book-entry |
| Business day: | New York |
| Agent: | Morgan Stanley & Co. LLC (“MS & Co.”), an affiliate of MSFL and a wholly owned subsidiary of Morgan Stanley. See “Supplemental Information Concerning Plan of Distribution; Conflicts of Interest.” |
| Calculation agent: | Morgan Stanley Capital Services LLC |
| Trustee: | The Bank of New York Mellon |
| Estimated value on the pricing date: | Approximately $964.20 per note, or within $34.20 of that estimate. See “The Notes” on page 2. |
| Commissions and issue price: | | Price to public(1) | Agent’s commissions and fees(2) | Proceeds to us(3) |
| Per note | | $1,000 | $ | $ |
| Total | | $ | $ | $ |
| (1) | The price to public for investorspurchasing the notes in fee-based advisory accounts will be $987.50 per note. |
| (2) | Selecteddealers, including Morgan Stanley Wealth Management (an affiliate of the agent), and their financial advisors will collectively receivefrom the agent, MS & Co., a fixed sales commission of $ for each note they sell; provided thatdealers selling to investors purchasing the notes in fee-based advisory accounts will not receive a sales commission with respect tosuch notes. See “Supplemental Information Concerning Plan of Distribution;Conflicts of Interest.” For additional information, see “Plan of Distribution (Conflicts of Interest)” inthe accompanying prospectus supplement. |
| (3) | See “Use of Proceeds andHedging” on page 6. |
The notes involve risks not associated with an investment in ordinarydebt securities. See “Risk Factors” beginning on page 3.
The Securities and Exchange Commissionand state securities regulators have not approved or disapproved these securities, or determined if this pricing supplement or the accompanyingprospectus supplement and prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
You should readthis document together with the related prospectus supplement and prospectus,
each of which can be accessed via the hyperlinks below.
References to “we,” “us”and “our” refer to Morgan Stanley or MSFL, or Morgan Stanley and MSFL collectively, as the context requires.
The notes are not deposits or savingsaccounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality, nor arethey obligations of, or guaranteed by, a bank.
Morgan Stanley Finance LLC |
Fixed Rate Callable Notes |
The Notes
The notes are debt securities of Morgan Stanley Finance LLC and arefully and unconditionally guaranteed by Morgan Stanley.
An early redemption, in whole but not in part, will occur on a redemptiondate if and only if the output of a risk neutral valuation model on the calendar day that is 13 calendar months prior to such redemptiondate, based on the inputs indicated in the call feature terms, indicates that redeeming on such date is economically rational for us ascompared to not redeeming on such date. Any redemption payment will be at a redemption price equal to 100% of the principalamount to be redeemed, plus accrued and unpaid interest thereon to but excluding the redemption date. If we call the notes,we will give you notice at least 5 business days before the call date specified in the notice. On or before the redemptiondate, we will deposit with the trustee money sufficient to pay the redemption price of and accrued interest on the notes to be redeemedon that date. If such money is so deposited, on and after the redemption date, interest will cease to accrue on the notes (unlesswe default in the payment of the redemption price and accrued interest) and such notes will cease to be outstanding. We describethe basic features of these notes in the sections of the accompanying prospectus called “Description of Debt Securities—FixedRate Debt Securities” and prospectus supplement called “Description of Notes,” subject to and as modified by the provisionsdescribed below. For information regarding notices of redemption, see “Description of Debt Securities—Redemptionand Repurchase of Debt Securities—Notice of Redemption” in the accompanying prospectus. All payments on the notesare subject to our credit risk.
The stated principal amount and issue price of each note is $1,000. Thisprice includes costs associated with issuing, selling, structuring and hedging the notes, which are borne by you, and, consequently, theestimated value of the notes on the pricing date will be less than the issue price. We estimate that the value of each noteon the pricing date will be approximately $964.20 or within $34.20 of that estimate. Our estimate of the valueof the notes as determined on the pricing date will be set forth in the final pricing supplement.
What goes into the estimated value on the pricing date?
In valuing the notes on the pricing date, we take into account thatthe notes comprise both a debt component and a performance-based component linked to interest rates. The estimated value ofthe notes is determined using our own pricing and valuation models, market inputs and assumptions relating to volatility and other factorsincluding current and expected interest rates, as well as an interest rate related to our secondary market credit spread, which is theimplied interest rate at which our conventional fixed rate debt trades in the secondary market.
What determines the economic terms of the notes?
In determining the economic terms of the notes, including the interestrate applicable to each interest payment period, we use an internal funding rate, which is likely to be lower than our secondary marketcredit spreads and therefore advantageous to us. If the issuing, selling, structuring and hedging costs borne by you were loweror if the internal funding rate were higher, one or more of the economic terms of the securities would be more favorable to you.
What is the relationship between the estimated value on the pricingdate and the secondary market price of the notes?
The price at which MS & Co. purchases the notes in the secondarymarket, absent changes in market conditions, including those related to interest rates, may vary from, and be lower than, the estimatedvalue on the pricing date, because the secondary market price takes into account our secondary market credit spread as well as the bid-offerspread that MS & Co. would charge in a secondary market transaction of this type, the costs of unwinding the related hedging transactionsand other factors.
MS & Co. may, but is not obligated to, make a market in the notesand, if it once chooses to make a market, may cease doing so at any time.
Morgan Stanley Finance LLC |
Fixed Rate Callable Notes |
Risk Factors
The notes involve risks not associated with an investment in ordinaryfixed rate notes. This section describes the material risks relating to the notes. For a complete list of risk factors,please see the accompanying prospectus supplement and prospectus. Investors should consult their financial and legal advisersas to the risks entailed by an investment in the notes and the suitability of the notes in light of their particular circumstances.
Risks Relating to an Investment in the Notes
| § | The notes have early redemption risk. Any early redemption, in whole but not in part, will occur on a redemptiondate if and only if the output of a risk neutral valuation model on the calendar day that is 13 calendar months prior to such redemptiondate, based on the inputs indicated in the call feature terms, indicates that redeeming on such date is economically rational for us ascompared to not redeeming on such date. In accordance with the risk neutral valuation model determination noted herein, itis more likely that the issuer will redeem the notes prior to their stated maturity date to the extent that the interest payable on thenotes is greater than the interest that would be payable on other instruments of the issuer of a comparable maturity, of comparable termsand of a comparable credit rating trading in the market. If the notes are redeemed prior to their stated maturity date, youwill receive no further interest payments on the redeemed notes and may have to re-invest the proceeds in a lower interest rate environment. |
| § | Investors are subject to our credit risk, and any actual or anticipated changes to our credit ratings or credit spreads may adverselyaffect the market value of the notes. Investors are dependent on our ability to pay all amounts due on the notes on interestpayment dates, on any redemption date and at maturity and therefore investors are subject to our credit risk and to changes in the market’sview of our creditworthiness. If we default on our obligations under the notes, your investment would be at risk and you couldlose some or all of your investment. As a result, the market value of the notes prior to maturity will be affected by changesin the market’s view of our creditworthiness. Any actual or anticipated decline in our credit ratings or increase inthe credit spreads charged by the market for taking our credit risk is likely to adversely affect the value of the notes. |
| § | As a finance subsidiary, MSFL has no independent operations and will have no independent assets. As a finance subsidiary,MSFL has no independent operations beyond the issuance and administration of its securities and will have no independent assets availablefor distributions to holders of MSFL securities if they make claims in respect of such securities in a bankruptcy, resolution or similarproceeding. Accordingly, any recoveries by such holders will be limited to those available under the related guarantee by MorganStanley and that guarantee will rank pari passu with all other unsecured, unsubordinated obligations of Morgan Stanley. Holderswill have recourse only to a single claim against Morgan Stanley and its assets under the guarantee. Holders of securitiesissued by MSFL should accordingly assume that in any such proceedings they would not have any priority over and should be treated paripassu with the claims of other unsecured, unsubordinated creditors of Morgan Stanley, including holders of Morgan Stanley-issued securities. |
| § | The price at which the notes may be sold prior to maturity will depend on a number of factors and may be substantially less thanthe amount for which they were originally purchased. Some of these factors include, but are not limited to: (i) actualor anticipated changes in interest and yield rates, (ii) any actual or anticipated changes in our credit ratings or credit spreads and(iii) time remaining to maturity. Generally, the longer the time remaining to maturity and the more tailored the exposure,the more the market price of the notes will be affected by the other factors described in the preceding sentence. This canlead to significant adverse changes in the market price of securities like the notes. Depending on the actual or anticipatedlevel of interest and yield rates, the market value of the notes is expected to decrease and you may receive substantially less than 100%of the issue price if you are able to sell your notes prior to maturity. |
| § | The rate we are willing to pay for securities of this type, maturity and issuance size is likely to be lower than the rate impliedby our secondary market credit spreads and advantageous to us. Both the lower rate and the inclusion of costs associated withissuing, selling, structuring and hedging the notes in the |
Morgan Stanley Finance LLC |
Fixed Rate Callable Notes |
original issue price reduce the economicterms of the notes, cause the estimated value of the notes to be less than the original issue price and will adversely affect secondarymarket prices. Assuming no change in market conditions or any other relevant factors, the prices, if any, at which dealers,including MS & Co., are willing to purchase the notes in secondary market transactions will likely be significantly lower than theoriginal issue price, because secondary market prices will exclude the issuing, selling, structuring and hedging-related costs that areincluded in the original issue price and borne by you and because the secondary market prices will reflect our secondary market creditspreads and the bid-offer spread that any dealer would charge in a secondary market transaction of this type, the costs of unwinding therelated hedging transactions as well as other factors.
The inclusion of the costs of issuing,selling, structuring and hedging the notes in the original issue price and the lower rate we are willing to pay as issuer make the economicterms of the notes less favorable to you than they otherwise would be.
| § | The estimated value of the notes is determined by reference to our pricing and valuation models, which may differ from those ofother dealers and is not a maximum or minimum secondary market price. These pricing and valuation models are proprietaryand rely in part on subjective views of certain market inputs and certain assumptions about future events, which may prove to be incorrect. Asa result, because there is no market-standard way to value these types of securities, our models may yield a higher estimated value ofthe notes than those generated by others, including other dealers in the market, if they attempted to value the notes. In addition,the estimated value on the pricing date does not represent a minimum or maximum price at which dealers, including MS & Co., wouldbe willing to purchase your notes in the secondary market (if any exists) at any time. The value of your notes at any timeafter the date of this pricing supplement will vary based on many factors that cannot be predicted with accuracy, including our creditworthinessand changes in market conditions. |
| § | The notes will not be listed on any securities exchange and secondary trading may be limited. The notes will notbe listed on any securities exchange. Therefore, there may be little or no secondary market for the notes. MS &Co. may, but is not obligated to, make a market in the notes and, if it once chooses to make a market, may cease doing so at any time. Whenit does make a market, it will generally do so for transactions of routine secondary market size at prices based on its estimate of thecurrent value of the notes, taking into account its bid/offer spread, our credit spreads, market volatility, the notional size of theproposed sale, the cost of unwinding any related hedging positions, the time remaining to maturity and the likelihood that it will beable to resell the notes. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade orsell the notes easily. Since other broker-dealers may not participate significantly in the secondary market for the notes,the price at which you may be able to trade your notes is likely to depend on the price, if any, at which MS & Co. is willing to transact. If,at any time, MS & Co. were to cease making a market in the notes, it is likely that there would be no secondary market for the notes. Moreover,in accordance with the risk neutral valuation model determination noted herein, it is less likely that the issuer will redeem the notesprior to their stated maturity date to the extent that the interest payable on the notes is less than the interest that would be payableon other instruments of the issuer of a comparable maturity trading in the market. Accordingly, you should be willing to holdyour notes to maturity. |
| § | Morgan Stanley & Co. LLC, which is a subsidiary of Morgan Stanley and an affiliate of MSFL, has determined the estimated valueon the pricing date. MS & Co. has determined the estimated value of the notes on the pricing date. |
| § | Our affiliates may publish research that could affect the market value of the notes. They also expect to hedge the issuer’sobligations under the notes. One or more of our affiliates may, at present or in the future, publish research reports withrespect to movements in interest rates generally. This research is modified from time to time without notice to you and mayexpress opinions or provide recommendations that are inconsistent with purchasing or holding the notes. Anyof these activities may affect the market value of the notes. In addition, our affiliates expect to hedge the issuer’sobligations under the notes and they may realize a profit from that expected hedging activity even if investors do not receive a favorableinvestment return under the terms of the notes or in any secondary market transaction. |
| § | The calculation agent, which is a subsidiary of Morgan Stanley and an affiliate of MSFL, will make determinations with respectto the notes. Any of these determinations made by the calculation agent may |
Morgan Stanley Finance LLC |
Fixed Rate Callable Notes |
adversely affect the payout to investors. Moreover,certain determinations made by the calculation agent may require it to exercise discretion and make subjective judgments. Thesepotentially subjective determinations may adversely affect the payout to you on the notes. For further information regardingthese types of determinations, see “Description of Debt Securities—Fixed Rate Debt Securities” and related definitionsin the accompanying prospectus.
Morgan Stanley Finance LLC |
Fixed Rate Callable Notes |
Use of Proceeds and Hedging
The proceeds from the sale of the notes will be used by us for generalcorporate purposes. We will receive, in aggregate, $1,000 per note issued, because, when we enter into hedging transactionsin order to meet our obligations under the notes, our hedging counterparty will reimburse the cost of the Agent’s commissions. Thecosts of the notes borne by you and described on page 2 above comprise the Agent’s commissions and the cost of issuing, structuringand hedging the notes.
Supplemental Information Concerning Plan of Distribution;Conflicts of Interest
The agent may distribute the notes through Morgan Stanley Smith BarneyLLC (“Morgan Stanley Wealth Management”), as selected dealer, or other dealers, which may include Morgan Stanley & Co.International plc (“MSIP”) and Bank Morgan Stanley AG. Morgan Stanley Wealth Management, MSIP and Bank Morgan StanleyAG are affiliates of ours. Selected dealers, including Morgan Stanley Wealth Management, and their financial advisors willcollectively receive from the agent, Morgan Stanley & Co. LLC, a fixed sales commission of $ foreach note they sell; provided that dealers selling to investors purchasing the notes in fee-based advisory accounts will not receivea sales commission with respect to such notes.
MS & Co. is an affiliate of MSFL and a wholly owned subsidiary ofMorgan Stanley, and it and other affiliates of ours expect to make a profit by selling, structuring and, when applicable, hedging thenotes. When MS & Co. prices this offering of notes, it will determine the economic terms of the notes such that for eachnote the estimated value on the pricing date will be no lower than the minimum level described in “The Notes” on page 2.
MS & Co. will conduct this offering in compliance with the requirementsof FINRA Rule 5121 of the Financial Industry Regulatory Authority, Inc., which is commonly referred to as FINRA, regarding a FINRA memberfirm’s distribution of the securities of an affiliate and related conflicts of interest. MS & Co. or any of our otheraffiliates may not make sales in this offering to any discretionary account.
Acceleration Amount in Case of an Event of Default
In case an event of default with respect to the notesshall have occurred and be continuing, the amount declared due and payable per note upon any acceleration of the notes shall be an amountin cash equal to the stated principal amount plus accrued and unpaid interest.
Where You Can Find More Information
MSFL and Morgan Stanley have filed a registrationstatement (including a prospectus, as supplemented by a prospectus supplement) with the Securities and Exchange Commission, or SEC, forthe offering to which this pricing supplement relates. You should read the prospectus in that registration statement, the prospectussupplement and any other documents relating to this offering that MSFL and Morgan Stanley have filed with the SEC for more complete informationabout MSFL, Morgan Stanley and this offering. You may get these documents without cost by visiting EDGAR on the SEC web siteat www.sec.gov. Alternatively, MSFL, Morgan Stanley, any underwriter or any dealer participating in the offering will arrangeto send you the prospectus and the prospectus supplement if you so request by calling toll-free 1-(800)-584-6837.
You may access these documents on the SEC web siteat www.sec.gov as follows:
Prospectus Supplement dated November 16, 2020
Prospectus dated November 16, 2020
Terms used but not defined in this pricing supplementare defined in the prospectus supplement or in the prospectus.
