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Morgan Stanley, the issuer of the Market Vectors Currency ETNs, has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Morgan Stanley has filed with the SEC for more complete information about the issuer and the offering of the Market Vectors Currency ETNs. You may get these documents for free by clicking here or EDGAR on the SEC Web site at www.sec.gov. Alternatively, you may request a free copy of the prospectus by calling Van Eck Securities Corporation at 1.888.MKT.VCTR; you may also request a copy from Morgan Stanley or any other dealer participating in this offer. |
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Market Vectors Currency ETNs
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| Single Exposure ETNs |
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| Double Exposure ETNs |
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What are Market Vectors Currency ETNs?
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Market Vectors Currency Exchange-Traded Notes are senior, unsecured debt securities issued by Morgan Stanley that deliver exposure to the exchange rate between U.S. dollars and foreign currencies. The underlying indices are also affected by movements in interest rates in the country of the underlying currency and in the United States.
Market Vectors ETNs are not equities or index funds, but do possess some trading advantages of these products.
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What are Market Vectors Double Exposure ETNs?
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The Double Long and Double Short strategies are two-times leveraged directional investments for those looking to manage risk or to enhance profits from upward or downward currency market movements.
The underlying indices seek to double the daily investment performance of a specific currency by producing investment results that are 200% of a long investment in that currency (Double Long strategy) or 200% of a short investment in that currency (Double Short strategy).
Leverage has potential for greater returns and losses and involves significant risk; investors should discuss this strategy with their financial advisors prior to investing.
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What are the advantages of exchange-traded notes?
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Exchange-traded notes allow for convenient access to the returns of market benchmarks, minus investor fees(1). They offer trading flexibility not unlike equities and are traded on an exchange throughout the day. ETNs can act as an effective hedging tool, as they can be traded long or short. ETNs typically seek to offer cost-effective investments in previously cumbersome, expensive or difficult-to-access sectors of the market. Please speak to your financial advisor for more information.
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How do ETNs generate returns?
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Investors may trade ETNs on an exchange at market price or receive a payment upon maturity (including upon acceleration) or early redemption(2), based on Index performance, less investor fees(1).
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Who is the issuer?
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Morgan Stanley is a global financial services firm that, through its subsidiaries and affiliates, provides its products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. The credit ratings for Morgan Stanley’s senior debt are A1 for Moody’s and A+ for Standard & Poor’s(3). Morgan Stanley's senior debt credit rating from S&P set forth above is on negative outlook.
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How can you buy and sell Market Vectors ETNs?
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Market Vectors ETNs are listed on NYSE Arca. You can buy and sell Market Vectors ETNs through a broker at any time and will be subject to brokerage commissions. You may sell Market Vectors ETNs in several ways. You can sell the ETNs in the secondary market during trading hours. You may also choose early redemption if you own a large block of ETNs, typically 50,000 units, and redeem the block directly to the issuer (see the procedures for redemption(2) set forth in the applicable prospectus). Alternatively, you may hold the ETNs until maturity (including upon acceleration) and receive a cash payment from the issuer based upon the positive or negative performance of the underlying index, less investor fees(1).
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What are the risks of investing in ETNs?
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ETNs are not secured debt; there is no principal protection; the ETNs do not pay interest and the issuer is subject to default risk. Apart from default risk, there is also credit rating risk. That is, if the issuer’s credit rating is downgraded, the ETN’s value may decrease even while the underlying index rises. The underlying index may go up or down. Even if the index goes up, investors may not recover their principal once investor fees are deducted.
Investing in leveraged investment strategies, such as the Market Vectors Double Exposure ETNs, involves significant additional risk. Any movement in the spot exchange rate or any differential between short-term interest rates will have a two-times leveraged impact on the underlying index.
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| Convenient |
| easy access to major world currencies through a single securities transaction |
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| Customized |
| customized tools to execute risk management strategies |
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| Economical |
| cost-effective way to take directional positions on global currencies |
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1Please see the prospectus for complete information about investor fees. The Investor Fee on the inception date will equal zero. On each subsequent calendar day until maturity or early redemption, the Investor Fee will increase by an amount equal to the yearly investment fee times the principal amount of your ETNs times the Index Factor on that day (or, if such day is not an index business day, the Index Factor on the immediately preceding an index business day) divided by 365. The Index Factor on any given day will be equal to the closing value of the Index on that day divided by the initial index level. The initial index level is the value of the underlying index on the inception date.
2Investors must make a request to redeem at least 50,000 units of the ETNs directly to the issuer, Morgan Stanley, subject to the procedures described in the relevant prospectus.
3The ETNs are not rated and offer no principal protection. Investors in the ETNs are subject to the credit risk of the issuer, Morgan Stanley, for any amounts payable on the ETNs at maturity or upon any earlier redemption.
The Market Vectors Currency ETNs are senior unsecured debt obligations of Morgan Stanley that do not pay interest or guarantee the return of principal.
The amount investors will be paid on their Market Vectors Currency ETNs at maturity or on any earlier repurchase date will depend on the index closing value of the underlying index on the applicable valuation date(s) and on the amount of investor fees that will have accumulated with respect to the Market Vectors Currency ETNs. Because the investor fees reduce the amount of payment you may receive at maturity or upon any earlier repurchase, the level of the underlying index on the applicable valuation date(s) must increase sufficiently to compensate for the deduction of the investor fees in order for you to receive at least the amount of your initial investment in the Market Vectors Currency ETNs at maturity or upon our earlier repurchase. In order to require the issuer to repurchase the Market Vectors Currency ETNs, investors must make the request with respect to at least 50,000 Market Vectors Currency ETNs. Depending on the index level on the applicable valuation date(s), investors could lose a substantial portion or even all of their investment.
In the case of the Market Vectors Double Exposure ETNs (Double Long and Double Short strategies), if the closing indicative value of the ETNs is less than or equal to $1.00 per ETN for any index business day, the maturity date of the ETNs will be accelerated and the ETNs will return only a de minimis amount, or zero.
Market Vectors Currency ETNs can be bought and sold through your broker at any time and will be subject to brokerage commissions.
Market Vectors Currency ETNs are subject to significant risk of loss. Risks include exposure to: single currency exchange rates; differences between the currency forward contracts tracked by the underlying index and the official spot rate; changes in the volatility of the underlying index; changes in the currency markets during hours when the Market Vectors Currency ETNs are not trading; changes in interest rate levels; government intervention in the currency markets; geopolitical conditions and economic, financial, regulatory, political, judicial or other events that affect the foreign exchange markets; and Morgan Stanley’s creditworthiness.
In addition, currency markets are subject to temporary distortions or other disruptions due to various factors, including lack of liquidity, participation of speculators and government regulation and intervention. As a result, the market value of the Market Vectors Currency ETNs will vary and may be less than the amount of your initial investment at any time over the term of the ETNs.
Market Vectors Double Exposure ETNs are also subject to additional significant risks associated with leverage. Any movement in the spot exchange rate or any differential between short-term interest rates will have two times leveraged impact on the underlying index. Additional risks associated with Market Vectors Double Exposure ETNs include adverse effects of interest rates on the index. In addition, the daily rebalancing of the index may dampen the positive effect or amplify the negative impact of currency movements on the index level.
“Standard & Poor’s®,” “S&P®,” "S&P Chinese Renminbi Total Return Index" and "S&P Indian Rupee Total Return Index" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Morgan Stanley. The Market Vectors Currency ETNs are not sponsored, endorsed, sold or promoted by The McGraw-Hill Companies, Inc., and The McGraw-Hill Companies, Inc. makes no representation regarding the advisability of investing in the Market Vectors Currency ETNs.
Van Eck Securities Corporation is the exclusive marketer of the Market Vectors Currency ETNs.
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