You may receive trading or market commentary from IST sales and trading personnel ("IST Communications") from time to time. This commentary is prepared for institutional investors by sales, trading, or other non-research personnel in the Institutional Securities Divisions of one of the following Morgan Stanley companies or their affiliates: Morgan Stanley & Co. LLC, Morgan Stanley & Co. International PLC, Morgan Stanley MUFG Securities Co., Ltd, Morgan Stanley Capital Group Inc., and/or Morgan Stanley Asia Limited (together with their affiliates hereinafter "Morgan Stanley").
The basis upon which IST Communications are provided is set out below together with important risk disclosures, conflicts, and other factors which you should take into account when considering any of the information provided. Additional information discussed in such communications are available on request.
IST Communications are not Research Reports, advice, or recommendations and are not intended as such
IST Communications are not products of Morgan Stanley's Equity Research or Fixed Income Research Departments. An IST Communication is a marketing communication and is not a research report, though it may refer to a Morgan Stanley research report or the views of a Morgan Stanley research analyst. Unless otherwise indicated, all views expressed in IST Communications are the views of the authors and may differ from or conflict with those of the Morgan Stanley Equity Research or Fixed Income Research Departments or others in the Firm. For additional information and research reports, please visit https://www.morganstanley.com/what-we-do/research and for important disclosures, please see https://www.morganstanley.com/disclosures.
IST Communications are also not tax, legal, financial, or accounting advice. The views of the author may differ from others at Morgan Stanley and Morgan Stanley may engage in conflicting activities, including principal trading before or after sending the views, market making, lending, and the provision of investment banking or other services related to instruments/issuers mentioned. No investment decision should be made in reliance on such material, which is condensed and incomplete, does not include all risk factors or other matters that may be material, does not take into account individual investment objectives, financial conditions, or needs, and is not a personal recommendation or investment advice or a basis to consider Morgan Stanley to be a fiduciary or municipal or other type of advisor.
IST Communications constitute invitations to consider entering into derivatives transactions under CFTC Rules 1.71 and 23.605 (where applicable) but are not binding offers to buy or sell any instrument or enter into any transaction.
IST Communications are not intended to serve as tax, legal, or regulatory advice
Morgan Stanley does not render advice on tax and tax accounting matters to clients. Any material included within IST Communications in respect of tax treatment was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws or other tax legislation. Similarly, any material included within such Communications referring to tax advice provided by external counsel/professionals has been written in support the promotion or marketing of the transaction or matters addressed in such communications. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws or other tax legislation. Each taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.
IST Communications are not intended to serve as official trade confirmations
Unless otherwise agreed, electronic communications are not intended to serve as official trade documents or confirmations, and we do not accept responsibility for or guarantee the content of any trading recaps provided by electronic means to be timely, secure, error, or virus-free.
Non Reliance and Generic Risk Disclosures
IST Communications are based upon information generally available to the public from sources believed to be reliable. No representation is given with respect to their accuracy or completeness, and the content may change without notice. Morgan Stanley on its own behalf and on behalf of its affiliates disclaims any and all liability relating to such materials, including, without limitation, any express or implied representations or warranties for statements or errors contained in, or omissions from, these materials. Any price levels are indicative only and not intended for use by third parties.
Currency Risk Disclosure
Where an investment is denominated in a currency other than the investor's currency, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from the investment.
Use of Historic Performance Data Risk Disclosure
Unless stated otherwise, any performance data quoted represents past performance. Past performance is not indicative of future returns. No representation or warranty is made that any returns indicated will be achieved. Certain assumptions may have been made in this analysis which have resulted in any returns detailed herein. Transaction costs (such as commissions) are not included in the calculation of returns. Changes to the assumptions may have a material impact on any returns detailed. Potential investors should be aware that certain legal, accounting, and tax restrictions, margin requirements, commissions, and other transaction costs and changes to the assumptions set forth herein may significantly affect the economic consequences of the transactions discussed herein.
Use of Hypothetical Performance Data Risk Disclosure
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO RESPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING STRATEGY IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING POGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
Use of Estimates, Projections, or Predictions Risk Disclosure
Unless stated otherwise, any estimates, projections, or predictions (including in tabular form) given in IST Communications are intended to be forward-looking statements. Although Morgan Stanley believes that the expectations in such forward-looking statement are reasonable, it can give no assurance that any forward-looking statements will prove to be correct. Such estimates are subject to actual known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date of the IST Communication. Morgan Stanley expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained in IST Communications to reflect any change in its expectations or any change in circumstances upon which such statement is based. Prices indicated are Morgan Stanley offer prices at the close of the date indicated. Actual transactions at these prices may not have been effected.
Futures and Options Risk Disclosure
The trading of futures or options on futures contains inherent risks. We remind investors that these investments are subject to market risk and will fluctuate in value. The investments discussed or recommended in IST Communications may be unsuitable for investors depending upon their specific investment objectives and financial position. Where an investment is denominated in a currency other than the investor's currency, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from the investment.
Options are not for everyone. Before engaging in the purchasing or writing of options, investors should understand the nature and extent of their rights and obligations and be aware of the risks involved, including the risks pertaining to the business and financial condition of the issuer and the underlying stock. A secondary market may not exist for these securities. For customers of Morgan Stanley & Co. LLC who are purchasing or writing exchange-traded options, your attention is called to the publication "Characteristics and Risks of Standardized Options". That publication, which you should have read and understood prior to investing in options, can be viewed on the Web at the following address: https://www.optionsclearing.com/publications/risks/riskchap1.jsp.
Clients engaging in the execution structure known as Spreading should understand that Spreading may also entail substantial commissions, because it involves at least twice the number of contracts as a long or short position and because spreads are almost invariably closed out prior to expiration. Potential investors should be advised that the tax treatment applicable to spread transactions should be carefully reviewed prior to entering into any transaction. Also, it should be pointed out that while the investor who engages in spread transactions may be reducing risk, he is also reducing his profit potential. The risk/reward ratio, hence, is an important consideration. The risk of exercise in a spread position is the same as that in a short position. Certain investors may be able to anticipate exercise and execute a "rollover" transaction. However, should exercise occur it would clearly mark the end of the spread position and thereby change the risk/reward ratio. Due to early assignments of the short side of the spread, what appears to be a limited risk spread may have more risk than initially perceived. An investor with a spread position in index options that is assigned an exercise is at risk for any adverse movement in the current level between the time the settlement value is determined on the date when the exercise notice is filed with OCC and the time when such investor sells or exercises the long leg of the spread. Other multiple-option strategies involving cash settled options, including combinations and straddles, present similar risk.
ETFs Risk Disclosures and Other Important Information
We remind investors that these investments are subject to market risk and will fluctuate in value. Investors may obtain prospectuses for the funds described in this report from the ETF distributor. The distributor for the iShare ETFs is SEI Investments Distribution Co. The distributor for Diamonds, Mid Cap SPDRS, SPDRS, Nasdaq 100 Index, and Select Sector SPDRS is Alps Mutual Fund Services.
The distributor for streetTRACKS is State Street Capital Markets, LLC. The distributor for the Vanguard ETFs is Vanguard Marketing Corporation. The prospectuses contain more complete and important information about the ETFs and should be read carefully before investing.
Use of rating agencies not registered with the Japan Financial Services Agency ("JFSA") Disclosure
Unless stated otherwise, the ratings used in certain IST Communications may have been issued by a rating agency not registered with the JFSA, but is a member of one of the following rating company groups that has a member registered pursuant to the Financial Instruments and Exchange Law of Japan.
Standard & Poor's Group, ratings likely to be expressed as "AA/A-1" (Registered members: Standard & Poor's Ratings Japan K.K. and Nippon Standard & Poor's K.K.). Moody's Investors Service Group, ratings likely to be expressed as "Aa/P-1" (Registered members: Moody's Japan K.K. and Moody's SF Japan K.K.). Fitch Ratings (Registered member: Fitch Ratings Japan K.K.).
Ratings issued by any other rating agency not registered with the JFSA should be disregarded.
The Restrictions around the Sale of Contingent Convertible Securities (CoCos) To Retail Clients in the EEA
Contingent convertible instruments or securities issued by CoCo funds (in each case, within the meaning of the PI Rules (as defined below) and for the purposes hereof, the “CoCo Securities”) are not intended to be sold and should not be sold to retail clients in the EEA, as defined in the rules set out in the Product Intervention (Contingent Convertible Instruments and Mutual Society Shares) Instrument 2015, as amended or replaced from time to time (the “PI Rules”), other than in circumstances that do not and will not give rise to a contravention of those rules by any person. You should not sell or offer the CoCo Securities (or any beneficial interest in such securities) to retail clients in the EEA or communicate or approve an invitation or inducement to participate in, acquire or underwrite the CoCo Securities (or a beneficial interest in such securities) where that invitation or inducement is addressed to or disseminated in such a way that it is likely to be received by a retail client in the EEA (in each case within the meaning of the PI Rules), other than in circumstances that do not and will not give rise to a contravention of the PI Rules by any person.
Conflicts of Interest Disclosure
Morgan Stanley and others associated with it may make markets or specialize in, have or may in the future enter into principal or proprietary positions (long or short) in and effect transactions in securities of companies or trading strategies mentioned or described in IST Communications and may also perform or seek to perform investment banking, brokerage, or other services for those companies and may enter into transactions with them. We may at any time modify or liquidate all or a portion of such positions and we are under no obligation to contact you to disclose any such intention to modify or liquidate or any such modification or liquidation. Morgan Stanley acts as "prime broker" and lender for a number of hedge funds. As a result, Morgan Stanley may indirectly benefit from increases in investments in hedge funds. Where you provide us with information relating to a customer order or proposed transaction we may use that information to facilitate the execution of your order or transaction, in managing our market making, other client facilitation activities or otherwise in carrying out our legitimate business which may include, but is not limited to, hedging a risk or otherwise limiting the risks to which we are exposed. Where we commit our capital in relation to either ongoing management of inventories used to facilitate clients, or in relation to providing you with quotes, we may make use of that information to enter into transactions that subsequently enable us to facilitate clients on terms that are competitive in prevailing conditions. Morgan Stanley has policies and procedures to assist in the identification, prevention and management of conflicts of interest between Morgan Stanley and you, or between you and another Morgan Stanley client, that may arise in the course of your interactions with us. Notwithstanding these conflict management policies and procedures, we may in certain circumstances disclose to you specific information regarding the source and nature of a particular conflict as well as the steps taken by us to mitigate such conflict.
Legal Entities Disseminating This Material
These materials may not be distributed in any jurisdiction where it is unlawful to do so. The products described in IST Communications may not be marketed or sold or be available for offer or sale in a number of jurisdictions where it is unlawful to do soin Hong Kong by Morgan Stanley Asia Limited; in Singapore by Morgan Stanley Asia (Singapore) Pte. and/or Morgan Stanley Asia (Singapore) Securities Pte. Ltd., each regulated by the Monetary Authority of Singapore, which accept responsibility for its contents; in Australia by Morgan Stanley Australia Limited A.B.N. 67 003 734 576, A.F.S.L. No. 233742 and/or Morgan Stanley Australia Securities Limited A.B.N. 55 078 652 276, A.F.S.L. No. 233741, which accept responsibility for its contents; in Canada by Morgan Stanley Canada Limited, which has approved of, and has agreed to take responsibility for, the contents of this publication in Canada; in Spain by Morgan Stanley, S.V., S.A., a Morgan Stanley group company, which is supervised by the Spanish Securities Markets Commission (CNMV) and states that this document has been written and distributed in accordance with the rules of conduct applicable to financial research as established under Spanish regulations; in the United States it is directed only to institutional clients and is distributed by Morgan Stanley & Co. LLC, which accepts responsibility for its contents; and in the European Economic Area it is directed only to those persons who are eligible counterparties or professional clients and must not be acted on or relied upon by retail clients (each as defined in the Markets in Financial Instruments Directive) and is distributed in the European Economic Area by Morgan Stanley & Co. International plc, except as provided above. In Australia, this publication, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. Private Investors should obtain the advice of their Morgan Stanley International wealth management representative about the investments concerned.
Investors must themselves assess the suitability of any particular investment opportunity and carry out any due diligence that they require in relation to the strategies or investments (e.g. futures, small cap or emerging market securities) of the Hedge Fund. In doing this, investors should seek separate advice. These materials shall not constitute an offer by Morgan Stanley or any of its affiliates to sell or a solicitation of an offer to buy any securities. US investors should note that Morgan Stanley is not a fiduciary (under the US Employment Retirement Income Security Act of 1974 or otherwise).
Neither Morgan Stanley & Co. LLC, Morgan Stanley & Co. International Limited, nor any of their affiliates (together "Morgan Stanley") recommends that any person invest with any of the investment managers or funds referenced in this e-mail of the attached information. Investing in private investment funds involves a high degree of risk. Investors must themselves assess the suitability of any particular investment opportunity and carry out any appropriate due diligence in relation to the relevant fund, manager, and the underlying strategies and investments. In doing this, investors should seek separate advice and further information, and the information included in or attached to this e-mail should not form the primary basis of any investment decision. Investors should note that Morgan Stanley is not their fiduciary (under the US Employment Retirement Income Security Act of 1974 or otherwise).
Any information contained in or attached to this e-mail regarding a fund or manager has been prepared by the manager, and the manager is solely responsible for the completeness and accuracy of that information. Morgan Stanley has not verified and is not liable or responsible for the completeness or accuracy of such information (including but not limited to any information relating to the past or future performance of such fund or manager, or any related vehicle).
Investors should be aware that funds and managers mentioned in this e-mail and the attached information may be Morgan Stanley Prime Brokerage clients. Through its relationships with a fund or manager, Morgan Stanley may possess information about such fund or manager, including, potentially, the fact that a fund's or manager's relationship with Morgan Stanley has or may be terminated. Morgan Stanley may take actions as creditor to a fund without taking into consideration the interests of investors in the fund. With respect to any information concerning its relationship with a fund or manager, whether or not material, and whether negative or positive, Morgan Stanley has no responsibility to, and may not, disclose that information to fund investors.
Morgan Stanley Fund Services:
Nothing here constitutes a commitment to provide services or information. Morgan Stanley Fund Services Inc. and each of its subsidiaries is an independent entity, providing its services separately and without reference to (1) the services provided by its affiliates, including broker or dealer or investment advisory services, or (2) the assets or liabilities of its parent Morgan Stanley, or its affiliates. E-mail should not be used as the sole means to send instructions or to effect any other transaction.
Please contact Employee Trading firstname.lastname@example.org if you have any questions relating to this matter.
FID Trading Practices Information