an INVESTOR’S GUIDE TO THE US TREASURY MARKET
february 2014
An Investor’s
Guide to the US
Treasury Market
summary
Many investors concerned with principal preservation turn
to US Treasury securities when building the foundation
of their investment portfolios. Commonly used as a core
investment, they provide periodic interest income and are
considered to be among the highest credit quality fixed
income securities.
This guide covers certain key topics related to Treasury
securities, including an overview of the market, their features,
benefits and risks and the different structures available. If you
are planning for retirement or other future financial obligations,
a laddered portfolio strategy using Treasury securities
may be worth considering. Consult your Morgan Stanley
Financial Advisor to find out how they may be able to help
you meet your specific investment goals.
in brief
2
What are US Treasury Securities?
3
Types of US Treasury Securities
5
An Overview of the US Treasury Market
6Utilizing Treasury Securities
in Your Portfolio
6
Treasury Investment Basics
7Treasury Security Investment
Considerations
This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other
financial instrument or to participate in any trading strategy. This is not a research report and was not prepared by the research departments of Morgan Stanley
& Co. LLC or Morgan Stanley Smith Barney LLC. It was prepared by Morgan Stanley Wealth Management sales, trading or other non-research personnel.
Past performance is not necessarily a guide to future performance. Please see additional important information and qualifications at the end of this material.
An Investor’s Guide to the US Treasury Market
What Are US
Treasury Securities?
Treasury securities are debt obligations issued by the US government to raise cash
needed to fund its operations and to help finance the federal deficit. When you buy
them, you are lending money directly to the US government. In return, the government
is obligated to pay periodic interest, plus full principal at maturity. Of all fixed income
investments, Treasury securities are thought to provide the most secure haven
for principal preservation.
what are the benefits of investing in us treasury securities?
1
2
3
4
5
principal preservation. Backed by the full faith and credit of the US government, Treasury securities are
considered to be among the most secure fixed income investments available. They provide a guaranteed return
of principal and interest when held to maturity. However, this guarantee does not eliminate market risk. See
page 7 for an explanation about Treasury security investment considerations.
In addition to principal preservation, the US government guarantees timely
interest payments to investors holding coupon-bearing Treasury securities.
a reliable income stream.
state & local tax-exempt income. The interest generated by Treasury securities is exempt from state
and local taxes. This tax-exemption feature provides a yield advantage over fully taxable securities, especially
for residents of high-tax states. Keep in mind that Treasury securities are subject to federal income tax on
interest income.
a wide range of maturities.
Treasury securities are available in a wide range of maturities, from a few
days to 30 years.
liquidity at market prices. If necessary, you can sell your Treasury investment in the secondary market,
prior to maturity. Morgan Stanley Wealth Management maintains a secondary market in Treasury securities
enabling you to sell your holdings at market prices. Of course, the price you receive may be more or less than
your original investment, or par value, depending on market conditions at the time of sale. See page 5 for more
information on the secondary market.
This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material
was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Please refer to important information
and qualifications at the end of this material.
2
Morgan Stanley | 2014
An Investor’s Guide to the US Treasury Market
Types of
US Treasury Securities
T
reasury securities are issued in six
classes: bills, notes, bonds, Treasury Inflation Protection Securities
(TIPS), floating rate notes and zerocoupon Treasury (STRIPS). Most
Treasury issues are non-callable,
eliminating early redemption risk.
treasury bills. Treasury bills (Tbills) are short-term securities with
maturities of four, 13, 26 and 52 weeks.
Bills are typically traded in $1,000
denominations and increments; however, they are available from as little
as $100 denominations and increments. They are traditionally issued
at a discount and pay accreted interest
at maturity.1 However, under certain
market conditions, T-bills may be
issued at or above par, which will
result in a zero or negative return.
Any interest received is the difference
between the discounted purchase
price, if any, and the par (or face) value
of the security at maturity.
T-bills are primarily quoted on
a discount yield basis and rarely at
a dollar price. The yield, if quoted,
represents the percentage discount
from the face value of the security.
For example, an investor might pay
$9,900 for a $10,000, 26-week T-bill
a nd receive accreted interest of
$100 at maturit y. This translates
i nto a 2% discou nt y ield. When
comparing the yields of T-bills to
Treasury notes or bond yields, the
T-bill discount rate is conver ted
to a bond equivalent yield (BEY),
which allows a direct comparison to
be made between T-bills and other
Treasury securities.
New issue T-bills are sold at auction by the US Treasury on a regular
basis. Auctions for four-week bills
occur on Tuesday, 13- and 26-week
bills are auctioned on Monday, while
52-week bills are auctioned monthly. Please note federal holidays may
cause these schedules to change.
(See page 5 for details on purchasing Treasury securities at auction
through Morgan Stanley Wealth
Management.)
tre asu ry notes. Trea sur y
securities with intermediate term
maturities ranging from two to 10
yea rs a re ca lled Trea sur y notes
(T-notes). T-notes offer a fixed rate
of interest ( known as the coupon
rate) which is paid semiannually.
Notes a re t y pica lly t raded in
$1,000 face value denominations
and increments (although $100 is
t he minimum ava ilable) a nd a re
auctioned in reg ula r cycles, like
T-bills, but less frequently.
treasury bonds. Treasury securities with maturities greater than 10 years
are called Treasury bonds (T-bonds).
Like T-notes, T-bonds are typically traded in $1,000 face value denominations
and increments (but are also available
from $100 face value minimums), have a
fixed coupon rate and pay interest semiannually. Currently, Treasury bonds
are issued in 30-year maturities only.
Both T-notes and T-bonds are generally quoted on a price basis and in
32nds, for example; 100:10 equals 100
10/32 which equals 100.3125 per $1,000
par amount, or $1,003.13.
treasury inflation protection
securities — tips. Treasury Inflation
Protection Securities (TIPS) are designed to protect the investor’s capital
from the effects of inflation (in periods
of rising inflation a dollar today will be
worth less when it is redeemed in the
future). The principal value of TIPS is
adjusted in line with changes in the
Consumer Price Index (CPI), therefore
the principal amount increases with
inflation and decreases with deflation. When TIPS mature, investors are
paid the adjusted principal or original principal amount, whichever is
greater; the government guarantees
the investor will receive at least par
value at maturity. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material
was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Please refer to important information
and qualifications at the end of this material.
Morgan Stanley | 2014
3
An Investor’s Guide to the US Treasury Market
TIPS are issued in five-, 10- and
20-year maturities and are typically
traded in $1,000 face value denominations and increments, although the
minimum face value and increment is
$100. They pay interest semiannually
at a fixed rate and this rate is applied
to the adjusted principal; so, like the
principal, interest payments rise with
inflation and fall with deflation. The
initial coupon rate on TIPS is often
lower than that of a T-note of the same
maturity because the issuer may be
required to pay a higher rate of interest
over time, due to future increases in
the CPI. However, there is no assurance that these increases in the CPI
will occur and, because the return
on TIPS is linked to inflation, they
may underperform fixed rate Treasury
securities in times of low inflation.
As with other Treasury securities,
TIPS interest payments are exempt
from state and local taxes but are federally taxable each year. In addition, although the inflation-adjusted principal
amount is not received until maturity,
the adjustment to the principal amount
is federally taxable each year. TIPS may
be an appropriate choice for qualified
retirement accounts, including IRAs
and 401(k) plans; the tax-deferred nature of these accounts enables investors
to compound interest tax-free until
withdrawn, and to defer the tax liability of any potential increase in the
inflation-adjusted principal.
floating r ate notes. Floating
rate notes or “f loaters” are bonds
that pay interest income based on
the performance of an underlying
reference rate that resets periodically:
daily, quarterly or semiannually, for
example. The bond issuer agrees to
pay interest in an amount equal to the
reference rate, which is a specified
index or interest rate, plus a fixed
spread. As a result, floaters may help
protect against interest rate risk — the
decline in a bond’s price when interest
rates rise — because the coupon (the
reference rate plus the spread) resets
to the higher interest level. See page
7 for a more a detailed explanation
about interest rate risk.
A f loater’s initial coupon is the
sum of the reference rate at issuance
and the spread. Thus, if the reference rate is 0.04% and the spread is
12 basis points, 2 the initial coupon
will be 0.16%, (Coupon = Reference
Rate ± Spread). 3 The note’s payments
then increase or decrease periodically, based on the movement of the
reference rate.
For T rea sur y f loaters, wh ich
debuted in January 2014, the reference rate is the 13-week Treasury bill
auction High Rate. They may be sold at
discount, par or premium; are issued
with maturities of at least one year, but
not more than 10; and may provide a
yield pickup over traditional T-bills.
Interest on Treasury floaters accrues
daily throughout the payment period
and is paid quarterly on the last calendar day of the month.
zero coupon TREASURY STRIPS. To
facilitate the issuance of zero coupon
Treasury bonds, the Treasury developed the STRIPS (Separate Trading
of Registered Interest and Principal
of Securities) program, whereby the
coupon and principal payments are
“stripped” from T-notes and T-bonds
and then traded separately as zero
coupon bonds.
After it is stripped, each piece of
the original security can effectively
trade by itself. For example, a newly
issued five-year note would be stripped
into eleven separate securities — ten
representing the note’s semiannual
coupon payments (called coupon
STRIPS) and one representing its
final principal payment (principal
STRIP). The principal STRIP would
have a maturity of five years, while
the coupon STRIPS would be traded individually, or repackaged into
a range of different maturities (e.g.,
six months, 18 months). STRIPS are
bought directly from qualified financial institutions and brokers, such as
Morgan Stanley Wealth Management,
but they still carry the full faith and
credit of the US government and are
state and local income tax-exempt.
As with T-bills, STRIPS are generally sold at a deep discount to their
face value, and do not make periodic
interest payments. Instead, accreted
interest compounds semiannually at
a stated fixed rate, and the zero grows
to its full face value at maturity. The
difference between the bond’s face value and its discounted purchase price
represents the investor’s return. Due
to the internal interest compounding
feature, zero coupon bonds mitigate
reinvestment risk; however, in the
secondary market these securities
have the most price volatility versus
coupon bearing bonds of the same
maturity. STRIPS are typically offered
in $1,000 face values and with maturities from one to 30 years; the longer
the term to maturity, the greater the
purchase discount.
Although interest is not received
until maturity, the accreted interest is subject to annual federal taxation, when held in a taxable account.
Therefore, STRIPS, like TIPS may be
suitable investments for tax-deferred
accounts such as IRAs or 401(k) plans,
as accreted interest is not taxed until
it is withdrawn. 1
Accreted interest is treated as ordinary
income for federal tax purposes and must
be declared in the period in which it is received (at maturity).
2
A basis point is one one-hundredth of one
percent or .01%.
3
The quoted yield is hypothetical, is for
illustrative purposes and does not reflect
current rates.
This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material
was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Please refer to important information
and qualifications at the end of this material.
4
Morgan Stanley | 2014
An Investor’s Guide to the US Treasury Market
An Overview of the
US Treasury Market
T
he Treasury market is the most
active capital market in the world.
Thousands of investors are daily participants, exchanging billions of dollars’
worth of securities. The movements of
Treasury securities are more closely
watched than those of any other fixed
income security and help determine the
direction of the bond market.
the primary market. Treasury securities are initially issued and sold in
the primary (new issue) auction market.
The Treasury sells T-bills, notes and
bonds, as well as Treasury Inflation Protection Securities (TIPS) and Treasury
floaters through a competitive bidding
process at regularly scheduled auctions
held by the Federal Reserve.
morgan stanley — primary dealer.
The Federal Reserve works directly
with designated primary dealers when
issuing and selling US Treasury securities. It is the responsibility of a primary dealer to make a market in all
government securities. Morgan Stanley
& Co. LLC is one of 22 primary dealers and an affiliate of Morgan Stanley
Wealth Management.
the auction process. Primary
dealers participate in a competitive
auction to determine the interest rate
on each new issue of Treasury securities. Each bid and order size is ranked
from the lowest to the highest bid rate.
The lowest bid rate at which all the
securities can be sold establishes the
discount rate or yield. This rate is paid
on the entire issue. Investors whose bid
rates were at or below the established
discount rate or yield will receive an
allotment of Treasury securities; however, an allotment may be prorated if the
bid rate equals the clearing rate / yield.
Investors may purchase new issue Treasur y securities through
Morgan Stanley Wealth Management or through the Federal Reserve
TreasuryDirect® program. If placed
directly with the Treasury, your bid
is classified as non-competitive and
you will receive securities at the rate
cleared in the auction. However, noncompetitive bids can also be placed with
Morgan Stanley Wealth Management.
Purchasing Treasury Securities at
Auction Through Morgan Stanley
Wealth Management
We are committed to offering our clients efficient access to Treasury auction transactions. You can purchase
Treasury securities at auction through
Morgan Stanley Wealth Management,
gaining a number of benefits not offered through the TreasuryDirect®
program. These advantages include:
easy to purchase . One phone
call to your Morgan Stanley Financial
Advisor is all it takes for you to buy
Treasury securities at auction through
Morgan Stanley Wealth Management.
You can enter either a competitive or a
non-competitive bid. A non-competitive
bid automatically secures Treasury
securities at the rate cleared in the
auction. A competitive bid allows you
to specify a minimum discount rate
or yield; hence, securities will only be
purchased if the auction clears this rate.
liquidity. If you want to sell all, or
a portion, of your Treasury securities
prior to maturity, a simple phone call to
your Morgan Stanley Financial Advisor can effect the transaction through
our actively traded secondary market.
Convenient collection and reinvestment of interest. By maintain-
ing your Treasury investments in a
Morgan Stanley Wealth Management
brokerage account, you can conveniently instruct your Financial Advisor to reinvest interest and principal
payments as they are received.
You will be charged a per transaction service fee when purchasing
Treasury securities at auction through
Morgan Stanley Wealth Management.
When interest rates are low, the impact
of the fee may result in a negative yield.
The Secondary Market
After Treasury securities are auctioned
in the primary market, they are immediately bought and sold in the secondary market. Individual investors may
purchase previously issued bonds, notes
and bills through Morgan Stanley Wealth
Management’s active secondary market,
overseen by our experienced trading staff.
Treasury securities can also be sold
before maturity in the secondary market.
However, you should be aware that the
price you receive in the secondary market
may be more or less than the original purchase price or maturity value, depending
on market conditions at the time of sale. This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material
was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Please refer to important information
and qualifications at the end of this material.
Morgan Stanley | 2014
5
An Investor’s Guide to the US Treasury Market
Treasury Investment Basics
Utilizing Treasury
Securities in
Your Portfolio
The Laddered Portfolio
Investment Strategy
Planning for retirement, generating
predictable income to meet expenses
or funding other future financial obligations, requires a portfolio management strategy that takes into account
changing interest rates as well as your
changing investment needs.
With a laddered portfolio strategy, you
can invest in Treasury securities with
different maturities — short, intermediate,
and /or long-term — to generate an attractive average portfolio yield, maintain periodic liquidity and protect against reinvestment risk due to changing interest rates.
For instance, the example below assumes an investment of $100,000. Rather
than investing the entire $100,000 in a
three-year Treasury note with a yield of
1.50%, the investment can be structured
using a laddered portfolio investing the
$100,000 in two-, three-, five- and 10-year
Treasury notes, for an estimated average
portfolio yield of 2.05% (typically yields
increase as the maturity term increases).
By using the laddered portfolio strategy
as this example illustrates, investments
can be structured to maintain periodic
liquidity through the shorter-term notes
while increasing the portfolio’s average
yield through the longer-term notes.
Keep in mind, as with any fixed income security, the price of the bonds
in a laddered portfolio will fluctuate
due to changing market conditions
and interest rates. Although a laddered
portfolio may not outperform all comparable investments under any conditions, it can help to stabilize a portfolio’s
performance by potentially reducing
exposure to interest rate risk. Below, we discuss some basic
bond concepts that you should
be familiar with when investing
in Treasuries:
• Prior to maturity, bond prices
and interest rates have an
inverse relationship. That
is, when interest rates fall,
bond prices rise, and, when
interest rates rise, bond prices
fall. This price fluctuation is
also influenced by changing
economic, political and market
factors. However, when held to
maturity, investors receive the
full par value of the security.
• The par (or face) value of
a coupon-bearing Treasury
security typically equals $1,000
(although they are also available
in $100 par value). Due to the
inverse relationship between
bond prices and interest rates,
a bond with a coupon rate that
is higher than the prevailing
market interest rate will trade
at a price above par value and is
called a premium bond. A bond
with a coupon rate that is lower
than the prevailing interest rate
will trade below its par value
and is called a discount bond.
• The prices of Treasury
securities quoted in financial
newspapers are indications of
prices as of time of press, for
trades of $1 million or more.
The bond table will show a
closing bid and ask from the
previous trading day. The bid
price is the highest price that a
buyer is willing to pay. The ask
price is the lowest price that a
seller is willing to accept.
Hypothetical Example of a Short to Intermediate Treasury Laddered Portfolio
Quantity
Description
Coupon
Maturity
YTM
Price
25M
2-yr Treasury Note
1.25%
2013
1.25%
100
25M
3-yr Treasury Note
1.50%
2014
1.50%
100
2.50%
2016
2.50%
100
3.00%
2021
3.00%
Average Portfolio Coupon / Yield to Maturity: 2.05%
100
25M
5-yr Treasury Note
25M
10-yr Treasury Note
Hypothetical example. Yields will vary. The yields quoted in this hypothetical laddered portfolio are for illustrative purposes only and do not reflect current
rates. Your Morgan Stanley Financial Advisor can inform you of the current yields available in the Treasury market. M = $1,000, i.e., 25M = $25,000.
This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material
was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Please refer to important information
and qualifications at the end of this material.
6
Morgan Stanley | 2014
An Investor’s Guide to the US Treasury Market
Treasury
Security Investment
Considerations
As with all investments, Treasury securities have inherent
risks, and while holding a diversified4 portfolio may help
mitigate some risks, the following should be considered:
interest rate and Duration risk.
Interest rate risk is the risk that the
market value of securities might rise
or fall, primarily due to changes in
prevailing interest rates. Generally,
fixed income securities are sensitive
to f luctuations in interest rates; if
interest rates rise, bond prices will
fall and vice versa. The rationale is
that as interest rates rise, investors
are able to realize greater yields from
other bond investments that reflect
the new higher market interest rate;
hence the value of those securities
with coupons lower than the current
market rate will be reduced. Usually,
the longer the term to maturity, the
greater the degree of price volatility.
However, if held to maturity, the investor will receive the original principal amount. Duration measures a
bond’s price sensitivity to changes in
interest rates. The longer the bond’s
duration, the more sensitive its market value is to changes in interest
rates. Your Financial Advisor can
provide you with the duration risk
of your fixed income investments.
credit risk. Credit risk is the risk
that the issuer might be unable to
pay interest and / or principal in a
timely manner. Among domestic fixed
income investments, US Treasury
securities are considered to be among
the safest investments as they are
backed by the full faith and credit of
the US government.
reinvestment risk. Reinvestment
risk is the risk that the income stream
from a given investment must be reinvested at a lower interest rate. This risk
is especially evident during periods of
falling interest rates where coupon payments are often reinvested at a lower
rate than the original instrument.
Inflation is another factor that should
be considered. During inflationary periods, the purchasing power of returned
principal and coupon payments may be
eroded. To compensate investors for
this uncertainty, the coupon rate of
non-inflation adjusted securities usually includes a risk premium. for more
information
Your Morgan Stanley
Financial Advisor
can provide you with
additional information on
US Treasury securities,
including a selection of
current offerings, and will
assist you in structuring a
portfolio that is suited to
your financial goals.
4
Diversification does not guarantee a profit
or protect against a loss in a declining
financial market.
This material is not a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy. This material
was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Please refer to important information
and qualifications at the end of this material.
Morgan Stanley | 2014
7
Important Information and Qualifications
This material was prepared by sales, trading or other non-research personnel of Morgan Stanley Smith Barney LLC (together with its affiliates
hereinafter, “Morgan Stanley Wealth Management,” or “the firm”). This
material was not produced by a research analyst of Morgan Stanley & Co.
LLC or Morgan Stanley Wealth Management, although it may refer to a
Morgan Stanley & Co. LLC or Morgan Stanley Wealth Management research
analyst or report. Unless otherwise indicated, these views (if any) are the
author’s and may differ from those of the aforementioned research departments or others in the firms.
The securities / instruments discussed in this material may not be suitable
or appropriate for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and
objectives. This material does not provide individually tailored investment
advice or offer tax, regulatory, accounting or legal advice. By submitting this
document to you, Morgan Stanley Wealth Management is not advising you
to take any particular action based on the information, opinions or views
contained in this document. Prior to entering into any proposed transaction,
recipients should determine, in consultation with their own investment, legal,
tax, regulatory and accounting advisors, the economic risks and merits, as
well as the legal, tax, regulatory and accounting characteristics and consequences, of the transaction. This information is not intended to, and should
not, form a primary basis for any investment decision. You should consider
this material among other factors in making an investments decision. Unless
stated otherwise, the material contained herein has not been based on a
consideration of any individual client circumstances and as such should not be
considered to be a personal recommendation. This material 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 US federal
tax laws. Each taxpayer should seek advice based on the taxpayer’s particular
circumstances from an independent tax advisor. The firm is not acting as a
fiduciary under either the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”) or under section 4975 of the Internal Revenue Code
of 1986 as amended (“Code”) in providing this material. Morgan Stanley
Wealth Management is not acting as a municipal advisor and the opinions or
views contained herein are not intended to be, and do not constitute, advice
within the meaning of Section 975 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act.
This material was prepared by or in conjunction with Morgan Stanley
Wealth Management trading desks that may deal as principal in or own or
act as market maker or liquidity provider for the securities / instruments (or
related derivatives) mentioned herein and may trade them in ways different
from those discussed in this material. Morgan Stanley Wealth Management
and its affiliates may act in a principal or agency capacity, and will charge a
markup or commission. The trading desk may have accumulated a position in
the subject securities / instruments based on the information contained herein.
Trading desk materials are not independent of the proprietary interests of
the firm, which may conflict with your interests. We may also perform or
seek to perform investment banking services for the issuers of the securities / instruments mentioned herein.
The author(s) principally responsible for the preparation of this material
receive compensation based upon various factors, including quality and accuracy of their work, firm revenues (including trading and capital markets
revenues), client feedback and competitive factors. Morgan Stanley Wealth
Management is involved in many businesses that may relate to companies,
© 2014 Morgan Stanley Smith Barney LLC. Member SIPC.
securities or instruments mentioned in this material. These businesses include
market making and specialized trading, risk arbitrage and other proprietary
trading, fund management, investment services and investment banking.
This material has been prepared for informational purposes only and is not
an offer to buy or a solicitation of any offer to sell any security / instrument,
or to participate in any trading strategy. Any such offer would be made only
after an investor had completed an independent investigation of the securities, instruments or transactions, and received all information required to
make their own investment decision, including, where applicable, a review of
any prospectus, prospectus supplement, offering circular or memorandum
describing such security or instrument. That information would supersede
this material and contain material information not contained herein and to
which prospective participants are referred. This material is based on public
information as of the specified date, and may be stale thereafter. We have
no obligation to tell you when information herein is stale or may change. We
make no express or implied representation or warranty with respect to the
accuracy or completeness of this material, nor are we obligated to provide
updated information on the securities / instruments mentioned herein.
Any securities referred to in this material may not have been registered
under the US Securities Act of 1933, as amended, and, if not, may not be
offered or sold absent an exemption therefrom. Recipients are required to
comply with any legal or contractual restrictions on their purchase, holding,
sale, exercise of rights or performance of obligations under any security / instrument or otherwise applicable to any transaction.
The value of and income from investments may vary because of changes
in interest rates, foreign exchange rates, default rates, prepayment rates,
prices of securities / instruments, market indexes, operational or financial
conditions of companies or other factors. There may be time limitations on
the exercise of options or other rights in securities / instruments transactions. Past performance is not necessarily a guide to future performance.
Estimates of future performance are based on assumptions that may not be
realized. Actual events may differ from those assumed and changes to any
assumptions may have a material impact on any projections or estimates.
Other events not taken into account may occur and may significantly affect
the projections or estimates. Certain assumptions may have been made for
modeling purposes only to simplify the presentation and / or calculation of
any projections or estimates, and Morgan Stanley Wealth Management does
not represent that any such assumptions will reflect actual future events
or that all assumptions have been considered or stated. Accordingly, there
can be no assurance that estimated returns or projections will be realized
or that actual returns or performance results will not materially differ from
those estimated herein.
The trademarks and service marks contained herein are the property of
their respective owners. Third-party data providers make no warranties or
representations, express or implied, relating to the accuracy, completeness, or
timeliness of the data they provide and shall not have liability for any damages
of any kind relating to such data. Unless otherwise specifically indicated, all
information in these materials with respect to any third party not affiliated
with Morgan Stanley Wealth Management has been provided by, and is the sole
responsibility of, such third party and has not been independently verified by
Morgan Stanley Wealth Management, its affiliates or any other independent
third party.
This material may not be sold or redistributed without the prior written
consent of Morgan Stanley Wealth Management. This material is not for
distribution outside the United States of America.
CMS21 CRC799483 CS 7794659 03/14