Disclosures
This document was released in September 2025 and is intended solely for informational purposes. It does not constitute an offer or solicitation to buy or sell securities or any financial instruments, nor does it advocate any trading strategies. It should be noted that this material is not prepared by Morgan Stanley’s Research Department and does not qualify as a Research Report as outlined by FINRA regulations. This document does not offer personalized investment advice and has been created without considering the specific financial situations and objectives of recipients. Morgan Stanley Smith Barney LLC and Morgan Stanley & Co. LLC (collectively referred to as “Morgan Stanley”), members of SIPC, advise that individuals consult with their own financial, legal, tax, regulatory, and accounting professionals to assess the economic risks and benefits, along with the legal, tax, regulatory, and accounting implications of any referenced transactions or strategies. The suitability of a specific investment or strategy is contingent on the unique circumstances and goals of each investor. Morgan Stanley, its affiliates, employees, and Financial Advisors do not offer tax, accounting, or legal guidance. Individuals are encouraged to seek advice from tax professionals regarding taxation and tax planning, and to consult with attorneys for legal matters. Historical performance does not guarantee or indicate future results. The historical data presented reflects past performance and does not ensure similar outcomes in the future. Some statements in this document may be categorized as “forward-looking statements” in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not based on historical facts or current conditions; rather, they stem from management’s expectations and are subject to uncertainty and changes in circumstances. These statements do not assure future results and involve various known and unknown risks, uncertainties, and assumptions that can be challenging to predict and often beyond our control. Furthermore, this report includes statements based on hypothetical scenarios and assumptions, which may not materialize or could differ significantly from actual events; thus, they should not be interpreted as representative of current risks or forecasts of anticipated risks. Actual results and financial conditions may vary significantly from those stated due to numerous factors. Any forward-looking statements made by or on behalf of Morgan Stanley are relevant only to the date they are issued, and Morgan Stanley does not commit to updating these statements to reflect subsequent events.
Investment Risks
Due to their concentrated nature, sector investments are generally more volatile compared to investments that are diversified across various sectors and companies. Certain portfolios may include holdings categorized as Environmental, Social, and Governance (ESG) investments. Environmental factors may encompass aspects like climate change, pollution, and resource conservation. Social factors might involve how a company interacts with its stakeholders, including employees and customers, as well as its community relations. Governance factors pertain to how a company operates, including its leadership structure and the rights of shareholders and bondholders. It is advisable to thoroughly examine an investment product’s prospectus or other offering documents to better understand how it integrates ESG factors into its investment approach. ESG investments may also be referred to as sustainable investments, socially responsible investments, or diversity, equity, and inclusion (DEI) investments. However, it is crucial to recognize the lack of consistent definitions and criteria for ESG within the industry, as well as the discrepancies among various ESG rating agencies, which can yield differing ratings for the same companies or securities. This inconsistency arises from the absence of standardized global reporting and auditing protocols, as well as variations in definitions, methodologies, data sources, and subjective interpretations by ESG raters. Some issuers, including mutual funds and exchange-traded funds (ETFs), may have differing views on ESG criteria, and claims made in offering documents may exaggerate the ESG impact. Moreover, socially responsible standards can vary by region, and the ESG practices of an issuer or Morgan Stanley’s assessment of those practices may evolve over time. Portfolios that incorporate ESG investments or that apply ESG screening criteria may experience performance that deviates from those that do not use such practices. Portfolios with ESG restrictions may miss certain investment opportunities or trends available to portfolios without these criteria. There can be no assurance that an ESG-focused strategy will yield successful outcomes, and past performance is not an indicator of future results. For specific funds, please consult the fund’s prospectus or summary prospectus. Investment managers may adopt various approaches to ESG and may provide strategies distinct from those of other managers regarding the same themes. Additionally, evaluating investments requires managers to rely on information that might be incomplete, inaccurate, or unavailable, potentially leading to incorrect assessments of an investment’s ESG attributes or performance. Such information is typically derived from voluntary or third-party reporting, and Morgan Stanley does not verify its accuracy, nor does it guarantee completeness when assessing an issuer. This can lead to an inaccurate evaluation of an issuer’s business practices concerning ESG. Consequently, comparing ESG investment products can be challenging. The suitability of a specific ESG investment or strategy will rely on an investor’s unique circumstances and aims.
Market Conditions
The principal value and returns of investments can fluctuate due to market conditions. Diversification does not guarantee profits or protect against losses in declining markets. Any securities mentioned are for informational purposes and should not be construed as recommendations to buy or sell. The securities discussed may not be suitable for all investors, and it should not be assumed that the transactions or holdings referenced were or will be profitable. Morgan Stanley suggests that investors conduct their evaluations of specific investments and strategies, and they encourage seeking guidance from a financial advisor. The relevance of any investment or strategy is contingent upon an investor’s individual circumstances and objectives. Morgan Stanley endeavors to use accurate and comprehensive information, but it does not guarantee its reliability or completeness. There is no obligation to inform you of changes in opinions or information within this report. Historical performance does not assure future results. Engagement in market investments carries the risk of volatility. The values of various investments, including stocks, mutual funds, ETFs, closed-end funds, and unit investment trusts, can rise or fall over different periods. Investing in an ETF involves risks similar to investing in a diversified equity portfolio traded on relevant exchanges, such as market fluctuations driven by economic and political events, interest rate changes, and stock price trends. The investment returns and principal value of ETF investments can fluctuate, meaning that an investor’s shares may be worth more or less than the initial investment when sold. Sector-specific investments are typically more volatile due to their narrow focus compared to those that spread risk across multiple sectors and firms. Equity securities can fluctuate based on news related to businesses, industries, and economic conditions. Companies that issue dividends may reduce or eliminate these payments at any time. Growth investing does not guarantee profits or mitigate risk. Stocks of high-growth companies often carry substantial valuations, making investments in such stocks potentially riskier than those in companies with more moderate growth forecasts.
Bond Investments
Bonds carry interest rate risk, meaning that when interest rates rise, bond prices generally decline; typically, bonds with longer maturities exhibit greater sensitivity to this risk. Additionally, bonds may face call risk, where the issuer redeems the debt before its scheduled maturity date. The market value of debt instruments can vary, and selling them before maturity may yield returns that differ from the original investment or maturity value due to fluctuations in market conditions or changes in the issuer’s credit quality. Debt securities from U.S. corporate and municipal issuers provide returns through fixed periodic payments and the eventual return of principal at maturity. Fixed income investments tend to perform well in low-inflation environments but may not protect investors during periods of rising inflation. Interest income from government securities is subject to federal taxes but is exempt from state and local taxation. Bond funds and holdings share the same interest rate, inflation, and credit risks associated with the underlying bonds they contain. The return of principal in bond funds and those with significant bond holdings is not guaranteed.
Legal and Tax Considerations
Morgan Stanley, its affiliates, and Financial Advisors do not provide tax, accounting, or legal advice. Individuals should seek guidance from tax professionals for issues related to taxation and planning, and consult attorneys for legal inquiries. © 2025 Morgan Stanley & Co. LLC and Morgan Stanley Smith Barney LLC. Members SIPC. All rights reserved. CRC 4759233 09/2025
