PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 15 to
PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833
Dated March 29, 1995 August 10, 1995
Rule 424(b)(3)
$15,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
2.26% Senior Fixed Rate Notes Due August 15, 2003
EQUITY PARTICIPATION NOTES
Interest payable February 15 and August 15
The 2.26% Senior Fixed Rate Notes due August 15, 2003 (the "Notes") are
Medium-Term Notes, Series C (Senior Fixed Rate Notes) of Morgan Stanley Group
Inc. (the "Company"), as further described herein and in the Prospectus
Supplement under "Description of Notes - Fixed Rate Notes." The Notes will
bear interest at the rate of 2.26% per annum (the "Base Coupon Rate") payable
semi-annually on February 15 and August 15 of each year (each an "Interest
Payment Date") commencing February 15, 1996. The Notes will be issued in
minimum denominations of $1,000 and will mature on August 15, 2003 (the
"Maturity Date"). The Notes will not be redeemable by the Company in whole or
in part prior to the Maturity Date.
Beginning on the Interest Payment Date occurring on February 15, 2001 through
and including the Maturity Date, the interest payable on each Interest Payment
Date will equal the sum of the Base Coupon (as defined herein) plus an amount
(the "Supplemental Coupon") equal to one-sixth of the dollar amount, if any,
by which (a) the Final Basket Value exceeds (b) the Initial Basket Value (the
"Supplemental Coupon Amount"), as further described in this Pricing
Supplement. The Supplemental Coupon cannot be less than zero. The Initial
Basket Value has been set to equal $1,000 per Note based on the Market Prices
(as defined herein) on the date of pricing of a basket (the "Basket") of the
common stocks of the ten United States corporations listed herein
(collectively the "Basket Stocks" and individually a "Basket Stock"). The
Basket consists of a fixed number of shares of each Basket Stock (each a
"Multiplier") initially calculated so that each Basket Stock constitutes an
equal dollar value in the Initial Basket Value. The Multiplier with respect
to any Basket Stock will remain constant for the term of the Notes unless
adjusted for certain corporate events. See "Adjustments to the Multipliers
and the Basket" in this Pricing Supplement. The Final Basket Value will be
based on the aggregate Market Values of the Basket Stocks. The Market Value
for any Basket Stock will equal the arithmetic average of the product of the
Market Price and the applicable Multiplier of such Basket Stock on the first
10 Determination Days (as defined herein) beginning 15 NYSE Trading Days (as
defined herein) prior to August 10, 2000 (the "Calculation Period"), unless
the Market Value has been fixed previously pursuant to the "Early Lock-in
Right" (as described below). See "Final Basket Value" in this Pricing
Supplement.
The Initial Basket Value may be reset by the holders of 100% of the Notes on
any NYSE Trading Day prior to September 30, 1995 (the "Reset Period"). See
"Reset Right" in this Pricing Supplement. If such holders elect to reset the
Initial Basket Value, the Initial Basket Value used in determining the
Supplemental Coupon Amount will be the Basket Value on the date of such
election, but the Multipliers for each Basket Stock will remain unchanged.
On any NYSE Trading Day prior to August 10, 2000, the holders of 100% of the
Notes will have a one-time right (the "Early Lock-in Right") to fix the Final
Basket Value and consequently the Supplemental Coupon Amount for the Notes.
See "Early Lock-in Right" in this Pricing Supplement.
For information as to the calculation of the Supplemental Coupon, the
calculation and the composition of the Basket and certain tax consequences to
beneficial owners of the Notes, see "Supplemental Coupon," "Supplemental
Coupon Amount," "Final Basket Value," "Basket Stocks," "Adjustments to the
Multipliers and the Basket" and "United States Federal Taxation" in this
Pricing Supplement.
The Company will cause the "Final Basket Value" to be determined by the
Calculation Agent for Chemical Bank, as Trustee under the Senior Debt
Indenture.
An investment in the Notes entails risks not associated with similar
investments in a conventional debt security, as described under "Risk Factors"
on PS-6 and PS-7 herein.
________________
PRICE 100% AND ACCRUED INTEREST
________________
Proceeds to
Price to Public(1) Agent's Commissions(2) Company(1)(3)
------------------ ---------------------- ------------------
Per Note... 100% .25% 99.75%
Total...... $15,000,000 $37,500 $14,962,500
_______________
(1) Plus accrued interest, if any, from August 17, 1995.
(2) The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company estimated at $20,000.
Capitalized terms not defined above have the meanings given to such terms in
the accompanying Prospectus Supplement.
MORGAN STANLEY & CO.
Incorporated
Principal Amount:................... $15,000,000
Maturity Date:...................... August 15, 2003
Interest Rate:...................... From the Interest Payment Date
occurring on February 15, 1996
through and including the Interest
Payment Date occurring on August 15,
2000, the interest payable on each
Interest Payment Date will equal the
Base Coupon. From the Interest
Payment Date occurring on February
15, 2001 through and including the
Maturity Date, the interest payable
on each Interest Payment Date will
equal the sum of the Base Coupon plus
the Supplemental Coupon, if any. See
"Base Coupon" and "Supplemental
Coupon" below.
Interest Payment Dates:............. February 15 and August 15
Specified Currency:................. U.S. Dollars
Issue Price:........................ 100%
Settlement Date (Original
Issue Date):...................... August 17, 1995
Book Entry Note or Certificated
Note:............................. Book Entry
Senior Note or Subordinated Note:... Senior
Minimum Denominations:.............. $1,000
Trustee:............................ Chemical Bank
Base Coupon Rate:................... 2.26% per annum
Base Coupon:........................ Principal Amount times Base Coupon
Rate times Day Count/360
Day Count:.......................... The number of days from and including
the later of (i) the Original Issue
Date and (ii) the most recent
Interest Payment Date on which
interest has been paid, to but
excluding the Interest Payment Date
or the Maturity Date, as applicable,
on which interest is to be paid,
computed on the basis of a 360-day
year of twelve 30-day months.
Supplemental Coupon:................ The Supplemental Coupon is equal
to one-sixth of the Supplemental
Coupon Amount. The Supplemental
Coupon cannot be less than zero.
The Company shall cause the
Calculation Agent to provide written
notice to the Trustee at its New York
office, on which notice the Trustee
may conclusively rely, of the
Supplemental Coupon on or prior to
the tenth Business Day following the
last Determination Day used to
calculate the Final Basket Value.
Supplemental Coupon Amount:......... The Supplemental Coupon Amount is equal
to the dollar amount, if any, by
which (a) the Final Basket Value
exceeds (b) the Initial Basket Value;
provided that, if the holders of 100%
of the Notes elect to exercise the
Early Lock-in Right, interest shall
accrue on the Supplemental Coupon
Amount as determined upon exercise of
such right. See "Early Lock-in
Right" below.
Initial Basket Value:............... The Initial Basket Value shall equal
$1,000 per $1,000 principal amount of
Notes. However, the holders of 100%
of the Notes may elect to change the
Initial Basket Value pursuant to the
Reset Right (as defined below).
Based on the Market Prices (as
defined below) of the Basket Stocks
on the date of this Pricing
Supplement, the Multipliers have been
initially set so that the value of
the Basket on such date equals the
Initial Basket Value.
Reset Right:........................ On any NYSE Trading Day (as defined
below) prior to September 30, 1995
(the "Reset Period"), the holders of
100% of the Notes will have a one-
time right (the "Reset Right"), upon
completion by such holders and
acknowledgment by the Company and the
Calculation Agent of the "Official
Notice of Reset" attached hereto as
Annex A prior to 11:30 A.M. New York
City time on such date (the "Reset
Date"), to reset the Initial Basket
Value for the Notes. If such holders
elect to reset the Initial Basket
Value on any Reset Date, the Initial
Basket Value used in determining the
Supplemental Coupon Amount will be
the Basket Value on the date of such
election but the Multipliers for each
Basket Stock will remain unchanged.
Final Basket Value:................. Except as set forth below under the
heading "Early Lock-In Right," the
Final Basket Value per $1,000
principal amount of Notes will be
determined by the Calculation Agent,
an affiliate of the Company, and will
equal the sum of the Market Values of
the Basket Stocks. The "Market
Value" of a Basket Stock will equal
the arithmetic average of the
products of the Market Price and the
applicable Multiplier of such Basket
Stock determined on each of the first
10 Determination Days with respect to
such Basket Stock during the
Calculation Period. If, as of any
Trading Day within the Calculation
Period (the "Trigger Date") prior to
September 30, 2000, the number of
Determination Days with respect to a
Basket Stock does not exceed the
amount by which 10 exceeds the number
of scheduled Trading Days from and
excluding the Trigger Date to and
including September 30, 2000 (the
"Reference Period"), then each
Trading Day with respect to such
Basket Stock during the Reference
Period shall be deemed to be a
Determination Date for the purpose of
determining the Final Basket Value,
notwithstanding the occurrence of a
Market Disruption Event on any such
Trading Day; provided, that if any
scheduled Trading Day during the
Reference Period is not an actual
Trading Day, the Market Price of such
Basket Stock for such scheduled
Trading Day shall be determined as of
the earliest practicable time (which
may be after such scheduled Trading
Day), except that if such Market
Price cannot be determined before the
close of business in New York City on
September 30, 2000, the Market Price
for such Basket Stock for such
scheduled Trading Day shall be deemed
to be zero.
All percentages resulting from any
calculation on the Notes will be
rounded to the nearest one hundred-
thousandth of a percentage point,
with five one-millionths of a
percentage point rounded upwards
(e.g., 9.876545% (or .09876545) would
be rounded to 9.87655% (or
.0987655)), and all dollar amounts
used in or resulting from such
calculation will be rounded to the
nearest cent with one-half cent being
rounded upwards. See also "Basket
Stocks" below.
Early Lock-In Right:................ On any NYSE Trading Day prior to August
10, 2000, the holders of 100% of the
Notes will have a one-time right (the
"Early Lock-in Right"), upon
completion by such holders and
acknowledgment by the Company and the
Calculation Agent of the "Official
Notice of Early Lock-in" attached
hereto as Annex B prior to 11:30 A.M.
New York City time on such date (the
"Early Lock-in Date"), to fix the
Final Basket Value and consequently
the Supplemental Coupon Amount for
the Notes. If such holders elect to
exercise the Early Lock-in Right, the
Final Basket Value will be determined
as set forth above, except that the
Market Value shall be determined
using the first 3 Determination Days
(by substituting 3 for 10 in the
first paragraph under "Final Basket
Value" above) in the Calculation
Period and the Calculation Period
shall be the period from and
including the Early Lock-In Date to
but excluding September 30, 2000. In
addition, if the Final Basket Value
and consequently the Supplemental
Coupon Amount is determined pursuant
to the Early Lock-in Right (and prior
to the fifteenth scheduled NYSE
Trading Day prior to August 10,
2000), then, for purposes of
calculating the Supplemental Coupon,
the Supplemental Coupon Amount shall
be deemed to be (x) the Supplemental
Coupon Amount so determined (the
"Locked-in Supplemental Coupon
Amount") plus (y) accrued interest on
the Locked-in Supplemental Coupon
Amount at a rate equal to the current
yield (interpolated offer side rate
as of the close of business, as
determined by the Calculation Agent,
on the day following the last
Determination Day used to calculate
the Supplemental Coupon Amount) for
on-the-run U.S. Government
securities having maturities closest
to August 10, 2000, from and
including the last Determination Day
used to calculate the Supplemental
Coupon Amount to but excluding the
first scheduled NYSE Trading Day
prior to August 10, 2000. The
accrued interest described in clause
(y) of the preceding sentence shall
be adjusted and computed on the basis
of a 360-day year of twelve 30-day
months.
Calculation Period:................. Except as set forth above under the
heading "Early Lock-In Right," the
period from and including the
fifteenth scheduled NYSE Trading Day
prior to August 10, 2000 to and
including September 30, 2000.
Determination Day:.................. With respect to any Basket Stock, any
Trading Day during the Calculation
Period on which a Market Disruption
Event (as defined below) with respect
to such Basket Stock has not
occurred, except as described above
under "Final Basket Value."
Market Price:....................... If a Basket Stock is listed on a
national securities exchange, is a
NASDAQ National Market System
("NASDAQ NMS") security or is
included in the OTC Bulletin Board
Service ("OTC Bulletin Board")
operated by the National Association
of Securities Dealers, Inc. (the
"NASD"), Market Price for any Trading
Day means (i) the last reported sale
price, regular way, on such day on
the principal United States
securities exchange registered under
the Securities Exchange Act of 1934
on which such Basket Stock is listed
or admitted to trading, or (ii) if
not listed or admitted to trading on
any such securities exchange or if
such last reported sale price is not
obtainable, the last reported sale
price on the over-the-counter market
as reported on the NASDAQ NMS or OTC
Bulletin Board on such day, or (iii)
if the last reported sale price is
not available pursuant to (i) and
(ii) above, the mean, as determined
by the Calculation Agent, of the bid
prices for such Basket Stock obtained
from as many dealers in such Basket
Stock, but not exceeding three, as
will make such bid prices available
to the Calculation Agent for an
amount equal to at least 10% (or 33%
if such Market Price is being
determined in connection with the
exercise of the Early Lock-In Right)
of the Multiplier for such Basket
Stock times the principal amount of
Notes then outstanding divided by
$1,000. The term "NASDAQ NMS" shall
include any successor to such system
and the term "OTC Bulletin Board
Service" shall include any successor
service thereto.
NYSE Trading Day:................... A day on which trading is generally
conducted in the over-the-counter
market for equity securities in the
United States and on the New York
Stock Exchange, as determined by the
Calculation Agent.
Trading Day:........................ A day on which trading is conducted (i)
on the principal exchange on which
such Basket Stock is traded and (ii)
on the principal exchanges on which
hedging instruments related to such
Basket Stock are traded, as
determined by the Calculation Agent.
Basket:............................. The basket is a portfolio of common
stocks of ten United States
corporations. See "Basket Stocks"
below.
Basket Value:....................... The Basket Value, for any day, will
equal the sum of the products of the
most recently available Market Prices
and the applicable Multipliers for
the Basket Stocks. The Final Basket
Value, however, is calculated based
on averaging Market Prices for
certain days. See "Final Basket
Value."
Market Disruption Event:............ "Market Disruption Event" means, with
respect to any Basket Stock:
(i) a suspension, absence or material
limitation of trading of such
Basket Stock on the primary
market for such Basket Stock for
more than two hours of trading
or during the one-half hour
period preceding the close of
trading in such market; or the
suspension or material
limitation on the primary market
for trading in options contracts
related to such Basket Stock, if
available, during the one-half
hour period preceding the close
of trading in the applicable
market, in each case as
determined by the Calculation
Agent in its sole discretion;
and
(ii) a determination by the Calculation
Agent in its sole discretion
that the event described in
clause (i) above materially
interfered with the ability of
the Company or any of its
affiliates to unwind all or a
material portion of the hedge
with respect to the Notes.
For purposes of determining
whether a Market Disruption
Event has occurred: (1) a
limitation on the hours or
number of days of trading will
not constitute a Market
Disruption Event if it results
from an announced change in the
regular business hours of the
relevant exchange, (2) a
decision to permanently
discontinue trading in the
relevant options contract will
not constitute a Market
Disruption Event, (3)
limitations pursuant to New York
Stock Exchange Rule 80A (or any
applicable rule or regulation
enacted or promulgated by the
New York Stock Exchange, any
other self-regulatory
organization or the Securities
and Exchange Commission of
similar scope as determined by
the Calculation Agent) on
trading during significant
market fluctuations shall
constitute a Market Disruption
Event, (4) a suspension of
trading in an options contract
on any Basket Stock by the
primary securities market
related to such Basket Stock, if
available, by reason of (x) a
price change exceeding limits
set by such securities exchange
or market, (y) an imbalance of
orders relating to such
contracts or (z) a disparity in
bid and ask quotes relating to
such contracts will constitute a
suspension or material
limitation of trading in options
contracts related to such Basket
Stock and (5) an "absence of
trading" on the primary
securities market on which
options contracts related to
such Basket Stock are traded, if
available, will not include any
time when such securities market
is itself closed for trading
under ordinary circumstances.
Calculation Agent:.................. Morgan Stanley & Co. Incorporated
("MS & Co.")
Because the Calculation Agent is an
affiliate of the Company, potential
conflicts of interest may exist
between the Calculation Agent and the
holders of the Notes, including with
respect to certain determinations and
judgments that the Calculation Agent
must make in determining the Final
Basket Value or whether a Market
Disruption Event has occurred. See
"Adjustment to the Multipliers and
the Basket" below and "Market
Disruption Event" above. MS & Co.,
as a registered broker-dealer, is
required to maintain policies and
procedures regarding the handling and
use of confidential proprietary
information, and such policies and
procedures will be in effect
throughout the term of the Notes to
restrict the use of information
relating to the calculation of the
Basket Value prior to its
dissemination. MS & Co. is obligated
to carry out its duties and functions
as Calculation Agent in good faith
and using its reasonable judgment.
Risk Factors:....................... An investment in the Notes entails
significant risks not associated with
similar investments in a conventional
debt security, including the
following:
The Base Coupon Rate is less than
that which would be payable on a
conventional fixed-rate debt security
having the same maturity date as the
Notes and issued by the Company on
the Original Issue Date.
The Notes will not be listed on any
exchange. There can be no assurance
as to whether there will be a
secondary market in the Notes or if
there were to be such a secondary
market, whether such market would be
liquid or illiquid. The value for
the Notes prior to maturity will be
affected by a number of factors
independent of the creditworthiness
of the Company and the Basket Value,
including, but not limited to, the
volatility of the Basket, dividend
rates on the Basket Stocks, the time
remaining to the Calculation Period
and to the maturity of the Notes,
market interest rates and whether the
Reset Right or Early Lock-In Right is
exercised. In addition, the Basket
Value depends on a number of
interrelated factors, including
economic, financial and political
events, over which the Company has no
control. The market value of the
Notes is expected to depend primarily
on the extent of the appreciation, if
any, of the Basket Value over the
Initial Basket Value. If, however,
Notes are sold prior to the
Calculation Period at a time when the
Basket Value exceeds the Initial
Basket Value, the sale price may be
at a discount from the amount
expected to be payable to the holder
if such excess of the Basket Value
over the Initial Basket Value were to
prevail during the Calculation Period
because of the possible fluctuation
of the Basket Value between the time
of such sale and the Calculation
Period. The price at which a holder
will be able to sell Notes prior to
maturity may be at a discount, which
could be substantial, from the
principal amount thereof, if, at such
time, the Basket Value, or the Final
Basket Value, if determined, is
below, equal to or not sufficiently
above the Initial Basket Value. The
historical Basket Values should not
be taken as an indication of the
future performance of the Basket
Stocks during the term of the Notes.
The Basket Value does not reflect the
payment of dividends on the stocks
underlying it and therefore the yield
to maturity of the Notes based on the
Final Basket Value relative to the
Initial Basket Value will not produce
the same yield as if such underlying
Basket Stocks were purchased and held
for a similar period.
Because the Calculation Agent is an
affiliate of the Company, potential
conflicts of interest may exist
between the Calculation Agent and the
holders of the Notes, including with
respect to certain adjustments to the
Multipliers applicable to each Basket
Stock and to the value of the Basket
that may influence the determination
of the Final Basket Value. See
"Adjustments to the Multipliers and
the Basket" and "Market Disruption
Event."
It is suggested that prospective
investors who consider purchasing the
Notes should reach an investment
decision only after carefully
considering the suitability of the
Notes in light of their particular
circumstances.
Investors should also consider the
tax consequences of investing in the
Notes. See "United States Federal
Taxation" below.
Basket Stocks:...................... The Basket Stocks listed below will be
used to calculate the Basket Value,
subject to adjustment as set forth
below under "Adjustments to the
Multipliers and the Basket." HOLDERS
OF THE NOTES WILL NOT HAVE ANY RIGHT
TO RECEIVE THE BASKET STOCKS. The
following table sets forth the Basket
Stocks, the initial Market Price of
each Basket Stock as of the date of
this Pricing Supplement, the dollar
value of each Basket Stock
represented in the Initial Basket
Value and the Initial Multiplier of
each Basket Stock as of the date of
this Pricing Supplement:
Dollar Value
Issuer of Represented
the Initial in Original Initial
Basket Stock Market Price (1) Basket Value Multiplier(1)
------------------------- ---------------- ------------ -------------
AirTouch Communications,
Inc. 31.779 $100 3.14673
Cisco Systems, Inc.(2) 58.346 $100 1.71391
Columbia/HCA Healthcare
Corporation 48.941 $100 2.04328
General Motors
Corporation 47.875 $100 2.08877
General Motors
Corporation
(Class E Common Stock) 45.875 $100 2.17984
Intel Corporation(2) 64.596 $100 1.54808
Merrill Lynch & Co., Inc. 55.401 $100 1.80502
Microsoft Corporation(2) 94.779 $100 1.05509
Motorola, Inc. 76.625 $100 1.30506
Mirage Resorts,
Incorporated 31.202 $100 3.20492
-------------
(1) Initial Market Prices and Initial Multipliers were determined based
on average Market Prices at the time the Notes were priced by the
Company for initial offering to the public.
(2) The common stocks of Cisco Systems, Inc., Intel Corporation and
Microsoft Corporation are currently traded on the NASDAQ NMS. All of
the other Basket Stocks are currently traded on the New York Stock
Exchange.
The initial Multiplier relating to
each Basket Stock indicates the
number of shares of such Basket
Stock, given the Market Price of such
Basket Stock, required to be included
in the calculation of the Initial
Basket Value so that each Basket
Stock represents an equal percentage
and dollar value of the Initial
Basket Value as of the date of this
Pricing Supplement. The respective
Multipliers will remain constant for
the term of the Notes unless adjusted
for certain corporate events. See
"Adjustments to the Multipliers and
the Basket."
If holders of 100% of the Notes elect
to exercise the Reset Right, the
Multipliers will remain unchanged,
and consequently, the Basket Stocks
may not represent an equal percentage
and dollar value of the Initial
Basket Value as so reset. See "Reset
Right" above.
Adjustments to the Multipliers
and the Basket:................... The Multiplier with respect to
any Basket Stock and the Basket will be
adjusted as follows:
1. If a Basket Stock is subject to
a stock split or reverse stock
split, then once such split has
become effective, the Multiplier
relating to such Basket Stock
will be adjusted to equal the
product of the number of shares
issued with respect to one share
of such Basket Stock and the
prior Multiplier.
2.
If a Basket Stock is subject to
a stock dividend (issuance of
additional shares of the Basket
Stock) that is given ratably to
all holders of shares of such
Basket Stock, then once the
dividend has become effective
and such Basket Stock is trading
ex-dividend, the Multiplier
relating to such Basket Stock
will be adjusted so that the new
Multiplier shall equal the
former Multiplier plus the
product of (i) the number of
shares of such Basket Stock
issued with respect to one share
of such Basket Stock and (ii)
the prior Multiplier.
3. There will be no adjustments to
the Multipliers to reflect cash
dividends or other distributions
paid with respect to a Basket
Stock other than distributions
described in paragraph 6 below
and Extraordinary Dividends as
described below. A cash
dividend or other distribution
with respect to a Basket Stock
will be deemed to be an
"Extraordinary Dividend" if such
dividend or other distribution
exceeds the immediately
preceding non-Extraordinary
Dividend for such Basket Stock
by an amount equal to at least
10% of the Market Price on the
Trading Day preceding the
ex-dividend date for the payment
of such Extraordinary Dividend
(the "ex-dividend date"). If an
Extraordinary Dividend occurs
with respect to a Basket Stock,
the Multiplier with respect to
such Basket Stock will be
adjusted on the ex-dividend date
with respect to such
Extraordinary Dividend so that
the new Multiplier will equal
the product of (i) the then
current Multiplier, and (ii) a
fraction, the numerator of which
is the Market Price on the
Trading Day preceding the
ex-dividend date, and the
denominator of which is the
amount by which the Market Price
on the Trading Day preceding the
ex-dividend date exceeds the
Extraordinary Dividend Amount.
The "Extraordinary Dividend
Amount" with respect to an
Extraordinary Dividend for a
Basket Stock will equal such
Extraordinary Dividend minus the
amount of the immediately
preceding non-Extraordinary
Dividend for such Basket Stock.
To the extent an Extraordinary
Dividend is not paid in cash,
the value of the non-cash
component will be determined by
the Calculation Agent, whose
determination shall be
conclusive. A Distribution on a
Basket Stock described in
paragraph 6 below that also
constitutes an Extraordinary
Dividend shall only cause an
adjustment to the Multiplier for
such Basket Stock pursuant to
paragraph 6.
4. If the issuer of a Basket Stock
is being liquidated or is
subject to a proceeding under
any applicable bankruptcy,
insolvency or other similar law,
such Basket Stock will continue
to be included in the Basket so
long as a Market Price for such
Basket Stock is available. If a
Market Price is no longer
available for a Basket Stock for
whatever reason, including the
liquidation of the issuer of
such Basket Stock or the
subjection of the issuer of such
Basket Stock to a proceeding
under any applicable bankruptcy,
insolvency or other similar law,
then the value of such Basket
Stock will equal zero in
connection with the calculation
of the Basket Value and Final
Basket Value for so long as no
Market Price is available, and
no attempt will be made to find
a replacement stock or increase
the Basket Value to compensate
for the deletion of such Basket
Stock.
5. If the issuer of a Basket Stock
has been subject to a merger or
consolidation and is not the
surviving entity, then a value
for such Basket Stock will be
determined at the time such
issuer is merged or consolidated
and will equal the last
available Market Price for such
Basket Stock and that value will
be constant for the remaining
term of the Notes. At such
time, no adjustment will be made
to the Multiplier of such Basket
Stock. For purposes of
calculating that portion of the
Final Basket Value attributable
to the value of such Basket
Stock, the Market Value will be
deemed to be the Multiplier of
such Basket Stock times such
last available Market Price.
6. If the issuer of a Basket Stock
issues to all of its
shareholders equity securities
of an issuer other than the
issuer of the Basket Stock
(other than in a transaction
described in paragraph 5 above),
then such new equity securities
will be added to the Basket as a
new Basket Stock, unless the
Market Price of such new equity
securities cannot be determined
using the procedures described
above under "Market Price." The
Multiplier for such new Basket
Stock will equal the product of
the original Multiplier for the
Basket Stock for which the new
Basket Stock is being issued
(the "Initial Basket Stock") and
the number of shares of the new
Basket Stock issued with respect
to one share of the Initial
Basket Stock.
No adjustments of any Multiplier
of a Basket Stock will be
required unless such adjustment
would require a change of at
least 0.1% in the Multiplier
then in effect. The Multiplier
resulting from any of the
adjustments specified above will
be rounded to the nearest one
thousandth with five ten-
thousandths being rounded
upward.
No adjustments to the Multiplier
of any Basket Stock or to the
Basket will be made other than
those specified above. The
adjustments specified above do
not cover all events that could
affect the Market Price of a
Basket Stock.
The Calculation Agent shall be
solely responsible for the
determination and calculation of
any adjustments to any
Multiplier of any Basket Stock
or to the Basket and its
determinations and calculations
with respect thereto shall be
conclusive.
The Calculation Agent will
provide information as to any
adjustments to the Multipliers
upon written request by any
holder of the Notes.
Hypothetical Payments:.............. The following table illustrates, for
a range of hypothetical Final Basket
Values, the Base Coupon, the
Supplemental Coupon and the total of
the Base Coupon and the Supplemental
Coupon for each $1,000 principal
amount of Notes. An investment in
the Basket Stocks would be
significantly different than
investing in the Notes. Among other
things, an investor in the Basket
Stocks may realize certain dividends
that are not reflected in the
Supplemental Coupon.
(Final Basket
Values minus Initial Base Supplemental
Basket Value)(1) Coupon(2) Coupon(3) Total Coupon(3)
------------------------- --------- ------------ ---------------
Less than or equal to $0 $11.30 $0.000 $11.300
$100 $11.30 $16.667 $27.967
$200 $11.30 $33.333 $44.633
$300 $11.30 $50.000 $61.300
$400 $11.30 $66.667 $77.967
$500 $11.30 $83.333 $94.633
$600 $11.30 $100.000 $111.300
$700 $11.30 $116.667 $127.967
$800 $11.30 $133.333 $144.633
$900 $11.30 $150.000 $161.300
$1,000 $11.30 $166.667 $177.967
$1,100 $11.30 $183.333 $194.633
$1,200 $11.30 $200.000 $211.300
$1,300 $11.30 $216.667 $227.967
$1,400 $11.30 $233.333 $244.633
$1,500 $11.30 $250.000 $261.300
$1,600 $11.30 $266.667 $277.967
$1,700 $11.30 $283.333 $294.633
$1,800 $11.30 $300.000 $311.300
$1,900 $11.30 $316.667 $327.967
$2,000 $11.30 $333.333 $344.633
(1) If the Early Lock-in Right were
exercised, the Locked-in
Supplemental Coupon Amount would be
adjusted to reflect accrued
interest. See "Early Lock-in Right"
above. Such potential adjustment is
not reflected in the table.
(2) Payable on each Interest Payment Date
during the term of the Notes.
(3) Payable on the six Interest Payment
Dates on and after February 15, 2001.
The above figures are for purposes of
illustration only. The actual
Supplemental Coupon will depend
entirely on the actual Initial Basket
Value and on the actual Final Basket
Value. See "Supplemental Coupon
Amount" above.
Public Information:................. All of the Basket Stocks are
registered under the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"). Companies with
securities registered under the
Exchange Act are required to file
periodically certain financial and
other information specified by the
Securities and Exchange Commission
(the "Commission"). Information
provided to or filed with the
Commission is available at the
offices of the Commission specified
under "Available Information" in the
accompanying Prospectus. In
addition, information regarding the
issuers of the Basket Stocks may be
obtained from other sources
including, but not limited to, press
releases, newspaper articles and
other publicly disseminated
documents. The Company makes no
representation or warranty as to the
accuracy or completeness of such
reports.
THIS PRICING SUPPLEMENT RELATES ONLY
TO THE NOTES OFFERED HEREBY AND DOES
NOT RELATE TO THE BASKET STOCKS OR
OTHER SECURITIES OF ANY ISSUER OF THE
BASKET STOCKS. ALL DISCLOSURES
CONTAINED IN THIS PRICING SUPPLEMENT
REGARDING THE ISSUERS OF THE BASKET
STOCKS ARE DERIVED FROM THE PUBLICLY
AVAILABLE DOCUMENTS DESCRIBED IN THE
PRECEDING PARAGRAPH. NEITHER THE
COMPANY NOR THE AGENT HAS
PARTICIPATED IN THE PREPARATION OF
SUCH DOCUMENTS OR MADE ANY DUE
DILIGENCE INQUIRY WITH RESPECT TO THE
ISSUERS OF THE BASKET STOCKS.
NEITHER THE COMPANY NOR THE AGENT
MAKES ANY REPRESENTATION THAT SUCH
PUBLICLY AVAILABLE DOCUMENTS OR ANY
OTHER PUBLICLY AVAILABLE INFORMATION
REGARDING THE ISSUERS OF THE BASKET
STOCKS ARE ACCURATE OR COMPLETE.
FURTHERMORE, THERE CAN BE NO
ASSURANCE THAT ALL EVENTS OCCURRING
PRIOR TO THE DATE HEREOF (INCLUDING
EVENTS THAT WOULD AFFECT THE ACCURACY
OR COMPLETENESS OF THE PUBLICLY
AVAILABLE DOCUMENTS DESCRIBED IN THE
PRECEDING PARAGRAPH) THAT WOULD
AFFECT THE TRADING PRICE OF THE
BASKET STOCKS (AND THEREFORE THE
INITIAL BASKET VALUE), HAVE BEEN
PUBLICLY DISCLOSED. SUBSEQUENT
DISCLOSURE OF ANY SUCH EVENTS OR THE
DISCLOSURE OF OR FAILURE TO DISCLOSE
MATERIAL FUTURE EVENTS CONCERNING THE
ISSUERS OF THE BASKET STOCKS COULD
AFFECT THE SUPPLEMENTAL COUPON WITH
RESPECT TO THE NOTES AND THEREFORE
THE TRADING PRICES OF THE NOTES.
THE INCLUSION OF A STOCK IN THE
BASKET IS NOT A RECOMMENDATION TO BUY
OR SELL SUCH STOCK, AND NEITHER THE
COMPANY NOR ANY OF ITS AFFILIATES
MAKE ANY REPRESENTATION TO ANY
PURCHASER OF NOTES AS TO THE
PERFORMANCE OF THE BASKET.
The Company or its affiliates may
presently or from time to time engage
in business with one or more of the
issuers of the Basket Stocks,
including extending loans to, or
making equity investments in, such
issuers or providing advisory
services to such issuers, including
merger and acquisition advisory
services. In the course of such
business, the Company or its
affiliates may acquire non-public
information with respect to such
issuers and, in addition, one or more
affiliates of the Company may publish
research reports with respect to such
issuers. The Company does not make
any representation to any purchaser
of the Notes with respect to any
matters whatsoever relating to such
issuers. Any prospective purchaser
of a Note should undertake an
independent investigation of the
issuers of the Basket Stocks as in
its judgment is appropriate to make
an informed decision with respect to
an investment in the Basket Stocks.
Historical Information:............. The following table sets forth the
high and low Market Prices with
respect to each Basket Stock during
1992, 1993, 1994, and during 1995
through August 10, 1995, and the
Market Price on August 10, 1995. All
Market Prices are rounded to the
nearest one-tenth of a cent, and
certain Market Prices have been
adjusted for stock splits. Beneath
the name of each issuer is the CUSIP
number for the security included in
the Basket relating to such issuer.
In order to derive historical Basket
Values retroactive adjustments to the
Multipliers would have to be made in
accordance with the procedures
described under "Adjustments to the
Multipliers and the Basket" above.
The historical prices of the Basket
Stocks should not be taken as an
indication of future performance, and
no assurance can be given that the
prices of the Basket Stocks will
increase sufficiently to cause the
holders of the Notes to receive any
Supplemental Coupons.
Basket Stock High Low Last
---------------------- -------------- --------- ---------
AirTouch Communications,
Inc.
(CUSIP # 00949T100)
1992..................
1993*................. 26.750 24.500
1994.................. 30.125 20.375
1995.................. 32.375 25.000 31.75
* The initial public offering of the common stock of AirTouch Communications,
Inc. occurred in December 1993.
Basket Stock High Low Last
-------------------- ----------- --------- ----------
Cisco Systems, Inc.
(CUSIP # 17275R102)
1992................ 20.000 8.219
1993................ 32.875 19.500
1994................ 40.375 19.625
1995................ 58.625 32.563 58.250
Basket Stock High Low Last
---------------------- ------------- --------- ----------
Columbia/HCA Healthcare
Corporation
(CUSIP # 197677107)
1992.................. 21.500 14.750
1993.................. 33.625 17.000
1994.................. 44.625 33.375
1995.................. 49.125 35.625 48.750
Basket Stock High Low Last
----------------------- --------------- --------- ----------
General Motors Corporation
(CUSIP # 370442105)
1992................... 44.000 29.125
1993................... 56.750 32.875
1994................... 64.750 36.625
1995................... 51.750 37.375 47.500
Basket Stock High Low Last
----------------------- --------------- --------- ----------
General Motors Corporation
Class E Common Stock
(CUSIP # 370442402)
1992................... 33.500 25.375
1993................... 35.250 26.000
1994................... 38.875 27.875
1995................... 46.500 37.250 46.375
Basket Stock High Low Last
-------------------- ----------- --------- ----------
Intel Corporation
(CUSIP # 458140100)
1992................ 22.594 11.750
1993................ 36.625 21.625
1994................ 36.125 28.250
1995................ 76.438 31.813 64.250
Basket Stock High Low Last
---------------------- -------------- --------- ----------
Merrill Lynch & Co., Inc.
(CUSIP # 590188108)
1992.................. 33.313 22.375
1993.................. 50.813 28.875
1994.................. 44.875 33.250
1995.................. 58.125 34.750 55.500
Basket Stock High Low Last
--------------------- ------------ --------- ----------
Microsoft Corporation
(CUSIP # 594918104)
1992................. 47.500 33.375
1993................. 48.125 35.500
1994................. 64.625 39.313
1995................. 109.000 59.000 94.125
Basket Stock High Low Last
-------------------- ----------- --------- ----------
Motorola, Inc.
(CUSIP # 620076109)
1992................ 26.313 16.375
1993................ 53.000 25.500
1994................ 61.000 43.500
1995................ 79.000 52.250 75.375
Basket Stock High Low Last
-------------------- ----------- --------- ----------
Mirage Resorts,
Incorporated
(CUSIP # 60462E104)
1992................ 14.800 9.450
1993................ 24.625 13.453
1994................ 26.500 17.000
1995................ 32.750 19.875 31.250
Use of Proceeds and Hedging:........ The net proceeds to be received by the
Company from the sale of the Notes
will be used for general corporate
purposes and, in part, by the Company
or one or more of its affiliates in
connection with hedging the Company's
obligations under the Notes. See
also "Use of Proceeds" in the
accompanying Prospectus.
On the date of this Pricing
Supplement, the Company, through its
subsidiaries, may hedge its
anticipated exposure in connection
with the Notes by taking positions in
the Basket Stocks, in options
contracts on the Basket Stocks listed
on major securities markets or
positions in any other instruments
that it may wish to use in connection
with such hedging. In the event that
the Company pursues such a hedging
strategy, the price at which the
Company is able to purchase such
positions may be a factor in
determining the Initial Multipliers
for the Basket Stocks. Purchase
activity could potentially increase
the prices of the Basket Stocks or
such options contracts, and therefore
effectively increase the level to
which the Basket must rise before a
holder of a Note will receive any
Supplemental Coupons. Although the
Company has no reason to believe that
its hedging activity will have a
material impact on the price of the
Basket Stocks or such options
contracts, there can be no assurance
that the Company will not affect such
prices as a result of its hedging
activities. The Company, through its
subsidiaries, may modify its hedge
position throughout the life of the
Notes by purchasing and selling the
securities and instruments listed
above and other available securities
and instruments.
United States Federal Taxation:..... The following discussion supplements
the "United States Federal Taxation"
section in the accompanying
Prospectus Supplement and should be
read in conjunction therewith. Any
limitations on disclosure and any
defined terms contained therein are
equally applicable to the summary
below.
United States Holders. The Notes
will be treated as indebtedness of
the Company for United States federal
income tax purposes. Although
proposed Treasury regulations
addressing the treatment of
contingent debt instruments were
issued on December 15, 1994, such
regulations, which generally would
require current accrual of contingent
amounts and would affect the
character of gain on the sale,
exchange or retirement of a Note, by
their terms apply only to debt
instruments issued on or after the
60th day after the date the
regulations are finalized.
Subject to the discussion below
regarding United States Holders
exercising the Early Lock-in Right, a
United States Holder would be
required, under general United States
federal income tax principles, to
include the Base Coupon and
Supplemental Coupon, if any, paid on
a Note at the time they accrue or are
received in accordance with the
United States Holder's method of
accounting for federal income tax
purposes. With respect to an accrual
basis taxpayer, the Company intends
to treat the Supplemental Coupons as
accruing ratably over the three year
period over which the Supplemental
Coupons are payable and report such
amounts accordingly. It is possible,
however, that the Internal Revenue
Service could assert that all or a
portion of the Supplemental Coupons
should be treated as having accrued
at the time the Final Basket Value
becomes fixed.
Holders exercising the Early Lock-in
Right will in effect have created a
stepped interest note by locking in a
higher interest rate beginning at the
time the Supplemental Coupons become
payable. Although there is no
authority directly on point, the
Company believes that the requirement
that a United States Holder's method
of accounting clearly reflect income
would require the United States
Holder to apply OID principles to the
Note. As discussed more fully in the
accompanying Prospectus Supplement,
under OID principles, the Base Coupon
would be treated as qualified stated
interest and the Supplemental Coupons
would be included in the Note's
stated redemption price at maturity.
Consequently, at the time the Early
Lock-in Right is exercised, the Note
would be treated as a Discount Note
with OID equal to the difference
between the Note's issue price and
its stated redemption price at
maturity (i.e. the principal amount
plus the Supplemental Coupons
payable). United States Holders
would be required to include OID in
income for United States federal
income tax purposes as it accrues in
accordance with a constant yield
method based on a compounding of
interest unless the amount of OID is
less than 1/4 of 1 percent of the
stated redemption price at maturity
multiplied by the number of complete
years to maturity remaining on the
Note at the time the Early Lock-in
Right is exercised. Inclusion of OID
as it accrues will result in a United
States Holder who acquired the Note
at original issuance having taxable
income in excess of the amount of the
Base Coupon prior to the time the
Supplemental Coupons become payable.
United States Holders that have
acquired debt instruments similar to
the Notes and have accounted for such
debt instruments under proposed, but
subsequently withdrawn, Treasury
regulation Section 1.1275-4(g) may be
deemed to have established a method
of accounting that must be followed
with respect to the Notes, unless
consent of the Commissioner of the
Internal Revenue Service is obtained
to change such method. Absent such
consent, such a Holder would be
required to account for the Note in
the manner prescribed in withdrawn
Treasury regulation Section 1.1275-
4(g). The Internal Revenue Service,
however, would not be required to
accept such method as correct.
There can be no assurance that the
ultimate tax treatment of the Notes
would not differ significantly from
the description herein. Prospective
investors are urged to consult their
tax advisors as to the possible
consequences of holding the Notes.
See also "United States Federal
Taxation" in the accompanying
Prospectus Supplement.
ANNEX A
OFFICIAL NOTICE OF RESET
Dated: [Prior to September 30, 1995]
Morgan Stanley Group Inc.
1251 Avenue of the Americas
New York, New York 10022
Morgan Stanley & Co. Incorporated, as
Calculation Agent
1251 Avenue of the Americas
New York, New York 10020
Fax No.: (212) 703-4377
(Attn: Richard P. Sandulli)
Dear Sirs:
Each of the undersigned holders of the Medium Term Notes, Series C,
2.26% Senior Fixed Rate Notes due August 15, 2003 (Equity Participation Notes)
of Morgan Stanley Group Inc. (the "Notes") hereby represents that such holder
owns directly or indirectly the principal amount of the Notes recorded in the
space provided below such holder's signature and irrevocably elects to
exercise, as of the date hereof (or, if this letter is received after 11:30
a.m. on any day, as of the next day, provided that such day is prior to
September 30, 1995), the Reset Right as described in Pricing Supplement No. 15
dated August 10, 1995 (the "Pricing Supplement") to the Prospectus Supplement
dated March 29, 1995 and the Prospectus dated March 29, 1995 related to
Registration Statement No. 33-57833. Capitalized terms not defined herein
have the meanings given to such terms in the Pricing Supplement. Please date
and acknowledge receipt of this notice in the place provided below on the date
of receipt, and fax a copy to each of us at the fax numbers indicated,
whereupon the Initial Basket Value will be reset in accordance with the terms
of the Notes, as described in the Pricing Supplement.
Very truly yours,
[Name of Holder]
By:
[Title]
[Fax No.]
$
Principal Amount of Notes Held
[Additional signature blocks, if
more than one holder]
Receipt of the above Official
Notice of Reset is hereby acknowledged
MORGAN STANLEY GROUP INC., as Issuer
MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By:
Title:
Date and time of acknowledgement
ANNEX B
OFFICIAL NOTICE OF EARLY LOCK-IN
Dated:[Prior to August 10, 2000]
Morgan Stanley Group Inc.
1251 Avenue of the Americas
New York, New York 10022
Morgan Stanley & Co. Incorporated, as
Calculation Agent
1251 Avenue of the Americas
New York, New York 10020
Fax No.: (212) 703-4377
(Attn: Richard P. Sandulli)
Dear Sirs:
Each of the undersigned holders of the Medium Term Notes, Series C,
2.26% Senior Fixed Rate Notes due August 15, 2003 (Equity Participation Notes)
of Morgan Stanley Group Inc. (the "Notes") hereby represents that such holder
owns directly or indirectly the principal amount of the Notes recorded in the
space provided below such holder's signature and irrevocably elects to
exercise, as of the date hereof (or, if this letter is received after 11:30
a.m. on any day, as of the next day, provided that such day is prior to August
10, 2000), the Early Lock-In Right as described in Pricing Supplement No. 15
dated August 10, 1995 (the "Pricing Supplement") to the Prospectus Supplement
dated March 29, 1995 and the Prospectus dated March 29, 1995 related to
Registration Statement No. 33-57833. Capitalized terms not defined herein
have the meanings given to such terms in the Pricing Supplement. Please date
and acknowledge receipt of this notice in the place provided below on the date
of receipt, and fax a copy to each of us at the fax numbers indicated,
whereupon the Final Basket Value, and consequently the Supplemental Coupon
Amount will be fixed in accordance with terms set forth in the Notes, as
described in the Pricing Supplement.
Very truly yours,
[Name of Holder]
By:
[Title]
[Fax No.]
$
Principal Amount of Notes Held
[Additional signature blocks, if
more than one holder]
Receipt of the above Official
Notice of Early Lock-in is hereby acknowledged
MORGAN STANLEY GROUP INC., as Issuer
MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By:
Title:
Date and time of acknowledgement
