PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 21 to
PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833
Dated March 29, 1995 December 1, 1995
Rule 424(b)(3)
$15,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
4.03% Senior Fixed Rate Notes Due December 16, 2002
EQUITY PARTICIPATION NOTES
Interest payable June 15 and December 15
The 4.03% Senior Fixed Rate Notes due December 16, 2002 (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 4.03% per annum payable semi-annually on June 15
and December 15 of each year (each an "Interest Payment Date") commencing
December 15, 1995. The Notes will be issued in minimum denominations of
$1,000 and will mature on December 16, 2002 (the "Initial Maturity Date"),
unless the maturity of the Notes is extended in accordance with the procedures
described below. The Initial Maturity Date will be automatically extended to
January 15, 2003 (the "Final Maturity Date"), unless the holder of any Note
elects to terminate such automatic extension with respect to such Note. The
Notes will not be redeemable by the Company in whole or in part prior to the
Initial Maturity Date (or, if applicable, the Final Maturity Date).
On the Initial Maturity Date (or, if applicable, the Final Maturity Date), the
holder of each Note will receive the par amount of such Note ($1,000) ("Par")
and the dollar amount, if any, by which the Final Basket Value (as defined
below) exceeds $1,000 (the "Supplemental Redemption Amount"), as further
described in this Pricing Supplement. The Supplemental Redemption Amount
cannot be less than zero. The Initial Basket Value has been set to equal
$714.286 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 eleven
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 assigned percentage and dollar value of the
Initial Basket Value. See "Basket Stocks" in this Pricing Supplement. 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 based on the average daily closing value of such Basket
Stock on the first 15 Determination Days (as defined herein) during the period
from and including the thirtieth day prior to the Initial Maturity Date (or,
if applicable, the Final Maturity Date) (as more particularly described
herein, the "Calculation Period"). See "Final Basket Value" in this Pricing
Supplement.
For information as to the calculation of the Supplemental Redemption Amount,
the calculation and the composition of the Basket and certain tax consequences
to beneficial owners of the Notes, see "Supplemental Redemption 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-5 and PS-6 herein.
________________
PRICE 100% AND ACCRUED INTEREST
________________
<TABLE>
<CAPTION>
Price to Public<F1> Agent's Commissions<F2> Proceeds to Company<F1>
------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Per Note............ 100% .25% 99.75%
Total............... $15,000,000 $37,500 $14,962,500
<FN>
_______________
<F1> Plus accrued interest, if any, from December 8, 1995.
<F2> The Company has agreed to indemnify the Agent against certain
liabilities, including liabilities under the Securities Act of 1933.
</TABLE>
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
Initial Maturity Date:......... December 16, 2002. The Initial Maturity Date
of each Note will be automatically extended
to January 15, 2003, unless, at least two
Business Days prior to November 15, 2002, the
holder of any Note (with a principal amount
equal to $1,000 or any integral multiple
thereof) exercises such holder's right
(evidenced by the completion by such holder
and acknowledgment by the Company and the
Calculation Agent of the "Official Notice of
Exercise of Option to Elect Termination,"
attached hereto as Annex A, prior to 11:30
a.m. New York City time on such date) to
terminate the automatic extension of maturity
with respect to such Note.
Final Maturity Date............ January 15, 2003
Interest Rate:................. 4.03%
Interest Payment Dates:........ June 15 and December 15
Specified Currency:............ U.S. Dollars
Issue Price:................... 100%
Settlement Date (Original Issue
Date): December 8, 1995
Book Entry Note or Certificated
Note: Book Entry
Senior Note or Subordinated
Note: Senior
Minimum Denominations:......... $1,000
Trustee:....................... Chemical Bank
Supplemental Redemption
Amount:........................ On the Initial Maturity Date (or, if
applicable, the Final Maturity Date), the
holder of each Note will receive the par
amount of such Note ($1,000) ("Par") and the
Supplemental Redemption Amount, which is
equal to the dollar amount, if any, by which
the Final Basket Value exceeds $1,000. The
Supplemental Redemption Amount cannot be less
than zero.
Initial Basket Value:.......... The Initial Basket Value shall equal $714.286
per $1,000 principal amount of Notes. 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.
Final Basket Value:............ 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 15 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 the Initial Maturity Date (or, if
applicable, the Final Maturity Date), the
number of Determination Days with respect to
a Basket Stock does not exceed the amount by
which 15 exceeds the number of scheduled
Trading Days from and excluding the Trigger
Date to and including the Initial Maturity
Date (or, if applicable, the Final Maturity
Date) (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 the second
scheduled Trading Day prior to Initial
Maturity Date (or, if applicable, the Final
Maturity Date), 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.
Calculation Period:............ The period from and including December 16,
2002 (or, with respect to any Note as to
which the holder exercises such holder's
right to terminate the automatic extension
of maturity, November 15, 2002) to but
excluding the NYSE Trading Day immediately
preceding the Final Maturity Date (or, if
applicable, the Initial Maturity Date).
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. If the last reported sale
price is not available pursuant to clause (i)
or (ii) of the preceding sentence, the Market
Price for any Trading Day shall be 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. 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 or market 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
eleven 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 Interest 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 and market interest rates. 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 Par. If, however, Notes are sold
prior to the Calculation Period at a time
when the Basket Value exceeds Par, 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 Par 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 is below, 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 yield to maturity of the Notes is based
on the Final Basket Value relative to Par
rather than the Initial Basket Value, and the
Basket Value does not reflect the payment of
dividends on the stocks underlying it;
therefore the yield to maturity of the Notes
will not produce the same yield as if such
underlying Basket Stocks were purchased and
held for a similar period. See "Hypothetical
Payments" below.
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 approximate dollar value of each Basket
Stock represented in the Initial Basket
Value, the initial weight assigned to each
Basket Stock and the Initial Multiplier of
each Basket Stock as of the date of this
Pricing Supplement:
<TABLE>
<CAPTION>
Dollar Value
Issuer of Represented
the Initial in Original Initial Initial
Basket Stock<F1> Market Price<F2> Basket Value Weight Multiplier<F2>
---------------- ---------------- ------------ -------- ----------------
<S> <C> <C> <C> <C>
American International
Group, Inc. $90.657 $71.429 10% 0.787900
APRIA Healthcare Group
Inc. $28.672 $35.714 5% 1.245620
Atlantic Richfield
Company $110.625 $107.143 15% 0.968520
Circus Circus
Enterprises, Inc. $27.583 $35.714 5% 1.294790
Home Depot Inc. $43.875 $71.429 10% 1.628000
Lowe's Companies, Inc. $30.874 $71.429 10% 2.313550
MCI Communications Corp. $26.562 $53.571 7.5% 2.016840
Newell Co. $26.044 $71.429 10% 2.742610
Pepsico Inc. $55.062 $107.143 15% 1.945860
Thermo Electron
Corporation $49.437 $35.714 5% 0.722420
Travelers Group Inc. $59.375 $53.572 7.5% 0.902260
<FN>
<F1> All of the common stocks of the eleven United States corporations
listed herein are currently traded on the New York Stock Exchange, except
for APRIA Healthcare Group Inc. and MCI Communications Corp., which are
traded on the NASDAQ NMS.
<F2> 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.
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 the
percentage and dollar value of the Initial Basket Value as assigned to
it in the table above 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."
</TABLE>
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 to equal
the sum of (i) last available Market Price
for such Basket Stock at the time such issuer
is merged or consolidated and (ii) interest
on such last available Market Price accrued
based on the interpolated U.S. dollar swap
rate for fixed rate into 3-month LIBOR, as
determined by the Calculation Agent, from the
date of such last available Market Price to
but excluding the first day of the applicable
Calculation Period. 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 the sum of (i) such last available
Market Price and (ii) interest on such last
available Market Price). A corporate event
described in paragraph 7 below that also
constitutes a corporate event described in
this paragraph shall only cause an adjustment
in accordance with paragraph 7.
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.
7. If an all cash tender offer is
consummated for all the outstanding shares of
any Basket Stock, the Market Value for such
Basket Stock used to determine the Final
Basket Value will equal the sum of (i) the
product of the cash received with respect to
one share of such Basket Stock and the
applicable Multiplier at the date (the
"Consummation Date") on which such tender
offer is consummated (the "Cash
Consideration") and (ii) interest on the Cash
Consideration accrued based on the
interpolated U.S. dollar swap rate for fixed
rate into 3-month LIBOR, as determined by the
Calculation Agent, from the Consummation Date
to but excluding the first day of the
applicable Calculation Period. On the
Consummation Date, no adjustment will be made
to the Multiplier of such Stock. For
purposes of calculating that portion of the
Final Basket attributable to the value of
such Basket Stock, the Market Value will be
deemed to be the Multiplier of such Basket
Stock times the sum of the Cash Consideration
and such interest.
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 and the
Supplemental Redemption Amount 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 Redemption Amount and would
participate in any principal appreciation
between the Initial Basket Value and a Basket
Value equal to Par.
Supplemental
------------
Final Redemption
-------------------------- ------------
Basket Values Amount(1)
-------------------------- ------------
Less than or equal to $700 $ 0
$800 $ 0
$900 $ 0
$1,000 $ 0
$1,100 $ 100
$1,200 $ 200
$1,300 $ 300
$1,400 $ 400
$1,500 $ 500
(1) Payable on the Initial Maturity Date (or,
if applicable, the Final Maturity Date).
The above figures are for purposes of
illustration only. The actual Supplemental
Redemption Amount will depend entirely on the
actual Final Basket Value. See "Supplemental
Redemption 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
REDEMPTION AMOUNT 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 MAKES 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 November 30, 1995, and the
Market Price on November 30, 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
Redemption Amount.
Basket Stock High Low Last
------------ ------- --------- ----------
American International
Group, Inc.
(CUSIP # 026874107)
1992................ 53.609 36.891
1993................ 66.672 50.000
1994................ 66.500 55.000
1995................ 89.750 64.672 89.750
Basket Stock High Low Last
------------ ----------- --------- ----------
APRIA Healthcare
Group Inc.
(CUSIP #037933108)
1992................ 17.328 7.141
1993................ 19.828 12.141
1994................ 20.719 10.531
1995................ 35.250 16.422 30.250
Basket Stock High Low Last
------------ -------- ------- --------
Atlantic Richfield
Company
(CUSIP # 048825103)
1992................ 121.250 98.250
1993................ 126.375 102.000
1994................ 111.750 93.750
1995................ 117.500 101.125 108.375
Basket Stock High Low Last
------------ -------- -------- --------
Circus Circus
Enterprises, Inc.
(CUSIP # 172909103)
1992................ 38.172 23.672
1993................ 49.000 28.172
1994................ 40.250 20.125
1995................ 35.750 24.250 27.750
Basket Stock High Low Last
------------ -------- -------- --------
Home Depot Inc.
(CUSIP # 437076102)
1992................ 51.094 30.313
1993................ 50.063 35.500
1994................ 47.750 36.625
1995................ 49.750 36.750 44.375
Basket Stock High Low Last
------------ -------- -------- --------
Lowe's Companies,
Inc.
(CUSIP # 548661107)
1992................ 12.563 8.125
1993................ 29.750 12.125
1994................ 40.625 27.125
1995................ 38.750 26.500 31.500
Basket Stock High Low Last
------------ -------- -------- --------
MCI Communications Corp.
(CUSIP # 552673105)
1992.................. 20.375 14.938
1993.................. 29.625 18.938
1994.................. 28.500 17.875
1995.................. 27.375 17.500 26.750
Basket Stock High Low Last
------------ -------- -------- --------
Newell Co.
(CUSIP # 651192106)
1992................ 26.500 16.563
1993................ 21.250 15.563
1994................ 23.875 19.000
1995................ 26.375 20.625 26.375
Basket Stock High Low Last
------------ -------- -------- --------
Pepsico Inc.
(CUSIP #713448108)
1992................ 42.750 30.750
1993................ 42.875 34.875
1994................ 41.125 29.750
1995................ 55.250 33.875 55.250
Basket Stock High Low Last
------------ -------- -------- --------
Thermo Electron
Corporation
(CUSIP # 883556102)
1992................ 21.000 16.891
1993................ 28.672 20.938
1994................ 31.828 24.328
1995................ 51.250 29.500 49.500
Basket Stock High Low Last
------------ -------- -------- --------
Travelers Group, Inc.
(CUSIP # 894190107)
1992................. 24.844 18.375
1993................. 49.313 24.219
1994................. 42.719 30.785
1995................. 59.500 32.875 59.500
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, hedged its
anticipated exposure in connection with the
Notes by taking positions in the Basket
Stocks. Such hedging was carried out in a
manner designed to minimize any impact on the
price of the Basket Stocks. Purchase
activity could potentially have increased the
prices of the Basket Stocks, and therefore
effectively increase the level to which the
Basket must rise before a holder of a Note
will receive any Supplemental Redemption
Amount. Although the Company has no reason
to believe that its hedging activity had a
material impact on the prices of the Basket
Stocks, there can be no assurance that the
Company did not, or in the future will not,
affect such prices as a result of its hedging
activities. The Company, through its
subsidiaries, is likely to modify its hedge
position throughout the life of the Notes by
purchasing and selling the Basket Stocks,
option contracts on the Basket Stock listed
on major securities markets or positions in
any other instruments that it may wish to use
in connection with such hedging.
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.
The Notes will be treated as debt for United
States federal income tax purposes. Interest
on the Notes will be taxable to a United
States Holder as ordinary interest income at
the time it accrues or is received in
accordance with the United States Holder's
method of accounting for United States 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
regulations are finalized.
Under general United States federal income
tax principles, upon maturity of the Note, a
United States Holder will recognize gain, if
any, equal to the difference between the
amount realized at maturity and such Holder's
tax basis in the Note. It is unclear under
existing law whether gain recognized at
maturity will be treated as ordinary or
capital in character. Subject to further
guidance from the Internal Revenue Service,
however, the Company intends to treat such
gain as interest income and to report such
amounts accordingly. Prospective investors
should consult with their tax advisors
regarding the character of gain recognized at
maturity.
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.
Any gain or loss recognized on the sale or
exchange of a Note prior to the applicable
Calculation Period will be treated as capital
in character.
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 EXERCISE OF OPTION TO ELECT TERMINATION
Dated: [At least two
Business Days prior
to November 15, 2002]
Morgan Stanley Group Inc.
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. Incorporated, as
Calculation Agent
1585 Broadway
New York, New York 10036
Fax No.: (212) 761-0028
(Attn: Richard P. Sandulli)
Dear Sirs:
The undersigned holder of the Medium Term Notes, Series C, 4.03% Senior Fixed
Rate Notes due December 16, 2002 (Equity Participation Notes) of Morgan
Stanley Group Inc. (the "Notes") hereby 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 at least two Business Days prior
to November 15, 2002), the right to terminate the automatic extension of
maturity as described in Pricing Supplement No. 21 dated December 1, 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 with respect to the principal amount of Notes stated below (which
amount must be at least $1,000 or an integral multiple thereof). 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 us at the fax number
indicated. Upon acknowledgment by the Issuer and the Calculation Agent of this
notice, such Notes will mature on the Initial Maturity Date
Very truly yours,
____________________________________
[Name of Holder]
By:
____________________________________
[Title]
____________________________________
[Fax No.]
$_____________________
[Principal Amount of Notes with respect to
which the election to terminate the
automatic extension of maturity is made.]
Receipt of the above Official Notice of
Exercise of Option to Elect Termination 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____________
