PROSPECTUS Dated March 29, 1995 Pricing Supplement No. 41 to
PROSPECTUS SUPPLEMENT Registration Statement No. 33-57833
Dated March 29, 1995 Dated February 9, 1996
Rule 424(b)(3)
Morgan Stanley Group Inc.
GLOBAL MEDIUM-TERM NOTES, SERIES D
Euro Nikkei 300 Senior Bearer Notes Due March 1, 1999
The Global Medium-Term Notes, Series D (Euro Nikkei 300 Senior Bearer
Notes Due March 1, 1999) of Morgan Stanley Group Inc. (the "Company") as
described in this Pricing Supplement (the "Notes) will mature on the
Maturity Date and will not pay interest prior to the Maturity Date. The
Notes will not be redeemable at the option of Morgan Stanley Group Inc.
prior to the Maturity Date other than under the circumstances described
under "Description of Notes - Tax Redemption" in the accompanying
Prospectus Supplement.
The Notes will be issued only in bearer form, which form is further
described under "Description of Notes - Forms, Denomination, Exchange and
Transfer" in the accompanying Prospectus Supplement. Notes in bearer form
will not be exchangeable at any time for Notes in registered form at the
option of the holder.
The Notes are issued in minimum denominations of Italian lire ("LIT")
100,000,000 per Note. On the Maturity Date the holder of a Note will have
the right to receive the principal amount of such Note multiplied by the
sum of (a) 112% (the "Base Percentage") plus (b) the Supplemental
Redemption Percentage (as defined herein). The Supplemental Redemption
Percentage will be the sum of the Nikkei Appreciation Percentages (as
defined herein) for three Calculation Periods (as defined herein). The
Nikkei Appreciation Percentage for any Calculation Period will be the
excess over 5% of the amount by which (A) the Average Nikkei Value for such
Calculation Period exceeds (B) the Starting Nikkei Value for such
Calculation Period, expressed as a percentage of such Starting Nikkei
Value. The Nikkei Appreciation Percentage for any Calculation Period
cannot be less than zero. The Average Nikkei Value for any Calculation
Period will be the arithmetic average of the values of the Nikkei Stock
Index 300 (the "Nikkei 300") for each Nikkei Determination Day (as defined
herein) in such Calculation Period, and the Starting Nikkei Value will be
the value of the Nikkei 300 on the Starting Date for such Calculation
Period. The Calculation Periods will be the periods (i) from and including
anuary 1, 1997 to and including
anuary 31, 1997 ("Calculation Period I"),
(ii) from and including
anuary 1, 1998 to and including
anuary 31, 1998
("Calculation Period II") and (iii) from and including
anuary 1, 1999 to
and including
anuary 31, 1999 ("Calculation Period III"). The Starting
Dates for Calculation Periods I, II and III will be February 9, 1996,
February 7, 1997, and February 6, 1998, respectively, or if any such date
is not a Nikkei Determination Day, the immediately succeeding Nikkei
Determination Day.
Due to the method of calculation, the Notes will not be subject to currency
risk related to fluctuations in the Italian lire value of the Nikkei 300,
which is quoted in
apanese Yen.
The Notes are further described below and in the Prospectus Supplement
under "Description of Notes -- Notes Exchangeable to Commodity Prices, Equity
Indices or Other Factors."
An investment in the Notes entails risks not associated with similar
investments in a conventional debt security, as described under "Risk Factors"
on PS-2 and PS-3 herein.
Application has been made to list the Notes on the London Stock Exchange
Limited (the "London Stock Exchange"). It is not possible to know whether the
Notes will trade in the secondary market or if such market will be liquid or
illiquid.
Principal Amount:.............. LIT 10,000,000,000
Maturity Date:................. March 1, 1999
Specified Currency:............ Italian lire ("LIT")
Issue Price:................... 100%
Settlement Date (Original Issue March 1, 1996
Date):
Common Code................... 6403875
ISIN.......................... X50064038754
Senior Note or Subordinated
Note: ........................ Senior Note
Minimum Denominations:......... LIT 100,000,000
Calculation Agent:............. Morgan Stanley & Co. International Limited
Trustee:....................... Chemical Bank (London branch)
Nikkei Value:.................. For any Nikkei Determination Day, the closing
value (afternoon session) of the Nikkei Stock
Index 300 (the "Nikkei 300") calculated and
published by Nihon Keizai Shimbun, Inc.
("NKS"), except as described under
"Discontinuance of the Nikkei 300;
Adjustments to the Index" below. See "The
Nikkei Stock Index 300" below.
Nikkei Determination Day:...... A day on which the Tokyo Stock Exchange (the
"TSE") and the Osaka Securities Exchange (the
"OSE") are each open for business and on
which a Market Disruption Event has not
occurred. See "Market Disruption Event"
below.
Supplemental Redemption The sum of the Nikkei Appreciation
Percentage: Percentages for each of the three Calculation
Periods. The Supplemental Redemption
Percentage cannot be less than zero. The
Supplemental Redemption Percentage may be
expressed by the following formula:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> _
_ |
| |
Supplemental | The sum for the -- Starting Nikkei |
Redemption | three Calculation Average Nikkei Value for Value for such |
Percentage = | Periods of: such Calculation Period Calculation Period -- 5% |
| _________________________________________________________________ |
| Starting Nikkei |
| Value for such _|
|_ Calculation Period
</TABLE>
Nikkei Appreciation Percentages: For any Calculation Period means the
excess over 5% of the amount by which (A)
the Average Nikkei Value for such
Calculation Period exceeds (B) the
Starting Nikkei Value for such Calculation
Period, expressed as a percentage of such
Starting Nikkei Value. The Nikkei
Appreciation Percentage for any
Calculation Period cannot be less than
zero.
Average Nikkei Value:.......... For any Calculation Period means the
arithmetic average of the Nikkei Values for
each Nikkei Determination Day in such
Calculation Period.
Starting Nikkei Value:......... For any Calculation Period means the Nikkei
Value on the Starting Date for such
Calculation Period.
Calculation Periods:........... The periods (i) from and including
anuary 1,
1997 to and including
anuary 31, 1997
("Calculation Period I"), (ii) from and
including
anuary 1, 1998 to and including
anuary 31, 1998 ("Calculation Period II"),
and (iii) from and including
anuary 1, 1999
to and including
anuary 31, 1999
("Calculation Period III").
Starting Dates:................ The starting dates for Calculation Periods I,
II and III will be February 9, 1996, February
7, 1997 and February 6, 1998, respectively,
or if any such date is not a Nikkei
Determination Day, the immediately succeeding
Nikkei Determination Day.
Risk Factors:.................. An investment in the Notes entails
significant risks not associated with similar
investments in a conventional debt security.
The Base Percentage 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.
There can be no assurance as to how the Notes
will trade in the secondary market or whether
such market will be liquid or illiquid. The
market value for the Notes will be affected
by a number of factors independent of the
creditworthiness of the Company and the value
of the Nikkei 300, including, but not limited
to, the volatility of the Nikkei 300, the
time remaining to the maturity of the Notes
and market interest rates in Italy and
apan.
In addition, the value of the Nikkei 300
depends on a number of interrelated factors,
including economic, financial and political
events, over which the Company has no
control. The historical experience of the
Nikkei 300 should not be taken as an
indication of its future performance during
the term of any Note.
The underlying stocks that constitute the
Nikkei 300 have been issued by
apanese
companies. Investments in securities indexed
to the value of
apanese equity securities
involve certain risks associated with the
apanese securities markets, including the
risks of volatility in such markets,
government intervention in such markets,
cross-shareholdings in
apanese companies, a
lack of public information about
apanese
companies and accounting and financial
standards that differ from those applicable
to certain companies in the United States,
the United Kingdom or Italy.
Securities prices in
apan are subject to
political, economic, financial and social
factors that apply in
apan. These factors
could negatively affect the
apanese
securities markets. Moreover, the
apanese
economy may differ favorably or unfavorably
from economies in the United States, the
United Kingdom or Italy in such respects as
growth of gross national product, rate of
inflation, capital reinvestment, resources
and self-sufficiency.
The stocks underlying the Nikkei 300 are
traded on the TSE. The TSE has adopted
certain measures intended to prevent any
extreme short-term price fluctuation
resulting from order imbalances. As a
result, variations in the Nikkei 300 may be
limited by price limitations on, or by
suspension of trading in, individual stocks
which comprise the Nikkei 300 which may, in
turn, adversely affect the amount of the
Supplemental Redemption Percentage.
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 value of the
Nikkei 300 or any Successor Index (as
defined below) that may influence the
determination of the Supplemental
Redemption Percentage. See "Market
Disruption Event" and "Discontinuance of
the Nikkei 300; Adjustments to the Index"
below.
NKS is under no obligation to continue the
calculation or dissemination of the Nikkei
300. In the event that NKS or any Third
Party (as defined below) discontinues or
suspends calculation or publication of the
Nikkei 300 or that the calculation of the
Nikkei 300 is changed in a material respect,
the Calculation Agent may calculate a stock
average comparable to the Nikkei 300 and the
Nikkei Value shall be calculated based on
such comparable index. See "Market
Disruption Event" and "Discontinuance of the
Nikkei 300; Adjustments to the Index" below.
The Company, the Calculation Agent and the
Trustee disclaim all responsibility for the
calculation or other maintenance of or any
adjustments to the Nikkei 300 or any
Successor Index.
Upon the occurrence of certain events
described under "Discontinuance of the
Nikkei 300; Adjustments to the Index," a
Successor Index (which will also relate to
the trading of equity securities in
apan)
will be substituted for the Nikkei 300 as
the basis of the calculation of the Nikkei
Value. In the event that a Successor
Index is substituted for the Nikkei 300,
no assurance can be given as to whether
the Supplemental Redemption Percentage
calculated on the basis of such Successor
Index will be more than, less than or
equal to the Supplemental Redemption
Percentage that would have been calculated
had such substitution not occurred.
Although this Pricing Supplement sets forth
procedures for making adjustments to the
calculation of the Supplemental Redemption
Percentage under certain circumstances, a
discontinuance of the publication of the
Nikkei 300 or an adjustment to its method of
calculation may adversely affect the value of
the Notes.
The Nikkei 300 does not reflect the payment
of dividends on the stocks underlying it and
therefore the yield to maturity of the Notes
based on the Nikkei 300 will not produce the
same yield as if such underlying stocks were
purchased and held for a similar period.
Furthermore, an investment in the underlying
stocks would, unlike the calculation of the
Supplemental Redemption Percentage with
respect to the Notes, be affected by
fluctuations in the exchange rate between the
apanese Yen and Italian lire.
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" in the
accompanying Prospectus Supplement.
The Nikkei Stock Index 300:.... All information regarding the Nikkei 300 set
forth herein, including, without limitation,
its make-up, method of calculation and
changes in its components, has been derived
from publicly available information.
Characteristics
The Nikkei 300 is an index calculated,
published and disseminated by Nihon Keizai
Shimbun, Inc. ("NKS"). The Nikkei 300
measures the composite price performance of
stocks of 300
apanese companies. All 300
stocks are listed in the first section of the
TSE (the "First Section"). Stocks in the
First Section are among the most actively
traded stocks on the TSE. Publication of the
Nikkei 300 began on October 8, 1993, although
NKS had calculated values for the Nikkei 300
since October 1, 1982.
Calculation of the Nikkei 300
The Nikkei 300 is calculated by (i)
multiplying the per share price of each stock
included in the Nikkei 300 by the number of
outstanding shares (excluding shares held by
the
apanese Government), (ii) calculating
the sum of all these products (such sum being
hereinafter the "Aggregate Market Price"),
(iii) dividing the Aggregate Market Price by
the Base Aggregate Market Price (i.e., the
Aggregate Market Price as of October 1, 1982,
as calculated by NKS) and (iv) multiplying
the result by 100. Because of such
capitalization weighting, movements in share
prices of companies with relatively larger
market capitalization will have a greater
effect on the level of the entire Nikkei 300
than will movements in share prices of
companies with relatively smaller market
capitalization.
Underlying Stocks and Selection
The 300 stocks included in the Nikkei 300
(the "Underlying Stocks") were selected from
a reference group of stocks which were
selected by excluding stocks listed in the
First Section of the TSE that have relatively
low market liquidity or extremely poor
financial results. The Underlying Stocks
were selected from this reference group by
(i) selecting from the remaining stocks in
this reference group the stocks with the
largest aggregate market value in each of 36
industrial sectors and (ii) selecting
additional stocks (with priority within each
industrial sector given to the stock with the
largest aggregate market value) so that the
selection ratios (i.e., the ratio of the
aggregate market value of the included stocks
to that of the stocks in the reference group)
with respect to all 36 industrial sectors
will be nearly equal as possible and the
total number of companies with stocks
included in the Nikkei 300 will be 300. A
list of the issuers of the 300 stocks
constituting the Nikkei 300 is available from
the Nikkei Economic Electronic Databank
System (NEEDS) and from the Stock Market
Indices Data Book (supplement) published by
NKS.
Deletion and Addition Rules
The Nikkei 300 will be reviewed annually by
NKS in order to maintain continuity in the
level. The Underlying Stocks may be
replaced, if necessary, in accordance with
deletion/addition rules ("Deletion/Addition
Rules"). Deletion/Addition Rules provide
generally for the deletion of a stock from
the Nikkei 300 if such stock is no longer
included in the reference group or if the
aggregate market value of such stock is low
relative to other stocks in the relevant
industrial sector. Stocks deleted pursuant
to the Deletion/Addition Rules will be
replaced by stocks included in the reference
group that have relatively high aggregate
market values. In addition, stocks may be
added or deleted from time to time for
extraordinary reasons.
No Relationship With NKS
The use of and reference to the Nikkei 300
in connection with the Notes has been
consented to by NKS, the publisher of the
Nikkei 300. All rights to the Nikkei 300
are owned by NKS. The Company, the
Calculation Agent and the Trustee disclaim
all responsibility for the calculation or
other maintenance of or any adjustments to
the Nikkei 300. In addition, NKS has no
relationship to the Company or the Notes;
it does not sponsor, endorse, authorize,
sell or promote the Notes, and has no
obligation or liability in connection with
the administration, marketing or trading
of the Notes or with the calculation of
the value of the Nikkei Value for any
Nikkei Determination Day or the
Supplementary Redemption Percentage.
The following table sets forth the high and
low daily closing values of the Nikkei 300
for each quarter, in the period from
anuary
1, 1991 through February 12, 1996, as
published and/or calculated by NKS. All
historical data presented in the following
table relating to periods prior to October 8,
1993 (the day NKS commenced the daily
calculation and public dissemination of the
Nikkei 300) are presented as if the Nikkei
300 had existed during such periods, based on
the Underlying Stocks contained in the Nikkei
300 as of October 8, 1993, and such closing
levels have been calculated hypothetically on
the same basis that the Nikkei 300 is
calculated. All historical data presented in
the following table relating to periods after
October 8, 1993 are based on actual data from
the Nikkei 300. The historical experience of
the Nikkei 300 should not be taken as an
indication of its future performance, and no
assurance can be given as to the level of the
Nikkei 300 as of the relevant Nikkei
Determination Days.
Daily Closing Values in
apanese Yen
-----------------------------------------------------
End of
High Low Quarter
----------- ------------- ---------------
1991:
1st Quarter......... 361.85 296.58 347.60
2nd Quarter......... 356.65 315.19 315.19
3rd Quarter......... 325.92 286.55 322.64
4th Quarter......... 331.72 286.40 300.23
1992:
1st Quarter......... 310.39 250.00 254.18
2nd Quarter......... 255.87 222.44 226.03
3rd Quarter......... 253.45 201.29 235.83
4th Quarter......... 245.25 221.35 237.58
1993:
1st Quarter......... 267.53 226.73 262.94
2nd Quarter......... 302.53 270.89 283.39
3rd Quarter......... 306.38 284.41 293.04
4th Quarter......... 305.49 249.64 265.04
1994:
1st Quarter......... 304.25 265.04 285.73
2nd Quarter......... 311.71 285.21 304.62
3rd Quarter......... 306.28 285.27 288.39
4th Quarter......... 294.18 272.67 287.17
1995:
1st Quarter......... 287.17 228.05 241.99
2nd Quarter......... 251.26 222.26 223.09
3rd Quarter......... 277.47 222.97 269.72
4th Quarter......... 297.64 259.53 296.33
1996:
1st Quarter......... 307.98 292.58 302.65
(through February 12, 1996
Market Disruption Event: "Market Disruption Event" means the occurrence
or existence of either of the following events
on a Nikkei Determination Day as determined by
the Calculation Agent:
(i) a suspension, material limitation
or absence of trading on the TSE of 20% or
more in number of the Stocks which then
comprise the Nikkei 300 (or a Successor
Index) for more than two hours of trading or
during the one-half hour period preceding the
close of trading on the TSE; or
(ii) the suspension or material
limitation on the Singapore International
Monetary Exchange Ltd. (the "SIMEX"), the OSE
or any other major securities market of
trading in futures or options contracts
related to the Nikkei 300 (or any Successor
Index) for more than two hours of trading or
during the one-half hour period preceding the
close of trading on such market.
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 future or options contract will
not constitute a Market Disruption Event, (3) a
suspension of trading in futures or options
contracts on the Nikkei 300 or such Successor
Index by the TSE, the OSE or other major
securities market 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 futures or
options contracts related to the Nikkei 300 or
such Successor Index and (4) an "absence of
trading" on the SIMEX, OSE or a major
securities market on which futures or options
contracts related to the Nikkei 300 or any
Successor Index are traded will not include any
time when the SIMEX, OSE or such securities
market, as the case may be, itself is closed
for trading under ordinary circumstances.
If a Market Disruption Event occurs on a day
that would otherwise be a Nikkei Determination
Day during any Calculation Period, the Nikkei
Value, if any, that would otherwise be
determined on such day will not be included in
the calculation of the Average Nikkei Value for
such Calculation Period. If a Market
Disruption Event occurs on each day during a
Calculation Period, the average Nikkei Value
for such Calculation Period will be deemed to
be zero.
Discontinuance of the Nikkei If the Nikkei 300 is not published by NKS
300; Adjustments to the but is published by another person not
Index: affiliated with the Company and acceptable
to the Company (a "Third Party"), then the
Nikkei Value for any date thereafter will be
determined based on the closing level of
the Nikkei 300 as published by such Third
Party.
If the NKS or any Third Party discontinues
publication of the Nikkei 300 and publishes
a successor or substitute index that the
Company determines, in its sole discretion,
to be comparable to the Nikkei 300 (any such
index being referred to hereinafter as a
"Successor Index"), then, upon the Company's
notification of such determination to the
Trustee and the Calculation Agent, the
Calculation Agent will substitute the
Successor Index as calculated by the NKS or
such Third Party for the Nikkei 300 in
determining Nikkei Values and whether there
has occured a Market Disruption Event on any
date thereafter. Upon any selection by the
Company of a Successor Index, the Company
shall cause notice thereof to be given to
holders of the Notes in the manner set forth
under the caption "Notices" in the
accompanying Prospectus Supplement."
If NKS or any Third Party discontinues
publication of the Nikkei 300 or any Successor
Index, the Calculation Agent will determine
Nikkei Values and whether there has occurred a
Market Disruption Event on any date thereafter
based on the formula and method used in
calculating the Nikkei 300 or any Successor
Index as in effect on the date such index was
last published. The Company will cause notice
of each such Nikkei Value to be published not
less than once each month in the Financial
Times (or another newspaper of general
circulation), and arrange for information with
respect to such values to be made available by
telephone. Notwithstanding these alternative
arrangements, discontinuance of the publication
of the Nikkei 300 or any Successor Index may
adversely affect trading in the Notes.
If the NKS or any Third Party makes a material
change in the formula for, or the method of
calculating, the Nikkei 300 or any Successor
Index (except for changes in the Underlying
Stocks made in accordance with the then-current
rules for such index), the Calculation Agent
shall determine Nikkei Values and whether a
Market Disruption Event has occurred on any
date thereafter using the formula and method of
calculating the Nikkei 300 or any Successor
Index as in effect prior to such change or
modification.
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.
During the course of the Tokyo trading day that occurred on the date of this
Pricing Supplement (and, with respect to hedging transaction on the Chicago
Mercantile Exchange (the "CME"), the Chicago trading day that occurred on the
day prior to the date of this Pricing Supplement), the Company, through its
affiliates, hedged its anticipated exposure in connection with the Notes by
taking position in (i) futures contracts listed on the SIMEX, OSE and the CME
linked to the Nikkei 300, (ii) futures contracts on the Euroyen and Eurolire
deposit rates and/or (iii) interest rate swap contracts. Such hedging was
carried out in a manner designed to minimize any impact on the prices of the
Underlying Stocks. Although the Company has no reason to believe that its
hedging activity had such an impact, there can be no assurance that the
Company did not affect the prices of the Underlying Stocks as a result of its
hedging activities. The Company, through its affiliates, expects to 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, including, without limitation, options contracts listed on the
SIMEX or the OSE linked to the Nikkei 300, and the component stocks of the
Nikkei 300.
____________________________
The Agent has agreed that (i) it has not offered or sold and will not offer
or sell any such Notes to persons in the United Kingdom prior to admission
of such Notes to listing in accordance with Part IV of the Financial
Services Act 1986 (the "Act") except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments
(as principal or agent) for the purposes of their businesses or otherwise
in circumstances which have not resulted and will not result in an offer to
the public in the United Kingdom within the meaning of the Act; (ii) it
has complied and will comply with all applicable provisions of the Act with
respect to anything done by it in relation to such Notes in, from or
otherwise involving the United Kingdom; and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of such Notes, other than any
document which consists of or any part of listing particulars,
supplementary listing particulars, or any other document required or
permitted to be published by the listing rules under Part IV of the Act, to
a person who is of a kind described in article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or
is a person to whom such documents may otherwise lawfully be issued or
passed on.
Capitalized terms not defined above have the meanings given to such terms in
the accompanying Prospectus Supplement.
MORGAN STANLEY & CO.
International
