PROSPECTUS Dated March 29, 1995 Amendment No. 1 to Pricing Supplement No. 59
PROSPECTUS SUPPLEMENT to Registration Statement No. 33-57833
Dated March 29, 1995 March 8, 1996
Rule 424(b)(3)
$15,000,000
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES C
EQUITY LINKED NOTES DUE DECEMBER 1, 1997
------------
The Equity Linked Notes due December 1, 1997 (the "Notes") are Medium-Term
Notes, Series C of Morgan Stanley Group Inc. (the "Company"), as further
described herein and in the Prospectus Supplement under "Description of Notes
- - Fixed Rate Notes" and " - Notes Linked to Commodity Prices, Equity
Indices or Other Factors." The Notes are being issued in minimum
denominations of $1,000 and will mature on December 1, 1997 (the "Maturity
Date"). The Notes will bear interest at the rate of 3.0% per annum payable
semi-annually on June 1, 1996, December 1, 1996, June 1, 1997 and December 1,
1997. The Notes will not be redeemable by the Company in whole or in part
prior to the Maturity Date.
At maturity, the holder of each Note will receive the par amount of such Note
plus an amount (the "Supplemental Redemption Amount") based on the percentage
decrease, if any, in the Final Index Value (as defined herein) of the S&P 500
Composite Stock Price Index (the "S&P 500 Index"), as calculated by Standard &
Poor's ("S&P"), a Division of the McGraw-Hill Companies, Inc., from the
Initial Index Value (as defined herein), as further described in this Pricing
Supplement. The Supplemental Redemption Amount, if any, payable with respect
to each Note at maturity will be calculated on the Determination Date (as
defined herein) and will equal the product of (i) the par amount of such Note,
(ii) .86 and (iii) a fraction the numerator of which shall be the Initial
Index Value less the Final Index Value, and the denominator of which shall be
the Initial Index Value. The Supplemental Redemption Amount cannot be less
than zero. Notwithstanding the above, if the 10 Year CMT Rate (as defined
herein) at approximately 3:00 p.m. on the second Business Day prior to
maturity is less than 2.0%, the Supplemental Redemption Amount shall be zero.
The Initial Index Value has been set to equal 642.73. The Final Index Value
will equal the S&P 500 Index closing value on the earlier of (i) the Early
Calculation Date (as defined herein) and (ii) March 13, 1997, except in the
case of certain Market Disruption Events (as defined herein). If the Final
Index Value is equal to or greater than the Initial Index Value, the holder of
each Note will be repaid the par amount of such Note, but will not receive any
Supplemental Redemption Amount.
For information as to the calculation of the Supplemental Redemption Amount,
and certain tax consequences to beneficial owners of the Notes, see
"Supplemental Redemption Amount," "Final Index Value," "Determination Date"
and "United States Federal Taxation" in this Pricing Supplement.
The Company will cause the "Supplemental Redemption Amount" to be determined
by Morgan Stanley & Co. Incorporated (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 through PS-7 herein.
________________
PRICE 100%
________________
<TABLE>
<CAPTION>
Price to Public(1) Agent's Commissions(2) Proceeds to Company(1)
-------------------- ------------------------ ------------------------
<S> <C> <C> <C>
Per Note............ 100% 0.25% 99.75%
Total............... $15,000,000 $37,500 $14,962,500
<FN>_______________
(1) Plus accrued interest, if any, from March 13, 1996.
(2) The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act of 1933.
Capitalized terms not defined above have the meanings given to such terms in
the accompanying Prospectus Supplement.
</TABLE>
MORGAN STANLEY & CO.
Incorporated
Principal Amount:.............. $15,000,000
Maturity Date:................. December 1, 1997
Interest Payment Dates:........ June 1, 1996, December 1, 1996, June 1, 1997
and December 1, 1997
Interest Rate:................. 3.0% per annum
Specified Currency:............ U.S. Dollars
Issue Price:................... 100%
Settlement Date (Original
Issue Date):................... March 13, 1996
Book Entry Note or Certificated
Note:.......................... Book Entry
Senior Note or Subordinated
Note:.......................... Senior
Minimum Denominations:......... $1,000
Trustee:....................... Chemical Bank
Maturity Redemption Amount:.... At maturity (including as a result of
acceleration or otherwise), the holder of
each Note will receive the par amount of such
Note plus the Supplemental Redemption Amount,
if any.
Supplemental Redemption
Amount:........................ The Supplemental Redemption Amount payable
with respect to each Note at maturity shall
be calculated on the Determination Date (as
defined below) and shall be an amount equal
to the greater of (a) the product of (i) the
par amount of such Note, (ii) .86 and (iii) a
fraction the numerator of which shall be the
Initial Index Value less the Final Index
Value and the denominator of which shall be
the Initial Index Value and (b) zero. The
Supplemental Redemption Amount is described
by the following formula:
Par x .86 x (Initial Index Value-Final
Index Value)
-------------------------------
Initial Index Value
Notwithstanding the above, if the 10 Year CMT
Rate (as defined below and determined by the
Calculation Agent) at approximately 3:00 p.m.
on the second Business Day prior to maturity
is less than 2.0%, the Supplemental
Redemption Amount shall be zero.
The Company shall cause the Calculation Agent
to provide written notice to the holder of
each Note and to the Trustee at its New York
office, on which notice the Trustee may
conclusively rely, of the Supplemental
Redemption Amount, on or prior to 11:00 a.m.
on the Business Day preceding the Maturity
Date. See "Discontinuance of the S&P 500
Index; Alteration of Method of Calculation"
below.
All percentages resulting from any
calculation with respect to 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.
Initial Index Value:........... The Initial Index Value is 642.73.
Final Index Value:............. The Final Index Value shall be the Index
Closing Value (as defined below) on the
Determination Date, as determined by the
Calculation Agent.
Index Closing Value:........... The Index Closing Value, as of the
Determination Date, will equal the closing
value of the S&P 500 Index or any Successor
Index (as defined below) at the regular
official weekday close of trading on such
Determination Date. See "Discontinuance of
the S&P 500 Index; Alteration of Method of
Calculation."
References herein to the S&P 500 Index shall
be deemed to include any Successor Index,
unless the context requires otherwise.
Trading Day:................... A day on which trading is generally conducted
(i) on the New York Stock Exchange ("NYSE"),
the American Stock Exchange, Inc. ("AMEX"),
and the NASDAQ National Market ("NASDAQ NMS"),
(ii) on the Chicago Mercantile Exchange and
(iii) on the Chicago Board of Options
Exchange, as determined by the Calculation
Agent.
Determination Date:............ The Determination Date shall be the earlier
of (i) the Early Calculation Date and (ii)
March 13, 1997 or, if either such date is not
a Trading Day, the next succeeding Trading
Day, unless there is a Market Disruption
Event on such Trading Day. If a Market
Disruption Event occurs on any such Trading
Day, the Determination Date shall be the
immediately succeeding Trading Day during
which no Market Disruption Event shall have
occurred; provided that if a Market
Disruption Event has occurred on each of the
five Trading Days immediately succeeding the
Early Calculation Date (if applicable) or
March 13, 1997, then (i) such fifth
succeeding Trading Day will be deemed to be
the relevant Determination Date,
notwithstanding the occurrence of a Market
Disruption Event on such day and (ii) with
respect to any such fifth Trading Day on
which a Market Disruption Event occurs, the
Calculation Agent will determine the value of
the S&P 500 Index on such fifth Trading Day
in accordance with the formula for and method
of calculating the S&P 500 Index last in
effect prior to the commencement of the
Market Disruption Event, using the closing
price (or, if trading in the relevant
securities has been materially suspended or
materially limited, its good faith estimate
of the closing price that would have
prevailed but for such suspension or
limitation) on such Trading Day of each
security most recently comprising the S&P 500
Index.
Early Calculation Date:........ On any Trading Day prior to March 13, 1997,
the holders of 100% of the Notes will have
the right (the "Early Calculation Right"),
upon completion by such holders and delivery
to the Company and the Calculation Agent of
the "Official Notice of Early Calculation"
(in the form of Annex A attached hereto)
prior to 11:00 a.m. New York City time on
such date, to elect such date as the
Determination Date on which the Final Index
Value and consequently the Supplemental
Redemption Amount shall be calculated with
respect to 100% of the Notes except in the
case of certain Market Disruption Events (as
defined herein), and, in the case of the
determination of the Supplemental Redemption
Amount, subject to the provisions described
in "Supplemental Redemption Amount" above.
Notwithstanding that such holders elect to
exercise the Early Calculation Right, the
Final Index Value, the Supplemental
Redemption Amount and the Maturity Redemption
Amount will be determined as set forth above.
Market Disruption Event:....... "Market Disruption Event" means, with
respect to the S&P 500 Index:
(i) a suspension, absence or material
limitation of trading of 100 or more of the
securities included in the S&P 500 Index on
the primary market for such securities 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,
absence or material limitation of trading on
the primary market for trading in futures or
options contracts related to the S&P 500
Index 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 good faith and
using its reasonable judgment (including, if
applicable, by reference to the relevant
specialist) in its reasonable discretion; and
(ii) a determination by the Calculation Agent
in its reasonable 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 or market, (2)
a decision to permanently discontinue trading
in the relevant futures or 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 NYSE, 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 a futures or options
contract on the S&P 500 Index by the primary
securities market related to such contract by
reason of (x) a price change exceeding limits
set by such 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 S&P 500 Index and (5)
an "absence of trading" on the primary market
on which futures or options contracts related
to the S&P 500 Index are traded will not
include any time when such market is itself
closed for trading under ordinary
circumstances.
10 Year CMT Rate:.............. The 10 Year CMT Rate with respect to this
Note shall be the rate for a 10 year period
of maturity displayed on Telerate Page 7055
for "Daily Treasury Constant Maturities and
Money Markets/Federal Reserve Board Release
H.15" (or such other page as may replace that
page on such service for the purpose of
displaying rates or prices comparable to the
10 Year CMT Rate, as determined by the
Calculation Agent) as of approximately 3:00
p.m., New York City time on the applicable
Business Day. If such rate is not available
by approximately 3:00 p.m., New York City
time on the second Business Day prior to
maturity (the "CMT Calculation Date"), then
the 10 Year CMT Rate with respect to this
Note shall be the bond equivalent yield to
maturity of the arithmetic mean (as
calculated by the Calculation Agent) of the
secondary market bid rates, as of
approximately 3:00 p.m., New York City time,
on such CMT Calculation Date reported by
three leading primary United States
government securities dealers in The City of
New York selected by the Calculation Agent,
for the most recently issued direct
noncallable fixed rate Treasury Bills with an
original maturity approximately equal to ten
years; provided, however, that if the dealers
selected as aforesaid by the Calculation
Agent are not quoting bid rates as mentioned
in this sentence, the 10 Year CMT Rate with
respect to this Note will be the same as the
10 Year CMT Rate for the immediately
preceding Business Day for which such 10 Year
CMT Rate can be determined as described above.
Calculation Agent:............. Morgan Stanley & Co. Incorporated ("MS & Co.")
All determinations made by the Calculation
Agent shall be at the sole discretion of the
Calculation Agent and shall, in the absence of
manifest error, be conclusive for all
purposes and binding on the Company and
holders of the Notes.
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 Index Value, the 10
Year CMT Rate or whether a Market Disruption
Event has occurred. See "Discontinuance of
the S&P Index; Alteration of Method of
Calculation" below and "Market Disruption
Event" above. 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 security,
including the following.
If the Final Index Value of the S&P 500 Index
exceeds or is equal to the Initial Index
Value, the holders of the Notes will receive
only the par amount of each Note at maturity
plus accrued interest. In addition, an
investor in the Notes will not benefit from
the payment of dividends on the stocks
underlying the S&P 500 Index. Because the
Final Index Value will be based upon the
closing value of the S&P 500 Index on a
specified day (the Determination Date), a
significant decrease in the S&P 500 Index
subsequent to issuance may be substantially
or entirely offset by subsequent increases in
the value of the S&P 500 Index on or prior to
the Determination Date.
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. Because the
Supplemental Redemption Amount may be equal to
zero, the effective yield to maturity may be
less than that which would be payable on such
a conventional fixed-rate debt security.
The return of only the par amount of a Note
at maturity plus accrued interest may not
compensate the holder for any opportunity cost
implied by inflation and other factors
relating to the time value of money.
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. It is expected that the secondary
market for the Notes will be affected by the
creditworthiness of the Company and by a
number of factors, including, but not limited
to, the volatility of the S&P 500 Index,
dividend rates on the stocks underlying the
S&P 500 Index, the time remaining to the
Determination Dates and to the maturity of
the Notes and market interest rates. In
addition, the Final Index Value depends on a
number of interrelated factors, including
economic, financial and political events,
over which the Company has no control. The
value of the Notes prior to maturity is
expected to depend primarily on market
interest rates and the extent of the
depreciation or appreciation of the S&P 500
Index from the Initial Index Value through
the Determination Date. The price at which a
holder will be able to sell the Notes prior
to maturity may be at a discount, which could
be substantial, from the par amount thereof,
if, at such time, the S&P 500 Index or the
Final Index Value, if determined, is above,
equal to, or not sufficiently below the
Initial Index Value.
The historical S&P 500 Index values should
not be taken as an indication of the future
performance of the S&P 500 Index during the
term of the Notes. While the trading prices
of the stocks underlying the S&P 500 Index
will determine the value of the S&P 500
Index, it is impossible to predict whether
the value of the S&P 500 Index will fall or
rise. Trading prices of the stocks underlying
the S&P 500 Index will be influenced by both
the complex and interrelated political,
economic, financial and other factors that can
affect the capital markets generally and the
equity trading markets on which the
underlying stocks are traded, and by various
circumstances that can influence the values
of the underlying stocks in a specific market
segment or a particular underlying stock.
The policies of S&P concerning additions,
deletions and substitutions of the stocks
underlying the S&P 500 Index and the manner
in which S&P takes account of certain changes
affecting such underlying stocks may affect
the value of the S&P 500 Index. The policies
of S&P with respect to the calculation of the
S&P 500 could also affect the value of the
S&P 500 Index. S&P may discontinue or suspend
calculation or dissemination of the S&P 500
Index. Any such actions could affect the
value of the Notes. See "S&P 500 Index" and
"Discontinuance of the S&P 500 Index;
Alteration of Method of Calculation" 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 determinations and
judgments that the Calculation Agent must make
in determining the Final Index Value, the 10
Year CMT Rate or whether a Market Disruption
Event has occurred. See "Discontinuance of
the S&P Index; Alteration of Method of
Calculation" 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 Final
Index Value that the Calculation Agent may be
required to make 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.
If a bankruptcy proceeding is commenced in
respect of the Company, the claim of a holder
of a Note may, under Section 502(b)(2) of
Title 11 of the United States Code, be
limited to the par amount of such Note plus
accrued interest.
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.
S&P 500 Index:................. The S&P 500 Index is published by S&P and is
intended to provide a performance benchmark
for the U.S. equity markets. The calculation
of the value of the S&P 500 Index (discussed
below in further detail) is based on the
relative value of the aggregate Market Value
(as defined below) of the common stocks of
500 companies (the "Component Stocks") as of
a particular time as compared to the
aggregate average Market Value of the common
stocks of 500 similar companies during the
base period of the years 1941 through 1943.
The "Market Value" of any Component Stock is
the product of the market price per share and
the number of the then outstanding shares of
such Component Stock. The 500 companies are
not the 500 largest companies listed on the
NYSE and not all 500 companies are listed on
such exchange. S&P chooses companies for
inclusion in the S&P 500 Index with an aim of
achieving a distribution by broad industry
groupings that approximates the distribution
of these groupings in the common stock
population of the U.S. equity market. S&P
may from time to time, in its sole
discretion, add companies to, or delete
companies from, the S&P 500 Index to achieve
the objectives stated above. Relevant
criteria employed by S&P include the
viability of the particular company, the
extent to which that company represents the
industry group to which it is assigned, the
extent to which the company's common stock is
widely-held and the Market Value and trading
activity of the common stock of that company.
The S&P 500 Index is calculated using a
base-weighted aggregate methodology: the
level of the Index reflects the total Market
Value of all 500 Component Stocks relative to
the S&P 500 Index's base period of 1941-43
(the "Base Period").
An indexed number is used to represent the
results of this calculation in order to make
the value easier to work with and track over
time.
The actual total Market Value of the
Component Stocks during the Base Period has
been set equal to an indexed value of 10.
This is often indicated by the notation
1941-43=10. In practice, the daily
calculation of the S&P 500 Index is computed
by dividing the total Market Value of the
Component Stocks by a number called the Index
Divisor. By itself, the Index Divisor is an
arbitrary number. However, in the context of
the calculation of the S&P 500 Index, it is
the only link to the original base period
value of the Index. The Index Divisor keeps
the Index comparable over time and is the
manipulation point for all adjustments to the
S&P 500 Index ("Index Maintenance").
Index maintenance includes monitoring and
completing the adjustments for company
additions and deletions, share changes, stock
splits, stock dividends, and stock price
adjustments due to company restructurings or
spinoffs.
To prevent the value of the Index from
changing due to corporate actions, all
corporate actions which affect the total
Market Value of the Index require an Index
Divisor adjustment. By adjusting the Index
Divisor for the change in total Market Value,
the value of the S&P 500 Index remains
constant. This helps maintain the value of
the Index as an accurate barometer of stock
market performance and ensures that the
movement of the Index does not reflect the
corporate actions of individual companies in
the Index. All Index Divisor adjustments are
made after the close of trading and after the
calculation of the closing value of the S&P
500 Index. Some corporate actions, such as
stock splits and stock dividends, require
simple changes in the common shares
outstanding and the stock prices of the
companies in the Index and do not require
Index Divisor adjustments.
The table below summarizes the types of S&P
500 Index maintenance adjustments and
indicates whether or not an Index Divisor
adjustment is required.
<TABLE>
<CAPTION> Divisor
Type of Corporate Adjustment
Action Adjustment Factor Required
- ------------------------------------- --------------------------------------------- -----------------
<S> <C> <C>
Stock split Shares Outstanding multiplied by 2; No
(i.e. 2x1) Stock Price divided by 2
Share issuance Shares Outstanding plus newly issued Shares Yes
(i.e. Change > 5%)
Share repurchase Shares Outstanding minus Repurchased Shares Yes
(i.e. Change > 5%)
Special cash dividends Share Price minus Special Dividend Yes
Company change Add new company Market Value minus old Yes
company Market Value
Rights offering Price of parent company minus Yes
Price of Rights
---------------
Right Ratio
Spinoffs Price of parent company minus Yes
Price of Spinoff Co.
--------------------
Share Exchange Ratio
</TABLE>
Stock splits and stock dividends do not
affect the Index Divisor of the S&P 500
Index, because following a split or dividend
both the stock price and number of shares
outstanding are adjusted by S&P so that there
is no change in the Market Value of the
Component Stock. All stock split and
dividend adjustments are made after the close
of trading on the day before the ex-date.
Each of the corporate events exemplified in
the table requiring an adjustment to the
Index Divisor has the effect of altering the
Market Value of the Component Stock and
consequently of altering the aggregate Market
Value of the Component Stocks (the "Post-Event
Aggregate Market Value"). In order that the
level of the Index (the "Pre-Event Index
Value") not be affected by the altered Market
Value (whether increase or decrease) of the
affected Component Stock, a new Index Divisor
("New Divisor") is derived as follows:
Post-Event Aggregate Market Value = Pre-Event
--------------------------------- Index
New Divisor Value
New Divisor = Post-Event Aggregate Market
Value
---------------------------
Pre-Event Index Value
A large part of the S&P 500 Index maintenance
process involves tracking the changes in the
number of shares outstanding of each of the
S&P 500 Index companies. Four times a year,
on a Friday close to the end of each calendar
quarter, the share totals of companies in the
Index are updated as required by any changes
in the number of shares outstanding. After
the totals are updated, the Index Divisor is
adjusted to compensate for the net change in
the total Market Value of the Index. In
addition, any changes over 5% in the current
common shares outstanding for the S&P 500
Index companies are carefully reviewed on a
weekly basis, and when appropriate, an
immediate adjustment is made to the Index
Divisor.
Hypothetical Supplemental
Redemption Amount:............. The following table illustrates, for a range
of hypothetical Final Index Values, the
Supplemental Redemption Amount for each $1,000
par amount of Notes.
Hypothetical Hypothetical
Final Supplemental Redemption
Index Value Amount
- -------------------------------- -------------------------
800.0 $0
750.0 $0
700.0 $0
642.73 $0
600.0 $57.17
550.0 $124.08
500.0 $190.98
450.0 $257.88
The above figures are for purposes of
illustration only. The actual Supplemental
Redemption Amount, if any, will depend
entirely on the actual Final Index Value.
See "Final Index Value" and "Supplemental
Redemption Amount" above.
Discontinuance of the S&P
500 Index; Alteration of
Method of Calculation:......... If S&P discontinues publication of the
S&P 500 Index and S&P or another entity
publishes a successor or substitute index
that the Calculation Agent determines, in its
sole discretion, to be comparable to the
discontinued S&P 500 Index (such index being
referred to herein as a "Successor Index"),
then the relevant Index Closing Value shall
be determined by reference to the value of
such Successor Index at the close of trading
on the NYSE, the AMEX, NASDAQ NMS or the
relevant exchange or market for the Successor
Index on the Determination Dates.
Upon any selection by the Calculation Agent
of a Successor Index, the Calculation Agent
shall cause written notice thereof to be
furnished to the Trustee, to the Company and
to the holders of the Notes within three
Trading Days of such selection.
If S&P discontinues publication of the S&P
500 Index prior to, and such discontinuance
is continuing on, the Determination Date and
the Calculation Agent determines that no
Successor Index is available at such time,
then on such Determination Date, the
Calculation Agent shall determine the Index
Closing Value that would be used in computing
the Supplemental Redemption Amount on such
Determination Date. The Index Closing Value
shall be computed by the Calculation Agent in
accordance with the formula for and method
of calculating the S&P 500 Index last in
effect prior to such discontinuance, using
the closing price (or, if trading in the
relevant securities has been materially
suspended or materially limited, its good
faith estimate of the closing price that
would have prevailed but for such suspension
or limitation) on such Determination Date of
each security most recently comprising the
S&P 500 Index. Notwithstanding these
alternative arrangements, discontinuance of
the publication of the S&P 500 Index may
adversely affect the value of the Notes.
If at any time the method of calculating the
S&P 500 Index or a Successor Index, or the
value thereof, is changed in a material
respect, or if the S&P 500 Index or a
Successor Index is in any other way modified
so that such index does not, in the opinion
of the Calculation Agent, fairly represent
the value of the S&P 500 Index or such
Successor Index had such changes or
modifications not been made, then, from and
after such time, the Calculation Agent shall,
at the close of business in New York City on
the Determination Date, make such
calculations and adjustments as, in the good
faith judgment of the Calculation Agent, may
be necessary in order to arrive at a value of
a stock index comparable to the S&P 500 Index
or such Successor Index, as the case may be,
as if such changes or modifications had not
been made, and calculate the Supplemental
Redemption Amount with reference to the S&P
500 Index or such Successor Index, as
adjusted. Accordingly, if the method of
calculating the S&P 500 Index or a Successor
Index is modified so that the value of such
index is a fraction of what it would have been
if it had not been modified (e.g., due to a
split in the index), then the Calculation
Agent shall adjust such index in order to
arrive at a value of the S&P 500 Index or
such Successor Index as if it had not been
modified (e.g., as if such split had not
occurred).
Alternate Determination Date in
case of an Event of Default:... In case an Event of Default with respect to
any Notes shall have occurred and be
continuing, the amount declared due and
payable upon any acceleration of the Notes
will be determined by the Calculation Agent
and will be equal to the par amount plus
accrued interest plus the Supplemental
Redemption Amount determined as though the
Determination Date scheduled to occur on or
after such date of acceleration were the date
of acceleration.
Public Information:............ All disclosure contained in this Pricing
Supplement regarding the S&P 500 Index,
including, without limitation, its make-up,
method of calculation and changes in its
components, are derived from publicly
available information prepared by S&P.
Neither the Company nor the Agent take any
responsibility for the accuracy or
completeness of such information.
Historical Information:........ The following table sets forth the high and
low daily closing values, as well as
end-of-quarter closing values, of the S&P 500
Index for each quarter in the period from
January 1, 1991 through March 7, 1996. The
historical values of the S&P 500 Index should
not be taken as an indication of future
performance, and no assurance can be given
that the S&P 500 Index will decrease so as to
cause the holders of the Notes to receive any
Supplemental Redemption Amount (subject to
the provisions described in "Supplemental
Redemption Amount" above).
Daily Index Closing Values
-------------------------------------------
Period
High Low End
------------- ----------- -----------
1991
1st Quarter.... 376.72 311.49 375.22
2nd Quarter.... 390.45 368.57 371.16
3rd Quarter.... 396.64 373.33 387.86
4th Quarter.... 417.09 375.22 417.09
1992
1st Quarter.... 420.77 403.00 403.69
2nd Quarter.... 418.49 394.50 408.14
3rd Quarter.... 425.27 409.16 417.80
4th Quarter.... 441.28 402.66 435.71
1993
1st Quarter.... 456.34 429.05 451.67
2nd Quarter.... 453.85 433.54 450.53
3rd Quarter.... 463.56 441.43 458.93
4th Quarter.... 470.94 457.48 466.45
1994
1st Quarter.... 482.00 445.55 445.76
2nd Quarter.... 462.37 438.92 444.27
3rd Quarter.... 476.07 446.13 462.71
4th Quarter.... 473.77 445.45 459.27
1995
1st Quarter.... 503.90 459.11 500.71
2nd Quarter.... 551.07 501.85 544.75
3rd Quarter.... 586.77 547.09 584.41
4th Quarter.... 621.69 576.72 615.93
1996
1st Quarter
(through March 7, 1996) 661.45 598.48 653.65
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,
including hedging market risks associated
with the Supplemental Redemption Amount. On
the date of this Pricing Supplement, the
Company, through its subsidiaries and others,
hedged its anticipated exposure in connection
with the Notes by the purchase and sale of
exchange traded and over the counter options
on the S&P 500 Index, individual stocks
included in the S&P 500 Index, futures
contracts on the S&P 500 Index and options on
such futures contracts. Although the Company
has no reason to believe that its hedging
activity had a material impact on the price
of such options, stocks, futures contracts,
and options on futures 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, is likely to modify its hedge
position throughout the life of the Notes by
purchasing and selling such instruments and
any other instruments that it may wish to use
in connection with such hedging. See also
"Use of Proceeds" in the accompanying
Prospectus.
License Agreement:............. S&P and MS & Co. have entered into a
non-exclusive license agreement providing for
the license to MS & Co., and any of its
affiliated or subsidiary companies, in
exchange for a fee, of the right to use the
S&P 500 Index, which is owned and published
by S&P, in connection with certain
securities, including the Notes.
The license agreement between S&P and MS &
Co. provides that the following language must
be set forth in this Pricing Supplement:
The Notes are not sponsored, endorsed, sold
or promoted by S&P. S&P makes no
representation or warranty, express or
implied, to the holders of the Notes or any
member of the public regarding the
advisability of investing in securities
generally or in the Notes particularly or the
ability of the S&P 500 Index to track general
stock market performance. S&P's only
relationship to the Company is the licensing
of certain trademarks and trade names of S&P
and of the S&P 500 Index, which is
determined, composed and calculated by S&P
without regard to the Company or the Notes.
S&P has no obligation to take the needs of
the Company or the holders of the Notes into
consideration in determining, composing or
calculating the S&P 500 Index. S&P is not
responsible for and has not participated in
the determination of the timing of, prices
at, or quantities of the Notes to be issued
or in the determination or calculation of the
equation by which the Notes are to be
converted into cash. S&P has no obligation
or liability in connection with the
administration, marketing or trading of the
Notes.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR
THE COMPLETENESS OF THE S&P 500 INDEX OR ANY
DATA INCLUDED THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO
BE OBTAINED BY THE COMPANY, HOLDERS OF THE
NOTES, OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE S&P INDEX OR ANY DATA INCLUDED
THEREIN IN CONNECTION WITH THE RIGHTS LICENSED
UNDER THE LICENSE AGREEMENT DESCRIBED HEREIN
OR FOR ANY OTHER USE. S&P MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND HEREBY EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT
OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES.
"Standard & Poor's[Registered]",
"S&P[Registered]", "S&P 500[Registered]",
"Standard & Poor's 500," and "500" are
trademarks of McGraw-Hill, Inc. and have been
licensed for use by MS & Co.
United States Federal
Taxation:...................... The following discussion is based on the
opinion of Davis Polk & Wardwell, special tax
counsel to the Company. This 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. In addition, this discussion
addresses only initial holders purchasing at
the Issue Price of the Notes and that do not
hold the Notes as part of a hedging
transaction or "straddle."
The Notes will be treated as debt for United
States federal income tax purposes. Under
current law, the treatment of the Supplemental
Redemption Amount feature is unclear.
Prospective investors should consult with
their tax advisors regarding the treatment of
the Supplemental Redemption Amount. 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.
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 may be required
to account for the Notes in the manner
prescribed in proposed, but subsequently
withdrawn, Treasury regulation Section
1.1275-4(g). The Internal Revenue Service,
however, would not be required to accept such
method as correct.
ANNEX A
OFFICIAL NOTICE OF EARLY CALCULATION
Dated: [Prior to March 13, 1997]
---------------------------------
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
(Att: Jerry Altomare)
Dear Sirs:
Each of the undersigned holders of the Medium Term Notes, Series C Equity
Linked Notes due December 1, 1997 (Equity Linked Notes) of Morgan Stanley
Group Inc. (the "Notes"), representing in the aggregate 100% of 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 the Early Calculation Right
whereby the Determination Date shall be set as of the date hereof (or, if this
letter is received after 11:00 a.m. on any day, as of the next day, provided
that such day is prior to March 13, 1997), as described in Pricing Supplement
No. 59 dated March 8, 1996 (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 Index Value shall be determined as of such
elected Determination Date. Such Final Index Value shall be used to determine
the Supplemental Redemption Amount and the Maturity Redemption Amount 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]
