PROSPECTUS Dated May 1, 1996 Pricing Supplement No. 68 to
PROSPECTUS SUPPLEMENT Registration Statement No. 333-01655
Dated May 2, 1996 Dated January 21, 1997
Rule 424(b)(3)
Morgan Stanley Group Inc.
MEDIUM-TERM NOTES, SERIES D
EQUITY LINKED NOTES DUE AUGUST 11, 1998
The Equity Linked Notes due August 11, 1998 (the "Notes") are Medium-Term
Notes, Series D 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, Single
Securities, Baskets of Securities or Indices." The Notes are being issued in
minimum denominations of LIT5,000,000 and will mature on August 11, 1998 (the
"Maturity Date"). There will be no periodic payments of interest on the
Notes. The Notes will not be redeemable by the Company in whole or in part
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 the Notes--Forms, Denominations,
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 maturity, the holder of each Note will receive the par amount of such Note
(LIT5,000,000) ("Par") plus an amount (the "Supplemental Redemption Amount")
based on the percentage increase, if any, in the Final Average Index Value (as
defined herein) of the MIB 30 Index, as calculated by the Consiglio Di Borsa
(the "Italian Stock Exchange Council"), over 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 equal the product of (i) the par amount of such Note and (ii) a
fraction, the numerator of which will be the Final Average Index Value less
the Initial Index Value and the denominator of which will be the Initial Index
Value. The Supplemental Redemption Amount cannot be less than zero. The
Initial Index Value has been set to equal 18,322. The Final Average Index
Value will equal the arithmetic average of the closing MIB 30 Index values on
the 21st day of each month, for 18 months, commencing February 21, 1997 and
ending July 21, 1998 (the "Determination Dates"), except in the case of
certain Market Disruption Events (as defined herein). If the Final Average
Index Value is equal to or less 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 Average Index Value," "Determination
Dates" and "United States Federal Taxation" in this Pricing Supplement.
The Company will cause the "Supplemental Redemption Amount" to be determined
by Morgan Stanley & Co. International Limited (the "Calculation Agent") for
The Chase Manhattan Bank, as Trustee under the Senior Debt Indenture.
The Global Medium-Term Notes, Series D of the Company, including the Notes,
have been listed on the London Stock Exchange.
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 through PS-7 herein.
(1) 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.
MORGAN STANLEY & CO.
International
Principal Amount........................LIT35,000,000,000
Maturity Date........................... August 11, 1998
Interest Rate........................... 0.00%
Specified Currency......................Italian Lire ("LIT")
Issue Price.............................99.25%
Settlement Date (Original Issue Date)...February 10, 1997
Common Code.............................7326009
ISIN....................................XS73260092
Book Entry Note or Certificated Note....Book Entry
Senior Note or Subordinated Note........Senior
Minimum Denominations................... LIT5,000,000
Trustee................................. The Chase Manhattan 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 (LIT5,000,000) ("Par") plus the
Supplemental Redemption Amount, if any.
Supplemental Redemption
Amount.................................. The Supplemental Redemption Amount,
if any, payable with respect to each Note
at maturity will be an amount equal to the
product of (i) the par amount of such Note
and (ii) a fraction, the numerator of
which will be the Final Average Index Value
less the Initial Index Value and the
denominator of which will be the Initial
Index Value. The Supplemental Redemption
Amount will not be less than zero. The
Supplemental Redemption Amount is
described by the following formula:
Par x (Final Average Index Value--Initial Index Value)
------------------------------------------------------
Initial Index Value
The Company will cause the Calculation
Agent to provide written notice to the
Trustee at its New York office, on which
notice the Trustee may conclusively rely,
of the Supplemental Redemption Amount, on
or prior to 11:00 a.m. on the Business
Day preceding the Maturity Date. See
"Discontinuance of the MIB 30 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 18,322.
Final Average Index Value............... The Final Average Index Value will be
the arithmetic average of the Index
Closing Values (as defined below) on each
of the Determination Dates, as determined
by the Calculation Agent.
Index Closing Value..................... The Index Closing Value, as of any
Determination Date, will equal the closing
value of the MIB 30 Index or any Successor
Index (as defined below) at the regular
official weekday close of trading on such
Determination Date. See "Discontinuance
of the MIB 30 Index; Alteration of Method
of Calculation."
References herein to the MIB 30 Index will
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 Italian Stock
Exchange and (ii) on any exchange on which
futures or options contracts related to
the MIB 30 Index are traded, other than a
day on which trading on such exchanges is
scheduled to close prior to its regular
weekday closing time, as determined by the
Calculation Agent.
Determination Dates..................... The Determination Dates will be the
21st day of each month, for 18 months,
commencing February 21, 1997 and ending
July 21, 1998 or, if any such date is not
a Trading Day, the next succeeding Trading
Day, unless there is a Market Disruption
Event on any such Trading Day. If a
Market Disruption Event occurs on any such
Trading Day, such Determination Date will
be the immediately succeeding Trading Day
during which no Market Disruption Event
will have occurred; provided that if a
Market Disruption Event has occurred on
each of the five Trading Days immediately
succeeding any of the scheduled
Determination Days, 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 MIB 30 Index on such fifth
Trading Day in accordance with the formula
for and method of calculating the MIB 30
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 MIB 30
Index.
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 the Supplemental Redemption Amount
determined as though each of the
Determination Dates scheduled to occur on
or after such date of acceleration were
the date of acceleration.
Market Disruption Event................. "Market Disruption Event" means,
with respect to the MIB 30 Index:
(i) a suspension, absence or material
limitation of trading of 20% more of the
securities included in the MIB 30 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 MIB 30 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 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
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 on trading
during significant market fluctuations
of the kind exemplified in the United
States by New York Stock Exchange Rule
80A, as determined by the Calculation
Agent, will constitute a Market
Disruption Event, (4) a suspension of
trading in a futures or options
contract on the MIB 30 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 MIB 30
Index and (5) an "absence of trading"
on the primary market on which futures
or options contracts related to the MIB
30 Index are traded will not include
any time when such market is itself
closed for trading under ordinary
circumstances.
Calculation Agent....................... Morgan Stanley & Co. International
Limited ("MSIL")
All determinations made by the Calculation
Agent will be at the sole discretion of
the Calculation Agent and will, 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 Average Index
Value or whether a Market Disruption
Event has occurred. See
"Discontinuance of the MIB 30 Index;
Alteration of Method of Calculation"
below and "Market Disruption Event"
above. MSIL 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 Average Index Value of the
MIB 30 Index does not exceed the Initial
Index Value, the holders of the Notes will
receive only the par amount of each Note
at maturity. Because the Final Average
Index Value will be based upon an average
of closing values of the MIB 30 Index on
specified days (the Determination Dates)
during eighteen successive months, a
significant increase in the MIB 30 Index
as measured on the Determination Date in
the final month, or in any earlier month,
may be substantially or entirely offset by
the values of the MIB 30 Index on the
Determination Dates in the other months.
The Notes do not bear any periodic payment
of interest. 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 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 return of only the par amount of a
Note at maturity will not compensate the
holder for any opportunity cost implied by
inflation and other factors relating to
the time value of money. The percentage
appreciation of the MIB 30 Index based on
the Final Average Index Value over the
Initial Index Value does not reflect the
payment of dividends on the stocks
underlying the MIB 30 Index. Therefore,
in addition to the considerations
regarding averaging discussed above,
the yield to maturity based on the
Final Average Index Value relative to
the Initial Index Value will not be the
same yield as would be produced if such
underlying stocks were purchased and
held for a similar period.
There can be no assurance as to how the
Notes will trade in the secondary market
or 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 MIB 30 Index, dividend
rates on the stocks underlying the MIB 30
Index, the time remaining to the
Determination Dates and to the maturity of
the Notes and market interest rates. In
addition, the Final Average 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 appreciation, if any, of the
Final Average Index Value over the Initial
Index Value. If, however, the Notes are
sold prior to maturity at a time when the
MIB 30 Index exceeds the Initial Index
Value, the sale price may be at a discount
from the amount expected to be payable to
the holder if such excess were to prevail
on each of the Determination Dates because
of the possible fluctuation of the MIB 30
Index between the time of such sale and
the Determination Dates. 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 MIB 30 Index or the Final Average
Index Value, if determined, is below,
equal to or not sufficiently above the
Initial Index Value.
The historical MIB 30 Index values should
not be taken as an indication of the
future performance of the MIB 30 Index
during the term of the Notes. While the
trading prices of the stocks underlying
the MIB 30 Index will determine the value
of the MIB 30 Index, it is impossible
to predict whether the value of the MIB
30 Index will rise or fall. Trading
prices of the stocks underlying the MIB
30 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 the Italian Stock Exchange
Council concerning additions, deletions
and substitutions of the stocks underlying
the MIB 30 Index and the manner in which
the Italian Stock Exchange Council takes
account of certain changes affecting such
underlying stocks may affect the value of
the MIB 30 Index. The policies of the
Italian Stock Exchange Council with
respect to the calculation of the MIB 30
Index could also affect the value of
the MIB 30 Index. The Italian Stock
Exchange Council may discontinue or
suspend calculation or dissemination of
the MIB 30 Index. Any such actions
could affect the value of the Notes.
See "MIB 30 Index" and "Discontinuance
of the MIB 30 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 Average Index
Value or whether a Market Disruption
Event has occurred. See
"Discontinuance of the MIB 30 Index;
Alteration of Method of Calculation"
below and "Market Disruption Event"
above. MSIL, 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 Average Index Value that the
Calculation Agent may be required to
make prior to its dissemination. MSIL
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.
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.
MIB 30 Index............................ The MIB 30 Index measures the
performance of the 30 largest and most
actively traded stocks listed on the
Italian Stock Exchange. The MIB 30 Index
is calculated by the CED Borsa for the
Italian Stock Exchange Council and is
disseminated daily on Bloomberg Financial
Markets, Reuters Limited and the Financial
Times. Publication of the MIB 30 Index
began in 1993 based on an initial MIB 30
Index value of 10,000 on December 31,
1992. Until October 14, 1994, the
historical series of the MIB 30 Index was
determined using the BCI Comit 30 Index
methodology.
The 30 stocks included in the MIB 30 Index
(the "Underlying Securities") are selected
twice a year based on the average market
value and average trading volume of each
Underlying Security over the preceding 6
months. In selecting the Underlying
Securities, the Italian Stock Exchange
Council identifies those companies with
the highest market capitalization by
evaluating the liquidity of each
company relative to the liquidity of
the market as a whole. As part of this
selection process, a stock which, at
the time of such selection, meets the
average market value and average
trading volume requirements may
nonetheless be excluded from the MIB 30
Index if such stock (i) has not traded
officially for a significant period of
time, (ii) is not likely to meet all
requirements for inclusion for the
entire period before the next
recomposition, (iii) has a ratio of
average market value to average trading
volume that exceeds 10,000 (i.e.,
stocks with a high market value and low
trading volume) or (iv) is issued by
the same company as an Underlying
Security that is already included in
the MIB 30 Index. In addition, an
Underlying Security may be excluded
from the MIB 30 Index, other than on
the yearly recomposition date, if there
is a cancellation or suspension for
more than 20 trading days of official
trading in the Underlying Security, or
any other event which makes it
reasonably certain that the Underlying
Security has lost liquidity or market
value. The five largest companies in
the MIB 30 Index are Eni, Generali,
Stet, Telecom Italia and Telecom Italia
Mobile, which together represent
approximately 55% of the index as a
whole. A current list of the 30
Underlying Securities, as of September
25, 1996, is set forth below:
Company Weight
Alleanza Assic.............................. 2.4335 97%
Banca Commerical Italiana................... 2.019325%
Banca di Roma............................... 1.595594%
Banca Fideuram.............................. 1.212606%
Benetton.................................... 1.178246%
Cred. Italiano.............................. 1.396244%
Edison...................................... 2.114237%
Eni......................................... 21.701646%
Fiat........................................ 5.181055%
Gemina...................................... 0.747540%
Generali.................................... 10.365373%
Ina......................................... 3.261667%
1st Banc. S. Paolo di Torino................ 3.123217%
1st Mobiliare Italiano...................... 2.720596%
Italgas..................................... 1.457174%
La Fondiaria................................ .790907%
Mediset..................................... 3.405870%
Mediobanca.................................. 1.456426%
Mediolanum.................................. .899336%
Montedison.................................. 1.337268%
Olivetti.................................... .737356%
Parmalat.................................... 1.196772%
Pirelli..................................... 1.466557%
Ras......................................... 1.715628%
Rolo Banca.................................. 1.912830%
Saipem...................................... 1.099365%
Sirti....................................... .763672%
Stet........................................ 7.012850%
Telecom Italia Mobile....................... 7.614522%
Telecom Italia.............................. 8.082524%
Source: Italian Stock Exchange Council
The MIB 30 Index is calculated by (i)
multiplying, for each Underlying
Security, the opening market price per
share on the semi-annual selection day
for the MIB 30 Index (the "Base Price")
by the number of outstanding shares
published in the Listino Ufficial of
the Italian Stock Exchange three
working days before such semi-annual
selection day (the "Base Number of
Shares"), (ii) multiplying, for each
Underlying Security, the product
obtained in (i) above by a ratio, the
numerator of which is the current
market price per share and the
denominator of which is the Base Price,
(iii) calculating the sum of the
products obtained for each Underlying
Security in (ii) above, (iv) dividing
such sum by the aggregate market value
of the Underlying Securities on such
semi-annual selection day, represented
by the sum of the products obtained by
multiplying, for each Underlying
Security, the Base Price by the Base
Number of Shares and (v) multiplying
the result by a Base Index of 10,000.
At every semi-annual revision of the
composition of the MIB 30 Index, the
Italian Stock Exchange Council
maintains the continuity of the MIB 30
Index by chain-linking the last value
of the old index with the first value
of the index as revised.
In the event of capital increases by
issuers of the Underlying Securities,
the calculation described above will
apply an adjustment coefficient, as
described below, to the Base Price of
the affected Underlying Security. Upon
such an event, a theoretical adjusted
price per share will be determined for
the affected Underlying Security
according to the rules of financial
parity established by the Italian
Association of Financial Analysts. The
adjustment coefficient will be
determined as the ratio of the
theoretical adjusted price per share
and the market price per share on the
day preceding the capital increase.
The Base Price will then be multiplied
by the adjustment coefficient to
produce an adjusted base price, which
will then replace the Base Price in the
calculation described above. In
addition, because the MIB 30 Index, is
a fixed weight index during the periods
between the dates of selection, the
adjustment to the Base Price is
balanced by a corresponding adjustment
to the Base Number of Shares. The Base
Number of Shares will be multiplied by
the reciprocal of the adjustment
coefficient to produce the adjusted
base number of shares, which will then
replace the Base Number of Shares in
the calculation described above.
Discontinuance of the MIB 30 Index;
Alteration of Method of Calculation........... If the Italian Stock Exchange
Council discontinues publication of the
MIB 30 Index and the Italian Stock
Exchange Council or another entity
publishes a successor or substitute
index that the Calculation Agent
determines, in its sole discretion, to
be comparable to the discontinued MIB
30 Index (such index being referred to
herein as a "Successor Index"), then
the relevant Index Closing Value will
be determined by reference to the value
of such Successor Index at the close of
trading on the Italian Stock Exchange
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 will 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 the Italian Stock Exchange Council
discontinues publication of the MIB 30
Index prior to, and such discontinuance is
continuing on, any of the Determination
Dates and the Calculation Agent determines
that no Successor Index is available at
such time, then on each Determination Date
until the earlier to occur of (i) the
Determination Date scheduled to occur on
July 21, 1998 and (ii) a determination by
the Calculation Agent that a Successor
Index is available, the Calculation Agent
will determine the Index Closing Value that
would be used in computing the
Supplemental Redemption Amount on each
Determination Date. The Index Closing
Value will be computed by the Calculation
Agent in accordance with the formula for
and method of calculating the MIB 30 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
MIB 30 Index. The Calculation Agent will
cause notice of each such Index Closing
Value to be provided to the holders of the
Notes on each succeeding Determination
Date until and including July 21, 1998
(unless a Successor Index is prior thereto
determined to be available).
Notwithstanding these alternative
arrangements, discontinuance of the
publication of the MIB 30 Index may
adversely affect the value of the Notes.
If at any time the method of
calculating the MIB 30 Index or a
Successor Index, or the value thereof,
is changed in a material respect, or if
the MIB 30 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 MIB 30 Index or such
Successor Index had such changes or
modifications not been made, then, from
and after such time, the Calculation
Agent will, at the close of business in
London on each Determination Date on
which an Index Closing Value is to be
calculated, 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 MIB 30 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
MIB 30 Index or such Successor Index,
as adjusted. Accordingly, if the
method of calculating the MIB 30 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 will adjust such
index in order to arrive at a value of
the MIB 30 Index or such Successor
Index as if it had not been modified
(e.g., as if such split had not
occurred).
Public Information............................ All disclosure contained in
this Pricing Supplement regarding the MIB
30 Index, including, without limitation,
its make-up, method of calculation and
changes in its components, are derived
from publicly available information
prepared by the Italian Stock Exchange
Council.
Historical Information........................ The following table sets forth
the high and low daily closing values, as
well as end-of-quarter closing values, of
the MIB 30 Index for each quarter in the
period from January 1, 1993 through
January 21, 1997. The historical values
of the MIB 30 Index should not be taken as
an indication of future performance, and
no assurance can be given that the MIB 30
Index will increase sufficiently to cause
the holders of the Notes to receive any
Supplemental Redemption Amount.
Daily Index Closing Values
----------------------------------
Period
High Low End
1993 ---- --- ------
1st Quarter 12,354 10,000 10,000
2nd Quarter 12,967 10,784 10,915
3rd Quarter 15,089 12,571 12,628
4th Quarter 14,606 12,015 14,135
1994
1st Quarter 16,847 13,793 14,697
2nd Quarter 18,836 15,366 17,120
3rd Quarter 17,100 14,908 15,670
4th Quarter 15,498 13,164 15,498
1995
1st Quarter 15,847 13,481 14,656
2nd Quarter 15,669 13,661 13,661
3rd Quarter 15,895 14,389 14,389
4th Quarter 14,531 13,094 14,531
1996
1st Quarter 15,144 13,397 14,132
2nd Quarter 15,985 13,600 13,600
3rd Quarter 15,836 13,767 15,664
4th Quarter 15,791 14,399 15,172
1997
1st Quarter (through
January 21, 1997) 18,485 15,574 15,697
Source: DataStream
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. Such
hedging may involve the purchase or sale
of exchange traded or over the counter
options on the MIB 30 Index or individual
stocks included in the MIB 30 Index,
futures contracts on the MIB 30 Index and
options on such futures contracts.
Although the Company has no reason to
believe that its hedging activity will
have 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............................. The Italian Stock Exchange
Council and MSIL have entered into a
non-exclusive license agreement
providing for the license to MSIL, in
exchange for a fee, of the right to use
the MIB 30 Index, which is owned and
published by the Italian Stock Exchange
Council, in connection with certain
securities, including the Notes. The
Company, the Calculation Agent and the
Trustee disclaim all responsibility for
the calculation or other maintenance of
or any adjustments to the MIB 30 Index.
In addition, the Italian Stock Exchange
Council 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 Index Closing Values
for any Determination Date or the
Supplemental Redemption Amount.
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--Foreign
Holders" 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 of the
Company for United States federal income
tax purposes. Accordingly, a Foreign
Holder will generally not be subject to
United States federal income tax,
including withholding tax, or estate
tax with regard to a Note, if the other
requirements for exemption from tax
listed under "Income Taxes" and "Estate
Taxes" in the United States Federal
Taxation--Foreign Holders" section in
the accompanying Prospectus Supplement
are met.
