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Market Value Adjusted (MVA) Fixed Annuities
 
  

 
 
MVA Fixed Annuities Defined
 
An MVA Fixed Annuity is a contract between you and an insurance company to provide future income. The insurance company pays a fixed rate of return for a specified time period known as a "guarantee period".
 
However, should you decide to withdraw your money before the end of the guarantee period, you may get more or less than what you invested. If current interest rates are higher than the contract guaranteed rate, you get less. If current rates are lower, you get more. The increase or decrease is called a "market value adjustment".
 
Learning about MVA fixed annuities
 
In order to be an informed investor in MVA fixed annuities, you should do several things. Every MVA fixed annuity that Morgan Stanley sells provides an informational document known as a "prospectus". You should read the prospectus carefully. Since the guarantees in each annuity depend solely on the financial strength of the insurance carrier, you should evaluate the insurance company's financial condition. The prospectus includes a summary of the insurance company's financial information. You may also want to consult public rating agencies such as Moodys, Standard and Poor's, or Bests that evaluate insurance company financial strength. Finally, you should also discuss your investment goals with your Financial Advisor.
 
General information on annuities can be obtained from The American Council of Life Insurers Web site at http://www.acli.com/ACLI/Consumer/Annuities/Default.htm and Morgan Stanley's Web site www.morganstanleyindividual.com/investmentproducts/annuities provides specific information on our annuity offerings.
 
We strongly urge you to read Morgan Stanley's Commitment to Clients for important information about building a successful working relationship among you, your Financial Advisor, and our Firm. This commitment is on our Web site (www.morganstanley.com/individual) and also is available from your Financial Advisor.
 
Costs associated with investing in MVA fixed annuities
 
Typically MVA fixed annuities do not have upfront sales loads or ongoing expenses. The insurance company's costs are built into the interest rate paid on the contract. In addition to the market value adjustment described above, your contract may be subject to an early withdrawal charge (also called a contingent deferred sales charge), in the first 5 - 8 years of the contract. You should consult the prospectus for the MVA fixed annuity that you are considering for the specific early withdrawal charge schedule and the market value adjustment calculation.
 
How Morgan Stanley and your Financial Advisor are compensated when you buy an MVA fixed annuity.
 
Compensation to Morgan Stanley on MVA Fixed annuities is paid by the issuing insurance company and does not represent an additional charge to you. The insurance company pays compensation out of their general revenues. Morgan Stanley receives commissions on the initial sale that are a percentage of your annuity contributions and may be paid an additional commission if you decide to renew your annuity at the end of a guarantee period. The maximum commission is currently 2% of contributions.
 
A portion of the payment received by Morgan Stanley is paid to your Financial Advisor. Morgan Stanley generally pays your Financial Advisor the same commission rate for a given guarantee period. However, not all MVA fixed annuities pay a renewal commission.
 
In addition to commissions, the insurance companies may reimburse Morgan Stanley for the cost of client seminars and Financial Advisor educational conferences.
 
To compensate Morgan Stanley for the costs of distribution, insurance licensing, insurance company due diligence and other home office services, the insurance carriers pay Morgan Stanley an additional percentage of contributions not exceeding 0.80% and a percentage of assets not exceeding 0.10%. Morgan Stanley currently solicits MVA fixed annuities issued by Allstate, Hartford, and Travelers.
 
 
 
 
 
 

 
 
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