MORGAN STANLEY — Capital/Financing Update 2010

Nov 23, 2010

Morgan Stanley

Issue of £4,000,000 Notes due 2016

linked to Index Warrants

under the Programme for the Issuance of Morgan Stanley Notes linked to Morgan Stanley Jersey Warrants exercisable for Morgan Stanley Jersey Limited Preference Shares

PART A – CONTRACTUAL TERMS

THE NOTES DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES, AND ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. THE NOTES DESCRIBED HEREIN MAY NOT BE OFFERED, SOLD OR DELIVERED AT ANY TIME, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN EITHER REGULATION S UNDER THE SECURITIES ACT OR THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED). SEE "SUBSCRIPTION AND SALE" AND "NO OWNERSHIP BY U.S. PERSONS" IN THE BASE PROSPECTUS DATED 6 AUGUST 2010. IN PURCHASING THE NOTES, PURCHASERS WILL BE DEEMED TO REPRESENT AND WARRANT THAT THEY ARE NEITHER LOCATED IN THE UNITED STATES NOR A U.S. PERSON AND THAT THEY ARE NOT PURCHASING FOR, OR FOR THE ACCOUNT OR BENEFIT OF, ANY SUCH PERSON.

The Notes are senior unsecured obligations of Morgan Stanley, and all payments on the notes, including the repayment of principal, are subject to the credit risk of Morgan Stanley. The Notes are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency, nor are they obligations of, or guaranteed by, a bank.

This document constitutes Final Terms relating to the issue of Notes described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Note Conditions incorporated by reference in the Base Prospectus dated 6 August 2010 which constitutes a Base Prospectus (the Base Prospectus) for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the Prospectus Directive). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with such Base Prospectus. Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Base Prospectus. Copies of the Base Prospectus are available from the offices of Morgan Stanley & Co. International plc at 20 Bank Street, Canary Wharf, London E14 4AD.

YOU SHOULD CONSULT YOUR INDEPENDENT FINANCIAL OR OTHER APPLICABLE ADVISOR(S) BEFORE INVESTING IN THE PRODUCT DESCRIBED ABOVE. YOU SHOULD NOT INVEST IN THE PRODUCT UNLESS YOU UNDERSTAND AND HAVE SUFFICIENT FINANCIAL RESOURCES TO BEAR THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE PRODUCT.

Morgan Stanley is not qualified to give legal, tax or accounting advice to its clients and does not purport to do so in this document. Clients are urged to seek the advice of their own professional advisers about the consequences of the proposals contained herein.

US Treasury Circular 230 Notice - Morgan Stanley does not render advice on tax and tax accounting matters to clients. This material was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws.

1. Issuer: Morgan Stanley 2. (i) Series Number: 4349 (ii) Tranche Number: 1 3. Specified Currency or Currencies: Pounds sterling ("£") 4. Aggregate Principal Amount of the Notes: Series: £4,000,000 Tranche: £4,000,000 5. Issue Price 100 per cent. of par per Note 6. Specified Denominations (Par): £1.00 (Condition 3) 7. (i) Issue Date: 23 November 2010 (ii) Trade Date: 9 November 2010 8. Maturity Date: 23 November 2016 9. Interest Basis: Non-interest bearing 10. Redemption/Payment Basis: Redemption at par (further particulars specified below) 11. Put/Call Options: (i) Redemption at the option of the Issuer: Not Applicable (ii) Redemption at the option of the Noteholders: Not Applicable Other Put/Call Options: Not Applicable 12. Method of distribution: Non-syndicated 13. Equity Linked Note Provisions Not Applicable/ Notwithstanding that the Notes are not Equity Linked Notes, Condition 10.5 (Additional Disruption Events) shall apply to the Notes. (Condition 10): Additional Disruption Event: All (but not some only) of the Warrants (as defined at paragraph 16 (Final Redemption Amount of each Note) below) are purchased and cancelled pursuant to Condition 20 of the Warrants.

PROVISIONS RELATING TO REDEMPTION

1. Call Option Not Applicable

(Condition 15.7)

1. Put Option Not Applicable

(Condition 15.9)

1. Final Redemption Amount of each Note

(Condition 15.1)

£1 per Note unless on the Election Valuation Date the market value of a Warrant determined by the Determination Agent in good faith and in a commercially reasonable manner (the "Warrant Market Value") is more than £1 in which case the Final Redemption Amount shall be determined as follows:

• (a) if the Warrant Market Value is more than £1.00 but equal to or less than £1.025, the Note Redemption Amount shall be an amount equal to the Warrant Market Value; and

• (b) if the Warrant Market Value is more than £1.025, the Final Redemption Amount shall be £1.025

• Warrants: 4,000,000 Warrants linked to the Index Basket, Series W875, ISIN: JE00B5BS0R48, issued by Morgan Stanley (Jersey) Limited and guaranteed by Morgan Stanley. Each Warrant is exercisable for one Class 875 Preference Share in Morgan Stanley (Jersey) Limited guaranteed by Morgan Stanley

The terms of the Warrants are contained in Part C ("Final Terms Relating to the Warrants") of these Final Terms. The Preference Shares (including the Guarantee thereof) are described in Part D ("Terms of the Preference Shares") of these Final Terms.

1. Election Valuation Date: The Final Observation Date (as defined in Part C of these Final Terms)

2. Early Termination Amount and Redemption Amount upon early redemption

(Condition 15.2, 15.5, 15.10 and 20)

Early Redemption Amount(s) of each Note payable on redemption for taxation reasons or on event of default or other early redemption and/or the method of An amount in cash equal to the fair market value of such Note on the date of such early termination less such Note's pro rata share of the reasonable cost to the Issuer and/or its affiliates of unwinding, or the loss calculating the same (if required or if different from that set out in the Conditions):

realised by the Issuer and/or its affiliates on, any related hedging arrangements, all as calculated by the Determination Agent in its sole and absolute discretion.

GENERAL PROVISIONS APPLICABLE TO THE NOTES

1. Form of Notes: Bearer Notes:

(Condition 3)

Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note

1. Additional Financial Centre or other special Not Applicable

provisions relating to Payment Dates:

1. Other final terms: Not Applicable

DISTRIBUTION

Dealer:

1. (i) If syndicated, names and addresses of Managers and underwriting commitments; and names and addresses of the entities agreeing to Not Applicable

place the issue without a firm commitment or on a "best efforts" basis if such entities are not the same as the Managers:)

(ii) Date of Subscription Agreement: Not Applicable

Stabilising Manager(s) (if any): Not Applicable

1. If non-syndicated, name and address of Morgan Stanley & Co. International plc

20 Bank Street

London E14 4AD

1. Non-exempt offer: Not Applicable

2. Whether TEFRA D or TEFRA C rules applicable or TEFRA rules not applicable: TEFRA D

Total commission and concession: Not Applicable

Additional selling restrictions: Not Applicable

RESPONSIBILITY

The Issuer accepts responsibility for the information contained in these Final Terms.

Signed on behalf of the Issuer:

Duly authorised

PART B – OTHER INFORMATION

1. LISTING

(i) Listing of the Notes Application has been made for the Notes to be

listed on the Official List of the UK Listing

Authority with effect from the Issue Date.

(ii) Admission to trading of the Notes: Application has been made for the Notes to be

admitted to trading on the London Stock Exchange plc's Regulated Market with effect

from the Issue Date.

2. RATINGS

Ratings of the Notes: The Notes have not been rated.

3. OPERATIONAL INFORMATION

ISIN Code: XS0559507255

Common Code: 055950725

New Global Note: No

Any clearing system(s) other than

Euroclear Bank S.A./N.V. and

Clearstream and the relevant

identification number(s):

Delivery to the Dealer: Delivery free of payment

Names and addresses of additional

Paying Agent(s) (if any):

Not Applicable

Not Applicable

Intended to be held in a manner which No

would allow Eurosystem eligibility:

PART C – FINAL TERMS RELATING TO THE WARRANTS

FINAL TERMS dated as of 23 November 2010

Series Number: W875 Common Code: 055991618 Tranche: 1 ISIN: JE00B5BS0R48

MORGAN STANLEY (JERSEY) LIMITED as Issuer

(incorporated with limited liability in Jersey, Channel Islands)

MORGAN STANLEY as Guarantor

PROGRAM FOR THE ISSUANCE OF WARRANTS AND CERTIFICATES

Issue of 5,000,000 Warrants linked to the Index

THE WARRANTS DESCRIBED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES, AND ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. THE WARRANTS DESCRIBED HEREIN MAY NOT BE OFFERED, SOLD OR DELIVERED AT ANY TIME, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN EITHER REGULATION S UNDER THE SECURITIES ACT OR THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED). SEE "SUBSCRIPTION AND SALE" AND "NO OWNERSHIP BY U.S. PERSONS" IN THE BASE PROSPECTUS DATED 6 AUGUST 2010. IN PURCHASING THE WARRANTS, PURCHASERS WILL BE DEEMED TO REPRESENT AND WARRANT THAT THEY ARE NEITHER LOCATED IN THE UNITED STATES NOR A U.S. PERSON AND THAT THEY ARE NOT PURCHASING FOR, OR FOR THE ACCOUNT OR BENEFIT OF, ANY SUCH PERSON. THE WARRANTS ARE NOT RATED.

This document constitutes Final Terms relating to the issue of Warrants described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Warrant Conditions incorporated by reference in the Base Prospectus dated 6 August 2010 which constitutes the Base Prospectus (the Base Prospectus). This document constitutes the Final Terms of the Warrants described herein and must be read in conjunction with such Base Prospectus. The Warrants shall constitute Securities for the purposes of the Warrant Conditions. Full information on the Issuer, the Guarantor and the offer of the Warrants is only available on the basis of the combination of these Final Terms and the Base Prospectus.

Index Disclaimer

The FTSE® 100 Index

"FTSE" is a trademark of the London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited ("FTSE") under licence. The Issuer is licensed by FTSE to redistribute the FTSE® 100 Index. All rights in and to the FTSE® 100 Index vest in FTSE and/or its licensors. All information is provided for reference only. Neither FTSE nor its licensors shall be responsible for any error or omission in the FTSE® 100 Index

General

1. Issuer: Morgan Stanley (Jersey) Limited

2. Guarantor: Morgan Stanley

3. Aggregate Number of 4,000,000

Warrants in the Series:

1. Aggregate Number of Warrants in the Tranche: 4,000,000

2. Issue Date: 23 November 2010

3. Issue Price: The Issue Price per Warrant is £1.00 per Warrant payable on the

Expiration Date subject to the Warrants being delivered upon redemption of the £4,000,000 Notes due 2016 linked to the Index Warrants, Series 4349, ISIN XS0559507255, issued by Morgan Stanley on 23 November 2010 (the "Notes"). If the Warrants are not so delivered, the Warrants will be cancelled and the Issue Price

will no longer be payable.

1. Warrant Style: European Style Warrants

(Condition 4)

1. Type: The Warrants are Index Warrants and Share Warrants

For Share Warrants only Notwithstanding that the Warrants are Share Warrants, Condition 7

so far as it relates to Share Warrants shall not apply to the

Warrants.

(i) Underlying Security: Class 875 Preference Share in Morgan Stanley (Jersey) Limited

guaranteed by Morgan Stanley. The Underlying Securities will be represented by a single certificate representing all the Underlying Securities (see Part D – Terms of the Preference Shares) and will

be delivered through Euroclear and Clearstream, Luxembourg.

(ii) Relevant Issuer: Morgan Stanley (Jersey) Limited

(iii) Exchange Not Applicable

(iv) Related Exchange: Not Applicable

(v) Exchange Business Not Applicable

Day:

(vi) Initial Date: Not Applicable

(vii) Additional Disruption

Events:

Not Applicable

For Index Warrants only

(viii) Index: The FTSE® 100 Index. The Index is not a Multi-Exchange Index.

(ix) Weighting: Not applicable

(x) Exchange(s): London Stock Exchange

(xi) Related Exchange: London International Futures and Options Exchange

(xii) Exchange Business Any Scheduled Trading Day on which the Exchange and the

Related Exchange are open for trading during their respective regular trading sessions, notwithstanding the Exchange or the

Related Exchange closing prior to its Scheduled Closing Time.

(xiii) Averaging Dates: Not Applicable

(xiv) Additional Disruption Applicable:

Events:

Day:

Change of Law

Hedging Disruption

Increased Cost of Hedging

Exercise

1. Expiration Date: 7 December 2016

2. Latest Exercise Time: 10:00 a.m. Brussels time (in the case of Euroclear) or 10:00 a.m.

Luxembourg Time (in the case of Clearstream, Luxembourg)

1. Minimum Exercise Number: Not Applicable

(Condition 5.10)

Settlement

1. Settlement Basis: The Warrants are Full Physical Settlement Warrants.

(Condition 4)

1. Ratio: 1 Warrant relates to 1 Underlying Security.

2. Strike Price Payment Date: Expiration Date

3. Strike Price: (a) If a Fixing Event has occurred on an Observation Date:

4. £10 Fixed Amount *(Accrual/£1)* FFL /( FIL * Exp(-Div*T))

5. (b) If a Fixing Event has not occurred,
6. (i) if a Knock-In Event has not occurred:

$$£10 - £1 (Accrual/£1) FFL / (FIL * Exp(-Div*T))$$

(ii) if a Knock-In Event has occurred:

£10 – (£1 *(Accrual/£1)* Indexf /Index0) * FFL/(FIL*Exp(- Div*T))

Where:

"Accrual" means (a) in the event that the Strike Price is calculated pursuant to the above, the value as calculated by the Determination Agent of £1 increased by interest at overnight GBP LIBOR compounded from, but excluding, the Affected Observation Date to and including the Final Observation Date, or (b) in the event that the Strike Price is calculated pursuant to paragraph (ii) above, £1;

"Knock-in Event" means Index^f is less than or equal to 50% of Index⁰

"Fixing Event" means if on an Observation Date i, the Index Level is greater than or equal to the product of (i) Barrier Level i, expressed as a percentage, and (ii) the Index0 as follows:

i	Observation Date i	Barrier Level i	Fixed Amount i
1	9 November 2011	90%	GBP1.0625
2	9 November 2012	85%	GBP1.1250
3	11 November 2013	80%	GBP1.1875
4	10 November 2014	75%	GBP1.2500
5	9 November 2015	70%	GBP1.3125
6	9 November 2016 (the Final	65%	GBP1.3750
	Observation Date)

^"T" means the period including the Final Observation Date to but

excluding the Expiration Valuation Date divided by 365;

"Index0": means the Index Level on 9 November 2010.

"Indexf": means the Index Level on the Final Observation Date, as determined by the Determination Agent.

"Div" means 3.55 per cent.;

"Expiration Valuation Date" means the first Scheduled Trading Day immediately preceding the Expiration Date that is not a Disrupted Day;

"FFL" means the Index Level on the Expiration Valuation Date, as determined by the Determination Agent;

"FIL" means the Index Level on the Final Observation Date, as determined by the Determination Agent;

"Observation Date" means each date as set out in the table above, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day unless such day is a Disrupted Day. If such day is a Disrupted Day, then the Pricing Date shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day, unless each of the eight Scheduled Trading Days immediately following the date that but for the occurrence of an event causing a Disrupted Day would have been the Pricing Date is a Disrupted Day. In that case, (1) that eighth Scheduled Trading Day shall be deemed to be the Pricing Date, notwithstanding the fact that such day is a Disrupted Day, and (2) the Determination Agent shall determine in its sole and absolute discretion the level of the Index as of the Valuation Time on that eighth Scheduled Trading Day in accordance with the formula for and method of calculating the Index last in effect prior to the occurrence of the first Disrupted Day using the Exchange traded or quoted price as of the Valuation Time on that eighth Scheduled Trading Day of each security comprised in the Index (or, if an event giving rise to a Disrupted Day has occurred in respect of the relevant security on that eighth Scheduled Trading Day, its good faith estimate of the value for the relevant security as of the Valuation Time on that eighth Scheduled Trading Day);

"Index Level" means, the official closing level of the Index on a relevant date, as published by the Index Sponsor and determined by the Determination Agent;

The Strike Price will be rounded to the nearest 1 pence with 0.5 pence being rounded downwards.

Adjustment to Index

References to "any Valuation Date" and "Final Price" in Condition 7.2.2 shall be deemed to be references to "the Expiration Valuation Date" and "Index Level" respectively; and

References to "final Valuation Date" and "Fiscal Agent" in Condition 7.2.3 shall be deemed to be references to "Expiration Valuation Date" and "Principal Securities Agent" respectively.

16.	Settlement Price:		Not Applicable
17.	Physical Settlement Date:		As defined in Condition 1
Additional details
18.	Determination Agent:		As defined in the Conditions
19.	Listing:		None
20.	Clearance Systems:		Euroclear and Clearstream, Luxembourg
21.	Additional Restrictions:	Selling	Not Applicable
Signed on behalf of the Issuer:
By:	Duly authorised

PART D - TERMS OF THE PREFERENCE SHARES

Description of Certain Rights

The following when read in conjunction with the Description of the Preference Shares set out in the Base Prospectus dated 6 August 2010 is a description of certain rights attaching to the Preference Shares which are set out in full in, are subject to, and are qualified in their entirety by reference to, the Memorandum and Articles of Association of Morgan Stanley (Jersey) Limited (the Issuer) and the Statement of Rights in relation to the Preference Shares approved by the Board of Directors of the Issuer on 4 August 2010 (together, the Articles).

• 1. Class 875
• 1. Redemption Amount: With respect to each Preference Share redeemed the following amount as at the Redemption Date:

£10 * Interest Factor

where:

"Determination Agent" means Morgan Stanley & Co. International plc;

"Interest Factor" means [1 + (Day Count/365 * GBP LIBOR)];

"Issue Date" means 7 December 2016;

"Issue Price" means the Strike Price of the Warrant;

"Day Count" means the number of calendar days from and including the Issue Date to but excluding the Redemption Date; and

"GBP LIBOR" means the interpolated GBP LIBOR swap rate applicable to an investment period starting on (and including) the Issue Date and extending to (but excluding) the Redemption Date, expressed as a percentage, as determined by the Determination Agent by reference to the official British Bankers' Association LIBOR fixings ("BBA Fixings") on the Issue Date or, in the event there is no such fixing on that date, the BBA Fixing on the immediately following day on which there is a fixing.

• 1. Redemption Date: 8 December 2017 or such earlier date as the holders of the Preference Shares may determine as set out below.
• 1. Optional Early Redemption Period: From and including 8 June 2017 to but excluding 8 December 2017