MORGAN STANLEY — Capital/Financing Update 2010

Dec 17, 2010

Morgan Stanley

Issue of £504,900 Notes due 2016

linked to Commodities Linked 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: 4224 Tranche Number: (ii) 1 3. Specified Currency or Currencies: Pounds sterling ("£") 4. Aggregate Principal Amount of the Notes: Series: £504,900 Tranche: £504,900 5. Issue Price 100 per cent. of par per Note 6. Specified Denominations (Par): £1.00 (Condition 3) 7. 17 December 2010 (i) Issue Date: 17 December 2010 (ii) Strike Date: 5 January 2017 8. Maturity Date: 9. Interest Basis: Non-interest bearing 10. Redemption/Payment Basis: Redemption at par (further particulars specified below) 11. Put/Call Options: Redemption at the option of the Not Applicable (i) Issuer: (ii) Redemption at the option of the Not Applicable Noteholders: Other Put/Call Options: Not Applicable Non-syndicated 12. Method of distribution: Not Applicable/ Notwithstanding that the Notes are Equity Linked Note Provisions 13. not Equity Linked Notes, Condition 10.5 (Additional Disruption Events) shall apply to the Notes. (Condition 10): All (but not some only) of the Warrants (as defined at Additional Disruption Event: paragraph 16 (Final Redemption Amount of each Note) below) are purchased and cancelled pursuant to

Condition 22 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 £1.03, the Note Redemption Amount shall be an amount equal to the Warrant Market Value: and

• (b) if the Warrant Market Value is more than £1.03, the Final Redemption Amount shall be £1.03

• Warrants: 504,900 Warrants linked to the Index Basket, Series W848, ISIN: JE00B4N2VH48, issued by Morgan Stanley (Jersey) Limited and guaranteed by Morgan Stanley. Each Warrant is exercisable for one Class 848 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)

Early Termination Amount and Redemption 19. Amount upon early redemption

(Condition 15.2, 15.5, 15.10 and 20)

payable on redemption for taxation reasons or on event of default or other early redemption and/or the method

Early Redemption Amount(s) of each Note 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 realised by the Issuer and/or its affiliates on, any different from that set out in the Conditions):

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 provisions relating to Payment Dates:

Not Applicable

1. Other final terms: Not Applicable

DISTRIBUTION

1. (i) If syndicated, names and addresses Managers and underwriting commitments: names and addresses of the entities agreeing to place the issue without a firm commitment or on a "best efforts" basis if such entities are not the same

as the Managers:)

Not Applicable

(ii) Date of Subscription Agreement: Not Applicable

Stabilising Manager(s) (if any):

Not Applicable

If non-syndicated, name and address of Morgan Stanley & Co. International plc 24.

20 Bank Street

Dealer:

London E14 4AD

1. Non-exempt offer: Not Applicable

Whether TEFRA D or TEFRA C rules 26. 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:

By: Duly authorised

PART B - OTHER INFORMATION

1. LISTING

Listing of the Notes (i) 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.

1. RATINGS

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

1. OPERATIONAL INFORMATION

ISIN Code: XS0547737063

Common Code: 054773706

New Global Note: No

Any clearing system(s) other than Not Applicable 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 Not Applicable

Paying Agent(s) (if any):

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 17 December 2010

Series Number: W848 Common Code: 054862288 Tranche: 1 ISIN: JE00B4N2VH48

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 504,900 Warrants linked to the a Basket of Commodities

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 STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED). SEE UNITED "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.

General

1. Issuer: Morgan Stanley (Jersey) Limited

2. Guarantor: Morgan Stanley

3. Aggregate Number 504,900

Warrants in the Series:

1. 504,900 Aggregate Number of

Warrants in the Tranche:

1. Issue Date: 17 December 2010

2. 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 £504,900 Notes due 2016 linked to the Index Warrants, Series 4224, ISIN XS0547737063, issued by Morgan Stanley on 17 December 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. The Warrants are Commodity Warrants and Share Warrants Type:

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.

Class 848 Preference Share in Morgan Stanley (Jersey) Limited (i) Underlying Security:

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.

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

Exchange Not Applicable (iii)

(iv) Related Exchange: Not Applicable

Not Applicable (v) Exchange Business

Day:

Not Applicable Initial Date: (vi)

Not Applicable (vii) Additional Disruption

Events:

For Commodity Warrants only

The Commodity Reference Price for each Underlying Commodity (i)

Commodities Basket: are listed below: 1. Gold: (GOLD-P.M. FIX): The afternoon Gold fixing price per troy ounce of Gold for delivery in London through a member of the LMBA authorized to effect such delivery, stated in U.S. Dollars, as calculated by the London Gold Market

Bloomberg: GOLDLNPM

1. Silver: (SILVER-FIX): The Silver fixing price per troy ounce of Silver for delivery in London through a member of the LMBA authorized to effect such delivery, stated in U.S. cents, as calculated by the London Silver Market

Bloomberg: SLVRLN

1. Platinum: (PLATINUM-P.M. FIX): The afternoon Platinum fixing price per troy ounce gross of Platinum for delivery in Zurich through a member of the LPPM authorized to effect such delivery, stated in U.S. Dollars, as calculated by the LPPM

Bloomberg: PLTMLNPM

(ii) Specified Price:

The Commodity Reference Price as set out above

(iii) Pricing Date:

The Strike Date: 17 December 2010

Each of the following Observation Date: 17 December 2012, 17 December 2013, 17 December 2014, 17 December 2015, 19

December 2016 (Final Observation Date)

Each Knock In Determination Date: each Commodity Business Day from but excluding the Strike Date to and including the Final

Observation Date (the Knock In Determination Period)

(iv) Price Source:

The relevant market as set out in (i) above in respect of each Underlying Commodity

(v) Commodity
Disruption Events:

Price Source Disruption

Trading Disruption

Disappearance of Commodity Reference Price

Material Change in Formula

Material Change in Content

Tax Disruption

(vi) Common Pricing:

Not Applicable

(vii) Commodity
Disruption Fallback:

Determination Agent Determination

Exercise

1. Expiration Date:

19 January 2017

1. 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.

1. Strike Price Payment Date:

Expiration Date

1. Strike Price:

(a) If a Fixing Event has occurred on an Observation Date (the "Affected Observation Date"):

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

• (b) If a Fixing Event has not occurred,
• (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)* WorstCommodityf /WorstCommodity0) * 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 if any of the Underlying Commodity's Commodity Reference Price on any Knock In Determination Date is less than 50% of Initial Price of that Underlying Commodity

"Fixing Event" means if on an Observation Date i, the Commodity Reference Price of each Underlying Commodity is equal to or greater than its Initial Price, the corresponding Fixed Amount i is as follows:

i	Observation Date i	Fixed Amount i
1	17 December 2012	GBP1.31
2	17 December 2013	GBP1.465
3	17 December 2014	GBP1.62
4	17 December 2015	GBP1.775
5	19 December 2016	GBP1.93

"T" means the period including the Final Observation Date to but excluding the Expiration Valuation Date divided by 365;

"Initial Price": means the Commodity Reference Price of the relevant Underlying Commodity on the Strike Date;

"Final Price": means the Commodity Reference Price of the relevant Underlying Commodity on the Final Observation Date;

"Worst Performing Commodity" means, the Underlying Commodity that has the lowest level calculated as follows:

Min (
$$\frac{Final\ Price_i - Initial\ Price_i}{Initial\ Price_i}$$
)

"WorstCommodityf" means, the Final Price of the Worst Performing Commodity;

"WorstCommodity0" means, the Initial Price of the Worst Performing Commodity

"Div" means 3.00 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 Commodity Reference Price of the Worst

Performing Commodity on the Expiration Valuation Date, as determined by the Determination Agent;

"FIL" means the Commodity Reference Price of the Worst Performing Commodity on the Final Observation Date, as determined by the Determination Agent;

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

1. Settlement Price: Not Applicable

2. Physical Settlement Date: As defined in Condition 1

Additional details

1. Determination Agent: Morgan Stanley & Co. International plc

2. Listing: None

3. Clearance Systems: Euroclear and Clearstream, Luxembourg

4. Additional Selling Not Applicable

Restrictions:

Signed	on behalf of the Issuer:
Ву:	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

848

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 19 January 2017;

"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:

18 January 2018 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 18 July 2017 to but excluding 18 January 2018