MORGAN STANLEY — Capital/Financing Update 2012

Dec 20, 2012

Certificates issued pursuant to these Final Terms are securities to be listed under Listing Rule 19

FINAL TERMS dated 21 December 2012

Series Number: W1147 Common Code: 084851272 Tranche: 2 ISIN: XS0848512728

MORGAN STANLEY

as Issuer

PROGRAM FOR THE ISSUANCE OF NOTES, SERIES A AND B, WARRANTS AND CERTIFICATES

Issue of 25,000 Equity linked Certificates (“Tranche 2”) to be consolidated with 25,000 Equity linked Certificates (“Tranche 1” and the “Existing Notes”) and form a single series of 50,000 Equity linked Certificates

The Base Prospectus referred to below (as completed by these Final Terms) has been prepared on the basis that any offer of Certificates in any Member State of the European Economic Area which has implemented the Prospectus Directive (2003/71/EC) (and any amendments, including Directive 2010/73/EU (the "2010 PD Amending Directive"), to the extent implemented in the Relevant Member State) (each, a "Relevant Member State") will be made pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of the Certificates. Accordingly any person making or intending to make an offer in that Relevant Member State of the Certificates may only do so in circumstances in which no obligation arises for the Issuer or any Distribution Agent to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. Neither the Issuer nor any Distribution Agent has authorised, nor do they authorise, the making of any offer of Certificates in any other circumstances.

THE CERTIFICATES 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 CERTIFICATES 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 REGULATION S UNDER THE SECURITIES ACT). SEE "SUBSCRIPTION AND SALE" AND "NO OWNERSHIP BY U.S. PERSONS" IN THE BASE PROSPECTUS DATED 7 JUNE 2012. IN PURCHASING THE CERTIFICATES, 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 CERTIFICATES ARE NOT RATED.

This document constitutes Final Terms relating to the issue of Certificates described herein. Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions of the Warrants and Certificates (the "Conditions") set forth in the Base Prospectus dated 7 June 2012 and the supplemental Base Prospectus dated 25 June 2012 which together constitute a base prospectus (the "Base Prospectus") for the purposes of the Prospectus Directive (Directive 2003/71/EC). The Certificates shall constitute Securities for the purposes of the Conditions. This document constitutes the Final Terms of the Certificates described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with such Base Prospectus as so supplemented. Full information on the Issuer and the offer of the Certificates 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 25 Cabot Square, Canary Wharf, London E14 4QA.

Information Concerning Investment Risk

Certificateholders and prospective purchasers of Certificates should ensure that they understand the nature of the Certificates and the extent of their exposure to risk and that they consider the suitability of the Certificates as an investment in the light of their own circumstances and financial condition. The amount payable on redemption of the Certificates is linked to the performance of

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the Underlying (as defined herein), and may be less than par. Given the highly specialised nature of these Certificates, Morgan Stanley (the "Issuer") and Morgan Stanley & Co. International plc ("MSI plc") consider that they are only suitable for highly sophisticated investors who are able to determine for themselves the risk of an investment linked to the Underlying, are willing to take risks and can absorb the partial or complete loss of their initial investment. Consequently, if you are not an investor who falls within the description above you should not consider purchasing these Certificates without taking detailed advice from a specialised professional adviser.

Potential investors are urged to consult with their legal, regulatory, investment, accounting, tax and other advisors with regard to any proposed or actual investment in these Certificates. Please see the Base Prospectus for a full detailed description of the Certificates and in particular, please review the Risk Factors associated with these Certificates.

In purchasing any Certificates, purchasers will be deemed to represent and undertake to the Issuer, the Dealer and each of their affiliates that (i) such purchaser understands the risks and potential consequences associated with the purchase of the Certificates, (ii) that such purchaser has consulted with its own legal, regulatory, investment, accounting, tax and other advisers to extent it believes is appropriate to assist it in understanding and evaluating the risks involved in, and the consequences of, purchasing the Certificates and (iii) in accordance with the terms set out in Annex 2.

Tax considerations for non-U.S. holders: A Non-U.S. holder will be subject to U.S. withholding tax unless the beneficial owner of the Notes (or a financial institution holding the note on behalf of the beneficial owner) furnishes a Form W-8BEN, on which the beneficial owner certifies under penalties of perjury that it is not a U.S. person. If withholding or deduction of taxes is required by law, payments on the Notes will be made net of applicable withholding taxes, and Morgan Stanley or any of its affiliates will not be required to pay any additional amounts to Non-U.S. holders with respect to any taxes withheld.

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.

General

1. Issuer:	Morgan Stanley
2. Guarantor:	Not Applicable
3. Aggregate Number of Certificates in the Series:	50,000
4. Aggregate Number of Certificates in the Tranche:	Tranche 1: 25,000
Tranche 2: 25,000
5. Issue Date:	Tranche 1: 26 October 2012
Tranche 2: 21 December 2012
6. Issue Price:	Tranche 1: USD 206.40 per Certificate
Tranche 2: USD 166.10 per Certificate
7. Form of Warrants or Certificates:	Registered Certificates:
Global Registered Certificate, exchangeable for

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Individual Registered Certificates on 30 days notice in the limited circumstances described in the Global Registered Certificate

1. Certificate Style: (Condition 4) American Style Certificates

(i) Exercise Period: As defined in Condition 1

(ii) Potential Exercise Dates: Each day from but excluding the Commencement Date to and including the Latest Exercise Time on the Expiration Date

(iii) Commencement Date: The Issue Date

1. Type: The Certificates are Index Securities

(i) Index/Indices: Yorkville Liquid MLP Total Return Index (BBG Code: YLMLPTR Index) (an “Underlying” or “Underlying Index”)

(ii) Exchange(s): As specified in Condition 7.8

(iii) Related Exchange(s): All Exchanges

(iv) Exchange Business Day: As per the Conditions

(v) Initial Date: 19 October 2012

(vi) Additional Exents: Disruption Change in Law, Hedging Disruption, Increased Cost of Hedging shall apply

(vii) Other special terms and conditions “Business Days” means New York; and “Business Day Convention” means Following.

1. Minimum Transfer Amount: Not Applicable (Condition 2.5):

Exercise

1. Expiration Date: 19 October 2022

2. Latest Exercise Time: As per the Conditions

3. Minimum Exercise Number: Not Applicable (Condition 5.9)

4. Permitted Multiple: Not Applicable (Condition 5.9)

5. Deemed Exercise: Applicable (Condition 5.6)

Issuer Call Option

1. Call Option Applicable

(Condition)

(i) Optional Settlement Date(s): Any Business Day from and excluding the Issue Date to and excluding the Expiration Date.

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(ii) Optional Settlement Amount(s) of each Security and method, if any, of calculation of such amount(s): Cash Settlement Amount, calculated on the basis that the Expiration Date is the Business Day on which the Issuer exercises the Call Option.

(iii) Notice period: Not less than five (5) Business Days

Settlement

1. Settlement Basis: (Condition 4) The Certificates are Cash Settlement Certificates.

2. Cash Settlement Amount: In respect of each Certificate, an amount in the Settlement Currency as determined by the Determination Agent on the relevant Valuation Date as follows:

(99.75% of Calculation Amount) - – Management Fee

Where: “Calculation Amount” means Par * (Final Reference Price / Initial Reference Price) “Par” means USD 205.88 per Certificate; “Final Reference Price” means the official VWAP level of the Underlying Index on the Valuation Date; “Initial Reference Price” means the official volume weighted average price (VWAP) level of the Underlying Index on the Strike Date; “Management Fee” means 85 basis points per annum, calculated on the product of Issue Price and Aggregate Number of Certificates on each Business Day from and including the Issue Date to and including the Valuation Date; and “VWAP” means the Volume Weighted Average Price as determined by the Determination Agent.

1. Strike Price: USD 205.88

2. Settlement Price: Not Applicable

3. Valuation Time: The time at which the official closing level of the Underlying Index is published.

4. Valuation Date: The Valuation Date shall be determined in accordance with the following:

(A) if the Certificates are deemed to have been exercised in accordance with Condition 5.6 (Deemed Exercise), the Expiration Date; (B) if the Certificates are exercised by a Securityholder, the fifth Scheduled Trading

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Day following the Exercise Date; or

(C) if the Certificates are to be terminated pursuant to Condition 6 (Termination at the option of the Issuer), the Optional Settlement Date (Call).

1. Averaging Dates: Not Applicable
2. Observation Date: Not Applicable
3. Strike Date: 19 October 2012
4. Settlement Currency: U.S. Dollars (“USD”)
5. Cash Settlement Payment Date: 26 October 2022, or 5 Business Days following the relevant Valuation Date

Additional details

1. Determination Agent: As defined in the Conditions
2. Clearing Systems: Euroclear and Clearstream, Luxembourg
3. Non-exempt offer: Not applicable
4. U.S. Selling Restrictions: Reg. S Compliance Category
5. Additional Selling Restrictions: Not Applicable
6. Other special terms and conditions: Not Applicable

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RESPONSIBILITY

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

Signed on behalf of the Issuer:

By: Duty authorised

Harald Herrmann Authorised Signatory

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PART B – OTHER INFORMATION

1. LISTING

Listing and admission to Trading: Application is expected to be made by the Issuer (or on its behalf) to be admitted to trading and listed on the London Stock Exchange’s Regulated Market on or about the Issue Date and for the Securities to be added to the Official List of the UKLA. No assurance can be given that such listing will be obtained.

The Existing Notes have already been listed and admitted to trading.

2. RATINGS

Ratings: The Certificates have not been rated.

3. OPERATIONAL INFORMATION

ISIN Code: XS0848512728 Common Code: 084851272 Any clearing system(s) other than Euroclear Bank S.A./N.V. and Clearstream Banking société anonyme and the relevant identification number(s): Not Applicable Delivery: Delivery free of payment Names and addresses of initial Securities Agent(s)/Securities Transfer Agent(s): Names and addresses of additional Securities Agent(s) and/or Securities Transfer Agent(s) (if any): As per the Conditions As per the Conditions

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ANNEX 1

STATEMENT CONCERNING UNDERLYING INDEX

These securities are not in any way sponsored, endorsed, sold or promoted by Yorkville Capital Management LLC (the “Index Sponsor”) and the Index Sponsor makes no warranty or representation whatsoever, express or implied, either as to the results to be obtained from the use of the index (the “Index”) and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated solely by Structured Solutions AG (the “Index Calculator”). However, the Index Sponsor and the Index Calculator shall not be liable (whether in negligence or otherwise) to any person for any error in the Index and Index Sponsor and the Index Calculator shall not be under any obligation to advise any person of any error therein. The Index Sponsor accepts no liability in connection with the trading of any products on the Index. All copyright in the index values and constituent list vests in the Index Sponsor.

The investors should familiarise themselves with the Index methodology, which is available on www.structured-solutions.de and/or from Morgan Stanley & Co. International plc and/ or from the Index Sponsor upon request.

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ANNEX 2

Any investment in the Certificates made with the intention to offer, sell or otherwise transfer (together, “distribute” and each a “distribution”) such Certificates to prospective investors will be deemed to include, without limitation, the following representations, undertakings and acknowledgements:

a) (i) you are purchasing the instruments as principal (and not as agent or in any other capacity); (ii) none of the Issuer, the Dealer or their affiliates is acting as a fiduciary or an advisor to it in respect of the instruments; (iii) you are not relying upon any representations made by the Issuer, the Guarantor (if any) or any of their affiliates; (iv) you have consulted with your own legal, regulatory, tax, business, investments, financial, and accounting advisers to the extent that you have deemed necessary, and you have made your own investments, hedging and trading decisions based upon your own judgement and upon any advice from such advisors as you have deemed necessary and not upon any view expressed by the Issuer or any of its affiliates or agents and (v) you are purchasing the instruments with a full understanding of the terms, conditions and risks thereof and you are capable of and willing to assume those risks;

b) you shall only distribute as principal or, alternatively, acting on a commission basis in your own name for the account of your investors and will not do so as agent for any Morgan Stanley entity (together “Morgan Stanley”) who shall assume no responsibility or liability whatsoever in relation to any such distribution. You shall distribute the product in your own name and to such customers as you identify in your own discretion, at your own risk and under your sole responsibility. You shall make such enquiries you deem relevant in order to satisfy yourself that prospective investors have the requisite capacity and authority to purchase the product and that the product is suitable for those investors;

c) you shall not make any representation or offer any warranty to investors regarding the product, the Issuer or Morgan Stanley or make any use of the Issuer’s or Morgan Stanley’s name, brand or intellectual property which is not expressly authorised and you shall not represent you are acting as an agent of Morgan Stanley in such distribution. You acknowledge that neither the Issuer nor Morgan Stanley assume any responsibility or liability whatsoever in relation to any representation or warranty you make in breach thereof;

d) if you distribute any material prepared and transmitted by the Issuer or by Morgan Stanley, you shall only distribute the entire material and not parts thereof. Any material you, or any third party you engage on your behalf, prepare shall be true and accurate in all material respects and consistent in all material respects with the content of the Base Prospectus and the Final Terms and shall not contain any omissions that would make them misleading. You shall only prepare and distribute such material in accordance with all applicable laws, regulations, codes, directives, orders and/or regulatory requirements, rules and guidance in force from time to time (“Regulations”). You acknowledge that neither the Issuer nor Morgan Stanley shall have any liability in respect of such material which shall, for the avoidance of doubt, at all times be your sole responsibility;

e) you will not, directly or indirectly, distribute or arrange the distribution of the product or disseminate or publish (which for the avoidance of doubt will include the dissemination of any such materials or information via the internet) any materials or carry out any type of solicitation in connection with the product in any country or jurisdiction, except under circumstances that will result in compliance with all applicable Regulations and selling practices, and will not give rise to any liability for the Issuer or Morgan Stanley. For the avoidance of doubt, this includes compliance with the selling restrictions mentioned herein;

f) if you receive any fee, rebate or discount, you shall not be in breach of any Regulation or customer or contractual requirements or obligations and you shall, where required to do so (whether by any applicable Regulation, contract, fiduciary obligation or otherwise), disclose such fees, rebates and discounts to your investors. You acknowledge that where fees are payable, or rebates or discounts applied, the Issuer and Morgan Stanley are obliged to disclose the amounts and/or basis of such fees, rebates or discounts at the request of any of your investors or where required by any applicable Regulations.

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g) you will be committed to purchase at the issue price stated in the term sheet (or at the price otherwise agreed between us) instruments, when issued, in the agreed quantity and having terms, as provided in the definitive documentation, consistent with those in this term sheet (subject to any modifications agreed between us);

h) we may enter into hedging or other arrangements in reliance upon your commitment, and, if you fail to comply with your commitment, your liability to us shall include liability for our costs and losses in unwinding such hedging or other arrangements;

i) you agree and undertake to indemnify and hold harmless and keep indemnified and held harmless the Issuer, the Dealer and each of their respective affiliates and their respective directors, officers and controlling persons from and against any and all losses, actions, claims, damages and liabilities (including without limitation any fines or penalties and any legal or other expenses incurred in connection with defending or investigating any such action or claim) caused directly or indirectly by you or any of your affiliates or agents to comply with any of the provisions set out in (a) to (h) above, or acting otherwise than as required or contemplated herein; and

j) You are not purchasing the Certificates as an extension of credit to Morgan Stanley pursuant to a loan agreement entered into in the ordinary course of your trade or business.

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