MORGAN STANLEY — Capital/Financing Update 2010

Feb 9, 2010

CALCULATION OF REGISTRATION FEE

| | Maximum
Aggregate | Amount
of Registration |
| --- | --- | --- |
| Title
of Each Class of Securities Offered | Offering
Price | Fee |
| Knock-Out Notes
due 2011 | $25,001,000 | $1,782.57 |

Pricing Supplement To prospectus dated December 23, 2008, and Amendment No. 1 to prospectus supplement for knock-out notes dated January 8, 2010 Pricing Supplement No. 302 Registration Statement No. 333-156423 Dated February 5, 2010; Rule 424(b)(2)

Structured Investments Morgan Stanley $25,001,000 Knock-Out Notes Linked to the S&P 500 ® Index due August 11, 2011

General

· The notes are designed for investors who seek to participate in the appreciation of the S&P 500 ® Index at maturity and who anticipate that the Index Closing Value on the Valuation Date will not have declined, as compared to the Initial Index Value, by more than 15%. Investors should be willing to forgo interest and dividend payments and, if the Index Closing Value on the Valuation Date has declined, as compared to the Initial Index Value, by more than 15%, be willing to lose some or all of their principal based on the performance of the Underlying Index over the term of the notes. If the value of the Underlying Index on the Valuation Date has not declined, as compared to the Initial Index Value, by more than 15%, investors will receive the greater of (a) the Underlying Index Return and (b) the Contingent Minimum Return of 2.50% at maturity.

· Senior unsecured obligations of Morgan Stanley maturing August 11, 2011 † . All payments on the notes are subject to the credit risk of Morgan Stanley.

· Minimum purchase of $10,000. Minimum denominations of $1,000 and integral multiples thereof.

· The notes priced on February 5, 2010 and are expected to settle on or about February 12, 2010.

Key Terms

| Underlying
Index: | S&P
500 ® Index |
| --- | --- |
| Knock-Out
Event: | A Knock-Out
Event occurs if, on the Valuation Date, the Final Index Value has
decreased, as compared to the Initial Index Value, by more than the Knock-Out
Buffer Amount. |
| Knock-Out
Buffer Amount: | 15% |
| Payment at
Maturity: | If a Knock-Out Event has not
occurred , you will receive a cash payment at maturity that will
reflect the greater of the performance of the Underlying Index and the
Contingent Minimum Return. If a Knock-Out Event has not
occurred, your payment at maturity per $1,000 principal amount note will
equal $1,000 plus the product of (a) $1,000 and (b) the greater of (i) the Underlying Index
Return and (ii) the Contingent Minimum Return. For additional
clarification, please see “What is the Return on the Notes at Maturity
Assuming a Range of Performance for the Underlying Index?” on page
2. |
| | If a Knock-Out Event has
occurred , you will receive a cash payment at maturity that will
reflect the decline in the Underlying Index. Under these
circumstances, your payment at maturity per $1,000 principal amount note
will be calculated as follows: |
| | $1,000 +
($1,000 x Underlying Index Return) |
| | If
a Knock-Out Event has occurred, you will lose over 15% of your investment
at maturity and you could lose your entire investment. |
| Contingent
Minimum Return: | 2.50%. |
| Observation
Period: | For the
purpose of determining the payment at maturity, the Observation Period
will be the Valuation Date. |
| Monitoring: | Closing
Level |
| Index Closing
Value: | On any day,
the index closing value for the Underlying Index |
| Underlying
Index Return: | Final Index Value –
Initial Index Value Initial
Index Value |
| Initial Index
Value: | 1,066.19,
which was the Index Closing Value on the Pricing Date |
| Final Index
Value: | The Index
Closing Value on the Valuation Date |
| Valuation
Date: | August 8,
2011 † |
| Maturity
Date: | August 11,
2011 † |
| Pricing
Date: | February 5,
2010 |
| Issue
Date: | February 12,
2010 (5 business days after the Pricing Date) |
| CUSIP: | 617482KN3 |
| ISIN: | US617482KN33 |

† Subject to postponement for non-index business days or in the event of a market disruption event and as described under “Description of Notes — Postponement of Valuation Date(s) or Review Date(s)” in the accompanying prospectus supplement for knock-out notes.

Investing in the notes involves a number of risks. See “Risk Factors” beginning on page S-18 of the accompanying prospectus supplement and “Selected Risk Considerations” beginning on page 5 of this pricing supplement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the notes or passed upon the accuracy or the adequacy of this pricing supplement or the accompanying prospectus supplement and prospectus. Any representation to the contrary is a criminal offense.

| | Price
to Public (1) | Fees
and Commissions (2) | Proceeds
to Issuer |
| --- | --- | --- | --- |
| Per
note | $
1,000 | $
12.50 | $
987.50 |
| Total | $
25,001,000 | $
212,212.50 | $
24,688,487.50 |

(1) Certain fiduciary accounts will pay a purchase price of $987.50 per note, and the placement agents with respect to sales made to such accounts will forgo any fees.

(2) JPMorgan Chase Bank, N.A. and J.P. Morgan Securities Inc., acting as placement agents for the notes, will receive a fee from the issuer of $12.50 per $1,000 principal amount note, but will forgo any fees for sales to fiduciary accounts. The total fees represent the amount that the placement agents received from accounts other than such fiduciary accounts.

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.

JPMorgan

Placement Agent

February 5, 2010

Additional Terms Specific to the Notes

You should read this pricing supplement together with the prospectus dated December 23, 2008, as supplemented by the prospectus supplement for knock-out notes dated January 8, 2010. This pricing supplement, together with the documents listed below, contains the terms of the notes, supplements the preliminary terms related hereto dated February 2, 2010 and supersedes all other prior or contemporaneous oral statements as well as any other written materials including preliminary or indicative pricing terms, correspondence, trade ideas, structures for implementation, sample structures, fact sheets, brochures or other educational materials of ours. You should carefully consider, among other things, the matters set forth in “Risk Factors” in the accompanying prospectus supplement, as the notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisers in connection with your investment in the notes.

You may access these documents on the SEC website at www.sec.gov as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):

· Product supplement for knock-out notes dated January 8, 2010:

http://www.sec.gov/Archives/edgar/data/895421/000095010310000049/dp16113_424b2a1.htm

· Prospectus dated December 23, 2008:

http://www.sec.gov/Archives/edgar/data/895421/000095010308003004/dp12129_424b2-debt.htm

Terms used in this pricing supplement are defined in the prospectus supplement for knock-out notes or in the prospectus. As used in this pricing supplement, the “Company,” “we,” “us” or “our” refer to Morgan Stanley.

What Is the Return on the Notes at Maturity Assuming a Range of Performance for the Underlying Index?

The following table illustrates the hypothetical return at maturity on the notes. The “Return on Notes” as used in this pricing supplement is the number, expressed as a percentage, that results from comparing the payment at maturity per $1,000 principal amount note to $1,000. The hypothetical returns set forth below assume an Initial Index Value of 1,000 and reflect the Contingent Minimum Return of 2.50%. The hypothetical returns set forth below are for illustrative purposes only and may not be the actual returns applicable to a purchaser of the notes.

| Final
Index Value | Underlying
Index Return | Return
on Notes — Knock
Out Event Has Not Occurred(1) | Knock
Out Event Has Occurred(2) |
| --- | --- | --- | --- |
| 1,800.00 | 80.00% | 80.00% | N/A |
| 1,650.00 | 65.00% | 65.00% | N/A |
| 1,500.00 | 50.00% | 50.00% | N/A |
| 1,400.00 | 40.00% | 40.00% | N/A |
| 1,300.00 | 30.00% | 30.00% | N/A |
| 1,200.00 | 20.00% | 20.00% | N/A |
| 1,150.00 | 15.00% | 15.00% | N/A |
| 1,100.00 | 10.00% | 10.00% | N/A |
| 1,050.00 | 5.00% | 5.00% | N/A |
| 1,025.00 | 2.50% | 2.50% | N/A |
| 1,000.00 | 0.00% | 2.50% | N/A |
| 950.00 | -5.00% | 2.50% | N/A |
| 900.00 | -10.00% | 2.50% | N/A |
| 850.00 | -15.00% | 2.50% | N/A |
| 840.00 | -16.00% | N/A | -16.00% |
| 800.00 | -20.00% | N/A | -20.00% |
| 750.00 | -25.00% | N/A | -25.00% |
| 700.00 | -30.00% | N/A | -30.00% |
| 600.00 | -40.00% | N/A | -40.00% |
| 500.00 | -50.00% | N/A | -50.00% |
| 400.00 | -60.00% | N/A | -60.00% |
| 300.00 | -70.00% | N/A | -70.00% |
| 200.00 | -80.00% | N/A | -80.00% |
| 100.00 | -90.00% | N/A | -90.00% |
| 0.00 | -100.00% | N/A | -100.00% |

(1) The Final Index Value on the Valuation Date has not declined, as compared to the Initial Index Value, by more than 15%. (2) The Final Index Value on the Valuation Date has declined, as compared to the Initial Index Value, by more than 15%.

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Hypothetical Examples of Amounts Payable at Maturity

The following examples illustrate how the return on the notes set forth in the table on the previous page are calculated.

Example 1: The value of the Underlying Index increases from the Initial Index Value of 1,000 to a Final Index Value of 1,010 and, as a result, a Knock-Out Event has not occurred. Because the Underlying Index Return of 1.00% does not trigger a Knock-Out Event but is less than the Contingent Minimum Return of 2.50%, the investor receives the benefit of the Contingent Minimum Return and therefore a payment at maturity per $1,000 principal amount note, calculated as follows:

$1,000+ ($1,000 x 2.50%) = $1,025

Example 2: The value of the Underlying Index decreases from the Initial Index Value of 1,000 to a Final Index Value of 850 and, as a result, a Knock-Out Event has not occurred . Because the Underlying Index Return of -15% does not trigger a Knock-Out Event but is less than the Contingent Minimum Return of 2.50%, the investor receives the benefit of the Contingent Minimum Return and therefore a payment at maturity per $1,000 principal amount note, calculated as follows:

$1,000 + ($1,000 x 2.50%) = $1,025

Example 3: The value of the Underlying Index increases from the Initial Index Value of 1,000 to a Final Index Value of 1,100 and, as a result, a Knock-Out Event has not occurred. Because the Underlying Index Return of 10% does not trigger a Knock-Out Event and is greater than the Contingent Minimum Return of 2.50%, the investor receives a payment at maturity per $1,000 principal amount note, calculated as follows:

$1,000 + ($1,000 x 10%) = $1,100

Example 4: The value of the Underlying Index decreases from the Initial Index Value of 1,000 to a Final Index Value of 500 and as a result a Knock-Out Event has occurred . Because the Underlying Index Return of -50% triggers a Knock-Out Event, the investor does not receive the benefit of the Contingent Minimum Return and receives a payment at maturity which is less than the stated principal amount, calculated as follows:

$1,000 + ($1,000 x -50%) = $500

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Selected Purchase Considerations

· APPRECIATION POTENTIAL — The notes provide the opportunity to participate in the appreciation of the Underlying Index at maturity. If the Underlying Index has increased in value or has not decreased by more than 15% on the Valuation Date and therefore, a Knock-Out Event has not occurred, in addition to the principal amount, you will receive at maturity at least the Contingent Minimum Return of 2.50% on the notes, or a minimum payment at maturity of $1,025 for every $1,000 principal amount note. If the Underlying Index has decreased in value by more than 15% on the Valuation Date and therefore, a Knock-Out Event has occurred, you will lose over 15% of your investment based on a 1% loss for every 1% decline in the Underlying Index. Because the notes are our senior unsecured obligations, payment of any amount at maturity is subject to our ability to pay our obligations as they become due.

· DIVERSIFICATION OF THE S&P 500 ® Index — The return on the notes is linked to the S&P 500 ® Index. The S&P 500 ® Index, which is calculated, maintained and published by Standard & Poor’s, a Division of The McGraw-Hill Companies, Inc., consists of 500 component stocks selected to provide a performance benchmark for the U.S. equity markets. The calculation of the S&P 500 ® Index is based on the relative value of the float adjusted aggregate market capitalization of the 500 component companies as of a particular time as compared to the aggregate average market capitalization of the 500 similar companies during the base period of the years 1941 through 1943. For additional information about the Underlying Index, see the information set forth under “S&P 500 ® Index” in the accompanying prospectus supplement for knock-out notes dated January 8, 2010.

· CAPITAL GAINS TAX TREATMENT — You should review carefully the section entitled “United States Federal Taxation” in the accompanying prospectus supplement for Knock-Out Notes, which contains the opinion of our special tax counsel, Davis Polk & Wardwell LLP, with respect to the tax consequences of an investment in the notes. Under current law and based on that opinion, subject to the conditions and limitations set forth in the section entitled “United States Federal Taxation” in the accompanying prospectus supplement for Knock-Out Notes, we believe that it is reasonable to treat your purchase and ownership of the notes as an “open transaction” for U.S. federal income tax purposes. Assuming this characterization is respected, your gain or loss on the notes should be treated as long-term capital gain or loss if you hold the notes for more than a year, even if you are an initial purchaser of notes at a price that is below the principal amount of the notes. The Internal Revenue Service (the “IRS”) or a court, however, may not respect this characterization or treatment of the notes, in which case the timing and character of any income or loss on the notes could be significantly and adversely affected. Because the notes provide for the return of principal except in the case of a Knock-Out Event, the risk that they will be recharacterized, for U.S. federal income tax purposes, as debt instruments giving rise to ordinary income, rather than as an open transaction, is higher than with other non-principal protected equity-linked notes. On December 7, 2007, the Treasury Department and the IRS released a notice requesting comments on the U.S. federal income tax treatment of “prepaid forward contracts” and similar instruments. The notice focuses on whether to require holders of instruments such as the notes to accrue income over the term of their investment. It also asks for comments on a number of related topics, including the character of income or loss with respect to these instruments; whether short-term instruments should be subject to any such accrual regime; the relevance of factors such as exchange-traded status of the instruments and the nature of the underlying property to which the instruments are linked; the degree, if any, to which any income (including any mandated accruals) realized by non-U.S. holders should be subject to withholding tax; and whether these investments are or should be subject to the “constructive ownership” regime, which very generally can operate to recharacterize certain long-term capital gains as ordinary income that is subject to an interest charge. While the notice requests comments on appropriate transition rules and effective dates, Treasury regulations or other forms of guidance, if any, issued after consideration of these issues could materially and adversely affect the tax consequences of this kind of investment, possibly with retroactive effect. You should consult your tax adviser regarding the treatment of the notes, including possible alternative characterizations in general and the possible impact of this notice in particular.

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Selected Risk Considerations

An investment in the notes involves significant risks. Investing in the notes is not equivalent to investing directly in the Underlying Index or any of the component stocks of the Underlying Index. These risks are explained in more detail in the “Risk Factors” section of the accompanying prospectus supplement for knock-out notes dated January 8, 2010.

· YOUR INVESTMENT IN THE NOTES MAY RESULT IN A LOSS — The terms of the notes differ from those of ordinary debt securities in that we do not guarantee to pay you the principal amount of the notes at maturity and generally do not pay you interest on the notes. If a Knock-Out Event occurs on the Valuation Date, which means that the Final Index Value is less than the Initial Index Value by over 15%, the payment at maturity on each note will be over 15% less than the stated principal amount of the notes and the entire principal amount of your investment is at risk.

· THE NOTES DO NOT PAY INTEREST – Unlike ordinary debt securities, the notes do not pay interest and do not guarantee any return of principal at maturity.

· NO DIVIDEND PAYMENTS OR VOTING RIGHTS – As a holder of the notes, you will not have voting rights or rights to receive cash dividends or other distributions or other rights that holders of securities composing the Underlying Index would have.

· THE NOTES ARE SUBJECT TO THE CREDIT RISK OF MORGAN STANLEY, AND ANY ACTUAL OR ANTICIPATED CHANGES TO ITS CREDIT RATINGS OR CREDIT SPREADS MAY ADVERSELY AFFECT THE MARKET VALUE OF THE NOTES – Investors are dependent on Morgan Stanley’s ability to pay all amounts due on the notes at maturity, and therefore investors are subject to the credit risk of Morgan Stanley and to changes in the market’s view of Morgan Stanley’s creditworthiness. Any actual or anticipated decline in Morgan Stanley’s credit ratings or increase in the credit spreads charged by the market for taking Morgan Stanley credit risk is likely to adversely affect the market value of the notes.

· POTENTIAL EXPOSURE TO UNDERLYING INDEX DECLINE ON THE VALUATION DATE — The Valuation Date is August 8, 2011, three business days before the Maturity Date of the notes. Whether a Knock-Out Event occurs depends solely on the Underlying Index performance on the Valuation Date as compared to the Initial Index Value, regardless of the Underlying Index performance prior to such date. Accordingly, if the value of the Underlying Index on the Valuation Date has declined, as compared to the Initial Index Value, by more than the Knock-Out Buffer Amount of 15%, a Knock-Out Event will have occurred, regardless of any appreciation of the Underlying Index prior to the Valuation Date, which may be significant. The possibility of a Knock-Out Event occurring and your potentially losing some or all of your principal amount at maturity depends solely on the Index Closing Value on the Valuation Date. If a Knock-Out Event does occur, your payment at maturity will be less than the stated principal amount in direct proportion to the decline in the Underlying Index, without the benefit of any buffer. For example, if the Underlying Index declines by 50% over the term of the notes, you will lose 50% of your investment.

· CERTAIN BUILT-IN COSTS ARE LIKELY TO ADVERSELY AFFECT THE VALUE OF THE NOTES PRIOR TO MATURITY — While the payment at maturity described in this pricing supplement is based on the full stated principal amount of your notes, the original issue price of the notes includes the agents’ commissions and the cost of hedging our obligations under the notes through one or more of our affiliates. The cost of hedging includes projected profit that our subsidiaries may realize in consideration for assuming the risks inherent in managing the hedging transactions. As a result, the price, if any, at which affiliates of Morgan Stanley, will be willing to purchase notes from you in secondary market transactions, if at all, will likely be lower than the original issue price, and any sale prior to the maturity date could result in a substantial loss to you. The notes are not designed to be short-term trading instruments. Accordingly, you should be able and willing to hold your notes to maturity.

· LACK OF LIQUIDITY — The notes will not be listed on any securities exchange. Therefore, there may be little or no secondary market for the notes. Morgan Stanley & Co. Incorporated (“MS & Co.”) may, but is not obligated to, make a market in the notes. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the notes easily. Because we do not expect that other broker-dealers will participate significantly in the secondary market for the notes, the price at which you may be able to trade your notes is likely to depend on the price, if any, at which MS & Co. is willing to transact. If, at any time, MS & Co. were not to make a market in the notes, it is likely that there would be no secondary market for the notes. Accordingly, you should be willing to hold your notes to maturity.

· POTENTIAL CONFLICTS — We and our affiliates play a variety of roles in connection with the issuance of the notes, including acting as calculation agent and hedging our obligations under the notes. In performing these duties, the economic interests of the calculation agent and other affiliates of ours are potentially adverse to your interests as an investor in the notes. We will not have any obligation to consider your interests as a holder of the notes in taking any corporate action that might affect the value of the Underlying Index and the notes.

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· MANY ECONOMIC AND MARKET FACTORS WILL IMPACT THE VALUE OF THE NOTES — In addition to the value of the Underlying Index on any day, the value of the notes will be affected by a number of economic and market factors that may either offset or magnify each other, including:

· the value, especially in relation to the Knock-Out Buffer Amount and the expected volatility of the Underlying Index;

· the time to maturity of the notes;

· the dividend rates on the common stocks underlying the Underlying Index;

· interest and yield rates in the market generally;

· geopolitical conditions and a variety of economic, financial, political, regulatory or judicial events; and

· our creditworthiness, including actual or anticipated downgrades in our credit ratings or credit spreads.

Some or all of these factors will influence the price that you will receive if you sell your notes prior to maturity. For example, you may have to sell your notes at a substantial discount from the stated principal amount if a Knock-Out Event has occurred or is likely to imminently occur in light of the then current level of the Underlying Index.

You cannot predict the future performance of the Underlying Index based on its historical performance. We cannot guarantee that the performance will be positive, so that you will receive at maturity an amount in excess of the principal amount of the notes. You can review the historical values of the Underlying Index below.

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Use of Proceeds and Hedging

Part of the net proceeds we receive from the sale of the notes will be used in connection with hedging our obligations under the notes through one or more of our subsidiaries. The hedging or trading activities of our affiliates on or prior to the Pricing Date and on the Valuation Date could affect the value of the Underlying Index in a way that reduces the amount you may receive on the notes at maturity.

Historical Information

The following graph sets forth the historical performance of the S&P 500 ® Index based on the daily historical closing values of the Underlying Index from January 1, 2005 through February 5, 2010. The closing value of the Underlying Index on February 5, 2010 was 1,066.19. We obtained the closing values of the Underlying Index below from Bloomberg Financial Markets. We make no representation or warranty as to the accuracy or completeness of the information obtained from Bloomberg Financial Markets.

The historical values of the Underlying Index should not be taken as an indication of future performance, and no assurance can be given as to the Index Closing Value on the Valuation Date. We cannot give you assurance that the performance of the Underlying Index will result in the return of any of your initial investment.

Historical Performance of the S&P 500 ® Index

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License Agreements

License Agreement between Standard & Poor’s and Morgan Stanley. “Standard & Poor’s ® ,” “S&P ® ,” “S&P 500 ® ,” “Standard & Poor’s 500” and “500” are trademarks of The McGraw-Hill Companies, Inc and have been licensed for use by Morgan Stanley. See “Underlying Indices and Underlying Index Publishers Information— S&P 500 ® Index—License Agreement between S&P and Morgan Stanley” in Annex A of the accompanying prospectus supplement for knock-out notes.

Benefit Plan Investor Considerations

Your purchase of a note in a self-directed Individual Retirement Account (an “IRA”) will be deemed to be a representation and warranty by you that, as of the date of purchase (i) neither the issuer, the placement agent nor any of their respective affiliates has or exercises any discretionary authority or control or acts in a fiduciary capacity with respect to the investment of the assets of such self-directed IRA used to purchase the note or renders investment advice (within the meaning of Section 3(21)(A)(ii) of ERISA) with respect to any such IRA assets and (ii) in connection with the purchase of the note, such self-directed IRA will pay no more than “adequate consideration” (within the meaning of Section 408(b)(17) of ERISA), and, in making the foregoing representations and warranties, you have (x) applied sound business principles in determining whether fair market value will be paid, and (y) made such determination acting in good faith.

See “Benefit Plan Investor Considerations” in the prospectus supplement for knock-out notes.

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