MORGAN STANLEY — Capital/Financing Update 2010

May 26, 2010

CALCULATION OF REGISTRATION FEE

| Title
of Each Class of Securities Offered | Maximum
Aggregate Offering
Price | Amount
of Registration Fee |
| --- | --- | --- |
| ELKS
due 2010 | $27,100,000 | $1,932.23 |

May 2010 Pricing Supplement No. 388 Registration Statement No. 333-156423 Dated May 24, 2010 Filed pursuant to Rule 424(b)(2)

STRUCTURED INVESTMENTS

Opportunities in U.S. Equities

ELKS ® Based on the Common Stock of Bank of America Corporation due November 23, 2010

Equity LinKed Securities (“ELKS ® ”)

The ELKS are senior unsecured obligations of Morgan Stanley, will pay a coupon at the rate specified below and will have the terms descr ibed below, as supplemented by the accompanying prospectus supplement and prospectus. The ELKS do not guarantee any return of principal at maturity. At maturity , the ELKS will pay either (i) an amount of cash equal to the stated principal amount of the E LKS or (ii) if the closing price of the common stock of Bank of America Corporation decreases to or below the downside threshold price on any trading day over the term of the ELKS, a number of shares of common stock of Bank of America Corporation equal to the equity ratio (as defined below) or, if we so elect, the cash value (determined as of the valuation date) of such shares . The value of those shares of common stock of Bank of America Corporation or that cash, as applicable, may be significantly less th an the stated principal amount of the ELKS and may be zero . The ELKS are senior unsecured obligations of Morgan Stanley, and all payments on the ELKS are subject to the credit risk of Morgan Stanley.

FINAL TERMS
Issuer:	Morgan
Stanley
Aggregate principal
amount:	$27,100,000
Stated principal
amount:	$10 per
ELKS
Issue
price:	$10 per ELKS
(see “Commissions and Issue Price” below)
Pricing
date:	May 24,
2010
Original issue
date:	May 27, 2010
(3 business days after the pricing date)
Maturity
date:	November 23,
2010
Underlying
equity:	Bank of
America Corporation common stock
Underlying equity
issuer:	Bank of
America Corporation
Coupon:	12.5% per
annum (approximately equivalent to $0.6111 per ELKS for the term of the
ELKS), paid monthly and calculated on a 30/360 basis.
Coupon payment
dates:	Monthly, on
the 23rd of each month, beginning on June 23,
2010

| Payment at
maturity | If on any trading day from
but excluding the pricing date to and including the valuation
date: | |
| --- | --- | --- |
| (per ELKS): | · | the closing
price has not decreased to or below the downside threshold price, then you will receive
an amount in cash equal to $10 per ELKS; or |
| | · | the closing
price has decreased to or below the downside threshold price, then you will receive
shares of Bank of America Corporation common stock in exchange for each
ELKS in an amount equal to the equity ratio per ELKS or, if we so elect,
the cash value (determined as of the valuation date) of such
shares. The
value of those shares of common stock or that cash, as applicable, may be
significantly less than the stated principal amount of the ELKS and may be
zero. |

| Initial equity
price: — Downside threshold
price: | $15.40, which
is the closing price of the underlying equity on the pricing
date — $12.32, which
is 80% of the initial equity price | | |
| --- | --- | --- | --- |
| Equity
ratio: | 0.64935,
which is $10 divided by the initial equity price, subject to adjustment
for certain corporate events affecting the underlying equity
issuer. | | |
| Valuation
date: | November 18,
2010, subject to adjustment for non-trading days or certain market
disruption events | | |
| Listing: | The ELKS will
not be listed on any securities exchange. | | |
| CUSIP: | 61759G703 | | |
| ISIN: | US61759G7034 | | |
| Agent: | Morgan
Stanley & Co. Incorporated (“MS & Co.”), a wholly-owned subsidiary
of Morgan Stanley. See “Supplemental information concerning
plan of distribution; conflicts of interest.” | | |
| Calculation
agent: | MS &
Co. | | |
| Commissions and Issue
Price: | Price to Public (1) | Agent’s Commissions ( 1 )( 2 ) | Proceeds to
Issuer |
| Per ELKS | $10 | $0.15 | $9.85 |
| Total | $27,100,000 | $406,500 | $26,693,500 |

(1) The actual price to public and agent’s commissions for a particular investor may be reduced for volume purchase discounts depending on the aggregate amount of ELKS purchased by that investor. The lowest price payable by an investor is $9.95 per ELKS. Please see “Syndicate Information” on page 6 for further details.

(2) Selected dealers, including Morgan Stanley Smith Barney LLC (an affiliate of the Agent), and their financial advisors will collectively receive from the Agent, MS & Co., a fixed sales commission of $0.15 for each ELKS they sell. See “Supplemental information concerning plan of distribution; conflicts of interest.” For additional information, see “Plan of Distribution (Conflicts of Interest)” in the accompanying prospectus supplement for ELKS.

The ELKS involve risks not associated with an investment in ordinary debt securities. See “Risk Factors” beginning on page 9.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this pricing supplement or the accompanying prospectus supplement and prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

You should read this document together with the related prospectus supplement and prospectus, each of which can be accessed via the hyperlinks below.

Prospectus Supplement for ELKS dated February 9, 2010

Prospectus dated December 23, 2008

The ELKS 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.

| ● |
| --- |
| ELKS ® Based on the Common Stock of Bank of America Corporation due November 23,
2010 |
| Equity
LinKed
Securities |

Fact Sheet

The ELKS are senior unsecured obligations of Morgan Stanley, do not guarantee any return of principal at maturity and have the terms described below, as supplemented by the accompanying prospectus supplement and prospectus. The ELKS do not guarantee any return of principal at maturity. The ELKS are issued as part of Morgan Stanley’s Series F Global Medium-Term Notes program. All payments on the ELKS are subject to the credit risk of Morgan Stanley. “ELKS” is a registered service mark of Citigroup Global Markets Inc. Used under license.

| Key Dates — Pricing
date: | Original issue date (settlement
date): | Maturity
date: |
| --- | --- | --- |
| May 24,
2010 | May 27, 2010
(3 business days after the pricing date) | November 23,
2010, subject to postponement for non-trading days or certain market
disruption events |

Key Terms
Issuer:	Morgan
Stanley
Aggregate principal
amount:	$27,100,000
Issue
price:	$10 per ELKS
(see “Syndicate Information” on page 6)
Stated principal
amount:	$10 per
ELKS
Denominations:	$10 and
integral multiples thereof
Underlying
equity:	Bank of America
Corporation common
stock
Underlying equity
issuer:	Bank of America
Corporation
Coupon:	12.5% per
annum (approximately equivalent to $0.6111 per ELKS for the term of the
ELKS), paid monthly and calculated on a 30/360 basis.
Coupon payment
dates:	Monthly, on
the 23rd of each month, beginning on June 23, 2010
Payment at
maturity:	If on any trading day from
but excluding the pricing date to and including the valuation
date:

| · | the closing
price has not decreased to or below the downside threshold price, then you will receive
an amount in cash equal to $10 per ELKS; or |
| --- | --- |
| · | the closing
price has decreased to or below the downside threshold price, then you will receive
shares of Bank of America Corporation common stock in exchange
for each ELKS in an amount equal to the equity ratio per ELKS or, if we so
elect, the cash value (determined as of the valuation date) of such
shares. The
value of those shares of common stock or that cash may be significantly
less than the stated principal amount of the ELKS and may be
zero. |

| Initial equity
price: | $15.40, which
is the closing price of the underlying equity on the pricing
date |
| --- | --- |
| Downside threshold
price: | $12.32, which
is 80% of the initial equity price |
| Equity
ratio: | 0.64935,
which is $10 divided by the initial equity price, subject to adjustment
for certain corporate events affecting the underlying equity
issuer. |
| Valuation
date: | November 18,
2010, subject to adjustment for non-trading days or certain market
disruption events |
| Risk
factors: | Please
see “Risk Factors” beginning on page
9. |

May 2010 Page 2

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ELKS ® Based on the Common Stock of Bank of America Corporation due November 23,
2010
Equity
LinKed Securities

| General
Information | |
| --- | --- |
| Listing: | The ELKS will
not be listed on any securities exchange. |
| CUSIP: | 61759G703 |
| ISIN: | US61759G7034 |
| Minimum ticketing
amount: | 100
ELKS |
| Tax
considerations: | The U.S. federal income tax consequences
of an investment in the ELKS are uncertain. There is no direct legal authority
as to the proper tax treatment of the ELKS, and our counsel has not
rendered an o pinion
as to their proper treatment for U.S. federal income tax
purposes. Pursuant to the terms of the ELKS and subject to the
discussion in the accompanying prospectus supplement for ELKS under
“ United States
Federal Taxation,” you agree with us to trea t an ELKS, under current law, as a
unit consisting of (i) an option on a forward contract written by you to
us that, if exercised, requires you to purchase the underlying equity (and
cash in lieu of fractional shares) or, if we so elect, the cash value of t he underlying equity determined as
of the valuation date and (ii) a deposit with us of a fixed amount of cash
to secure your obligation under the forward contract. Assuming
the characterization of the ELKS as set forth above is respected, a
portion of th e coupon on the ELKS will be
treated as the yield on the deposit, and the remainder will be
attributable to the option premium, as described in the section of
the accompanying
prospectus supplement for ELKS called “United States Federal Taxation ―
Tax Consequences to U.S. Holders ― Tax Treatment of the ELKS ― ELKS with a
Term Equal to or Less Than One Year.” We have determined that
the yield on the deposit is 0.7139% per annum, compounded
monthly. The remainder of the coupons on the ELKS is
attributable to the option premium. Please read
the discussion under “Risk Factors” in this pricing supplement and the
discussion under “United States Federal Taxation” in the accompanying
prospectus supplement for ELKS concerning the U.S. federal income tax
consequences of an investment in the ELKS. Neither this
summary nor the section of the accompanying prospectus supplement for ELKS
called “United States Federal Taxation” addresses the U.S. federal income
tax consequences of the ownership or disposition of the underlying equity
should a holder receive shares of the underlying
equity. Investors should consult their tax advisers regarding
the U.S. federal income tax consequences of the ownership or disposition
of the underlying equity. In addition,
we will not attempt to ascertain whether the underlying equity issuer is
treated as a “U.S. real property holding corporation” (“USRPHC”) within
the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended. If the underlying equity issuer were so treated,
certain adverse U.S. federal income tax consequences might apply to a
Non-U.S. Holder upon the sale,
exchange or other disposition of the ELKS. Non-U.S. Holders
should refer to information filed with the Securities and Exchange
Commission or another governmental authority by the underlying equity
issuer and consult their tax advisers regarding the possible consequences
to them if the underlying equity issuer is or becomes a
USRPHC. On December
7, 2007, the Treasury Department and the Internal Revenue Service (the
“IRS”) released a notice requesting comments on the U.S. federal income
tax treatment of “prepaid forward contracts” and similar
instruments. While it is not entirely clear whether the ELKS
would be viewed as similar to the prepaid forward contracts described in
the notice, it is possible that any Treasury regulations or other guidance
issued after consideration of these issues could materially and adversely
affect the tax consequences of an investment in the ELKS, possibly with
retroactive effect. The notice focuses on a number of issues,
the most relevant of which for holders of the ELKS are the character and
timing of income or loss (including whether the option premium should be
required to be included currently as ordinary income) and the degree, if
any, to which income realized by non-U.S. investors should be subject to
withholding tax. Non-U.S. Holders should note that we currently
do not intend to withhold on any payments made with respect to the ELKS to
Non-U.S. Holders (subject to compliance by such holders with certification
requirements necessary to establish an exemption from
withholding). However, in the event of a change of law or any
formal or informal guidance by the IRS, Treasury or Congress, we may
decide to withhold on payments made with respect to the ELKS to Non-U.S.
Holders, and we will not be required to pay any additional amounts with
respect to amounts withheld. Both U.S. and non-U.S. investors
considering an investment in the ELKS should read the discussion under
“ Risk
Factor s” in this pricing supplement and the discussion under “United States Federal Taxation” in the
accompanying prospectus supplement for ELKS and consult their tax advisers
regarding the U.S. federal income tax consequences of an investment in the
ELKS, inclu ding
possible alternative treatments, the issues presented by the
aforementioned notice and any tax consequences arising under the laws of
any state, local or foreign taxing
jurisdiction. |

May 2010 Page 3

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ELKS ® Based on the Common Stock of Bank of America Corporation due November 23,
2010
Equity
LinKed Securities

| Trustee: | The Bank of
New York Mellon (as successor trustee to JPMorgan Chase Bank,
N.A.) |
| --- | --- |
| Calculation
agent: | Morgan
Stanley & Co. Incorporated (“MS & Co.”) |
| Use of proceeds and
hedging: | The net
proceeds we receive from the sale of the ELKS will be used for general
corporate purposes and, in part, in connection with hedging our
obligations under the ELKS through one or more of our
subsidiaries. |
| | On or prior
to the pricing date, we, through our subsidiaries or others, hedged our
anticipated exposure in connection with the ELKS by taking positions in
the underlying equity and in options contracts on the underlying equity
listed on major securities markets. Such purchase activity
could have increased the initial equity price of the underlying equity
used to calculate the downside threshold price, and, therefore, increased
the downside threshold price relative to the price of the underlying
equity on the pricing date absent such hedging activity. In
addition, through our subsidiaries, we are likely to modify our hedge
position throughout the life of the ELKS by purchasing and selling the
underlying equity, options contracts on the underlying equity listed on
major securities markets or positions in any other available securities or
instruments that we may wish to use in connection with such hedging
activities. We cannot give any assurance that our hedging activities will
not affect the price of the underlying equity and, therefore, adversely
affect the value of the ELKS or the payment you will receive at
maturity. Additionally, such hedging or trading activities
during the term of the ELKS could potentially affect whether the closing
price of the underlying equity decreases to or below the downside
threshold price and, therefore, whether or not you will receive the stated
principal amount of the ELKS or shares of the underlying equity (or, if we
so elect, the cash value of such shares, determined as of the valuation
date) at maturity. For further information, see “Use of
Proceeds and Hedging” in the accompanying prospectus supplement for
ELKS. |
| Benefit plan investor considerations : | Each
fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) (a “Plan”), should consider the fiduciary standards of ERISA in
the context of the Plan’s particular circumstances before authorizing an
investment in the ELKS. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the
prudence and diversification requirements of ERISA and would be consistent
with the documents and instruments governing the Plan. In addition,
we and certain of our subsidiaries and affiliates, including MS & Co.,
may each be considered a “party in interest” within the meaning of ERISA,
or a “disqualified person” within the meaning of the Internal Revenue Code
of 1986, as amended (the “Code”), with respect to many Plans, as well as
many individual retirement accounts and Keogh plans (also
“Plans”). Prohibited transactions within the meaning of ERISA
or the Code would likely arise, for example, if the ELKS are acquired by
or with the assets of a Plan with respect to which MS & Co. or any of
its affiliates is a service provider or other party in interest, unless
the ELKS are acquired pursuant to an exemption from the “prohibited
transaction” rules. A violation of these “prohibited
transaction” rules could result in an excise tax or other liabilities
under ERISA and/or Section 4975 of the Code for such persons, unless
exemptive relief is available under an applicable statutory or
administrative exemption. The U.S.
Department of Labor has issued five prohibited transaction class
exemptions (“PTCEs”) that may provide exemptive relief for direct or
indirect prohibited transactions resulting from the purchase or holding of
the ELKS. Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for
certain transactions involving insurance company general accounts), PTCE
91-38 (for certain transactions involving bank collective investment
funds), PTCE 90-1 (for certain transactions involving insurance company
separate accounts) and PTCE 84-14 (for certain transactions determined by
independent qualified professional asset managers). In
addition, ERISA Section 408(b)(17) and Section 4975(d)(20) of the Code may
provide an exemption for the purchase and sale of securities and the
related lending transactions, provided that neither the issuer of the
securities nor any of its affiliates has or exercises any discretionary
authority or control or renders any investment advice with respect to the
assets of the Plan involved in the transaction and provided further that
the Plan pays no more, and receives no less, than “adequate consideration”
in connection with the transaction (the so-called “service provider”
exemption). There can be no assurance that any of these class
or statutory exemptions will be available with respect to transactions
involving the ELKS. Because we
may be considered a party in interest with respect to many Plans, the ELKS
may not be purchased, held or disposed of by any Plan, any entity whose
underlying assets include “plan assets” by reason of any Plan’s investment
in the entity (a “Plan Asset Entity”) or any
person |

May 2010 Page 4

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ELKS ® Based on the Common Stock of Bank of America Corporation due November 23,
2010
Equity
LinKed Securities

| | investing
“plan assets” of any Plan, unless such purchase, holding or disposition is
eligible for exemptive relief, including relief available under PTCEs
96-23, 95-60, 91-38, 90-1, 84-14 or the service provider exemption or such
purchase, holding or disposition is otherwise not
prohibited. Any purchaser, including any fiduciary purchasing
on behalf of a Plan, transferee or holder of the ELKS will be deemed to
have represented, in its corporate and its fiduciary capacity, by its
purchase and holding of the ELKS that either (a) it is not a Plan or a
Plan Asset Entity and is not purchasing such ELKS on behalf of or with
“plan assets” of any Plan or with any assets of a governmental, non-U.S.
or church plan that is subject to any federal, state, local or non-U.S.
law that is substantially similar to the provisions of Section 406 of
ERISA or Section 4975 of the Code (“Similar Law”) or (b) its purchase,
holding and disposition are eligible for exemptive relief or such
purchase, holding and disposition are not prohibited by ERISA or Section
4975 of the Code or any Similar Law. Due to the
complexity of these rules and the penalties that may be imposed upon
persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the
ELKS on behalf of or with “plan assets” of any Plan consult with their
counsel regarding the availability of exemptive relief. Each
purchaser and holder of the ELKS has exclusive responsibility for ensuring
that its purchase, holding and disposition of the ELKS do not violate the
prohibited transaction rules of ERISA or the Code or any Similar
Law. The sale of any ELKS to any Plan or plan subject to
Similar Law is in no respect a representation by us or any of our
affiliates or representatives that such an investment meets all relevant
legal requirements with respect to investments by Plans generally or any
particular Plan, or that such an investment is appropriate for Plans
generally or any particular Plan. However,
individual retirement accounts, individual retirement annuities and Keogh
plans, as well as employee benefit plans that permit participants to
direct the investment of their accounts, will not be permitted to purchase
or hold the ELKS if the account, plan or annuity is for the benefit of an
employee of Citigroup Global Markets Inc., Morgan Stanley or Morgan
Stanley Smith Barney LLC (“MSSB”) or a family member and the employee
receives any compensation (such as, for example, an addition to bonus)
based on the purchase of ELKS by the account, plan or
annuity. |
| --- | --- |
| Additional considerations : | Client
accounts over which Citigroup Inc., Morgan Stanley, MSSB or any of their
respective subsidiaries have investment discretion are not permitted to
purchase the ELKS, either directly or indirectly. |
| Supplemental i nformation concerning p lan of distribution; conflicts of
interest: | The agent may
distribute the ELKS through MSSB, as selected dealer, or other dealers,
which may include Morgan Stanley International plc (“MSIP”) and Bank
Morgan Stanley AG. MSSB, MSIP and Bank Morgan Stanley AG are
affiliates of Morgan Stanley. Selected dealers, including MSSB,
and their financial advisors will collectively receive from the Agent, MS
& Co., a fixed sales commission of $0.15 for each ELKS they
sell. MS & Co.
is our wholly-owned subsidiary. MS & Co. will conduct this offering in
compliance with the requirements of NASD Rule 2720 of the Financial
Industry Regulatory Authority, Inc., which is commonly referred to as
FINRA, regarding a FINRA member firm’s distribution of the securities of
an affiliate and related conflicts of interest. MS & Co. or
any of our other affiliates may not make sales in this offering to any
discretionary account. See “Plan of Distribution (Conflicts of Interest)”
and “Use of Proceeds and Hedging” in the accompanying prospectus
supplement for ELKS. |
| Contact: | Morgan
Stanley Smith Barney clients may contact their local Morgan Stanley Smith
Barney branch office or our principal executive offices at 1585 Broadway,
New York, New York 10036 (telephone number (866) 477-4776). All
other clients may contact their local brokerage
representative. Third-party distributors may contact Morgan
Stanley Structured Investment Sales at (800)
233-1087. |

May 2010 Page 5

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ELKS ® Based on the Common Stock of Bank of America Corporation due November 23,
2010
Equity
LinKed Securities

| Syndicate
Information — Issue price of the
ELKS | Selling
concession | Principal amount of
ELKS for any single
investor |
| --- | --- | --- |
| $10.00 | $0.15 | <$1MM |
| $9.975 | $0.125 | ≥$1MM and
<$3MM |
| $9.9625 | $0.1125 | ≥$3MM and
<$5MM |
| $9.95 | $0.10 | > $5MM |

The agent may reclaim selling concessions allowed to dealers in connection with the offering, if, within 30 days of the offering, the agent repurchases the ELKS distributed by such dealers.

This is a summary of the terms and conditions of the ELKS. We encourage you to read the accompanying prospectus supplement for ELKS and prospectus related to this offering, which can be accessed via the hyperlinks on the front page of this document.

May 2010 Page 6

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ELKS ® Based on the Common Stock of Bank of America Corporation due November 23,
2010
Equity
LinKed Securities

H ow the ELKS Work

The following payment scenarios illustrate the potential returns on the ELKS at maturity.

| Payment Scenario
1 | The closing
price of the underlying equity does not decrease to or
below the downside threshold price on any trading day from
but excluding the pricing date to and including the valuation date, and
you receive the monthly coupon until maturity with a full return of
principal at maturity. You will not participate in any
appreciation of the underlying equity, even if the closing price of the
underlying equity is above the initial equity price at
maturity. |
| --- | --- |
| Payment Scenario
2 | The closing
price of the underlying equity decreases to or below
the downside threshold price on any trading day from
but excluding the pricing date to and including the valuation date, and
you receive a number of shares of the underlying equity in exchange for
each ELKS equal to the equity ratio or, if we so elect, the cash value
(determined as of the valuation date) of such shares. The value
of those shares or that cash may be significantly less than the stated
principal amount of the ELKS and could be zero. You will still
receive the monthly coupon until maturity if this
occurs. |

Hypothetical Payments on the ELKS

The following examples illustrate the payment at maturity on the ELKS (assuming an exact six-month term) for a range of hypothetical closing prices for the underlying equity at maturity under two different scenarios for the hypothetical closing prices of the underlying equity during the term of the ELKS, to illustrate the effect on the return at maturity of both the closing price of the underlying equity at maturity and the closing price of the underlying equity relative to the downside threshold price over the term of the ELKS, including on the valuation date. The numbers appearing in the following tables have been rounded for ease of analysis.

The hypothetical examples are based on the following terms and assume a term of six months:

| § | Stated
principal amount (per ELKS): | $10 |
| --- | --- | --- |
| § | Hypothetical
initial equity price: | $20.00 (the
hypothetical closing price of one share of the underlying equity on the
pricing date) |
| § | Hypothetical
equity ratio: | 0.5 (the $10
stated principal amount per ELKS divided by the hypothetical initial
equity price) |
| § | Hypothetical
downside threshold price: | $16.00 (80%
of the hypothetical initial equity price) |
| § | Annual
coupon: | 12.5% |
| § | Hypothetical
annualized dividend yield: | .25% |

TABLE 1: This table represents the hypothetical payment at maturity and the total payment over the term of the ELKS (assuming an exact six-month term) on a $10 investment in the ELKS if the closing price of the underlying equity has not decreased to or below the hypothetical downside threshold price of $16.00 on any trading day from but excluding the pricing date to and including the valuation date. Consequently, the payment at maturity in each of these examples would be made in cash and would not be affected by the value of the underlying equity at maturity.

| Hypothetical underlying equity closing price at maturity | Value of payment at maturity per ELKS | Total monthly coupon payment s per ELKS | Value of total payment per ELKS | Total return
on the underlying equity | Total return
on the ELKS |
| --- | --- | --- | --- | --- | --- |
| $ 0.00 | N/A | N/A | N/A | N/A | N/A |
| $ 15.00 | N/A | N/A | N/A | N/A | N/A |
| $ 17.00 | $ 10.00 | $ 0.625 | $ 10.625 | -14.875% | 6.25% |
| $ 18.00 | $ 10.00 | $ 0.625 | $ 10.625 | -9.875% | 6.25% |
| $ 20.00 | $ 10.00 | $ 0.625 | $ 10.625 | 0.125% | 6.25% |
| $ 25.00 | $ 10.00 | $ 0.625 | $ 10.625 | 25.125% | 6.25% |
| $ 30.00 | $ 10.00 | $ 0.625 | $ 10.625 | 50.125% | 6.25% |
| $ 35.00 | $ 10.00 | $ 0.625 | $ 10.625 | 75.125% | 6.25% |
| $ 40.00 | $ 10.00 | $ 0.625 | $ 10.625 | 100.125% | 6.25% |

*Assumes that if the closing price at maturity was below the hypothetical downside threshold price of $16.00 at maturity, the closing price would have also decreased to or below the hypothetical downside threshold price at some time on or prior to the valuation date. In this case, the investor would suffer a loss as set out below in Table 2. Nonetheless, if the underlying equity had decreased to or below the downside threshold price on the maturity date, but had not decreased to or below the downside threshold price on any trading day from but excluding the pricing date to and including the valuation date, investors would still be entitled to receive at maturity the $10 stated principal amount.

May 2010 Page 7

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ELKS ® Based on the Common Stock of Bank of America Corporation due November 23,
2010
Equity
LinKed Securities

TABLE 2: This table represents the hypothetical payment at maturity and the total payment over the term of the ELKS (assuming an exact six-month term) on a $10 investment in the ELKS if the closing price of the underlying equity has decreased to or below the downside threshold price of $16.00 on any trading day from but excluding the pricing date to and including the valuation date. Consequently, the payment at maturity in each of these examples could be made by the delivery of shares of the underlying equity and, if so, would be affected by the value of the underlying equity at maturity.

| Hypothetical
underlying equity closing price at maturity | Value of the underlying equity delivered as payment at maturity per ELKS | Total monthly coupon payments per ELKS | Value of total payment per ELKS | Total return
on the underlying equity | Total return on the
ELKS |
| --- | --- | --- | --- | --- | --- |
| $ 0.00 | $ 0.00 | $ 0.625 | $ 0.625 | -99.875% | -93.75% |
| $ 5.00 | $ 2.50 | $ 0.625 | $ 3.125 | -74.875% | -68.75% |
| $ 14.00 | $ 7.00 | $ 0.625 | $ 7.625 | -29.875% | -23.75% |
| $ 16.00 | $ 8.00 | $ 0.625 | $ 8.625 | -19.875% | -13.75% |
| $ 18.00 | $ 9.00 | $ 0.625 | $ 9.625 | -9.875% | -3.75% |
| $ 18.75 | $ 9.375 | $ 0.625 | $ 10.00 | -6.125% | 0.00% |
| $ 20.00 | $ 10.00 | $ 0.625 | $ 10.625 | 0.125% | 6.25% |
| $ 25.00 | $ 12.50 | $ 0.625 | $ 13.125 | 25.125% | 31.25% |
| $ 30.00 | $ 15.00 | $ 0.625 | $ 15.625 | 50.125% | 56.25% |
| $ 35.00 | $ 17.50 | $ 0.625 | $ 18.125 | 75.125% | 81.25% |
| $ 40.00 | $ 20.00 | $ 0.625 | $ 20.625 | 100.125% | 106.25% |

*You will not receive a positive return on the ELKS in excess of the total monthly coupon payments unless (1) the closing price of the underlying equity on any trading day after the pricing date up to and including the valuation date is less than or equal to the downside threshold price and (2) the closing price of the underlying equity at maturity (or on the valuation date if we elect to deliver the cash value thereof, which will be determined as of such date) is greater than the initial equity price.

Because the closing price of the underlying equity may be subject to significant fluctuation over the term of the ELKS, it is not possible to present a chart or table illustrating the complete range of possible payments at maturity. The examples of the hypothetical payment calculations above are intended to illustrate the effect of general trends in the price of the underlying equity over the term of the ELKS on the amount payable to you at maturity, if any. However, the price of the underlying equity may not increase or decrease over the term of the ELKS in accordance with any of the trends depicted by the hypothetical examples above. The actual payment amounts received by investors will depend on (a) whether the closing price of the underlying equity falls to or below the downside threshold price on any trading day from but excluding the pricing date to and including the valuation date and (b) the closing price of the underlying equity at maturity (or on the valuation date if we elect to deliver the cash value thereof, which will be determined as of such date).

You can review the historical prices of the underlying equity in the section below called “Historical Information” on page 14. The historical performance of the underlying equity should not be taken as an indication of its future performance during the term of the ELKS. It is impossible to predict whether the price of the underlying equity will rise or fall during the term of the ELKS, whether the price of the underlying equity will or will not decrease to or below the downside threshold price during the term of ELKS, or whether the closing price of the underlying equity at maturity (or on the valuation date if we elect to deliver the cash value thereof, which will be determined as of such date) will be above the initial equity price.

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Risk Factors

The ELKS are financial instruments that are suitable only for investors who are capable of understanding the complexities and risks specific to the ELKS. Accordingly, investors should consult their own financial and legal advisors as to the risks entailed by an investment in the ELKS and the suitability of the ELKS in light of their particular circumstances.

The following is a non-exhaustive list of certain key risk factors for investors in the ELKS. For a complete list of risk factors, please see the accompanying prospectus supplement for ELKS and the accompanying prospectus.

§ The ELKS are not ordinary debt securities — no guaranteed return of principal. The ELKS combine features of equity and debt. The terms of the ELKS differ from those of ordinary debt securities in that we will not pay you a fixed amount at maturity. Our payment to you at maturity will either be (i) an amount of cash equal to the stated principal amount of each ELKS or (ii) if the closing price of the underlying equity decreases to or below the downside threshold price over the term of the ELKS, a number of shares of the underlying equity equal to the equity ratio or, if we so elect, the cash value (determined as of the valuation date) of such shares. If we deliver shares of the underlying equity at maturity (or the cash value of such shares, determined as of the valuation date) in exchange for each ELKS, the value of those shares or that cash, as applicable, may be significantly less than the stated principal amount of each ELKS and could be zero. In addition, if we elect to deliver cash in lieu of shares of the underlying equity at maturity, the amount of cash we deliver will be determined as of the valuation date. Therefore, you will not participate in any appreciation of the underlying equity between the valuation date and the maturity date. See “How the ELKS Work” on page 7.

§ You will not participate in any appreciation in the value of the underlying equity, except in certain limited circumstances. You will not participate in any appreciation in the price of the underlying equity, and your return on the ELKS will be limited to the interest payable on the ELKS, unless: (i) the closing price of the underlying equity declines to or below the downside threshold price on any trading day from but excluding the pricing date to and including the valuation date, scheduled to be November 18, 2010, and (ii) the closing price of the underlying equity at maturity (or on the valuation date if we elect to deliver the cash value thereof, which will be determined as of such date) has recovered and is greater than the initial equity price of the underlying equity. See “How the ELKS Work” on page 7.

§ The ELKS 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 ELKS. You are dependent on Morgan Stanley’s ability to pay all amounts due on the ELKS on coupon payment dates and at maturity and therefore you are subject to the credit risk of Morgan Stanley. If Morgan Stanley defaults on its obligations under the ELKS, your investment would be at risk and you could lose some or all of your investment. As a result, the market value of the ELKS prior to maturity will be affected by 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 ELKS.

§ The ELKS will not be listed and secondary trading may be limited. The ELKS will not be listed on any securities exchange. Therefore, there may be little or no secondary market for the ELKS. MS & Co. may, but is not obligated to, make a market in the ELKS. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the ELKS easily. Because we do not expect that other broker-dealers will participate significantly in the secondary market for the ELKS, the price at which you may be able to trade your ELKS is likely to depend on the price, if any, at which MS & Co. is willing to transact. If at any time MS & Co. were to not make a market in the ELKS, it is likely that there would be no secondary market for the ELKS. Accordingly, you should be willing to hold your ELKS to maturity.

§ Market price of the ELKS will be influenced by many unpredictable factors. Several factors, many of which are beyond our control, will influence the value of the ELKS in the secondary market and the price at which MS & Co. may be willing to purchase or sell the ELKS in the secondary market. We expect that generally the price of the underlying equity on any day, including in relation to the downside threshold price, will affect the value of the ELKS more than any other single factor. However because the payment on the ELKS is not directly correlated to the value of the underlying equity, the ELKS will trade differently from the underlying equity. Other factors that may influence the value of the ELKS include:

o whether the closing price of the underlying equity has decreased to or below the downside threshold price on any trading day;

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o the volatility (frequency and magnitude of changes in price) of the underlying equity;

o the dividend rate on the underlying equity;

o geopolitical conditions and economic, financial, political, regulatory or judicial events that affect stock markets generally and that may affect the underlying equity issuer and the price of the underlying equity;

o interest and yield rates in the market;

o the time remaining to the maturity of the ELKS;

o the occurrence of certain events affecting the underlying equity issuer that may or may not require an adjustment to the equity ratio; and

o any actual or anticipated changes in our credit ratings or credit spreads.

Some or all of these factors will influence the price you will receive if you sell your ELKS prior to maturity. For example, you may have to sell your ELKS at a substantial discount from the stated principal amount if the price of the underlying equity has declined below the initial equity price, especially if the closing price has decreased to or below the downside threshold price on any trading day after the pricing date of the ELKS.

You cannot predict the future performance of the underlying equity based on its historical performance. The price of the underlying equity may decrease to or below the downside threshold price and remain below the initial equity price to maturity (or the valuation date if we elect to deliver the cash value thereof, which will be determined as of such date) so that you will receive at maturity shares of the underlying equity or cash worth less than the stated principal amount of the ELKS. We cannot guarantee that the price of the underlying equity will stay above the downside threshold price over the life of the ELKS or that, if the price of the underlying equity has decreased to or below the downside threshold price, the price of the underlying equity will recover and be at or above the initial equity price at maturity or on the valuation date, as applicable, so that you will receive an amount at least equal to the stated principal amount of the ELKS.

§ The inclusion of commissions and projected profit from hedging in the original issue price is likely to adversely affect secondary market prices. Assuming no change in market conditions or any other relevant factors, the price, if any, at which MS & Co. is willing to purchase the ELKS at any time in secondary market transactions will likely be significantly lower than the original issue price, since the secondary market prices are likely to exclude commissions paid with respect to the ELKS and the cost of hedging our obligations under the ELKS that are included in the original issue price. The cost of hedging includes the projected profit that our subsidiaries may realize in consideration for assuming the risks inherent in managing the hedging transactions. These secondary market prices are also likely to be reduced by the costs of unwinding the related hedging transactions. Our subsidiaries may realize a profit from the expected hedging activity even if investors do not receive a favorable investment return under the terms of the ELKS or in any secondary market transaction. In addition, any secondary market prices may differ from values determined by pricing models used by MS & Co., as a result of dealer discounts, mark-ups or other transaction costs.

§ No affiliation with the underlying equity issuer. The underlying equity issuer is not an affiliate of ours and is not involved with this offering in any way. Consequently, we have no ability to control the actions of the underlying equity issuer, including any corporate actions of the type that would require the calculation agent to adjust the payment to you at maturity. The underlying equity issuer has no obligation to consider your interest as an investor in the ELKS in taking any corporate actions that might affect the value of your ELKS. None of the money you pay for the ELKS will go to the underlying equity issuer.

§ Morgan Stanley may engage in business with or involving the underlying equity issuer without regard to your interests. We or our affiliates may presently or from time to time engage in business with the underlying equity issuer without regard to your interests, including extending loans to, or making equity investments in, the underlying equity issuer or providing advisory services to the underlying equity issuer, such as merger and acquisition advisory services. In the course of our business, we or our affiliates may acquire non-public information about the underlying equity issuer. Neither we nor any of our affiliates undertakes to disclose any such information to you. In addition, we or our affiliates from time to time have published and in the future may publish research reports with respect to the underlying equity issuer. These research reports may or may not recommend that investors buy or hold the underlying equity.

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§ Maturity date of the ELKS may be accelerated. The maturity of the ELKS will be accelerated if (i) the closing price of the underlying equity on any two consecutive trading days is less than $2.00 or (ii) there is an event of default with respect to the ELKS. The amount payable to the investor will differ depending on the reason for the acceleration and may be substantially less than the stated principal amount of the ELKS. See “Description of ELKS—Price Event Acceleration” and “—Alternate Exchange Calculation in Case of an Event of Default” in the accompanying prospectus supplement for ELKS.

§ You have no shareholder rights. Investing in the ELKS is not equivalent to investing in the underlying equity. As an investor in the ELKS, you will not have voting rights or rights to receive dividends or other distributions or any other rights with respect to the underlying equity. In addition, you do not have the right to exchange your ELKS for cash or for the underlying equity prior to maturity.

§ The ELKS may become exchangeable into the common stock of companies other than the underlying equity issuer. Following certain corporate events relating to the underlying equity, such as a stock-for-stock merger where the underlying equity issuer is not the surviving entity, you will receive at maturity cash or a number of shares of the common stock of a successor corporation to the underlying equity issuer based on the closing price of such successor’s common stock. We describe the specific corporate events that can lead to these adjustments in the section of the accompanying prospectus supplement called “Description of ELKS—Antidilution Adjustments.” The occurrence of such corporate events and the consequent adjustments may materially and adversely affect the market price of the ELKS.

§ The antidilution adjustments the calculation agent is required to make do not cover every corporate event that could affect the underlying equity. MS & Co., as calculation agent, will adjust the equity ratio and the downside threshold price for certain events affecting the underlying equity, such as stock splits and stock dividends, and certain other corporate actions involving the underlying equity issuer, such as mergers. However, the calculation agent will not make an adjustment for every corporate event that could affect the underlying equity. For example, the calculation agent is not required to make any adjustments if the underlying equity issuer offers common stock for cash or in connection with acquisitions. If an event occurs that does not require the calculation agent to adjust the amount of the underlying equity deliverable at maturity, the market price of the ELKS may be materially and adversely affected.

§ The calculation agent, which is a subsidiary of the issuer, will make determinations with respect to the ELKS. As calculation agent, MS & Co. will determine whether the closing price of the underlying equity has decreased to or below the downside threshold price during the term of the ELKS, whether a market disruption event has occurred, the appropriate payment you receive at maturity, including, if we elect to deliver cash in lieu of shares of the underlying equity, the cash value of such shares on the valuation date, any adjustment to the equity ratio to reflect certain corporate and other events and the appropriate underlying security or securities to be delivered at maturity following certain extraordinary dividends or reorganization events. Any of these determinations made by MS & Co., in its capacity as calculation agent, including adjustments to the equity ratio, may affect the amount payable to you at maturity of the ELKS. See the section of the accompanying prospectus supplement called “Description of ELKS—Antidilution Adjustments.”

The original issue price of the ELKS includes the agent’s commissions and certain costs of hedging our obligations under the ELKS. The subsidiaries through which we hedge our obligations under the ELKS expect to make a profit. Since hedging our obligations entails risk and may be influenced by market forces beyond our or our subsidiaries’ control, such hedging may result in a profit that is more or less than initially projected.

§ Hedging and trading activity by our subsidiaries could potentially affect the value of the ELKS. One or more of our subsidiaries have carried out, and will continue to carry out, hedging activities related to the ELKS, including trading in the underlying equity as well as in other instruments related to the underlying equity. Some of our subsidiaries also trade the underlying equity and other financial instruments related to the underlying equity on a regular basis as part of their general broker-dealer and other businesses. Any of these hedging or trading activities on or prior to the pricing date could have affected the price of the underlying equity on the pricing date and, accordingly, increased the initial equity price used to calculate the downside threshold price and, therefore, increased the downside threshold price relative to the price of the underlying equity absent such hedging or trading activity. Additionally, such hedging or trading activities during the term of the ELKS could potentially affect whether the closing price of the underlying equity decreases to or below the downside threshold price and, therefore, whether or not you will receive the stated principal amount of the ELKS or shares of the underlying equity (or, if we so elect, the cash value thereof, determined as of the valuation date) at maturity.

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§ The U.S. federal income tax consequences of an investment in the ELKS are uncertain. There is no direct legal authority as to the proper treatment of the ELKS for U.S. federal income tax purposes, and our counsel has not rendered an opinion as to their proper tax treatment. Please read the discussion unde r “Fact Sheet ― General Information ― Tax considerations” in this pricing supplement and the discussion under “United States Federal Taxation” in the accompanying prospectus supplement for ELKS (together the “Tax Disclosure Sections”) concerning the U.S. f ederal income tax consequences of an investment in the ELKS. If the IRS were successful in asserting an alternative treatment for the ELKS, the timing and character of income on the ELKS might differ significantly from the tax treatment described in the Tax Disclosure Sections. We do not plan to request a ruling from the IRS regarding the tax treatment of the ELKS, and the IRS or a court may not agree with the tax treatment described in the Tax Disclosure Sections. 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. While it is not entirely clear whether the ELKS would be viewed as similar to the prepaid forward contracts described in the notice, it is possible that any Treasury regulations or other guidance issued after consideration of these issues could materially and adversely affect the tax consequences of an investment in the ELKS, possibly with retroactive effect. The notice focuses on a number of issues, the most relevant of which for holders of the ELKS are the character and timing of income or loss (including whether the option premium should be required to be included currently as ordinary income) and the degree, if any, to which income realized by non-U.S. investors should be subject to withholding tax. Non-U.S. Holders should note that we currently do not intend to withhold on any payments made with respect to the ELKS to Non-U.S. Holders (subject to compliance by such holders with certification requirements necessary to establish an exemption from withholding). However, in the event of a change of law or any formal or informal guidance by the IRS, Treasury or Congress, we may decide to withhold on payments made with respect to the ELKS to Non-U.S. Holders, and we will not be required to pay any additional amounts with respect to amounts withheld. Both U.S. and Non-U.S. Holders should consult their tax advisers regarding the U.S. federal income tax consequences of an investment in the ELKS, including possible alternative treatments, the issues presented by this notice and any tax consequences arising under the laws of any state, local or foreign taxing jurisdictions.

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Information about the Underlying Equity

Bank of America Corporation is a bank holding company and a financial holding company. The underlying equity is registered under the Securities Exchange Act of 1934, as amended. Information provided to or filed with the Securities and Exchange Commission by Bank of America Corporation pursuant to the Securities Exchange Act of 1934, as amended, can be located by reference to the Securities and Exchange Commission file number 001-06523 through the Securities and Exchange Commission’s website at . www.sec.gov. In addition, information regarding Bank of America Corporation may be obtained from other sources including, but not limited to, press releases, newspaper articles and other publicly disseminated documents. See the section called “Description of ELKS––The Underlying Equity Issuer and Underlying Equity––Public Information” in the accompanying prospectus supplement for ELKS.

This pricing supplement relates only to the ELKS referenced hereby and does not relate to the underlying equity or other securities of Bank of America Corporation The issuer has derived all disclosures contained in this pricing supplement regarding Bank of America Corporation from the publicly available documents described in the preceding paragraph. In connection with the offering of the ELKS, neither the issuer nor the agent has participated in the preparation of such documents or made any due diligence inquiry with respect to Bank of America Corporation Neither the issuer nor the agent makes any representation that such publicly available documents or any other publicly available information regarding Bank of America Corporation is accurate or complete.

Neither the issuer nor any of its affiliates makes any representation to you as to the performance of the underlying equity.

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Historical Information

The following table sets forth the published high and low closing prices of, as well as dividends on, the underlying equity for each quarter in the period from January 1, 2007 through May 24, 2010. The closing price of the underlying equity on May 24, 2010 was $15.40. The associated graph shows the closing prices for the underlying equity for each day in the same period. We obtained the information in the table and graph below from Bloomberg Financial Markets, without independent verification. You should not take the historical prices of the underlying equity as an indication of its future performance. No assurance can be given as to the closing price of the underlying equity on any trading day during the term of the ELKS.

| Bank of America Corporation (CUSIP 060505104 ) | High ($) | Low ($) | Dividends
($) |
| --- | --- | --- | --- |
| 2007 | | | |
| First
Quarter | 54.05 | 49.46 | 0.56 |
| Second
Quarter | 51.82 | 48.80 | 0.56 |
| Third
Quarter | 51.87 | 47.00 | 0.64 |
| Fourth
Quarter | 52.71 | 41.10 | 0.64 |
| 2008 | | | |
| First
Quarter | 45.03 | 35.31 | 0.64 |
| Second
Quarter | 40.86 | 23.87 | 0.64 |
| Third
Quarter | 37.48 | 18.52 | 0.64 |
| Fourth
Quarter | 38.13 | 11.25 | 0.32 |
| 2009 | | | |
| First
Quarter | 14.33 | 3.14 | 0.01 |
| Second
Quarter | 14.17 | 7.05 | 0.01 |
| Third
Quarter | 17.98 | 11.84 | 0.01 |
| Fourth
Quarter | 18.59 | 14.58 | 0.01 |
| 2010 | | | |
| First
Quarter | 18.04 | 14.45 | 0.01 |
| Second
Quarter (through May 24, 2010) | 19.48 | 15.30 | – |

We make no representation as to the amount of dividends, if any, that Bank of America Corporation may pay in the future. In any event, as an investor in the ELKS, you will not be entitled to receive dividends, if any, that may be payable on the common stock of Bank of America Corporation.

Bank of America Corporation common stock – Daily Closing Prices January 1, 2007 to May 24, 2010

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Where You Can Find More Information

Morgan Stanley has filed a registration statement (including a prospectus, as supplemented by a prospectus supplement for ELKS) with the Securities and Exchange Commission, or SEC, for the offering to which this pricing supplement relates. You should read the prospectus in that registration statement, the prospectus supplement for ELKS and any other documents relating to this offering that Morgan Stanley has filed with the SEC for more complete information about Morgan Stanley and this offering. You may get these documents without cost by visiting EDGAR on the SEC web site at . www.sec.gov. Alternatively, Morgan Stanley will arrange to send you the prospectus and the prospectus supplement for ELKS if you so request by calling toll-free 800-584-6837.

You may access these documents on the SEC web site at . www.sec.gov as follows:

Prospectus Supplement for ELKS dated February 9, 2010

Prospectus dated December 23, 2008

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

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