Prospectus Filed Pursuant to Rule 424(b)(2) (424b2)
October 07 2019 - 12:48PM
Edgar (US Regulatory)
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of Securities Offered
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Maximum
Aggregate Offering Price
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Amount
of Registration Fee
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Fixed Rate Step-Up Callable Notes due 2039
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$5,000,000
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$649.00
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October
2019
Pricing Supplement
No. 2,659
Registration
Statement No. 333-221595
Dated October
3, 2019
Filed pursuant
to Rule 424(b)(2)
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Fixed Rate Step-Up Callable Notes due 2039
As further described below, we, Morgan Stanley, have the right
to redeem the notes, in whole or in part, on any semi-annual redemption date, beginning October 17, 2022, at a redemption
price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest thereon to but excluding the redemption
date. Subject to our semi-annual redemption right, interest will accrue and be payable on the notes semi-annually, in arrears,
in (i) years 1 to 10, at an annual rate of 3.000%, (ii) years 11 to 18, at an annual rate of
3.500% and (iii) years 19 to maturity, at an annual rate of 4.000%.
All payments are subject to the credit risk of Morgan Stanley.
If Morgan Stanley defaults on its obligations, you could lose some or all of your investment. These securities are not secured
obligations and you will not have any security interest in, or otherwise have any access to, any underlying reference asset or
assets.
FINAL TERMS
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Issuer:
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Morgan Stanley
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Aggregate principal amount:
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$5,000,000. May be increased prior to the original issue date but we are not required to do so.
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Issue price:
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$1,000 per note
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Stated principal amount:
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$1,000 per note
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Pricing date:
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October 3, 2019
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Original issue date:
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October 17, 2019 (9 business days after the pricing date)
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Maturity date:
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October 17, 2039
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Interest accrual date:
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October 17, 2019
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Payment at maturity:
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The payment at maturity per note will be the stated principal amount plus accrued and unpaid interest
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Interest rate:
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From and including the original issue date
to but excluding October 17, 2029: 3.000% per annum
From and including October 17, 2029 to but
excluding October 17, 2037: 3.500% per annum
From and including October 17, 2037 to but
excluding the maturity date: 4.000% per annum
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Interest payment period:
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Semi-annually
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Interest payment period end dates:
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Unadjusted
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Interest payment dates:
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Each April 17 and October 17, beginning April 17, 2020; provided that if any such day is not a business day, that interest payment will be made on the next succeeding business day and no adjustment will be made to any interest payment made on that succeeding business day.
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Day-count convention:
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30/360
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Optional early redemption:
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Beginning October 17, 2022, we have the right to redeem the notes, at our discretion, in whole or in part, on any semi-annual redemption date at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest thereon to but excluding the redemption date. If we decide to redeem some or all of the notes, we will give you notice at least 5 business days before the redemption date specified in the notice. No further payments will be made on the redeemed notes once they have been redeemed. See “The Notes.”
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Redemption percentage at redemption date:
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100% per note redeemed
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Redemption dates:
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Each April 17 and October 17, beginning October 17, 2022.
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Specified currency:
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U.S. dollars
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No listing:
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The notes will not be listed on any securities exchange.
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Denominations:
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$1,000 / $1,000
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CUSIP:
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61760QMS0
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ISIN:
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US61760QMS02
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Book-entry or certificated note:
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Book-entry
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Business day:
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New York
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Agent:
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Morgan Stanley & Co. LLC (“MS & Co.”), a wholly owned subsidiary of Morgan Stanley. See “Supplemental Information Concerning Plan of Distribution; Conflicts of Interest.”
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Calculation agent:
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Morgan Stanley Capital Services LLC
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Trustee:
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The Bank of New York Mellon
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Estimated value on the pricing date:
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$928.10 per note. The estimated value on any subsequent pricing date may be lower than this estimate, but will in no case be less than $880.00 per note. See “The Notes” on page 2.
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Commissions and issue price:
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Price to public
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Agent’s commissions(1)
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Proceeds to issuer(2)
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Per note
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$1,000
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$18.50
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$981.50
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Total
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$5,000,000
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$92,500
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$4,907,500
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(1)
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Selected dealers, including
Morgan Stanley Wealth Management (an affiliate of the agent), and their financial advisors will collectively receive from the
agent, MS & Co., a fixed sales commission of $18.50 for each note 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.
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(2)
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See “Use of Proceeds
and Hedging” on page 5.
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The notes involve risks not associated with an investment
in ordinary debt securities. See “Risk Factors” beginning on page 3.
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 dated November 16, 2017 Prospectus
dated November 16, 2017
The notes are not deposits or savings accounts and are not
insured by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality, nor are they obligations
of, or guaranteed by, a bank.
Fixed Rate Step-Up Callable Notes due 2039
The Notes
The notes are debt securities of Morgan Stanley. Interest on
the notes will accrue and be payable on the notes semi-annually, in arrears, (i) from the original issue date until October
17, 2029, at a rate of 3.000% per annum; (ii) from October 17, 2029 until October 17, 2037 at a rate of 3.500%
per annum; and (iii) from October 17, 2037 until the maturity date, at a rate of 4.000% per annum. Beginning
October 17, 2022, we have the right to redeem the notes, at our discretion, in whole or in part, on any semi-annual
redemption date at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest thereon
to but excluding the redemption date. If we decide to redeem some or all of the notes, we will give you notice at least 5 business
days before the redemption date specified in the notice. On or before the redemption date, we will deposit with the trustee
money sufficient to pay the redemption price of and accrued interest on the notes to be redeemed on that date. If such money is
so deposited, on and after the redemption date, interest will cease to accrue on the notes (unless we default in the payment of
the redemption price and accrued interest) and such notes will cease to be outstanding. We describe the basic features of these
notes in the sections of the accompanying prospectus called “Description of Debt Securities—Fixed Rate Debt Securities”
and prospectus supplement called “Description of Notes,” subject to and as modified by the provisions described below.
For information regarding notices of redemption, see “Description of Debt Securities—Redemption and Repurchase of Debt
Securities—Notice of Redemption” in the accompanying prospectus. All payments on the notes are subject to the credit
risk of Morgan Stanley.
The stated principal amount and issue price of each note is $1,000.
This price includes costs associated with issuing, selling, structuring and hedging the notes, which are borne by you, and, consequently,
the estimated value of the notes on the pricing date is less than the issue price. We estimate that the value of each note on the
pricing date is $928.10. The estimated value on any subsequent pricing date may be lower than this estimate, but will in
no case be less than $880.00 per note.
What goes into the estimated value on the pricing date?
In valuing the notes on the pricing date, we take into account
that the notes comprise both a debt component and a performance-based component linked to interest rates. The estimated value of
the notes is determined using our own pricing and valuation models, market inputs and assumptions relating to volatility and other
factors including current and expected interest rates, as well as an interest rate related to our secondary market credit spread,
which is the implied interest rate at which our conventional fixed rate debt trades in the secondary market.
What determines the economic terms of the notes?
In determining the economic terms of the notes, including the
interest rate applicable to each interest payment period, we use an internal funding rate, which is likely to be lower than our
secondary market credit spreads and therefore advantageous to us. If the issuing, selling, structuring and hedging costs borne
by you were lower or if the internal funding rate were higher, one or more of the economic terms of the securities would be more
favorable to you.
What is the relationship between the estimated value on the
pricing date and the secondary market price of the notes?
The price at which MS & Co. purchases the notes in the secondary
market, absent changes in market conditions, including those related to interest rates, may vary from, and be lower than, the estimated
value on the pricing date, because the secondary market price takes into account our secondary market credit spread as well as
the bid-offer spread that MS & Co. would charge in a secondary market transaction of this type, the costs of unwinding the
related hedging transactions and other factors.
MS & Co. may, but is not obligated to, make a market in the
notes and, if it once chooses to make a market, may cease doing so at any time.
Fixed Rate Step-Up Callable Notes due 2039
Risk Factors
The notes involve risks not associated with an investment
in ordinary fixed rate notes. This section describes the most significant risks relating to the notes. For a complete list of risk
factors, please see the accompanying prospectus supplement and prospectus. Investors should consult their financial and legal advisers
as to the risks entailed by an investment in the notes and the suitability of the notes in light of their particular circumstances.
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The notes have early redemption risk. The issuer
retains the option to redeem the notes, in whole or in part, on any semi-annual redemption date, beginning on October 17, 2022,
on at least 5 business days’ prior notice. It is more likely that the issuer will redeem the notes in whole prior
to their stated maturity date to the extent that the interest payable on the notes is greater than the interest that would be
payable on other instruments of the issuer of a comparable maturity, of comparable terms and of a comparable credit rating trading
in the market. If the notes are redeemed, in whole or in part, prior to their stated maturity date, you will receive no further
interest payments on the redeemed notes and may have to re-invest the proceeds in a lower interest rate environment.
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§
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Investors are subject to our credit risk, and any
actual or anticipated changes to our credit ratings or credit spreads may adversely affect the market value of the notes.
Investors are dependent on our ability to pay all amounts due on the notes on interest payment dates, redemption dates and at
maturity and therefore investors are subject to our credit risk and to changes in the market’s view of our creditworthiness.
The notes are not guaranteed by any other entity. If we default on our obligations under the notes, your investment would be at
risk and you could lose some or all of your investment. As a result, the market value of the notes prior to maturity will be affected
by changes in the market’s view of our creditworthiness. Any actual or anticipated decline in our credit ratings or increase
in the credit spreads charged by the market for taking our credit risk is likely to adversely affect the value of the notes.
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The price at which the notes may be sold prior to
maturity will depend on a number of factors and may be substantially less than the amount for which they were originally purchased.
Some of these factors include, but are not limited to: (i) actual or anticipated changes in interest and yield rates, (ii)
any actual or anticipated changes in our credit ratings or credit spreads and (iii) time remaining to maturity. Generally, the
longer the time remaining to maturity and the more tailored the exposure, the more the market price of the notes will be affected
by the other factors described in the preceding sentence. This can lead to significant adverse changes in the market price of
securities like the notes. Depending on the actual or anticipated level of interest and yield rates, the market value of the notes
is expected to decrease and you may receive substantially less than 100% of the issue price if you are able to sell your notes
prior to maturity.
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§
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The rate we are willing to pay for securities of this
type, maturity and issuance size is likely to be lower than the rate implied by our secondary market credit spreads and advantageous
to us. Both the lower rate and the inclusion of costs associated with issuing, selling, structuring and hedging the notes in the
original issue price reduce the economic terms of the notes, cause the estimated value of the notes to be less than the original
issue price and will adversely affect secondary market prices. Assuming no change in market conditions or any other relevant
factors, the prices, if any, at which dealers, including MS & Co., are willing to purchase the notes in secondary market transactions
will likely be significantly lower than the original issue price, because secondary market prices will exclude the issuing, selling,
structuring and hedging-related costs that are included in the original issue price and borne by you and because the secondary
market prices will reflect our secondary market credit spreads and the bid-offer spread that any dealer would charge in a secondary
market transaction of this type, the costs of unwinding the related hedging transactions as well as other factors.
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The inclusion of the costs of issuing,
selling, structuring and hedging the notes in the original issue price and the lower rate we are willing to pay as issuer make
the economic terms of the notes less favorable to you than they otherwise would be.
Fixed Rate Step-Up Callable Notes due 2039
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§
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The estimated value of the notes is determined by reference to our pricing and valuation models, which may differ from those
of other dealers and is not a maximum or minimum secondary market price. These pricing and valuation models are proprietary
and rely in part on subjective views of certain market inputs and certain assumptions about future events, which may prove to be
incorrect. As a result, because there is no market-standard way to value these types of securities, our models may yield a higher
estimated value of the notes than those generated by others, including other dealers in the market, if they attempted to value
the notes. In addition, the estimated value on the pricing date does not represent a minimum or maximum price at which dealers,
including MS & Co., would be willing to purchase your notes in the secondary market (if any exists) at any time. The value
of your notes at any time after the date of this pricing supplement will vary based on many factors that cannot be predicted with
accuracy, including our creditworthiness and changes in market conditions.
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§
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The notes will not be listed on any securities exchange
and secondary trading may be limited. The notes will not be listed on any securities exchange. Therefore, there may
be little or no secondary market for the notes. MS & Co. may, but is not obligated to, make a market in the notes and, if
it once chooses to make a market, may cease doing so at any time. When it does make a market, it will generally do so for transactions
of routine secondary market size at prices based on its estimate of the current value of the notes, taking into account its bid/offer
spread, our credit spreads, market volatility, the notional size of the proposed sale, the cost of unwinding any related hedging
positions, the time remaining to maturity and the likelihood that it will be able to resell 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, and any redemption by
the issuer in part but not in whole may further reduce any liquidity in the notes that may exist at that time. Since other
broker-dealers may not 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 to cease making a market in the notes, it is likely that there would be no secondary market for the notes. Moreover,
it is less likely that the issuer will redeem the notes prior to their stated maturity date to the extent that the interest payable
on the notes is less than the interest that would be payable on other instruments of the issuer of a comparable maturity trading
in the market. Accordingly, you should be willing to hold your notes to maturity.
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Morgan Stanley & Co. LLC, which is a subsidiary
of the issuer, has determined the estimated value on the pricing date. MS & Co. has determined the estimated value of
the notes on the pricing date.
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§
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The issuer, its subsidiaries or affiliates may publish
research that could affect the market value of the notes. They also expect to hedge the issuer’s obligations under the notes.
The issuer or one or more of its affiliates may, at present or in the future, publish research reports with respect to movements
in interest rates generally. This research is modified from time to time without notice to you and may express opinions or provide
recommendations that are inconsistent with purchasing or holding the notes. Any of these activities may affect the market value
of the notes. In addition, the issuer’s subsidiaries expect to hedge the issuer’s obligations under the notes and
they may realize a profit from that expected hedging activity even if investors do not receive a favorable investment return under
the terms of the notes or in any secondary market transaction.
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The calculation agent, which is a subsidiary of the
issuer, will make determinations with respect to the notes. Any of these determinations made by the calculation agent may
adversely affect the payout to investors. Moreover, certain determinations made by the calculation agent may require it to exercise
discretion and make subjective judgments. These potentially subjective determinations may adversely affect the payout to you on
the notes. For further information regarding these types of determinations, see “Description of Debt Securities—Fixed
Rate Debt Securities” and related definitions in the accompanying prospectus.
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Fixed Rate Step-Up Callable Notes due 2039
Use of Proceeds and Hedging
The proceeds we receive from the sale of the notes will be used
for general corporate purposes. We will receive, in aggregate, $1,000 per note issued, because, when we enter into hedging transactions
in order to meet our obligations under the notes, our hedging counterparty will reimburse the cost of the Agent’s commissions.
The costs of the notes borne by you and described on page 2 above comprise the Agent’s commissions and the cost of issuing,
structuring and hedging the notes.
Supplemental Information Concerning Plan of Distribution;
Conflicts of Interest
The agent may distribute the notes through Morgan Stanley Smith
Barney LLC (“Morgan Stanley Wealth Management”), as selected dealer, or other dealers, which may include Morgan Stanley
& Co. International plc (“MSIP”) and Bank Morgan Stanley AG. Morgan Stanley Wealth Management, MSIP and Bank Morgan
Stanley AG are affiliates of Morgan Stanley. Selected dealers, including Morgan Stanley Wealth Management, and their financial
advisors will collectively receive from the agent, Morgan Stanley & Co. LLC, a fixed sales commission of $18.50 for each note
they sell.
MS & Co. is our wholly owned subsidiary and it and other
subsidiaries of ours expect to make a profit by selling, structuring and, when applicable, hedging the notes.
MS & Co. will conduct this offering in compliance with the
requirements of FINRA Rule 5121 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.
Acceleration Amount in Case of an Event of Default
In case an event of default with respect to
the notes shall have occurred and be continuing, the amount declared due and payable per note upon any acceleration of the notes
shall be an amount in cash equal to the stated principal amount plus accrued and unpaid interest.
Validity of the Notes
In the opinion of Davis Polk & Wardwell LLP, as special counsel
to Morgan Stanley, when the notes offered by this pricing supplement have been executed and issued by Morgan Stanley, authenticated
by the trustee pursuant to the Senior Debt Indenture and delivered against payment as contemplated herein, such notes will be valid
and binding obligations of Morgan Stanley, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability
(including, without limitation, concepts of good faith, fair dealing and the lack of bad faith), provided that such counsel
expresses no opinion as to the effect of fraudulent conveyance, fraudulent transfer or similar provision of applicable law on the
conclusions expressed above. This opinion is given as of the date hereof and is limited to the laws of the State of New York and
the General Corporation Law of the State of Delaware. In addition, this opinion is subject to customary assumptions about the trustee’s
authorization, execution and delivery of the Senior Debt Indenture and its authentication of the notes and the validity, binding
nature and enforceability of the Senior Debt Indenture with respect to the trustee, all as stated in the letter of such counsel
dated November 16, 2017, which is Exhibit 5-a to the Registration Statement on Form S-3 filed by Morgan Stanley on November 16,
2017.
Fixed Rate Step-Up Callable Notes due 2039
Where You
Can Find More Information
Morgan Stanley has filed a registration statement (including
a prospectus, as supplemented by a prospectus supplement) 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
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 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 dated November 16, 2017
Prospectus
dated November 16, 2017
Terms used but not defined in this pricing
supplement are defined in the prospectus supplement or in the prospectus. As used in this pricing supplement, the “Company,”
“we,” “us” and “our” refer to Morgan Stanley.
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