Morgan Stanley plans to price capital-protected barrier notes linked to hybrid basket

By Angela McDaniels

Tacoma, Wash., Aug. 13 - Morgan Stanley plans to price zero-coupon capital-protected barrier notes due August 2012 linked to a hybrid basket, according to a 424B2 filing with the Securities and Exchange Commission.

The basket includes the iShares MSCI Emerging Markets index fund with a 30% weight, the S&P 500 index with a 20% weight, the Dow Jones - UBS Commodity index with a 20% weight and the Japanese yen, euro and Australian dollar, each with a 10% weight and each relative to the U.S. dollar.

If the basket remains at or below the barrier level - 122% to 134% of the initial level - throughout the life of the notes, the payout at maturity will be par of $10 plus any basket gain. If the basket is ever above the barrier level, the payout will be par plus 6%.

The exact barrier level will be set at pricing.

The notes will price and settle in August.

Morgan Stanley & Co. Inc. is the agent.

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