Morgan Stanley plans protected securities linked to 2007-3 Fund Dynamic Reference index

By Angela McDaniels

Tacoma, Wash., Nov. 5 - Morgan Stanley plans to price protected fund-linked securities due Nov. 30, 2012 linked to the performance of the 2007-3 Fund Dynamic Reference index, according to a 424B2 filing with the Securities and Exchange Commission.

The index is a dynamic composite index that tracks the performance of hypothetical investments in two assets - 90% to 100% in the class D shares of the Morgan Stanley FX Alpha Plus Strategy Portfolio, which is the equity component, and 0% to 10% in the zero-coupon bond component - and 0% in one liability, which is the leverage component.

The leverage component represents hypothetical borrowed funds that may, under certain circumstances, be used to leverage the allocation to the equity component in the index.

The percentage allocations will be determined at pricing and will change over time based on the performance of the components.

The payout at maturity will be par of $10 plus any appreciation of the index over the threshold level. The initial index level is 97, and the threshold level is 100. Investors will receive at least par.

The notes will price and settle in November.

Morgan Stanley & Co. Inc. will be the agent.

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