Morgan Stanley plans lesser index annual review notes linked to Euro Stoxx 50, Nikkei

By Jennifer Chiou

New York, July 13 - Morgan Stanley plans to price 0% lesser index annual review notes due Aug. 3, 2010 linked to the Dow Jones Euro Stoxx 50 and Nikkei 225 indexes via J.P. Morgan Securities Inc., according to an FWP filing with the Securities and Exchange Commission.

The notes will be called at increasing premiums if both index levels are at least 90% of their initial levels on the first review date and at or above their initial index levels on the second or third annual review dates. The redemption amount will be par plus 17.3% if the notes are called on July 30, 2008, par plus 34.6% if called on July 29, 2009 and par plus 51.9% if called on July 29, 2010.

If the notes are not called, the payout at maturity will be par unless one or both indexes decline by more than 10%. Investors will lose 1.1111% for every 1% decline in the lesser-performing index beyond 10%.

The notes will price on July 20 and settle on July 27.

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