Morgan Stanley plans to price buffered PLUS linked to indexes, ETF

By Angela McDaniels

Tacoma, Wash., Sept. 20 - Morgan Stanley plans to price 0% buffered Performance Leveraged Upside Securities due November 2011 linked to a basket of indexes and an exchange-traded fund, according to an FWP filing with the Securities and Exchange Commission.

The basket includes the Philadelphia Oil Service Sector index with a 50% weight, the iShares FTSE/Xinhua China 25 index fund with a 25% weight and the Russell 2000 index with a 25% weight.

If the final basket level is greater than the initial level, the payout at maturity will be par of $10 plus 1.5 times the increase. The payout will be subject to a maximum return of 10% to 14%, which will be set at pricing. Investors will receive par if the basket declines by 7.5% or less and will lose 1% for every 1% that it declines beyond 7.5%.

The notes (Cusip 61759G364) will price and settle in September.

Morgan Stanley & Co. Inc. is the agent.

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