New Issue: Morgan Stanley prices $7.09 million knock-out notes linked to gold

By Angela McDaniels

Tacoma, Wash., Aug. 3 - Morgan Stanley priced $7.09 million of 0% knock-out notes due Aug. 11, 2011 linked to the price of gold, according to a 424B2 filing with the Securities and Exchange Commission.

If the price of gold declines by more than 15% during the life of the notes, the payout at maturity will be par plus the gold return, which could be positive or negative. Otherwise, the payout will be par plus the greater of the gold return and 3%.

In either case, the payout will be capped at 131% of par.

J.P. Morgan Securities Inc. and JPMorgan Chase Bank, NA are the agents.

Issuer:	Morgan Stanley
Issue:	Knock-out notes
Underlying commodity:	Gold
Amount:	$7,085,000
Maturity:	Aug. 11, 2011
Coupon:	0%
Price:	Par
Payout at maturity:	If price of gold declines by more than 15% during life of notes, par plus gold return with exposure to losses; otherwise, par plus greater of gold return and 3%; payout capped at 131% of par in either case
Initial gold price:	$1,169.00
Pricing date:	July 30
Settlement date:	Aug. 6
Agents:	J.P. Morgan Securities Inc. and JPMorgan Chase Bank, NA
Fees:	1%
Cusip:	617482MY7

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